Ogilvy On Advertising

Time Magazine once called David Ogilvy "the most sought-after wizard in today's advertising industry". Ogilvy shares his wisdom in his book, Ogilvy On Advertising.

Smart Retail

Retail is a tough industry. There are low switching costs for customers (though firms try to mitigate this with things like loyalty programs), low barriers to entry, and fixed costs make up a large percentage of overall costs, which means even slight changes in revenue can have large effects on the bottom line. But for these very same reasons, it is also a very interesting/dynamic sector from the perspective of a retailer that is doing well and looking to grow its share.

Tellza: Undiscovered Growth At A Very Cheap Price

Tellza (TEL) is an under-followed Canadian microcap. The company has seen year-over-year revenue growth of almost 60% through the first 9 months of 2013, with likely more to come thanks to what appears to be a competitive advantage. Despite this, the company trades at a single-digit P/E, with no debt and a rising cash balance.Read more...

Top 10 Investment Books

I've been asked a few times to list my favourite investment books of all-time, so I figured I'll take a stab at it. I cameup with this list rather arbitrarily, because I don't know how else to do it without using up too much time. Here they are, in alphabetical order:

The Map and the Territory

Alan Greenspan was Chairman of the Federal Reserve for 19 years. In his 2013 book, The Map and the Territory, he takes a look at the lessons he has learned from the financial crisis that he failed to foresee.

The Help

I don't read a lot of fiction, but that may soon change. Though I do prefer my continuing education to be fact-based, there's no denying that fiction has a unique ability to illustrate and communicate ideas that would otherwise be difficult to fully express. For this reason, despite my overwhelming preference for non-fiction material, some of my favourite books happen to be fiction, including Animal Farm and The Goal. I hold Kathryn Stockett's The Help in similarly high esteem.

Value Fail: Aeropostale

A few years ago, I brought up Aeropostale as a potential value investment. There was a time this company could do no wrong. Times have changed.

Value Investors by Chan

We hear a lot about the most famous value investors. But there is a group of very successful value managers who fly under the radar, many of whom are profiled in Ronald Chan's Value Investors.

Capital Cities

Tom Murphy started out managing a tv station after graduating from Harvard Business School. Over the ensuing decades, he would come to run/own the media company Capital Cities, which bought ABC and eventually sold itself to Disney, earning shareholders who hung in there from the start 10,000 times (not a typo!) their original investment. Here is a terrific interview transcript where he talks about what allowed him to be successful:

Naked Statistics

If all statistics text books were as entertaining as Charles Wheelan's Naked Statistics, I don't think statistics would be considered a boring subject.

More Than You Know

I very much enjoyed Michael Mauboussin's book The Success Equation a few months ago, so when a reader recommended another of his books, More Than You Know, I was happy to give it a try.

IBI Group Plummets Some More

A few weeks ago, I discussed IBI Group's debt as a potentially attractive risk/reward. Unfortunately, the company has since issued a very ugly quarterly report that has resulted in IBI's debentures falling to less than 40 cents on the dollar.Read more...

I Am Malala

While I take my freedom for granted, others have to fight for it every day. Malala Yousafzai was a young teenager when she spoke out against the Taliban taking over her community in Pakistan, as they banned education and other freedoms she previously enjoyed. So at the age of 15, she was shot in the head on her way home from school. Somehow she survived, and has written a book about how life changed in her community once the Taliban rolled in.

Nortech Offers Investors A Selling Opportunity

Just over 3 months ago, Nortech Systems (NSYS) was brought up here as a potential value investment. Last week, the company's shares traded as high as 100% above their levels from just 3 months ago, offering investors the opportunity to sell this company for more than its book value. Read more...

Good To Great

I had been putting off reading Good To Great for some time, but finally bit the bullet. It is one of the most popular business books of all time, but I would also say it is one of the most useless. I can kind of understand why it's so popular; everything written in it makes complete sense! You can nod your way through the entire thing, without realizing by the end that you haven't actually learned anything useful.

Where Good Ideas Come From

Warning: This is not about *stock* ideas. Instead, it's a review of a book I came across through a Bill Gates recommendation: Where Good Ideas Come From by Steven Johnson.

