I purchased shares of Disney for my childrens' college funds several years ago. I did so for a couple of reasons, I have always been impressed with the company's ability to grow by purchasing new intellectual property and leveraging its network to squeeze every last dime out of it. Also, I wanted to use a company that my kids were familiar with to teach them how investing works. To this day, they still follow Disney's stock, so that aspect of the mission was very successful. [more]
In investing, I am a HUGE fan of using negative headlines to establish positions in what ultimately are quality companies that are experiencing short-term turbulence.
Following this investing theory, I established a real-money and CAPS position in Wells Fargo a little over a week ago. There is certainly some issues at the bank, including excessive compensation for some executives and some messed up incentives / comp plans, but at the end of the day Wells Fargo has been one of the best run banks in the world. Uncle Warren's continued ownership validates that to me. Not that he has never made any mistakes, but he buys positions in high-quality companies for the long-term and this is such an entity.
There may be a little more near-term downside in the stock, who knows. I'm not all that concerned about the bumps in the short-term because I bought what I intend to be longer-term positions in WFC for my family's retirement accounts and college funds. A dividend yield of nearly 3.5% is nothing to sneeze at in today's low-yield world. The pundits on television keep saying to short treasuries and not to lock in yield because interest rates are going to skyrocket, but I have been saying for years and still continue to believe that interest rates will remain lower for much longer than most believe.
See you around!
Jason aka TMFDeej [more]
Demutualizations aka thrift conversions are a stalwart sub-sector of special situation investing. There's a number of reasons why converted thrifts often outperform the market, but one of the primary ones is they are often gobbled up by larger banks after the three-year moratorium on buyouts has been lifted. I came across an interesting article on one such situation this morning on Seeking Alpha. Enjoy! [more]
Every week I go through the latest issue of Barron's looking for interesting special situation investing ideas. This week's magazine was a little light on them, but I did find one interesting piece on the former spinoff of B/E Aerospace (BEAV) [funny ticker, It always makes me think of Beavers] KLX (KLXI). [more]
I read lots of articles about investment ideas, particularly ones about special situations and undervalued small cap stocks. Inevitably, there's always a few companies who pop up in articles year, after year, after year. After a while, I grow skeptical about these seemingly permanently undervalued companies and start to question whether they will ever perform as well as the bulls believe. [more]