This is how I like to invest as well. I use the Magic Formula stock screen - the point of the strategy is to find good companies (high return on capital) at low prices (high earnings yield). Then check out the long term moat characteristics to make sure a stock is not a flash in the pan. You definitely have some excellent companies there, but a stock does not have to be owned by Berkshire to have these characteristics. Look at some of the smaller caps as well, even Buffett has said that these offer the greatest gains for the individual investor.
Barrett Business Services Earnings Review [View article]
Sounds like hindsight, but BBSI was really a no brainer. Net cash was almost half of market cap, and no debt. The company was in a good position to ride out any troubles in California, plus they had spent the past 2 years diversifying into other western markets. Long term, PEO is an attractive growth market. I haven't heard the CC, but the CEO is quite entertaining. He sounds like grandpa telling it like it is.
Barrett Business Services: Jumping in Ahead of Earnings [View article]
The company holds nearly half it's market cap in cash with no debt - enterprise value is only a bit above 75 million. With 56m in cash and no debt, they can survive a downturn for some time. California is a challenge, no doubt. They've been trying to expand their geographical base with acquisitions in Arizona, Colorado, and Utah.
The trick is surviving the downturn, which the company is well positioned to do. Try a DFCF scenario - the stock is 20% undervalued today assuming the company never increases free cash flow for 10 years!
KLA-Tencor and the Fate of the Semiconductor Capital Equipment Sector [View article]
Cadence and KLA sounds like an odd match. KLA-Tencor is very specialized in yield management, while Cadence is a jack of all trades EDA vendor. I don't see how Cadence's tools for synthesis, logical simulation, layout... in fact the whole front end match with anything KLA-Tencor is doing. Still, good overview of the company.
Most of the comments here are typical emotionally driven investing, which has failed in the past and will continue to fail. Dogs of the Dow has been a successful strategy over long periods of time and will likely continue to be. Sure some of these may see dividend cuts (particularly financials), but over the long run the vast majority will maintain and even raise the dividend. Don't let a few months of macro concerns deter you from following strategies that are proven over long periods of time. Nobody can predict the overall economy, but it seems everyone thinks they can.
NVIDIA's Long-Term Prospects Mean It's Currently Undervalued [View article]
Good write up, and I agree largely with your analysis. In my opinion there are too many competitive and technology pressures that can sink this stock. Outperformance is no sure thing. There's a lot of risk. There's no "moat". Why gamble with money on this one when there are so many other stocks that come closer to being a sure thing, or as close as you can get in the investing world?
With a solid balance sheet and huge cash flow and reserves, Pfizer can participate in whatever the next big drug category will be. The dividend isn't going anywhere - payout of free cash flow is high at 80%, but don't forget share buybacks (which lower total dividend payout) and the fact that it's one of only 8 companies with a AAA debt rating. R&D is a numbers game, and nobody has the scale of numbers that Pfizer brings to the table.
Love Hasbro. The new strategy is golden - milk every last cent out of their long established properties. Next year they have Transformers 2 and GI Joe movies, plus they should profit in 2Q from Iron Man and Hulk. In Q3 they have the Star Wars animated flick to drive toy sales. Their new TF cartoon toys have been flying off the shelves, and I've noticed these toys are about 10% more expensive then a year ago.
Using the Magic Formula With Dividend Stocks [View article]
Every time in the past someone has said "we're going through a fundamental change", they've been wrong. It was said during the tech boom. It was said in the late 80's when Japan was booming. It was said in the 70's after 7 years of stagflation. It was certainly said in the 1930's. And guess what? Value investing has always been a winner. Don't be fooled by the gushing talking heads. Buying cheap and selling dear will ALWAYS work.
Good commentary Todd. I concur with the surprise at how minor the revenue decline was domestically. I suppose it's easier for homeowners to paint the deck or a couple rooms instead of spending big bucks on remodeling and such. Sherwin's stock really feels like a coil that's been pushed down by litigation and housing fears. It was due for the big bump yesterday, and still at least 30% undervalued.
Accenture: Prospering Even in a Tough Environment [View article]
Concur, great company and outstanding performance in a tough market. It's been a "Magic Formula" stock for some time now. Clearly a top class IT consultant, and still buyable at today's prices with current momentum.
Great review Mike. Pfizer indeed looks attractive at today's prices, which are a nearly 11 year low. The 7% dividend is in good shape, payout on free cash is 80%, which is high but sustainable, particularly if Pfizer executes some share repurchases. Nice to have your insider views on Chantix as well.
Don't Try to Fix the Rating-Agency Model: Get Rid of It [View article]
And replace them with what? You can't get rid of the existing system without a better replacement. The last thing you want is each individual investment house trying to rate debt on their own. Without the NRSROs, how does yield get determined? You don't want 20 investment banks rating debt - this is a formula for "rating shopping" and will lead to worse results. Look, these guys made some bad calls, no question. The instruments they were rating were fairly new and complex. You learn from mistakes, make adjustments, and move on. That's the solution.
Don't Try to Fix the Rating-Agency Model: Get Rid of It [View article]
And replace them with what? You can't get rid of the existing system without a better replacement. The last thing you want is each individual investment house trying to rate debt on their own. Without the NRSROs, how does yield get determined? You don't want 20 investment banks rating debt - this is a formula for "rating shopping" and will lead to worse results. Look, these guys made some bad calls, no question. The instruments they were rating were fairly new and complex. You learn from mistakes, make adjustments, and move on. That's the solution.
Buying a Buffett Portfolio [View article]
Steve
magicdiligence.com
Barrett Business Services Earnings Review [View article]
Steve
magicdiligence.com
Barrett Business Services: Jumping in Ahead of Earnings [View article]
The trick is surviving the downturn, which the company is well positioned to do. Try a DFCF scenario - the stock is 20% undervalued today assuming the company never increases free cash flow for 10 years!
Steve
magicdiligence.com
KLA-Tencor and the Fate of the Semiconductor Capital Equipment Sector [View article]
Steve
magicdiligence.com
8 Dow Stocks Likely To Outperform [View article]
Steve
magicdiligence.com
Crocs Crushes the Bottom Feeders [View article]
I WILL NOT INVEST IN FAD COMPANIES
Great job Daniel.
Steve
magicdiligence.com
NVIDIA's Long-Term Prospects Mean It's Currently Undervalued [View article]
Steve
magicdiligence.com
Pfizer Stock: Value Trap? [View article]
Steve
magicdiligence.com
Earnings Preview: Hasbro [View article]
Steve
magicdiligence.com
Using the Magic Formula With Dividend Stocks [View article]
Sherwin-Williams' Surprising Beat [View article]
Steve
magicdiligence.com
Accenture: Prospering Even in a Tough Environment [View article]
Steve
magicdiligence.com
A Fat Yield at Pfizer [View article]
Steve
magicdiligence.com
Don't Try to Fix the Rating-Agency Model: Get Rid of It [View article]
Steve
magicdiligence.com
Don't Try to Fix the Rating-Agency Model: Get Rid of It [View article]
Steve
magicdiligence.com