IBI Group: Cheap Debt That's Covered By Net Current Assets

Shares of IBI Group (IBG) have fallen off a cliff, and therefore may be substantially undervalued. Unfortunately, the company carries a decent amount of debt, which means even though the stock's potential upside is large, so is its potential downside!

IBI's debt, however, also trades at a large discount. As a result, investors in the debt are offered substantial upside without the same level of risk as that borne by equity holders. In particular, the company's 7% debentures, due at the end of 2014, currently offer investors a yield to maturity of 30% in a company that is profitable if you ignore intangible asset write-downs. Interestingly, this debt is also currently covered by the company's net current assets, as discussed further below.Read more...

Lean Analytics

One does not need to take huge risks in order to grow most businesses. Techniques to understand markets before scaling are explained very well in a book that has been previously discussed on this site, The Lean Startup. But what specific metrics should managers focus on, in order to ensure they are on the right path? Alistair Croll's Lean Analytics seeks to answer this question.

Short Stories

Artham Capital founder Amit Kumar has written a book called Short Stories, which covers the important basics of short selling. I'm not a short seller, nor do I envision myself becoming one anytime soon, but I read it anyway. I often find myself on the other side of a bunch of short sellers; knowing how they think and what their limitations are can be useful.

Reitmans Is Very Cheap

As Reitmans (RET.A) has seen declining same-store sales and reduced profitability, shares of the profitable retailer have been battered as of late, now down 50% from their year-ago levels. As a result, the company now trades for less than half of its sales, despite a strong net cash position representing one-third of the company's market cap. Furthermore, Reitmans is run by a management team with a strong track record that has implemented a number of initiatives to return margins to normal.Read more...

InfoSonics...Again

For no reason I could find, shares of InfoSonics exploded yesterday, at one point trading up over 90 cents per. This represents a 100% gain from when it was discussed on this site just five months ago as a potential value investment. Interestingly, thanks to its enormous volatility, this also marks the second time InfoSonics will show up on the Value In Action page.

The Effective Executive

When I saw that Amazon's founder and CEO Jeff Bezos recommends The Effective Executive as one of only three books to all of his employees, I didn't think much of it. I had read Drucker before (as discussed here), and therefore had a decent grasp of the principles he expounded. But when I saw the other two books Bezos recommends (The Goal and The Innovator's Dilemma), I had to get this one. That's because, for me, those were two of the most eye-opening/educational books I've ever read.

Rocky Mountain: Way Too Cheap

Shares of Rocky Mountain Dealerships (RME) have fallen dramatically over the last few months, for issues that appear to be only short term in nature. As a result, the company can be purchased for not much more than its 2007 IPO price.

But since that IPO six years ago, both sales and operating income have tripled. Consequently, the company now trades at a P/E of less than 10 despite a history of stellar returns on capital, including an ROE* of 19% for 2012.Read more...

Best Buy Lives Up To Its Name

One of the toughest (from a psychological perspective) companies I've ever owned is Best Buy. Until recently, that is: the shares are up 250% year to date. While the ending is happy (I'm now out of it), the journey had more than its share of downs, for several reasons.

Data Group Debentures Trade At Massive Discount

Shares of Data Group (DGPIF.PK) have a dividend yield of nearly 20%. In this low-rate environment, Mr. Market is making it clear he does not believe in the sustainability of this dividend. While Data Group has proven itself to be a cash cow, because of the company's debt load, Mr. Market may be right.

But investors don't have to take the downside risk associated with the company's equity, because the company's debt (DGI.DB.A) is trading at a massive discount to par. Data Group's debentures trade at just 58 cents on the dollar (as of Tuesday's close), providing an upside of over 100% should the company make good on these obligations due in 2017.Read more...

1493

I first heard of 1493 when PlanMaestro called it his favourite book of the year. Until I looked into it at that point, I hadn't realized just how many had enjoyed this book.

Karsan Value Funds: 2013 Q3 Results

Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site.

Entrepreneur's Guide To Customer Development

I know you think this is a blog on value investing, but to know what you're doing investing in businesses, you need to know a lot about business. How else can you identify when a manager is pursuing a sound strategy, and when he's pissing into the wind? When I first started investing, I don't think I could tell the difference. Now, however, I think I can *sometimes* tell when a strategy is a poor one; though of course I could always be wrong. (The worst position to be in is where you're wrong, but "know" you're right...you have to be vigilant to ensure you avoid that where possible!)

