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Smead Capital Management  

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  • Find Hated, You May Find Wealth
    Wed, Feb. 25 CMCSA, CMCSK, EBAY 2 Comments

    Summary

    • We find value in hated companies.
    • It seems temporary disgust and more permanent hatred have proven to be available and useful for seeking success.
    • We believe the ultimate combination for long-term investment success is sticky-customers and ongoing disdain for a business.
  • Keynesian Contrarianism: Where Is The Minority Today?
    Wed, Feb. 18 1 Comment

    Summary

    • Keynes argued that financial success and security go to the minority, so we look at where money is and is not.
    • The average ownership of U.S. equities has dropped from 18% in 2009 to 17%, but the largest institutions have only 13% U.S. equity ownership.
    • As interest rates rise, the strong balance sheets and self-financing ability of large-caps could make them be the place to be.
  • Selling Stocks Is Like Football: Ohio State Coach Woody Hayes On Portfolio Management
    Sat, Feb. 7 AMGN, HD 6 Comments

    Summary

    • We thinking selling stocks is like football: “There are three things that can happen when you pass the football and two of them are bad."
    • Investing in common stock has been very rewarding over the decades because it has been a positive sum game.
    • Do you want to throw away one of your best long-term performers the way the Seahawks threw away the Super Bowl?
  • Will Millennials Drive In 2-0-1-5?
    Fri, Jan. 23 WBA, AMGN, DIS 25 Comments

    Summary

    • It is our opinion that the most important question in stock picking is one related to the Millennial group.
    • We don't believe buying a home will be monumentally cheaper than renting for much longer.
    • For us, the answer is to stay put in the consumer discretionary, domestically-oriented companies which are most affected by higher GDP growth rates and more normal consumer behavior.
  • Are Macroeconomists Rebuilding A Wall Of Worry?
    Wed, Jan. 14 4 Comments

    Summary

    • We believe in the idea that good markets die on too much affection and continue due to a lack of affection.
    • The problem with acting on the advice of respected macro-economic theorists is that it is a regurgitation of the advice they have given for the last 4 years.
    • As a firm, we believe this bull market will die on over-enthusiastic positives not on regurgitated negatives.
  • Ben Graham's Mr. Market 2015
    Tue, Jan. 6 18 Comments

    Summary

    • The beginning of the year is a good time to review market esoterica.
    • We use Ben Graham's Mr. Market to take a temperature of current conditions.
    • Mr. Market is depressed by banking regulations, local news affiliates, and student loans.
  • The Rolling Stones Understand Long-Duration Investing
    Dec. 23, 2014 7 Comments

    Summary

    • Many investors have short-term horizons.
    • Short-duration investors can miss major market gains.
    • We think long-duration investing creates wealth over long periods of time.
  • Where Did The New Middle-Class Citizens Go?
    Dec. 17, 2014 4 Comments

    Summary

    • As long-duration common stock investors, we don’t see oil dropping merely because OPEC and Bakken Shale have produced too much supply.
    • Oil’s demise as a symptom of something larger of the unwinding of a globally synchronized trade.
    • We show what the long-duration investor can glean from theses events.
  • Pushback: The Gift That Keeps On Giving
    Dec. 9, 2014 NVR, SLM, NAVI Comment!

    Summary

    • Since we developed our eight proprietary criteria for common stock selection, the most contentious stocks we own have been among our best performers over the following three years.
    • We need to find out where today's pushback comes from.
    • We see pushback in our faith in Millennials and student loans.
  • Strangers Passing In The Night
    Dec. 2, 2014 BAC, JPM, WFC 2 Comments

    Summary

    • The U.S. stock market has soared in value the last five years as the economy produced very sub-par growth in GDP.
    • China’s stock market has been among the most miserable among large countries in the world even as their growth has remained in the 7-10% year-over-year category.
    • We think investors must be cautious about selecting U.S. companies so as to maintain revenue from within the U.S.
  • Will $2.50 Gasoline Catalyze U.S. Consumer Stocks?
    Nov. 19, 2014 NVR, BRK.A, BRK.B 4 Comments

    Summary

    • RBOB gas has moved from $3.12 to $2.04.
    • Many still argue that low oil will hurt suppliers and the economy.
    • We argue that consumer discretionary companies stand to gain from low oil.
  • Outrunning The Bear: An Active Manager's Survival Guide
    Nov. 4, 2014 1 Comment

    Summary

    • Active managers used to compete with only do-it-yourself investors and other managers.
    • Active managers must safeguard themselves from passive investors.
    • Active managers must reduce their expense ration, seek out quality, and practice long-duration common stock investing.
  • Do Activist Investors Let The Game Come To Them?
    Oct. 29, 2014 EBAY, AMGN, GCI 3 Comments

    Summary

    • There are too many activist focuses on short-term gains.
    • We favor long-duration value over short-term gains.
    • Long-term investors must let the game come to them.
  • Attractive Stocks In A Bifurcated Market
    Oct. 22, 2014 3 Comments

    Summary

    • We see an opportunity for Main Street to beat Wall Street.
    • We think domestically-oriented companies will beat ones with large foreign revenue.
    • We think U.S. domestically-oriented large-caps can outperform both large peers and small-caps.
  • You Ain't Seen Nothin' Yet
    Oct. 15, 2014 SPY, VB, SCHA 6 Comments

    Summary

    • Today's equity market harkens back to the period 1983-1987 in the U.S. stock market.
    • The largest private equity investment is in leveraged buyouts, transactions which are mostly likely to occur in small and mid-cap companies.
    • When the wholesaler promoting alternatives shows up at your office, you better claim to be on vacation.
  • Warren Buffett On Buying Businesses
    Oct. 8, 2014 Comment!

