Arne Alsin's  Instablog

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Martin Schwoerer Comments (142)
 
Excellent results, Arne -- congratulations! Another three years of this and you'll be in the upper echelons of stock pickers.
13 Oct 2012, 01:51 PM Reply Like

Arne Alsin Comments (307)
 
Thanks Martin. As of now, I don't intend to post more top ten lists past the one I'm planning for 2013, but you never know.
13 Oct 2012, 03:12 PM Reply Like

The Hammer Comments (3027)
 
nice picking but the odds are u will underperform soon.
8 Dec 2012, 07:42 AM Reply Like

22thoroughbred Comments (516)
 
why? There are no odds in picking stocks, if you are consistent in how you pick, stick to your disciplines and don't reach for beta it's not a horse race, I think your comment is one of jealousy and frustration rather than thought out
8 Dec 2012, 09:07 AM Reply Like

The Hammer Comments (3027)
 
why?
u said u been investing since 14 (sounds a little like me too) and you think you can outperform s&p 500 index every year? some of the greatest investors on record have underperformed 1/3 of the time.
Jealosy and frustration? if you owned philip morris (largest holding - now pm - mo - krft - mdlz) for several decades and reinvested every dividend would u be jealous?
8 Dec 2012, 12:07 PM Reply Like

22thoroughbred Comments (516)
 
I don't measure against an index as my investment strategies change whenever the landscape changes thus not a good comparison, example, I opened an acct. on 5/4/12 with some extra cash I had and wanted to keep separate, started with exactly $400k, have withdrawn $35k and current balance is $395k so I have made NET 10% in 7 months
05/04/2012 CHECK DEPOSIT $400,000.00 (initial deposit)
12/09/2012 CURRENT BALANCE $395,124.15

another acct. is all hi yield bonds, that I bought between 18-24 months ago, that acct started @ $600k and is now $767,041.22
just accrued interest and appreciated bond prices, avg current price 108 avg purchase price 96.45 for ALL $600k

thus why I don't measure, but IF I bought an S&P index fund and sold covered calls AND Naked puts against it I would beat the index EVERY year by the amount of the option income! Does that make me the "best" investor, no, just flexible. Your thoughts?
9 Dec 2012, 09:11 AM Reply Like

Business Economics Analyst Comments (2482)
 
Berkshire Hathaway seems like a great deal. But Amazon? That company looks incredibly expensive whatever way you view it. You are talking about a company with a 116 Billion market cap and only 5 billion or so in tangible equity, so it is selling at something like 23 times tangible book value. Amazon is making peanuts, so you would have to close your eyes to net income, as Amazon posted a loss last quarter and a net incoem of $63 million for the year. I think you are paying something like an unbelievable 3000 times earnings. Even projecting better earnings next year, you are still looking at well over 100 times earnings.
24 Dec 2012, 01:03 AM Reply Like

Business Economics Analyst Comments (2482)
 
Hovanian is losing money. Maybe it can turn that around and start making money, but the bottom line is, that after 53 years of being in business, it has managed to end up in the hole about 485 million dollars. Look at their balance sheet, they report negative equity or negative book value of 485 million.
24 Dec 2012, 01:04 AM Reply Like

Arne Alsin Comments (307)
 
You're spouting the typical Amazon bear case... yawn. Good luck to you.
24 Dec 2012, 05:51 PM Reply Like

Arne Alsin Comments (307)
 
False, they just reported a profitable quarter. And your balance sheet criticism ignores the tax valuation allowance that will soon be reversed.
24 Dec 2012, 05:53 PM Reply Like

Arne Alsin Comments (307)
 
MGM is sure off to a fast start in 2013 (first day of trading) could be one of my bigger top ten winners... for those interested in my methdology, I discussed game theory in my Q&A with SA:

http://seekingalpha.co...
2 Jan, 11:37 AM Reply Like

DAG1996 Comments (1823)
 
Indeed, congrats Arne! I really hope you change your mind making the 2013 list your last one and I'm certain there are very many other SA readers who would agree. I'm long GE, MTW, MWA & RJF.
13 Oct 2012, 09:17 PM Reply Like

Arne Alsin Comments (307)
 
nice holdings, you've got a lot more gain in front of you
13 Oct 2012, 10:48 PM Reply Like

DAG1996 Comments (1823)
 
Thanks Arne. I wouldn't have had the nerve to hold or buy more of MWA or MTW without affirmation from your writings and track record.

