Most people who are interested in investing have heard of the old "Dogs of the Dow" theory. The following interesting Barron's article supports the thesis that this years losers might just be next year's winners on the stock market...though the "Dogs of the S&P" doesn't have quite the same ring to it. Perhaps we could change it to something like the "Suck Dogs of the S&P." That sounds a little better. [more]
"Cheap with a catalyst" I didn't coin that phrase, but it certainly suits my investing style to a T. It's a great thing to find an undervalued stock, but cheap stocks can remain so for a long time absent of some sort of catalyst that has the potential to cause them to rise. While one can question the economic value of activist investors and their efforts to make companies split up, sell divisions or return money to shareholders in the form of buybacks or dividends on really can't question the success that some of them have had at making stocks rise in value. [more]
Back in June 2010 I heard about an ETF that invests only in the stock of spun-off companies, the Claymore/Beacon Spin-Off ETF (CSD). As a huge fan of special situation investing in general and specifically spinoffs, I found this isea fascinating and immediately gave it the thumbs up here in CAPS. So how has this ETF done over the past two and a half years? [more]
While I normally try to stick to my knitting in terms of investing and ignore much of the shenanigans that go on in Washington, I made an exception last night and looked into what was happening with the "Fiscal Cliff." When I heard that the Republican's "Plan B" had fallen apart I knew that we were going to see some red in the markets today. Sure enough, that's exactly what we're getting. [more]
DIN has been on an absolute tear since I wrote about it earlier this week, up 6.5% and counting. More details of Mick McGuire's plan for the company have emerged. The centerpiece of his play for the company is for it to pay out a $6 per share dividend and for that divvy to grow in future years. As I mentioned in the previous piece, if he gets his way at a more than solid 5% yield the stock would trade at nearly $100 per share. I have a sneaking suspicion that this is going to be one of those cases where a company's products are so lame that I cannot bring myself to buy them in real life yet the special situation causes the shares tonrisensignificantly none the less. Oh we'll, at least I'll get some CAPS POINTS:). Here's the latest on the situation courtesy of ValueWalk. [more]
Ok, I've got two more interesting investment ideas that I came across this afternoon courtesy of Market Folly's "What We're Reading". The first came to me after reading a really interesting bullish article on lumber prices. It got me thinking that now might be a good time to pick up shares of some of the timber REITs that are out there. [more]
I normally don't share personal details of my life here on CAPS, but this one is related to money and is so funny that I had to pass it along. [more]
I just did a tour of the interesting Seeking Alpha articles there are out there today. Like with anything there's some amazing stuff over then and some that's not so much. To me, one of the keys to successful investing is sifting through a tremendous number of ideas, as many as possible, and separating the wheat from the chaff. With all of the information on the Internet today, there's absolutely no reason to sit there banging your head against the proverbial wall trying to come up with new investment ideas when there's so many outstanding ones available at one's finger tips. Again, the key though is picking the good ideas out of the noise. [more]
Hi everyone. This weekend I came across another interesting stock. I like the potential special situation-esque catalyst that exists, but I really don't like the company's product. So, I'm not sure what to do with this one yet. This pick comes to us courtesy of one of my new favorite special situation / activist investors, Marcato Capital Management. The company's head honcho Mick McGuire, a former employee of Bill Ackmann at Pershing Square, had presented some outstanding ideas lately.
I've been following his moves fairly closely lately, but I haven't been able to determine the reason for why he has established an activist position in DineEquity (DIN). As someone who doesn't just blindly follow the picks of other super investors, but rather wants to know the thesis behind their investments, I haven't picked up any of DIN in CAPS yet.
For those of you who aren't familiar with DineEquity, it owns the restaurant chains Applebee's and IHOP. I'm not snooty in my food taste, I like an inexpensive meal as much as the next guy. I'll take some good BBQ and a cold beer or some nice Thai food any day of the week and they're not expensive, but I definitely am not a big fan of either of these restaurants. Regardless of personal taste, tons of people go to them.
Courtesy of this week's 13F article in Barron's I know see why he has established a position in DIN. DineEquity is a cheap cash-flow machine now that it has franchised the majority of its company-owned stores. It appears as though Mr. McGuire wants DIN to use the stream of cash that it has coming in to establish a dividend. According to Barron's:
"$96: assuming a 5% dividend yield, the share price DIN would trade at if it paid out a regular dividend of 80% of its $6-per-share free cash flow."