Urbana Goes On A Roll

For what seemed like an eternity, shares of Urbana (URB) went absolutely nowhere. After I discussed the company in July of 2011 as a potential value investment, shares continued to drift lower for a good year and a half. As the discount grew wider, investor patience grew thin. But in the last ten months or so, the shares have been on an absolute tear; the stock is up 50% from July 2011 and up more than 100% from its 2012 low.

Universal Security Instruments Is Very Cheap

Universal Security Instruments (UUU) does not look like a great business of late. Its operating income has been negative for four consecutive years. But as a result of what appears to be distressed selling, the company's stock price has been in free fall relative to the firm's equity, which is stable. As such, the stock now trades at a massive discount to book value, offering an extraordinary risk/reward opportunity for deep-value investors with a long-term outlook. Read more...

Hawaiian Holdings

I don't have much interest in owning any airlines (as per this note) but a write-up I read on Hawaiian Airlines has me intrigued. In my opinion, Red makes a tremendous case for it.

The Manual Of Ideas

I recently had the chance to read a great new book on value investing called The Manual Of Ideas. You might recognize the title from the site with the same name, where you can watch a number of interviews with quality value investors who discuss everything from specific aspects of competitive advantages to their favourite stock ideas.

Four Steps To The Epiphany

As Ben Graham is credited with fathering value investing, so can Steve Blank be credited with starting the Lean Startup school of thought. Startups (defined to include both brand new companies as well as innovative groups within established firms of any size) are traditionally seen as risky businesses, but with his book Four Steps To The Epiphany, Blank spawned a revolution that is changing that.

Quiet

About one-third to one-half of the world's population is introverted, but the world considers such people second-class citizens, according Susan Cain, author of the book Quiet: The Power Of Introverts In A World That Can't Stop Talking. But Cain makes the case that introverts contribute just as much if not more to society than do extroverts. Despite this, as a society we idealize the extrovert, the smooth-talking people-persons that capture the attention of whatever room they're in. We shouldn't.

The Lean Startup

In the excellent book The Innovator's Dilemma, the competitive situation is generally viewed through the eyes of the established incumbent. In The Lean Startup by Eric Ries, the focus is on the disrupting company.

Torstar Shines Bright

Newspaper stocks are generally shunned by today's investors. Moats are shrinking as advertising moves online, and yet capital structures are often levered (a consequence of the decades of industry stability). But it is among the most-hated industry groups that some of the best bargains can be found.Read more...

The Turnaround Kid

I've said many times that I like to buy companies undergoing temporary problems, because that's when I can get a good price. Sometimes, I'm wrong in thinking that the problems are temporary. As a result, I've been an unwitting investor in a few turnarounds. Other times, I've invested because I believe assets to be worth more than market value. In these particular cases, I've been a willing investor in turnaround situations.

Settling A Five-Year-Old Bet

I only like to bet when I believe the odds are in my favour. Since I believe commodity prices to be rather unpredictable, I tend not to bet on anything commodity-price related. I made an exception five years ago.

A Major Gafisa

As recently discussed by a broker who has been reformed, the Brazilian market has been absolutely rocked as of late. Its PE10 sits at a dreamy 10, likely offering up a bunch of value opportunities.

#thirdworldproblems

How To Get Filthy Rich In Rising Asia tells the story of a boy who grows up dirt poor and rises through various means to become rather successful. The methods by which success are attained are the book's primary focus, as the key success factors by which success is attained in the developing world are quite different than what they are in the developed world.

Surging Towards Intrinsic Value

Just eight months ago, Surge Components traded at a massive discount to its net current assets, as discussed here. Furthermore, the company was profitable! More recently, the company has traded within a hair of its net current assets, which is a much more appropriate valuation, allowing shareholders the opportunity to realize a gain in the high double-digits over the course of a few months!

Mathletics: Same Title, Different Content

A few weeks ago, I reviewed a book by the title Mathletics that was a total snoozefest. A reader alerted me to the fact that I probably had the wrong book! Wayne Winston's book Mathletics is exactly what I was looking for.