Although it's no longer nearly as undervalued as when I was buying in the $22-23 range a few months ago, TRN is another holding worth looking at in case it pulls back again. It looks like a simple railcar leasing business on the surface, but it's actually a very diverse company with construction and highway business units that fit well with the long-term infrastructure theme.

By the way, I just found the Alsin Capital Management site for the first time and find your philosophy, terms and track record very impressive. I'm having too much fun managing my own portfolio for right now, but once I'm no longer willing or able to continue doing so, I'm very likely to become a client.
14 Oct 2012, 11:02 AM Reply Like

Arne Alsin Comments (307)
 
I just put TRN on my list to review this week...thanks!
14 Oct 2012, 12:17 PM Reply Like

DAG1996 Comments (1823)
 
You're quite welcome and thank you again for your willingness to share your expertise to help others.
14 Oct 2012, 12:24 PM Reply Like

sjgmoney Comments (2)
 
Arne, have you ever looked at PKOH?
18 Oct 2012, 02:37 PM Reply Like

Arne Alsin Comments (307)
 
Yes, an interesting small cap...I'm going to go bigger with my next Top Ten, so this is not one I'll be dissecting (but maybe for fun).
18 Oct 2012, 07:22 PM Reply Like

Mike Arnold Comments (466)
 
Interested if HPQ turns up on your list, the quintessential cigar butt of 2012. I'm a buyer at these levels and lower. Figure the market is giving away the printer/PC business for free.
18 Oct 2012, 07:53 PM Reply Like

Arne Alsin Comments (307)
 
Mike, there might be some pop left in the stock, but I don't see them as thriving over the long haul. I'm avoiding the entire Windows-based contingent... MSFT/INTC/DELL et al.
23 Oct 2012, 10:03 AM Reply Like

Mike Arnold Comments (466)
 
Thanks for the reply. I'm more interested in what they are doing in the Converged Cloud space, enterprise services, etc. Time will tell, but I find it hard to believe the market is ascribing the same value to this company as it did 10 years ago, when revenues and operating profits have tripled, and they have a more diversified business. I assume I'll be wrong awhile longer before I'm right. That is, if I'm right.
23 Oct 2012, 06:50 PM Reply Like

siestadreamer Comments (77)
 
Arne--Have you ever considered a UIT, maybe for future years?
24 Oct 2012, 05:07 PM Reply Like

Arne Alsin Comments (307)
 
My tentative plan is to make this my last top ten, but you never know...thanks!
26 Oct 2012, 08:47 AM Reply Like

Dominic Faultz Comments (221)
 
Congrats, Arne!

Looking forward to your 2013 list!

Best,
Dom
29 Oct 2012, 07:58 AM Reply Like

22thoroughbred Comments (516)
 
AA, I know I have tossed this name at you 1-2x before, however with the recent performance (a performance worthy of Viagra BTW) you might want to look soon, their 3 divisions are ALL in the fastest growing segments of the economy, ALL 3 are profitable and growing, ALL 3 can and probably will become parts of a bigger company at some point and finally ALL 3 are being effected by the worry about military spending cuts that will take place but hard to see much being cut from the UAV / Drone spending as this is where the military has said repeatedly will be the way wars in the future will be fought, as will securing the border and local security and policing. My assessment says the stock is worth between $40-$50 and is currently just under $20. The $40 isn't "hope" as the stock was at $40 on/about Valentines day 2009. I truly want to read your thoughts on this (unless you don't agree) :) Take care and hope you have/had a wonderful Thanksgiving (depending on when you read this)
18 Nov 2012, 04:13 AM Reply Like

