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"It's a scary time to invest," says hedge fund manager Joel Greenblatt, but "that’s when...

"It's a scary time to invest," says hedge fund manager Joel Greenblatt, but "that’s when you get your best bargains." He thinks now is the time to pick up shares of good companies on the cheap. His favorite picks: Gamestop (GME), American Eagle (AEO), Best Buy (BBY), Microsoft (MSFT) and Hewlett Packard (HPQ). These stocks "are reflecting a lot of skepticism right now," he notes, and "usually it doesn’t look this good unless things are terrible." (Video).
Comments (12)
  • tjohn1
    , contributor
    Comments (152) | Send Message
     
    The first three companies depend on consumer spending. I doubt they have seen their lows. Microsoft may be a good bet. HPQ, I believe is too early to buy with new management and an uncertain outlook for hardware. Mr Greenblatt: Keep your money in utilities. You will at least get your dividends and you may experience no capital loss, Inshallah!. For your information I am no hedge fund operator.
    27 Sep 2011, 07:39 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4091) | Send Message
     
    GME is ok I think - the kids drag their parents there all the time. My kid is a big fan and there always seems to be a line and they have a couple of employees even in small stores. The second hand stuff is a great idea bringing the customers back - you can trade used games there. GME is nearly secular and Xmas is coming.
    27 Sep 2011, 07:59 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Gee, retail? Why would I buy those names when instead I could by Gimbel's, Borders, and Montgomery Ward? The bottom line is that retailers go bankrupt at a rate that only airlines can compete with. And with their lousy margins and tiny ROE, they're not exactly getting me excited about their near-term prospects either.

     

    There are plenty of better companies available at even lower multiples than GME, BBY, and AEO. None of those companies capture the "first dollar" in people's paychecks, so they remain vulnerable to the continuing crushing of the American middle class. Look to companies like STO, CQB, BG, VZ, and FCX instead. The yields are better, except for VZ the multiples are lower, and you will be capturing the first dollars spent each month by even the newly poor. That means you don't need to worry about "Europe" or "financial collapse" or even the insane sovereign debt situation in the US. Own the basics at the bottom of the economy and sleep well every night. Betting on people somehow being able to consume more than they produce is not a winning strategy.
    27 Sep 2011, 08:20 PM Reply Like
  • Spencer Knight
    , contributor
    Comments (398) | Send Message
     
    I like the VZ idea, but with smaller prepaid services offering much more affordable service with great features I wouldn't be surprised to see VZ lose some revenue in a slowing economy as the lower and middle classes look for cheaper phone services.
    27 Sep 2011, 08:25 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    There are only 4 actual service providers in the US: T, VZ, S, and T-Mobile. The rest are all reselling those services on a pre- or post-paid basis. There is no reason to think the newly poor will suddenly go for prepaid; it's more expensive than postpaid and has a decidedly downmarket connotation, the last thing Mr. and Mrs. Middle Class Reject will be looking for. I can see making the case for S, but it's decidedly riskier than VZ and yields nothing. I also own T, but their directors have decided to spend $3 billion of my money on a gamble that the DOJ won't win its lawsuit, so I can't in good conscience recommend it (and its directors can count on my not voting for them next time around; they ought to be in prison). Of the lot, VZ is the best bet right now; they're winners no matter what.

     

    You'll spend your first $50 on your cell service so you can text your bootie calls, and so will everyone else. That's why I own VZ.
    27 Sep 2011, 09:50 PM Reply Like
  • Tom Young
    , contributor
    Comments (197) | Send Message
     
    No, VZ is fine. For now, anyway.

     

    It's a classic trade up/down situation. Affluent consumers are heading to Verizon and AT&T. Cash-strapped consumers are ditching Sprint and T-Mobile for prepaid.

     

    This is part of the reason why T-Mobile was up for sale. They saw no way out of the mess, except to get absorbed into the larger GSM carrier.
    28 Sep 2011, 10:35 AM Reply Like
  • User 487974
    , contributor
    Comments (1105) | Send Message
     
    Are you fracking for real?
    Microsoft?
    Dead money for what,close to 10 years?
    There is no "INVESTING" right now folks!
    Get small, get rid of all debt and look to help you family / neighbors!
    We are in a progressive made deflationary depression that is about to ravage the economic world!
    Obama and all the class warfare, (racist Maxine Waters) vitrol are early signs of the socialistic breakdown raging from the U.S.A. to the wonderful "Arab Spring" blowing up the Middle East!
    W.T.F. are we going to do when the oil fields in Saudi Arabia get taken out by Mahmoud Ahmadinejad and his first test of his "Nuclear" capabilities?
    Oil at 500 / 750 a barrel?
    25 / 40 dollar gasoline?
    Yeah that worthless stock is going to be worth, what exactly again?
    Wake the frack up and get with the real worldwide threats going on around you but the lame street media and Obama refuse to tell you about!
    There is a time for risk taking, this is NOT it folks!

     

    May the good lord watch over this fragile little experiment in freedom we call America
    Jerry

     

    God Bless The Virtuous
    27 Sep 2011, 08:58 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4091) | Send Message
     
    Please immediately work on building your bunker and prepare for the world to end! Or, alternatively, spend all your money on fun activities until then. I will be singing "Coconuts from Kongoville" all day long drunk on Bacardi at the beach.
    27 Sep 2011, 09:07 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Seriously? Bacardi is terrible. I'll be drunk on Zacapa XO, living it up. Otherwise our plans are identical.
    27 Sep 2011, 09:29 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9966) | Send Message
     
    Mr. Greenblatt must be the exception. Most hedge funds are building cash and exiting the markets at every opportunity. Most hedge funds expect the markets to go much lower and are positioning for that, not building long positions.
    27 Sep 2011, 11:01 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4091) | Send Message
     
    Happy reporting to them then in 3 days. Happy customers I bet. Who do you think was responsible for todays market, the value investor?
    27 Sep 2011, 11:07 PM Reply Like
  • pretsler
    , contributor
    Comments (9) | Send Message
     
    Hewlett's failure to find a halfway decent CEO is beyond alarming. It signifies something greater: there is not enough talent among management to warrant an internal promotion to CEO. HP has simply lost that great culture of ingenuity. Wait until they have consistent management, then wait to hear a plan. If you're sold on those two, go ahead. But that could be several years out...
    27 Sep 2011, 11:16 PM Reply Like
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