As you may have noticed, there is a new value investing book out. It’s called Active Value Investing: Making Money in Range-Bound Markets by Vitaliy N. Katsenelson. In the spirit of full disclosure, I want to mention that Vitaliy is sponsoring this month’s contest at Value Investing News, where we are giving away three free signed copies of his book. Acknowledging this potential bias, I’ve tried to be extra critical in my review of this book.

Vitaliy is a CFA charter holder and a portfolio manager with Investment Management Associates. (You can review IMA’s performance record here.) He has been involved with the investment industry since 1994. Vitaliy is also a fellow value investing blogger at the site, Vitaliy’s Contrarian Edge. I give authors more credibility when they are willing to expose themselves to public comments and debate by having a blog.

I was looking at the front page of Value Investing News last night, and the New 52-Week Lows list jumped out at me. Take a look at these names:

• CITIGROUP INC (C)
• LEVEL 3 COMM INC (LVLT)
• HOME DEPOT INC (HD)
• RITE AID CP (RAD)
• STANDARD PACIFIC LP (SPF)
• TENET HLTHCRE CP (THC)
• FIFTH THIRD BNCP (FITB)
• LM ERICSSON ADR (ERIC)
• D R HORTON INC (DHI)
• NATL CITY CP (NCC)
• WALGREEN CO (WAG)
• SPANSION INC. (SPSN)
• N Y TIMES CL A (NYT)
• NORDSTROM INC (JWN)
• P M I GROUP INC (PMI)
• REGIONS FINANCIAL CP (RF)
• SPDR HOMEBUILDERS ET (XHB)
• KEYCORP (KEY)
• PENNEY J C CO HOLDIN (JCP)
• PROGRESSIVE CP (PGR)

With the recent liquidity crisis in the subprime market, the formerly red hot housing sector has finally started to cool off. Home equity loans are costing significantly more now and future home price appreciation expectations are finally getting back to reality. These factors have caused investors and shoppers to curtail their demand for home improvement retailers.

Home Depot (HD) and Lowe’s (LOW) dominate the home improvement retail sector. Both of these stocks are trading close to their 52-week lows. Interest in these stocks started to pick up on Value Investing News, so I started a poll on September 26th to find out which of these leading home improvement stocks provides a better value.

Concord Camera (LENS) recently released its 2007 10-K. Last week I calculated the net current asset value of Concord Camera, so I figured I should update my figures in the June 30, 2007 balance sheet. Here’s what I found:

Apple Inc. (AAPL) is one of the most popular stocks followed on Wall Street. It is a classic glamor stock. It is followed by both institutional investors and the general public. Apple’s highly popular iPod media players and iTunes digital media store have captured the imagination of music lovers everywhere.

Many of those music lovers dabble in stocks. I’m certain many have followed Peter Lynch’s mantra, “Invest in what you know.” These “dumb money” investors are probably what has helped propel Apple’s PE to over 40. Many of the most recent stock buyers probably think that if iPods could bring Apple’s stock from the single digit to well over 100 that maybe the new iPhone could get APPL to 500.

Several weeks ago a discussion broke out in the Fat Pitch Financials Contributor’s Corner forum regarding stocks selling below net current asset value. Geoff Gannon submitted several posts about stocks that were selling below net current asset value [NCAV]. He even found one selling below Ben Graham’s 2/3 or less of NCAV criteria. This find was Concord Camera (LENS).

Finding stocks selling below 2/3 of their NCAV is a fairly rare occurance in today’s market, but back in the Graham-Newman days this simple value criteria of buying stocks selling at 2/3 of NCAV had tremendous success.

I was just reviewing the new stories queue at Value Investing News when I discovered that Warren Buffett’s Berkshire Hathaway was named ‘Most Respected’ by a Barron’s survey. This doesn’t come as any real surprise to me. It’s really about time that Buffett’s company was recognized as a true corporate leader.