Arne Alsin Comments (307)
 
You're talking about AVAV, of course. You're right, it is a high quality idea. My guess is they'll be bought by one of the big defense co's, given their technology and sterling balance sheet (always a key in takeovers). The risk here is that bigger players, with hundred-fold larger R&D budgets, can catch AVAV; not likely, but it's worth noting.
18 Nov 2012, 08:33 AM Reply Like

22thoroughbred Comments (516)
 
Sorry, yes I did mean AVAV, just testing you :) when you say "catch" what do you mean? Thanks again and take good care
18 Nov 2012, 09:21 AM Reply Like

Arne Alsin Comments (307)
 
The big boys won't buy AVAV if they can match the technology via in house R&D....I think the easier path is to buy them, but it's not a lock.
18 Nov 2012, 09:24 PM Reply Like

dmaislen Comments (18)
 
Great results..Congrats!!!

I am very long GE and have been for years. I must sadly admit that I've owned it at $60 as well. I bought my last 1,000 shares at $7.58 so that was a great add a couple of years ago. GE just continues to reinvest itself...going where the action is and selling businesses that don't fit anymore...GE Supply, Plastics...and the like. Getting into water, energy and natural resources. They are sharp and continue to get most of what they do right!! It's not the most exciting place to be, but it is consistant and I believe the dividend will continue to be raised.

BAC has been wonderful and I'm looking forward to selling mine when it gets to $20, hopefully within the next 24 months.
19 Nov 2012, 05:14 PM Reply Like

Arne Alsin Comments (307)
 
Excellent, I wish more investors would average down, the periodic panics are amazing opp's if you can do it. Good luck to you.
19 Nov 2012, 07:12 PM Reply Like

k2climber Comments (82)
 
Hi Arne,

Thanks for the interesting articles. You've had amazing success and I too hope to read the 2014 list if it materializes!

I've noticed that many of your 2013 picks to date revolve around the real estate recovery. Do you have any thoughts or insight into ELLI (Ellie Mae)? They're growing incredibly fast, have a very disruptive product and seem poised to benefit greatly when the recovery really takes hold. YTD Elli is up 350% but the stock seems reasonably valued.

Thanks for taking the time to have a look.

Kind regards,
25 Nov 2012, 09:01 AM Reply Like

Arne Alsin Comments (307)
 
I don't follow ELLI, sorry. With real estate, we're not talking about anything new or unusual, just a return to normal production - and stock prices still don't reflect that...yet. I'm guessing we've got 5-7 years of money-making opp's in the sector.
25 Nov 2012, 03:58 PM Reply Like

Mike Arnold Comments (466)
 
Arne: You are crushing again, good work. Now I've got a question for you, which do you think is more undervalued: TEX or NCR? Of course, its better to own a stock that is trading at 33 cents on the dollar than one trading at 50 cents. I'm thinking of booking some gains on TEX prior to the "fiscal cliff" and reallocating the proceeds.
19 Dec 2012, 05:56 PM Reply Like

22thoroughbred Comments (516)
 
Mike, I strongly suggest NOT doing anything solely on the fiscal cliff (I truly hate that term) issue, it may have large ramifications at some point but today it is a blip and an emotional issue, not the kind to make decisions based on. and FWIW, I think Arne will say NCR is more undervalued.
19 Dec 2012, 09:16 PM Reply Like

Mike Arnold Comments (466)
 
Thanks, 22. I agree, the term is rhetoric.
20 Dec 2012, 09:25 AM Reply Like

Arne Alsin Comments (307)
 
TEX is a straightforward earnings leverage story, while NCR is badly mispriced... should be $35-40 now.
20 Dec 2012, 07:16 AM Reply Like

Mike Arnold Comments (466)
 
TEX is doing all the right things. Their conf call last summer was a thing of beauty. Thanks for the confirmation on NCR, I will be doing some more research over the holidays while cooped up in the rainy PacNW.
20 Dec 2012, 09:27 AM Reply Like

allenyip Comments (2)
 
do you have any comment on AVP & SWHC. I think AVP has been beaten down enough and 2013 is their comeback year. For SWHC, I just don' think we will ever give up our guns, so the drop in price this last week might have been premature? I am not a gun owner.
20 Dec 2012, 06:22 PM Reply Like

