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January 2010

Recs

4

Pitching KLA Tencor

January 30, 2010 – Comments (1) | RELATED TICKERS: KLAC , AMAT

Earlier, I pitched Applied Materials, a semiconductor industry behemoth that sells chip equipment. AMAT is the 500-lb gorilla in the market. However, it only has about a 13% share in the total market, because it's so big. Applied is by now the jack of all trades, but it competes against a lot of specialists.   [more]

Recs

1

Pitching France Telecom (FTE)

January 29, 2010 – Comments (4) | RELATED TICKERS: ORAN

France Telecom has large wireless shares in several Western European markets. It has a large fixed line business in France, which is declining thanks to the advent of VoIP - FTE actually went and cannibalized a lot of its fixed line business to get into this growing market. It's still the dominant wireline firm in France, but the those lines are still used to carry DSL data. And FTE is using the cash from that business to invest in its growing emerging markets portfolio.   [more]

Recs

0

Berkshire joins the S&P500 - my thoughts

January 29, 2010 – Comments (0)

Bruce Berkowitz said, after dumping his entire Berkshire stake a while ago, that Warren Buffet himself said that Berkshire couldn't be expected to outperform the S&P 500 by a wide margin. It's simply too big, although its insurance subsidies have substantial competitive advantages over their competitors. Berkowitz thought he could do better at the time - and he certainly hasn't made a fool of himself.  [more]

Recs

3

Pitching Applied Materials (AMAT)

January 27, 2010 – Comments (1) | RELATED TICKERS: AMAT

As I said earlier, I'm going to focus my investment efforts on high-quality large US companies this year. I feel like opportunities elsewhere are declining, but the strong blue chips have lagged the market. Applied Materials is one such blue chip.  [more]

Recs

3

Mutual funds for the new year

January 26, 2010 – Comments (1)

I've been mulling where to put my IRA money this year. As usual, there are uncertainties. In a way, this year is harder than last year. In January last year, the S&P was on a straight plunge downward, but you had to figure that companies like Johnson and Johnson and Procter and Gamble would not go bankrupt. You had to figure that we had learned the lesson that you don't cut spending to balance the budget in a recession, unless you want to produce a depression. This is where the government absolutely should run a deficit - and enact spending increases and tax cuts that are timely and targeted. The majority of the stimulus money fit this criteria. The infrastructure spending is slower by nature, of course. Anyway, you had to figure that you could not go wrong investing in high quality stocks and bonds.   [more]

Recs

1

Jeremy Grantham (GMO): focus on high-quality US companies

January 26, 2010 – Comments (0)

Past performance isn't a predictor of future performance. That said, Jeremy Grantham's Q4 2009 letter says that his firm expects high-quality US stocks - but not US stocks as a whole - to return about 6.8% annualized over the next seven years or so. They are "nearly certain" (odds of about 90%) that high quality US equities will outperform the average US stock (they estimate 1.3% for large caps and 0.5% for small caps). They also believe that international large and small equities will outperform the average US stock, with an estimated annual return of 4.7% or so.   [more]

Recs

2

Thoughts on American Express and other card companies

January 18, 2010 – Comments (4) | RELATED TICKERS: AXP , DFS

While Amex was trading in the low $30s last year, Paul Larson, who runs the Stockinvestor portfolios at Morningstar, said that this stock could triple within the next two years ... or get cut in half. Amex faces increasing consumer credit losses and it also misstepped by going outside its core competency of high-income customers. Morningstar rated the stock as a low-uncertainty one in early 2008, which turns out to have been mistaken.  [more]

Recs

5

Reflections on the psychology of Warren Buffett

January 13, 2010 – Comments (1)

A while ago, a very good New York Times article interviewed Dr. Brent James, a physician at Intermountain Healthcare who's devoted to using statistical and social science methods to improve medicine.  [more]

Recs

16

Checkup on MLPs

January 10, 2010 – Comments (8)

The Master Limited Partnership sector has been joining in the general stock market rebound. As many readers know, MLPs in general have a unique tax structure: most of their income isn't taxed, you instead pay capital gains taxes when you sell the underlying units. This tax deferral can be quite powerful. MLPs in the energy sector are generally pipelines that transport liquids or gases. Some MLPs are connected to exploration and production companies. There are a few miscellaneous MLPs, like Cedar Fair (FUN) or AllianceBernstein (AB).  [more]

Recs

1

Checkup on MLPs

January 10, 2010 – Comments (0)

The Master Limited Partnership sector has been joining in the general stock market rebound. As many readers know, MLPs in general have a unique tax structure: most of their income isn't taxed, you instead pay capital gains taxes when you sell the underlying units. This tax deferral can be quite powerful. MLPs in the energy sector are generally pipelines that transport liquids or gases. Some MLPs are connected to exploration and production companies. There are a few miscellaneous MLPs, like Cedar Fair (FUN) or AllianceBernstein (AB).  [more]

Recs

4

Compass Minerals and alternatives to salt

January 08, 2010 – Comments (1) | RELATED TICKERS: CMP

As I've said earlier, Compass Minerals is one of my favorite boring-but-very-profitable stocks. Its main business is highway deicing salt. It seems farfetched that someone could come up with a more economical alternative to salt, but if someone did, that would kill Compass.  [more]

Recs

3

Deal musings: Novartis/Alcon and Kraft/Cadbury

January 05, 2010 – Comments (1) | RELATED TICKERS: NVS , KRFT

I usually dislike large acquisitions, but Novartis already owned most of Alcon. Alcon has a very attractive business. Novartis is pretty likely to get Alcon and doesn't seem to be overpaying - they can leverage the fact that they will own the majority of the company after acquiring Nestle's stake. However, as with most stocks of potential acquirers, Novartis' stock has dropped several percent in the last two days. I think this is a good time to buy.  [more]

Recs

4

Health care picks

January 03, 2010 – Comments (1) | RELATED TICKERS: GENZ.DL

Morningstar releases a market outlook piece every quarter. Here's their outlook for healthcare in general.   [more]

Recs

6

Thoughts on Compass Minerals

January 02, 2010 – Comments (7) | RELATED TICKERS: CMP

Compass Minerals has been quite good to me. I bought a small stake in the upper $30s. In mid 2008, the stock got caught up in the potash mania and hit $80. I sold about half my shares. It then tanked to under $50 (and under $40 some times). Now, it's hit nearly $70.  [more]

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