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MagicDiligence (< 20)

October 2011

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Magic Formula Investing Weekly Roundup 10/30/2011

October 30, 2011 – Comments (0) | RELATED TICKERS: LSTZA.DL , LO , LMT

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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Contemplating a Bid on Sotheby's

October 26, 2011 – Comments (0) | RELATED TICKERS: BID

Sotheby's (BID) deals in the acquisition and selling of fine art, jewelry, and collectibles. Virtually all (nearly 95%) of revenues come from the Auction segment. Here, the company acts as the agent, conducting due diligence to verify the authenticity of the piece, building interest through marketing, setting up and conducting the auction, and handling collection and distribution of funds from buyer to seller. In exchange, both the buyer and seller pay a commission to the company, usually in the range of 16-19% of the selling price. Smaller contributors include a Finance segment (effectively a cash advance business), and Norrtman Master Paintings, a small art dealer. Sotheby's is a global company, conducting over 250 auctions a year across 40 countries, and earning close to 60% of sales outside of the U.S.

One of my favorite aspects of this company is its competitive position as a "big fish in a small pond". 2 players dominate the global fine art commercial market - Sotheby's and Christie's, each with about 50% market share. The firm has even faced monopolistic practice charges in the past. Considering both Sotheby's and Christie's have been in the business since the mid-1700's, the relatively small size of the market, and existing relationships with the few customers for these items (which routinely fetch tens of millions), the firm has an almost impenetrable economic moat against competition. This is a wide moat company, with a capital 'W'.  [more]

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Magic Formula Investing Weekly Roundup 10/23/2011

October 23, 2011 – Comments (0) | RELATED TICKERS: DISH , INTC , FLR

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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TRW Automotive is Set to Steer Higher

October 19, 2011 – Comments (0) | RELATED TICKERS: TRW , F , GM

Note: TRW was MagicDiligence's Top Buy pick for 10/18/2011!

It comes as no great surprise that investors would be wary about investing into the automotive sector. 2008-09 are fresh in people's minds, during which American automakers General Motors (GM) and Chrysler filed for bankruptcy, and Ford (F) barely survived. Auto suppliers such as Delphi andLear (LEA) trudged into bankruptcy court. The industry, put simply, was decimated by the "Great Recession".  [more]

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Magic Formula Investing Weekly Roundup 10/16/2011

October 16, 2011 – Comments (0) | RELATED TICKERS: MRVL , OVTI , ARO

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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30 Efficient, Dividend Paying Companies With Cheap Stock Prices

October 14, 2011 – Comments (0) | RELATED TICKERS: STRA , KLAC , CATO

Dividend stocks are a portfolio anchor in turbulent investing times, as 2011 has surely been. These stocks provide steady income returns, many at rates much higher than Treasury bonds, with the added bonuses of capital appreciation potential and the ability to raise their dividend payments over the years.  [more]

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Is Vonage Calling Investors Back?

October 12, 2011 – Comments (1) | RELATED TICKERS: VG

Who hasn't heard of Vonage (VG)? One of the pioneers of the voice-over-IP (VoIP) telephony business, the company came to prominence with aggressive marketing and rapid revenue growth in the middle of the last decade. It also earned infamy in the investment community, badly botching its 2006 IPO by soliciting its customer base to participate, fighting off patent infringement lawsuits from several wireless carriers, delivering massive net losses, and also working up an ugly balance sheet with crippling debt terms and dilutive stock warrants.

So you can imagine my surprise when the stock showed up recently in the Magic Formula Investing (MFI) lists! Like most, my impression of Vonage was formed from the highly negative coverage of the stock several years ago. But after some research, I believe the firm no longer deserves such a bad rap. Let's take a look.  [more]

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Announcing MagicDiligence's own Magic Formula-style Stock Screener!

October 11, 2011 – Comments (0)

MagicDiligence now has its own version of the Magic Formula screen!

Anyone can view 3 pre-built screens for the current day from this page. These 3 screens - the top 50 stocks over 50 million market cap, top 50 over 1 billion, and top 30 over 3 billion - represent a nice cross section of small and larger cap picks.  [more]

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Magic Formula Investing Weekly Roundup 10/9/2011

October 09, 2011 – Comments (0) | RELATED TICKERS: AFAM , MHFI , GCI

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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5 Magic Formula Stocks With High Debt Burdens

October 06, 2011 – Comments (0) | RELATED TICKERS: GCI , VG , LPS

Due to its technique of using enterprise valuein lieu of market capitalization, Joel Greenblatt's Magic Formula Investing (MFI) strategy generally does a good job of weeding out firms with poor balance sheets. However, occassionally there are stocks with high debt burdens that do slip through the screen, although it generally takes a very cheap stock price to make up for the debt penalty that enterprise value applies.

High debt burdens cause several issues. In extreme cases (one of which exists below), debt can create a situation where the solvency of the company can be at risk when interest payments or debt maturities cannot be met, or when financial ratios exceed covenants on the debt.  [more]

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Magic Formula Investing News and Links for Week of 10/2/2011

October 02, 2011 – Comments (0) | RELATED TICKERS: MSFT , DELL.DL , DLB

Since the "official" Magic Formula Investing screen did not update at the end of last week, we don't have a roundup of stocks moving in and out of it for the past week. However, below are some interesting news and analysis of Magic Formula stocks from around the investing world this past week.

CNBC Interview with Joel Greenblatt  [more]

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