Arne Alsin Comments (307)
 
AVP is not the sort of model I'm looking for... generally I like value-added producers like an NCR... plus very selective in platforms, as they tend to be winner-take-all (AMZN).
21 Dec 2012, 08:01 AM Reply Like

allenyip Comments (2)
 
I don't understand, your top ten returns are kick ass. Think of all those investors who is losing money with John Paulson the last few years :) They could have just follow you. Have you thought of writing a simple plain English book on your strategy. One like Warren Buffet - Interpretation of Financial Statements by Mary Buffet/David Clark. All you got to do is lay out each years top ten picks, explain your reasoning (macro/micro/financial statement), and publish the book. Just a thought.
20 Dec 2012, 06:23 PM Reply Like

Arne Alsin Comments (307)
 
It's a great thought, and I'm planning on it... maybe by summer, I'll get something put together... buffettology meets game theory.
21 Dec 2012, 07:53 AM Reply Like

Kowksi06 Comments (9)
 
I hope you follow up on this. I would love to have some insight on where to start and what to look for when researching stocks. You seem to be someone folks could learn from. Thanks for you sharing of these list. I really appreciate it
24 Dec 2012, 08:16 PM Reply Like

wmc-boston Comments (11)
 
Hello Arne Alsin, Great articles. Huge resource for a guy like me... all of the ideas being tossed around are GOLD to me !!

I'm new at much of this (watching stock prices) so do not take this as being mean. Why did you not list 2011? Was it way off? Again, total respect for you and your accomplishments.

You mentioned WEB's IBM buy in another article. Berkshire.
I believe that he knows more about the future than any of us and that he is long IBM scares me --although knowing some history I understand why.

Do you know why BAC is a great investment, if you feel it will be?

Thank you sir.
W.
20 Dec 2012, 06:35 PM Reply Like

Arne Alsin Comments (307)
 
If i did a list in 2011, I'd post it. I can't post a list every year because I manage concentrated portfolios, only about 12 stocks, and I'd be giving away everything. BAC is not part of 2013's top ten, I'm not saying it's a buy at current prices.
21 Dec 2012, 07:58 AM Reply Like

drone Comments (432)
 
Quality management is very important. Immelt is a lying, sleazy grub so GE should be avoided for this reason alone.
20 Dec 2012, 10:30 PM Reply Like

22thoroughbred Comments (516)
 
Specifics? Or are you one of those "banksters are all liars" fools?
21 Dec 2012, 03:11 AM Reply Like

drone Comments (432)
 
Maybe you weren't invested in 2008 when he appeared with Cramer on national television and told us the dividend was safe and there was no exposure to subprime.
21 Dec 2012, 05:45 PM Reply Like

Derek A. Barrett Comments (2994)
 
Oh and by the way someone needs to link this post to the "Stock Picking Doesn't Work" article.
21 Dec 2012, 03:26 AM Reply Like

Derek A. Barrett Comments (2994)
 
Oh and meant this comment as a compliment to the author as his track record clearly demonstrates stock picking does work, it just takes time and effort. I think that's one of the biggest myths out there, that you need "experts" to manage money for you, and that's more marketing to generate fees than anything. Kinda reminds me of all the macho truck commericals where the pickup is pulling another truck and a bunch of boulders up a hill, while a bunch of macho talk from the cast of Tombstone goes on in the background. Cause you know most people do that with their trucks!
21 Dec 2012, 01:44 PM Reply Like

Anonymous 2 Comments (214)
 
I am retired (age 74) and need income. I believe in "total return" but would prefer long term equities (which you seem to like) from which I can expect a "reasonably high but growing dividend stream". Only a few of your past picks generates dividend income. What with
"whatever" tax legislation is in the works as the "cliff" issues are resolved, generating income is and will be a "need" for retired folks. Your thoughts.
21 Dec 2012, 11:47 AM Reply Like

Arne Alsin Comments (307)
 
It's a good idea, I'll write something soon focused on stocks with growing dividends.
21 Dec 2012, 01:37 PM Reply Like

New Low Observer Comments (1642)
 
Thanks Arne,

you saved me a lot of work...I was going through all of the picks and running the numbers...hence the recent comments.

