Kevin J. Holloway

Long only, value, special situations, long-term horizon
Kevin J. Holloway
Long only, value, special situations, long-term horizon
Contributor since: 2011
Good write up, thanks.
Was in this for awhile, but came to the same conclusion that you laid out. There's value here, but not sure the upside compensates for the risk. Management has been less than stellar.
Well said. One of the few articles I've seen that looked past the headlines you mentioned. I own quite a bit myself.
Great analysis Daniel. Good to see some second level analysis after so many articles claiming either "book stores are dead" or "nook loses more money". Hopefully management continues to "rationalize" nook and we start seeing a profitable retail biz come to the forefront.
you are thinking too much
Microcap- agree with your scenario breakdown. The good news is in scenario C we can monitor the cash burn and get out if mgmt doesn't follow thru. As far as a buyout goes I'm curious if anyone is/was interested in Stanley. There's no doubt they could make it instantly profitable. Maybe too small to move the dial? Idk. Good risk/reward like the author says in STLY.
Good stuff, I bought a small position at $15 and trying to buy more under $20. The bottom line is the retail stores are profitable and extremely cheap. Yes the biz is declining, but that doesn't mean there isn't value here. Upside is spinoff and mgmt adapting the retail stores. I still go to B&N and many of my friends wifes take the kids. Cheap.
I've owned FIATY shares since they were at $5 and I can tell you one thing… Commercials for the FIAT brand did not enter into the equation. And they won't now. In fact the FIAT brand in general had almost no part of the analysis.
Great piece. Well done… own it and agree with your evaluation.
Good article and well balanced. Thanks.
Some good scuttlebutt right there. Thanks.
Have a small position in STLY. All the comments are pretty much right on. Management is definitely not the best. They said in the most recent call that they expect to have margins in line with other case good companies. A caller asked what the margin was for case good co's and they couldn't answer. That did not give me confidence.
But the stock is incredibly cheap and good things happen to cheap stocks. No debt, cash and supposedly a profitable line ex young america.
I'd like to have more conviction as well. These next couple quarters will hopefully answer our questions. Keeping an eye on cash burn.
There's no way the author was a portfolio manager. No. way.
Couldn't agree more Tim. Many of the companies I own are profitable companies that became out of favor for one reason or another.
@Harcorevalue... just saw your post. Said the same thing below. No way he'd buy back stock, which he rarely does, at a 10 or 20% discount to IV.
I don't think Buffett would be buying back at 1.1 book value if he thought it was only a 10% or 20% discount to intrinsic value. 25% and up sounds like the MOS he would be looking for.
Also, insurance in general has been hurt pretty badly over the last few years. Insurance is cheap, should do better of the next 5 years than the last. I think when the sentiment towards insurance stocks turns positive we'll see a reflection in BRK stock price.
Long GLW as well. Watching the Investor Meeting I come away impressed with their level of innovation. Here's the video they showed...
Cool Stuff.
A very balanced opinion... we probably agree on this more than disagree. I can't say with certainty that everything is baked in.
I still like Corning as a long term holding, but yes there are better value plays than GLW right now. It's probably best to wait and see.
I agree that tough times are ahead, but I think value trap is a short sighted description. Many of the issues you discuss are reflected in the current price. As Kevin notes above, you're not accounting for reduction in spending and subsequent increase in FCF.
You're probably right in taking a more wait and see approach, but 3-5 years from now I find it hard to believe Corning won't be growing profitably. 160 years in business.
I guess it all depends on your investment time horizon.
The reason GLW is so cheap is because of the problems Corning addressed and you stated above. Prevailing opinion is negative and the author is simply stating why he believes this is overkill. I wouldn't call it spin, it's contrarian to the current price and outlook.
And yes it maybe "dead money" for some time, which to me is why it's a good opportunity to buy. Best time to buy is when it's cheap, unloved. If you have a 3-5 year horizon you should do well... and collect 2.4% div that will grow.
There is no doubt this stock will require patience, but I wouldn't call it dead money. If you have a 3-5 year time horizon then you should do well with GLW. If you don't have that kind of patience than I understand your disinterest. A price drop and short term earnings outlook is precisely a reason to BUY a stock, not justify selling. Well at least to a value investor. Corning has been around for over 100 years and has been innovating ever since. Their balance sheet is pristine, they're cheap, pay a dividend, buying back shares, insider buying. Pessimism is at an all time high, which to me is the best time to buy. I'll wait for it to bottom out and purchase more shares.
You can read my outlook here:
Managements guidance for next year was not good. Glass prices falling, end of the big LCD TV cycle. I'm in a wait and see mode, but I'm a buyer when it bottoms. Corning is a tech company more than anything. They continue to innovate and have for over 100 years. Stock will require some patience.
That's why it's cheap. A little to overblown though. If you're in it for the long term (3-5 years), you'll do well with this stock.
I noticed the 12 P/E recently and was surprised to see Coke at such a low multiple. Then I saw your article... thanks, saved me some time.
Lou, it's by no means a sure thing. That is my point. This article suggests that not only is the success of xbox platform a sure thing, but it's "the future" and will be the leader in this area. They have a lot of competition that has shown a much better ability to make products the consumers want.
Like I said, maybe they can be a significant player but that's no sure thing. I think the stock is undervalued. I just don't agree with the points made in this article.
I agree that MSFT is undervalued and the negative sentiment is slightly overblown. It's a solid company with a great balance sheet, dividend and it's cheap. Claiming that it's the future of TV, search and mobile is just ridiculous. A player in these areas... Maybe, but the future? Come on.
The reason people are so frustrated with MSFT is their inability to allocate their massive cash flows (Balmer). If they can show leadership knows how to accomplish this you may indeed see a nice gain in stock price. However Microsoft will never "skyrocket"... they have a market cap of $200B. Also their bread and butter is office, which is becoming less relevant. Xbox, mobile and bing are a very small % of MSFT business. Google has over 60% share of search... How exactly are they going to be the future?
I own MSFT and I think it's cheap, but your claims are over-hyped opinions based on no facts or reasoning.
pig1mouse; that is definitely a risk. I think this concern has been reflected in the stock price. Market watch explains your concerns here. ( AFL stock was at $53 a share. It's now around $34.
Great article and explanation on the macro side of things. Very helpful.
Here's a link to my article on AFL:
Yes it could go down further, and I'll be a buyer on the way down.
I'm not going to pretend to understand everything about the macro environment affecting Aflac, but after reading the article you suggested I still come away encouraged.
Management seems to be doing the right thing by "de-risking" their portfolio. The risks explained in the article are fairly well known and contributed to much of the sell off that already happened. I'm not saying it won't drop further. Looking long term, (5yrs) Aflac's prospects look good. If there is another crisis in Europe the whole market will be affected not just Aflac.
I agree with Thomas Lott's article. Is there downside? Of course. But down the road (I'm 27 I can wait and wait some more) I like this stock. I'll buy AFL on the way down to the bottom like I did in 2008. That strategy served me well.
David great article. They're are many articles out there that teach a specific way of investing, but very few that focus on the investors decisions and goals.
I had one question specifically regarding the following statement...
"Reinvest dividends, but not automatically in the company that issued them. Rather, collect the cash and reinvest when it accumulates to $1000, selecting the best candidate at that time."
By doing this don't I miss out on the gains I could be seeing from getting a dividend on my reinvested shares?
Also, I am 27 and at the moment buy a relatively low amount of shares. Anywhere from $500 to $1200 in a single stock. Does this change anything when it comes to dividend investing?