A Visit with an Investing Legend
"For almost three decades Lou Simpson has managed insurer Geico's $4 billion-plus equity portfolio largely out of the limelight, amassing a nearly unrivaled record in the process. The Geico portfolio has topped the S&P 500 Index by an estimated 7% per annum during his tenure. It's not much of a stretch to call the 70-year-old Simpson one of the greatest investors of all time.
So imagine our delight at having the chance to pick Simpson's brain when he stopped by our Chicago office earlier this month. Although the discussion was wide-ranging, touching on the broader strokes of Simpson's philosophy--which shares a number of attributes in common with Morningstar's approach--as well as the finer points of the theses behind various investments he's made, he also imparted a few lessons."
Recovering Companies (8.26 % of Portfolio) [more]
Apollo Group is officially on my "Probation" list, I will probably hold on to it for 1 or 2 more quarters and if the company turnaround isn't progresssing, I will be inclined to pare down my holdings in APOL. At first blush, they have restated the results, hence no longer in fear of delisting. The bad news is that they have also dialed down the expectations for growth down to single digit growth. Historically, APOL has managed growth in the 20's and the P/E has reflected the growth, if APOL isn't a growth story, I need to reset the expectations. My currnet EPS growth of 9 and 7% for the next 5 / 5 years shows that it is fairly valued / over-valued at the current price. [more]
Name % Portfolio Gain Since Inception
American Express Company 3.48 5.37%
Apollo Group, Inc. 1.99 23.65%
Berkshire Hathaway Inc. 15.05 14.29%
Buffalo Wild Wings 5.75 198.05%
Citigroup Inc. 1.36 10.88%
Georgia Gulf Corporation 2.93 -10.77%
Kona Grill, Inc. 1.57 100.52%
MasterCard Incorporated 4.57 209.11%
Microsoft Corporation 1.75 22.26%
Moody's Corporation 1.72 5.80%
Morningstar, Inc. 3.40 5.61%
Popular, Inc. 1.49 -8.99%
Portfolio Recovery Associates...2.31 45.86%
TASER International, Inc. 1.72 34.69%
The Coca-Cola Company 7.51 27.01%
The Western Union Co. 7.69 4.39%
USG Corporation 1.85 12.20%
Wm. Wrigley Jr. Company 4.59 12.05%
Wm. Wrigley Jr. Company 0.07 14.54%
Cash + Shortterm Investments 29.19%
Gain YTD 13.00% [more]
I read up on Wild Oats's financials, out of the past 10 years, they only made accounting profits in 6 years and Free Cash Flow positive in 4 years. Sales is growing quite nicely and Gross margins is fairly stable, however Operating margins is hovering between -1 to +1%. [more]
Whole Foods Markets Inc is buying Wild Oats. Currently, the spread is widening because the market on 10th May, WFMI mentioned that the FTC has expressed concern about anti-competitive behavior, ie. US consumers won't be able to buy organics cheaply. [more]
I received my copy of Hormel Food's 2006 annual report. And I wished all annual reports looked that yummy. From the cursory glance, 2006 (oct annual) was a good year. [more]
I did some slides today for my economics group assignment, what is interesting to note is that if the Singapore GDP continues to grow at 5% and the Total Fertility Rate continue to decline at 1.35 per women, partially off-set by 30,000 permanent immigrants to this city-state, the number of foreigners Singapore has to import is a boggling 51% by the year 2034. Foreign workers already represent 20% of the labor force.
Yes. I got my grubby hands on the Nintendo Wii yesterday. I got the Wii Sports and the Wii Games plus Medal of Honour. I am not a game person but the tennis game got me panting quite a bit.
We should never underestimate the power of Luck. It is an irrational feeling but the thought of dodging the Cyptologic (CRYP) and Planetout (LGBT) bullets really made me feel good, a perverse sense of schadenfreude.
I sold LGBT last year at a loss, but nothing compared to the 25% loss this past week. You can read my reasons for selling LGBT here, http://boards.fool.com/Message.asp?mid=25253445
The other bullet I dodged is my 2 time investment in CRYP. I sold earlier because I wanted to Moody's (MCO) and didn't want to over-diversify the portfolio. This past week CRYP fell on lower Q1 results and lower Q2 outlook. [more]
I had a major cognitive dissonance yesterday, at first I thought the nagging / tingling feeling was the dissappointment that the spreads over my want-to-buy risk arbitrage deals were shrinking. But today, I realised what my imaginary tail was trying to warn me about my portfolio, the following are the top 2 gainers recently: [more]
This are the results from the Mechanical Investing Method (please see previous post on the formula). Note that Stock returns is different from the portfolio returns because the portfolio holds cash as well as stocks. Two stocks are being purchased every month. [more]