Regards.
21 Dec 2012, 12:14 PM Reply Like

Tony Pow Comments (4027)
 
Hi Arne, I'm finishing up an ebook on Investing. I can only find a few investor heroes like Einhorn. Your record speaks loudly and clearly. Do you mind your name to be included in my book?

I've practiced market timing quite successfully. The book is outlining hints on market plunges. You're great stock picker, but do you practice market timing?

Here is info on the book.
http://bit.ly/RGbS9K
21 Dec 2012, 08:02 PM Reply Like

Tony Pow Comments (4027)
 
I've two chapters on stock pickers.

Chapter 7. No investor heroes.
Chapter 8. 2011, when stock pickers die.

------
A draft on No investor heroes:

As of 1/2012, Bill Miller is stepping down after big recent losses. Buffett's last three year performance is so lousy that he should be ashamed and should not show his handsome face in public. Gross, the king of bonds, made serious mistakes, so was Whitney on muni bonds. It was same for a famous shorter of Netflix with convincing arguments. Their arguments are correct but the timings are not. The fund manager of the decade in a famous financial service advocated bank stocks. He was burned badly and you would if you followed him.

There are many examples of heroes turning into disgrace in the past. Recently my local newspaper Boston Globe has an article on top fund managers and they all have turned into big losers. Even Professor Irvin Fisher, the father of Wall Street, could not predict the 1929 crash and lost a bundle including most of his life-long savings.

Recently Barron's had a round table discussion the market on 2012 with the top experts. They also listed the recommended stocks from these experts a year ago and their performances. Guess what? Their average does not even beat the Dow index. Am I stupid enough to follow their 2012's recommendations again?


We learn:

• Retire at your peak like Peter Lynch. You can call him a coward but he has a good sleep and laughs all the way to the bank. With his fame, it is easy to sell some books and lives nicely.

• Do not invest on your losing horse like Miller. Doubling on the way down without good reason is a fool's game and it could be the last straw that terminates a brilliant career.

• Need specialty advice on banks, bio drugs and mines. Their financial statements do not tell the whole story. Avoid them unless you feel this selected sector is moving up and/or you really understand these sectors.

• Is your loser stock a good deal now when it loses half of its value? Should someone be excited when the dividend yield is doubled due to the loss of half of its stock value?

• Do not believe you're always right all the time and put all eggs on a basket. Market is irrational as it is created by irrational folks. The black swan could kill you unexpectedly. The one who made millions with all his money in one deal is just lucky or using insider’s information. Diversify.

• Even the genius could not be right all the time. It only takes one big loss to wipe out your entire saving if you bet it all. Have plan B to reduce your losses.

• Gambling with other folks' money is better than with your own. The most you lose is your job, but not your life-time saving and the bonuses in good times.

• Quit at the peak. We still remember the beautiful face of Princess D forever. I rest my case.

21 Dec 2012, 08:06 PM Reply Like

Arne Alsin Comments (307)
 
Very cool, yes you can mention me. Einhorn is slipping, I have to say, his portfolio is not impressive. An overlooked money manager that's smart is the guy managing Bill Gates money... Michael Larson is his name, if I remember correctly... very solid stock picker, one of the few.
22 Dec 2012, 01:14 PM Reply Like

Arne Alsin Comments (307)
 
Nice... Bill Miller is very smart... if he could just tighten up a bit, he could crush it.
22 Dec 2012, 01:15 PM Reply Like

MDG1600 Comments (6)
 
"Buffett's last three year performance is so lousy that he should be ashamed and should not show his handsome face in public."