PineTree Offers Debt Holders A Bone

One month ago, the debt of Pinetree Capital was brought up as a potential value investment. The company's debentures had fallen to barely over 60 cents on the dollar, as the company was in violation of a covenant which specifies that its debt to assets may not exceed 33%.

Yesterday, the company requested that the maximum ratio allowed under the covenant be temporarily lifted (for nine months) from 33% to 50%. In return, the company has offered the following:Read more...

Lexmark Hits The Mark

I just love catching falling knives, and last year at this time, Mr. Market gave me the opportunity to do so on shares of Lexmark. As discussed here, Lexmark fell a whopping 25% after a pre-earnings announcement that missed expectations, and then led the decliners list *again* after its actual earnings announcement. (I guess Mr. Market doesn't believe in double jeopardy?) Today, Lexmark's shares have more than doubled from where they were then.

Coast Distributes Some Gains

Less than two years ago, Coast Distribution Systems (CRV) was brought up on this site as a potential value investment. Following the release of the company's results yesterday, the shares went flying, having doubled from their 2011 and 2012 lows.

Nortech Systems' Properties And Profits Offered For Free

Nortech Systems (NSYS) is a contract manufacturer of electronic products such as circuit boards and medical devices. The company's customers are original equipment manufacturers (OEMs) in industrial, medical and aerospace/defense markets, in order of importance. The company serves its customers through its facilities in both the US and Mexico.

This is not a glamour industry in any way. The key success factors for electronic manufacturing services (EMS) are efficiency and low cost. But it is often in the boring and mundane industries that the deepest value can be found, particularly when it comes to small caps. Read more...

The Art of Profitability

PlanMaestro of Variant Perceptions recommended the book The Art of Profitability, and I loved it.

Obvious Adams

What it takes many writers hundreds of pages to say, Robert Updegraff can do in just a few. His book, Obvious Adams, is just seventy pages long, but its worldly wisdom could fill an encyclopedia.

The Unwinding

In The Unwinding, George Packer makes his case that America has begun to unwind from its apparent glory days in the 1960's.

Strayer Shines In The For-Profit Black Hole

A few short months ago, the negativity in for-profit stocks appeared to be at a peak. But many of the issues have hair on them, so even though I wanted exposure at those appealing price levels, I couldn't get comfortable accepting many of the individual risks. So as discussed here, I took a basket approach. That is, small positions in a lot of hated firms. Since then, many of those issues have exploded upward in price, as my timing was pretty lucky. There is at least one notable exception, however; shares of Strayer University are even lower now than they were then. Read more...

Battle Over Genesis Land's Board

If you follow Genesis Land (GDC), your head may be spinning by now. It's almost every day now that the current board and the activists trying to take it over are claiming some sort of injustice permeated by the other side. (To watch this battle in real-time, sign up for filing notifications for GDC here.) But surely, behind all the "Our directors are superior to yours" puffery, there are some differences in how each group would run the company differently.

To get to the bottom of this question, I had a conversation with Stephen Griggs, the CEO of Smoothwater Capital, the firm looking to upend GDC's current board:

Alco Stores Gets Bought Out

In the last two years and change, Alco Stores has been brought up on this site five separate times. Each time, the large discount at which the company traded relative to its net current assets was brought up. Last week, the price of the company's shares soared 60% as the company received a friendly buyout offer.

Beating The Street by Peter Lynch

Famed investor Peter Lynch took the Magellan Fund from $18 million in 1977 (when he took charge) to $18 billion when he resigned in 1990, posting a 29% average annual return in the process. The way Lynch achieved those returns is discussed in his book, Beating The Street.

Great Canadian Gaming: Wide Moat, Cheap Price

Warren Buffett has made much of his fortune by investing in companies with wide moats in periods during which they traded at reasonable prices. Unfortunately, the run-up in the prices of US stocks has made finding such companies at reasonable prices exceedingly difficult at the present time. The Canadian market, however, currently hovers not too far from its 2009 highs, and remains well below its highs from 2011. As a result, the long-term investor is likely to find more bargains meeting the wide-moat/reasonable-price criteria. Casino operator Great Canadian Gaming (GC) appears to be a terrific example. Read more...