Some have speculated that Warren Buffett’s massive donations this past year is what secured Berkshire Hathaway’s position as the most respected company in the world. That might be what did it. I’m just surprised that Berkshire Hathaway (BRK.A) (BRK.B) was not at the top of the list last year.

I was trying to figure out what is causing Mothers Work (MWRK) to climb more than 13% on Friday. All I could find was James Altucher’s Daily Blog Watch, which mentions a blog article by Blogvesting questioning whether Mothers Work is a value trap.

Altucher’s Blog Watch is always an interesting read but it’s not really stock price moving news. In addition, the blog post mentioned Altucher is bearish on Mothers Work.

This strange trend got me thinking. What would the impact of this latest style trend be on actual maternity clothing retailers and manufacturers? I quickly thought of Mothers Work (MWRK). I discovered that Mothers Work produces many of the major brands of maternity clothes during my wife’s first pregnancy. These leading brands include:

I have been busy today buying stocks. I added Mothers Work (MWRK) and I accumulated shares of an actual Graham net-net for the Fat Pitch Financials Port. I also picked up shares of an odd lot tender offer and earlier this week I sold my very profitable KBR position in the Special Situations Real Money Port. More details will follow shortly on some of my purchases.

I turned to the presentations given at the June 19th Tyco Investor Meeting. I find the slide presentation given at these meetings to be particularly helpful when trying to understand what is going to happen after a spinoff. Sadly, I can’t seem to find links to these presentations anymore on the Tyco website. However, using one of my handy investor hacks, I located this link to the Tyco Investor Meeting presentations and webcasts. (Hack: I used the cache links in Google to help find what was on the Tyco corporate website a few weeks earlier. This trick comes in handy on occasion.)

There were tender offers that appeared as plain as day. It was clearer than crystal that tender offers could provide investors with opportunities. So I set forth with investments in Tribune Co. (TRB) and Navigant Consulting (NCI).

Last month, the Fat Pitch Financials Port returned 1.48%. The S&P 500 returned 3.22% over the same period, so I trailed the index by 1.73%. I’ve basically been trailing the index since the beginning of the year. I’m a bit dissapointed but the feedback also inspires me to search a bit harder for new value opportunities.

1. Hack EDGAR

In his letter, Shai asks just one question:

James Altucher made some great points in his article for why Warren Buffett has added to his position in US Bancorp and why it might still be a good buy now.  US Bancorp has been outperforming other banks with a 23 percent return on equity.  The average for the banking industry as a whole is only 10 percent. Even more impressive is the fact that US Bancorp’s return on equity has been increasing even while the yield curve has inverted. Many banks struggle to be profitable when short term interest rates climb above long term interest rates because it makes it difficult for them to profit from the spread between the money they lend out and the interest they pay depositors.

James’s thinks Wall Street is throwing the baby out with the bath water with U.S. Bancorp. The collapse of stock prices in the subprime mortgage sector has also dragged down stock prices for almost all banks. There is widespread concern about credit quality.  However as James points out, the credit quality of U.S. Bancorp’s loans has actually gone up over the past quarter.

What are split-offs?

Split-offs are a type of reorganization where the stock of a subsidiary is offered in exchange for shares in the parent company. A split-off differs from a spinoff in that the shareholders in a split-off must exchange their shares of stock in the parent company in order to receive shares of the subsidiary, whereas the shareholders in a spin-off do not need to trade in their shares in order to receive shares in the subsidiary. The key difference here is that you have to take action to opt into a split-off and you have to give up your shares in the parent company to receive shares in the subsidiary.

So how well did I do?
I initially purchased 1,200 Western Sizzlin rights at $0.52 a piece for $630.95 on November 27, 2006.  I exercised my rights on December 8, 2007 for a $25 fee and an additional $4,200 for 600 Western Sizzlin shares at the $7.00 price the rights entitled me to.  Today, I sold my 600 shares for a net $5,993.05.  My net return from this trade was $1,137.10.  That is a 23.4% gain on my investment.  Since this deal took 100 days to complete, my average annualized return was 85.5%.