Seems a bit harsh.

1) According to Morningstar BRK.B outperformed S&P500 in 2010 and 2012YTD
2) Historically Berkshire has had lots of down years vs. the indexes. Not sure Buffett loses any sleep over this since he invests for a marathon not a sprint.
3) Trying to invest over $100 billion dollars and beat the market is a whole different ball game. Small Cap money doublers that can make an individual investors portfolio soar don't even put a dent in Berkshire.
4) Berkshire has crushed the indexes over a 40+ year period - people can get lucky for 2 or 3 years - not 40! What more do you want the man to do?

I have no position in Berkshire Hathaway.
22 Dec 2012, 03:12 PM Reply Like

Jonathan Wagner Comments (373)
 
Berkshire Hathaway for the last 3 years has made 19.8%, 13.0% and 4.6%, their gain since 1965 is 513,000%. Let me put that into perspective, if you invested $100 in berkshire in 1965, you would have half a million today.

The previous person's comments is correct, 100 billion dollars is harder to invest. The fact you talk about value investing the way you do illustrates your ignorance of what value investing actually is. True value investing doesn't believe in a strong coupling of fundamentals with stock price motion.

I think you're more likely to make money from your book then you will on the market.
22 Dec 2012, 04:00 PM Reply Like

Tony Pow Comments (4027)
 
Yes, it is a little harsh, but I try to stress the point that you both accept: With the huge portfolio, he cannot perform - a point I also stress in my ebook. As in investing, you look at the potential appreciation in the future, and not in the past. There are many examples of 'past' heroes.

From my blog and ebook:

When the Magellan Fund headed by Peter Lynch lost his touch, I got my money out, but most did not - most probably due to the huge capital gain taxes. The result is many years of below average return for them. Hence, his (Buffett's) mediocre performance in last three years matters and it could be a canary to the future performance.
23 Dec 2012, 09:31 AM Reply Like

Thesavvyinvestor Comments (67)
 
Great ideas . But a little confused on start date for 2013 picks. And Mueller seems chronically flat, any upside likely? Thanks from The Lonely Canadian
23 Dec 2012, 03:44 AM Reply Like

Arne Alsin Comments (307)
 
I'll get a start date (the date of the column) put in there for you.. MWA is an interesting play on a housing rebound, their water infrastructure biz lags by about one year.
23 Dec 2012, 08:48 AM Reply Like

Mike Arnold Comments (466)
 
The last trading day of the year is shaping up to be very kind to the 2012 list. TEX up another 7%. Crush! Thanks AA.
31 Dec 2012, 03:07 PM Reply Like

Heinz Doofenshmirtz Comments (182)
 
nm
12 Feb, 11:58 PM Reply Like

Tom Boise Comments (287)
 
Thank you for the article.

You didn't list your picks for 2011; any special reason for that?

Thanks.
21 Feb, 06:45 PM Reply Like

Kowksi06 Comments (9)
 
The author states in the article that he did not do a list for 2011. Probably because both of his conditions were not met.
21 Feb, 06:59 PM Reply Like

Arne Alsin Comments (307)
 
Righto, when I did Turnaround lists I did 4 in 7 years...not every year.
21 Feb, 08:57 PM Reply Like

David Crosetti Comments (6881)
 
Arne:

I have been investing in your top 10's for three years now. I am very happy with the results and your thought process as to why these particular stocks are/were value priced.

You have done exceptionally well and I thank you for your picks. Please reconsider 2014--I want to retire next year!

Dave
28 May, 06:05 PM Reply Like

sk1bum73 Comments (38)
 
Good job, indeed, Arne. You still a believer in AMZN on the basis of storage/IT? I'm hearing there will be lots of cheap competition in that space from other companies.
3 Jun, 04:21 PM Reply Like

Arne Alsin Comments (307)
 
Nobody can beat AMZN on price, and they're so far out front, and now with the benefits of scale...those datacenters suck massive capex... which makes GOOG the only viable competitor...duopolies are cool.
3 Jun, 05:54 PM Reply Like