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PierreArcane568 (< 20)



PBR Overvalued?

June 17, 2008 – Comments (5) | RELATED TICKERS: BHP , PBR

Morningstar recently posted an article on MSN's website stating that energy companies looked overvalued. The writer specifically mentioned PBR as overvalued compared to its historical valuation compared to the S&P 500. I find this view interesting but a little misguided. Energy companies have historically been considered cyclical and thus have sported traditionally lower P/E ratios compared to less cyclical companies. However, energy companies' history of extreme cyclical business cycles may be over due to (likely) long-term global outsized demand for energy. In addition, PBR has suffered from an emerging market discount due to Brazil's perceived political instability, high interest rates, and economic weakness. Brazil has overcome many of these problems and has become a great oil/ ethanol play.  [more]




March 15, 2007 – Comments (0)

Purchased more shares of USG yesterday when it dipped into the $48 range. I also initiated a small position in WisdomTree's International Small-Cap Dividend Fund ETF (DSL) as a diversification strategy and hedge against US market volatility (small-cap international stocks have a low correlation with US markets). I bought Thornburg Mortgage REIT (TMA) a week ago at $25 a share as a play on lowering/ stable interest rates and to take advantage of an eventual rebound in the housing/ loan origination market. The stock has a yield north of 10%.  [more]



New Buy: USG

November 28, 2006 – Comments (0)

Initiated a small position in USG yesterday. I anticipate a short-term slide in price as the company finally settles its asbestos liability obligations under its Chapter 11 reorganization and will buy more shares on the dips. USG is trading at 50% of its intrinsic value based on my discount cash-flow calculations. In addition, after settling its asbestos liabilities (whether $900 million or $3.5 billion), the company will finally be able to implement a dividend and stock repurchase program. USG is a play on the housing market. I believe U.S. demographics for the housing market are very positive for the next 10 years.  [more]

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