Eric Wu

USG: Supply Is High, Demand Is Low and Pricing Is Still Improving

Agree with Mr. Cullen. Although USG's prospects, at times, seem like a sea of red without end, they: 1.) are an industry leader, 2.) have sales of $3-4 billion, 3.) experienced management, 4.) Buffett's implicit backing.

Those 4 points strongly favor USG coming out of the recession intact, at which point a 12-15% ROE means a stock price at least 2-3x today's value.

I did a similar analysis as Mr. Cullen's BCIC back when the common was at $7, but instead of averaging down on the common, I swapped it for a delta equivalent of USG $10 Jan 2011 LEAPs, which has tripled since then. It's a great way to lay out a smaller amount of capital to bet on a big recovery and participate fully when it goes in-the-money.

Capital Structure and Some Cheap Stocks

I, too, have found WDC to be nonsensically cheap. Yet, as its share price continues to fall relentlessly, I have doubted my judgment; is everything I know about business valuation wrong?

I'm glad to have read your article Brendan. Your clear thinking and well-constructed arguments have provided me with at least a modicum of confidence that I am not going insane.