    Summary

    • Buffett said loudly and clearly that he believes many people can pick out reasonable businesses to own for 10 to 20 years.
    • “What’s in your portfolio” is most important question in the world of manager search and asset allocation.
    • We believe that in order to hold businesses for 10 to 20 years you need them to be high quality businesses.
  • Buffett's Passive Can Of Worms
    Sep. 24, 2014 10 Comments

    Summary

    • Buffett's mention of indexing in his annual letter invites too much speculation about his views on indexing.
    • Not all fans of efficient market hypothesis believe in 100% indexing.
    • Buffett and Munger affirm their belief in disciplined value investing.
  • The Myth Of Student Debt: Lies, Damned Lies And Statistics
    Sep. 17, 2014 SLM, NAVI 16 Comments

    Summary

    • Fear has driven the story of student debt.
    • Debt levels are high, but not in light of income and debt services abilities.
    • The level of contentiousness in the market creates opportunity for the long-duration investor.
  • The Risk Of Permanent Loss
    Sep. 10, 2014 VV, SCHX, FEX 19 Comments

    Summary

    • We think investors should consider the risk of permanent loss.
    • We think long-duration common stock investing is a way to defend against permanent loss.
    • We think selecting high-quality companies also helps defend against permanent loss.
  • Could A China Recession Cause $50/Barrel Crude Oil?
    Sep. 4, 2014 6 Comments

    Summary

    • China's become one of the largest oil consumers in the world.
    • It takes progressively more debt to create economic growth in China and represents diminishing returns.
    • China's bust and cheap oil could be great for the U.S.
  • The Demise Of Active Management Is Greatly Exaggerated
    Aug. 26, 2014 7 Comments

    Summary

    • Too many writers are forecasting the demise of active management.
    • Every fund is an index.
    • Using low-turnover and long-duration can create an advantage over passive index funds.
  • There's No Place Like Home
    Aug. 14, 2014 BAC, CAB, NVR 5 Comments

    Summary

    • The U.S. political and economic system has been cleansed.
    • Household balance sheets are better than they've been in 30 years.
    • Things outside the border are scary.
  • Would John Templeton See Light At The End Of Aflac's Tunnel?
    Aug. 6, 2014 AFL 5 Comments

    Summary

    • Sir John Templeton said, "If you wait to see the light at the end of the tunnel, you have already missed the bottom."
    • Aflac has no light in sight.
    • We find Aflac has been a long-term wealth creator and remains out of favor.
  • U.S. Stock Market On The 'Edge Of Tomorrow'
    Jul. 22, 2014 SPY, QQQ, DIA 23 Comments

    Summary

    • Markets tend to reset.
    • Resetting can be difficult for the long-duration common stock investor.
    • Market timing requires one to live on the "edge of tomorrow."
  • Your Portfolio's Enemies
    Jul. 16, 2014 PM, GCI, CAB 9 Comments

    Summary

    • There are many enemies to a portfolio.
    • Excitement, Expenses, Market Timing, Fear, and Greed can harm a portfolio.
    • We will unpack these enemies.
  • Forget 2008 While Avoiding Popularity
    Jul. 11, 2014 BAC, JPM, SPY 3 Comments

    Summary

    • Long-duration common stock owners should be much more concerned about what they own rather than whether to own.
    • Anecdotal evidence of popularity can serve as a guide for what not to own.
    • Bank of America and JPMorgan are the new Philip Morris.
  • The Over-Capitalization Curse
    Jun. 24, 2014 IWM, SPY, IWB 6 Comments

    Summary

    • Be wary of over-capitalized areas.
    • Private equity appears to be over-capitalized.
    • Private equity allocations might have led to misallocation in common stock investing.
  • I Love Technology, But I Love LaFawnduh More
    Jun. 17, 2014 EBAY 6 Comments

    Summary

    • Too many people love tech.
    • Not enough people love free cash flow.
    • "Competition is the enemy of competence".
  • The Orphaned Bull Market
    Jun. 10, 2014 DIA, SPY, QQQ 10 Comments

    Summary

    • Equities appear abandoned and unloved.
    • The rise of alternatives and bonds have crowded out equities.
    • We think the long-duration equity holders will be rewarded.
  • The Investor Screwtape Letters
    Jun. 3, 2014 DIA, SPY, QQQ 9 Comments

    Summary

    • Don't time the market.
    • Don't be too active.
    • Don't bet on every horse in the race.
  • Throwing Babies Out With Bathwater
    May. 21, 2014 EBAY, AMGN, GCI 11 Comments

    Summary

    • Investors are throwing the babies out with the bathwater.
    • Wealth is created by the ownership of wonderful companies over a long duration.
    • The will to reduce risk and volatility damages long-duration wealth creation.
  • Our Efficient Market Theory
    May. 14, 2014 DIA, SPY, QQQ 10 Comments

    Summary

    • Over-thinking the market can decrease wealth.
    • Fama-French's new model supports long-duration common stock investing.
    • The best businesses generate a great deal of free-cash-flow and don't require much capital to perpetuate future success.