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Smead Capital Management

 
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  • Where Did The New Middle-Class Citizens Go?
    Wed, Dec. 17 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
    Tue, Dec. 9 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
    Tue, Dec. 2 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?
    Wed, Nov. 19 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
    Tue, Nov. 4 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?
    Wed, Oct. 29 EBAY, AMGN, WAG 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
    Wed, Oct. 22 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
    Wed, Oct. 15 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
    Wed, Oct. 8 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
    Wed, Sep. 24 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
    Wed, Sep. 17 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
    Wed, Sep. 10 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?
    Thu, Sep. 4 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
    Tue, Aug. 26 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
    Thu, Aug. 14 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?
    Wed, Aug. 6 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'
    Tue, Jul. 22 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
    Wed, Jul. 16 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
    Fri, Jul. 11 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
    Tue, Jun. 24 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
    Tue, Jun. 17 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
    Tue, Jun. 10 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
    Tue, Jun. 3 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
    Wed, May. 21 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
    Wed, May. 14 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.
  • The 5 Commandments Of Warren Buffett And Charlie Munger
    Tue, May. 6 BRK.A, BRK.B 12 Comments

    Summary

    • Thou Shalt Not Envy.
    • Thou Shall Hire Great People and Over-trust Them.
    • Thou Shall View Competition as the Enemy of Competence.
  • Strong Insider Ownership: Do As I Do, Not As I Say
    Wed, Apr. 30 2 Comments

    Summary

    • We prefer to watch what insiders do, not listen to what they say.
    • Recent studies show benefits from owning firms with recent inside ownership.
    • We like to be side by side with owners who have been made wealthy by their businesses and believe in the future wealth creating ability of their respective companies.
  • A Strong Balance Sheet
    Wed, Apr. 23 DIS, SBUX, JNJ Comment!

    Summary

    • Strong balance sheets allow great companies to seize business.
    • Companies with low leverage (debt) in the S&P 500 index outperformed those with average debt levels by 1% per year.
    • Long-run survival is a key element in high current intrinsic value, and strong balance sheets are a key factor in creating longevity.
  • Every Portfolio Has Faith
    Wed, Apr. 16 PRF, VV, SCHX 3 Comments

    Summary

    • We believe your investments reveal where you put your faith in the future.
    • We assume that US large-cap stocks will offer some of the highest returns among liquid asset classes.
    • To own businesses for a long time, you need a high-quality set of companies.
  • Amgen: Management's History Of Shareholder Friendliness
    Tue, Apr. 8 AMGN 3 Comments

    Summary

    • We like companies with strong shareholder friendliness.
    • Shareholder friendliness includes: dividends, buybacks, free cash flow, long-term vision, and inside ownership.
    • Amgen is great of example of a shareholder friendly company.
  • Available At A Low Price In Relation To Intrinsic Value
    Tue, Apr. 1 AFL, BEN 1 Comment

    Summary

    • Cheap stocks outperform more expensive stocks.
    • Cheapness is a gift that keeps on giving.
    • Intrinsic value is a good measure of cheapness.
  • Hangman: The ETF Revolution
    Tue, Mar. 25 SPY, SH, SSO 6 Comments

    Summary

    • We believe there is a false reality around ETF investing.
    • Trading ETFs is like rubbing soap.
    • ETFs and mutual funds have similar problems.