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Valve Invesing


My personal first and second experience with growth and value investing.

One long term example with Apple, and one short term with KKR

Value Investing and market risk.


I started investing years ago and never really focused on the method of stock selection other than that of buying things that I knew something about. LIke Apple, Fluor, Targa, Microsoft, etc. However, I had so many companies at times that I could not keep up them and understand them at an analytic level. However, when it became obvious that my financial advisor was performing very poorly and still collecting fees, I took over investing our funds. That move caused me to need a real method of investing that I could agree with. I ended up with two methods: dividend investing for income, and value investing for long term purchases. I study Warren Buffet, Charlie Munger, Phil Town, Guy Spier, Monish Pabrai, and Joel Greenblatt investing techniques and tried to understand what investments they made and why. So here I am some time later with a few value buys to complement my dividend strategy and with no fees to pay for management and stocks primarily I figure that am savings in the range of 2% to 4% fees per year and doing quite nicely with about 7.5% capital gains over the last year and enough income to get along.

I have held Apple stock since 2008 and it has been an enlightening example of a long term stock. It was not truly a value stock at the time as I would classify it as a growth stock. However, as time has gone along it has continued to generate great margins, great revenue growth, and has unusual cash flow. 

There are many investors including Warren Buffet who are in Apple and I will not bore you with it performance further, except to say it is not a value buy at this time in my opinion. A recently run DCF would led me to invest more at $93 given it current performance level continues.

A shift to value investing for capital gains and dividends has been an interesting and valuable experience. The primary driver was Phil Town's Rule #1 and Payback Time books and his free 3 day seminar. Along with many books about about those mentioned above. His basic approach ( in my words)

1. buy what you can understand and has Meaning to you.

2. It has to have a Moat

3. Has to have good management

4. Has to be at a price which is at least 80% of it intrinsic value.

5. Look for an event that brings the company into a value buy and determine if it can recover.

Are directly from Munger and Buffet examples. I interestingly I got hooked and started looking for companies that fit this mode. To help I use Phil Town's Toolbox, and Gurufocus websites and tools, as well as Seeking Alpha for assistance. As a result I ended up with a few value plays: Kravis, Kholberg and Roberts (NYSE:KKR), American Financial (NASDAQ:AFSI), TEVA Pharmeutical (NYSE:TEVA), and Gilead (NASDAQ:GILD) and a few that appeared to meet the criteria. 

I will provide more commentary on these companies as time goes on, but for now they have provided good opportunity.

I welcome any comments on company's mentioned above, value investing, tools for investing , books and reference sources, etc.

Disclosure: I am/we are long Kkr, ASFI, TEVA, GILD, FCAU.