Follow super-investors to get great ideas
I've put together a list of investors who I like to listen to and follow for ideas. It's funny that sometimes you see talking heads who are critical of fund managers or investors for "talking their book." My opinion on that is, please do. The more investment ideas I come across, the better. I'll worry about sifting through all of the ideas to determine whether the person who is talking their book is looking at the idea through rose colored glasses or trying to unload something. I love sharing and reading others' ideas.
One of the investors that I follow is Mario Gabelli. The best place to find ideas from him is Barron's semi-annual investing roundtable. He has been on the panel there for many years. I've gotten a number of good ideas from him in the past.
You want to talk about nailing an investment, take a look at what Gabelli had to say about Hillshire Brands (HSH) a while ago. I picked up shares of it in CAPS, but I'm not sure why I never did so in the real world. Well, HSH is up over 22% today after news broke that it is going to be bought out by Pilgrim's Pride (PPC). Since I bought HSH in CAPS in January 2013 it has outperformed the S&P 500 53% to 29%. Here's the pitch:
"Mario Gabelli's first recommendation of the 2013 Barron's Roundtable is Hillshire Brands (HSH).
What I like about this stock:
- It's a spinoff (from Sara Lee), of course.
- It's a potential takeover target, as many spunoff companies ultimately are. Per Gabelli "Three or four companies were looking to buy Hillshire from Sara Lee before it was spun off.
- HSH is using its solid cash flow to rapidly pay down its $694 million in debt.
- Gabelli's Bottom Line, "The stock trades for $29 and change, and could be $35 to $50 a share two years out...It will be bought by someone. Meanwhile, management is doing a terrific job of getting back to basics."
- "The sausage market is growing by about 5% a year in the U.S." I really don't care about this statistic, but I found it funny for some reason :)
I doubt that I am going to put real money behind this idea, but I do believe that it will out-perform the S&P 500 going forward and I will add it to my CAPS portfolio."
Hmmmm, I shouldn't have doubted. I'm looking forward to the ideas presented by Gabelli and the other (probably only other) worthwhile member of the Barron's Roundtable panel Meryl Witmer have to say when the next one happens likely some time next month.