This compares to a stock price today of slightly over $50/share, even after a strong run in the stock.
A cheap stock with a potential catalyst. Marcato Capital Management has made had a number of successful activist investments lately. I like the upside here and am adding it to my CAPS picks.
Good morning everyone. As anyone who has read my writings will know, in investing I lean heavily towards value, particularly value with some sort of relatively near-term special situation that has the potential to unlock that value. While I have tried it in the past, mostly successfully in the run up of the price of oil several years ago...I say mostly because while I captured a ton of the ride up here in CAPS and in real life I certainly did not bail at the top and caught a portion of the ride back down, I tend to stay away from investments that rely purely on trying to time the bottom in the market for a particular commodity. Even more so when I am not intimately familiar with the market for said commodity. I know a decent amount about oil, natural gas and certain agricultural commodities like corn as a result of following them for years but I know absolutely nothing about the the market for something called Titanium Dioxide aka T02. [more]
Oh how I love Phillips 66. Man, these guys have been making all of the right moves lately and fortunately I have been along for the ride. I established my initial position in PSX after it was spunoff from COP earlier this year. This one was a textbook spinoff, experiencing a dip as many shareholders dumped the shares that they received. As someone who has not historically been a big fan of refining, I didn't even want the shares at first...until I researched them and realized how undervalued they were. I went from wanting to dump my shares to wanting to add more. [more]
Here's an interesting article that I stumbled across today. In it the author analyzed the returns of the stock picks that we're made by participants in the annual Barron's Roundtable. I have always been a big fan of the series. I like anything in Barron's that contains realmstockmideas rather than opinions on politics and the macro situation. I particularly like Meryl Witmer's and Mario Gabelli's stock picks because they usually seem to have a special situation or value tilt to them. [more]
According to S&P Capital IQ, U.S. companies have completed 82 major spinoffs, valued at $530 billion, since January 2002. For those valued at more than $500 million, the spinoffs have delivered a total return of 70%, compared with 22% for the S&P 500. (Their former parent companies have not fared too poorly either, returning 35%.) [more]
"A further advantage of the value investor's approach - first the assets, then the current earnings power, and finally then rarely the value of potential growth - is that it gives most authority to the elements of valuation that are most credible. Asset values depend upon tangible aspects of a company's situation today. Earnings power valuations assess the value of today's earnings. It is much easier to establish with confidence the current market price of a piece of land or the current profitability of a division than it is to predict the size of a market, it's profit margins, and its cost of capital 20 years, or even five into the future. Ultimately the future does matter, but it is important to separate what we reliably know today from less secure conjectures about tomorrow." [more]
Cheap with a catalyst. That the sort of stock that one of my favorite investors, Mario Gabelli, looks for when he invests his clients' money. I just came across an excellent CFA Institute interview with Mr. Gabelli in which he explains what sort of investments he likes. My investment style is almost exactly the same as his. I love cheap stocks, particularly ones that pay holders a dividend to wait until a particular catalyst unlocks value at some point over the next couple of years. [more]
I always like Todd Johnson's Seeking Alpha articles. We seem to have similar taste in stocks. Here's a new one that he wrote about an MLP that I went long in CAPS right after the IPO, but didn't actually buy in real-life. I wish I had though, I'm up 67.27% on it here versus a 2% gain in the S&P over the same time period...AND it's still yielding an estimated 17%. Wow.
My Must-Own 17% Dividend Yield Equity [more]
Hooray, I can finally post in CAPS using my iPad. While I'm not a huge fan of typing on this thing, it sure beats lugging out my laptop and firing it up. I have a feeling that this will make me a much more frequent poster here. CAPS blogging never worked on my old 1st generation iPad, but I am now using my new renta display iPad instead. I'm a pretty simple person, I didn't really need the upgrade, but Grandma and Grandpa live in Memphis and they like to FaceTime with the kids so I needed the camera on the new one. As an added bonus, this thing is lightning quick compared to the old one. A big you're welcome to all of the Apple shareholders out there in CAPS ;). [more]