PineTree Capital's Debt In Free Fall, Now Cheap

Canadian investment firm Pinetree Capital (PNPFF.PK) has been a destroyer of capital over the last few years. Consider the following chart depicting the company's Net Asset Value (NAV) over the last decade: Read more...

Aastra Management Does It Again

I raved about Aastra's management in an article I wrote about two years ago in which I highlighted the stock. Since then, the company's primary market (Europe) has only gotten weaker. But shareholders have done extremely well, amassing gains of over 75%. How is this possible? A good chunk of the credit has to go to management.

Strategic Logic

Strategic Logic is one of the best books I've read in a long time. I'd compare it to Greenwald's Competition Demystified in terms of both subject matter and quality. I would say it is extremely useful for two specific groups: value investors and entrepreneurs.

IGOI'ng To Where The Puck Is Going To Be

Just three months ago, the stenchy shares of iGo were brought up on this site as a potential value investment. Today, those shares smell almost 40% better, even though the company's operations have only gotten worse.

Mathletics

I believe the sports media to be as misguided as the financial media. They both tend to ignore the role of luck/chance in outcomes, attributing causes and effects in wonky and often contradictory ways. But as you can find a lot of smart guys in finance who understand the challenges of separating out the skill from the luck, so you can find smart writers about sports who are doing the same. To that end, I became interested in reading Mathletics, which purports to explore counter-intuitive insights into the world of sports.

Commercially Trusting in PMC's Assets

PMC Commercial Trust was first brought up on this site in 2010, and then again in 2012. The company routinely traded at a discount of 30%+ to its net asset value, giving deep value investors the opportunity to buy a company that paid a high single-digit yield, and to do so while protecting one's principal.

The Shipping Man

Value investor Monish Pabrai recommends The Shipping Man, for those looking to learn about the shipping industry. It's a novel, unlike the vast majority of the books profiled on this site, about a hedge fund manager who knows nothing about shipping, but learns the ropes through both counsel and by experience. This setup frequently reminded me of The Goal, an operations management novel which I highly recommend.

Karsan Value Funds: 2013 Q2 Results

Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site

The Great Rebalancing

The symptoms of the Great Recession are by now well-understood. Housing markets rocketed to obscene levels; loans were made to borrowers who could not repay. But conditions surely existed for such events to occur prior to the past decade, so why didn't they? In The Great Rebalancing, Michael Pettis attributes the cause of the recession to an oft-ignored meme: international trade imbalances.

The Success Equation

We love to explain why something happened. The problem is, our explanations often have no basis in fact. For example, when the market rises or falls, a number of explanations are offered up as to why...but how do we know they're real? When a pro-sports team wins a game, reporters chalk it up to the winning team having superior grit, intensity and desire. Are they right? How do we know?

Unfortunately, these narratives are often wrong because they gloss over an element that plays a large role in regulating outcomes in the short-term: luck. In The Success Equation, Michael Mauboussin does his best to untangle the luck from the skill, to help us improve our decision-making processes.

Investing Between The Lines

I was really looking forward to reading Investing Between The Lines. I think it's very important to try to understand management's intentions, and any book that purports to offer some insight in this regard is worth considering. Furthermore, the book was recommended by none other than Warren Buffett in his most recent shareholder letter, making it a no-brainer addition to the reading list. Was I ever disappointed.

Premier Returns...Hopefully

Should anything ever happen to me, readers of this blog wouldn't miss a beat in terms of Stock Ideas. All you would have to do is follow Whopper Investments, who independently writes about many of the same stocks I do. For the second week in a row now, we have come out with new articles about the exact same company. This week's stock: Premier Exhibitions (PRXI).

The Power Of Productivity

When a country's GDP stops growing or starts glowing more slowly, the focus is generally placed on macroeconomic policy and fiscal spending. But it's not blind GDP growth that leads to our wealth. After all, one can increase GDP by borrowing and spending on just about anything, even if it does nothing to increase wealth. (Some examples include: starting a war, building a city that sits unoccupied, digging holes in the ground and then filling them back up.)

A society's wealth, on the other hand, comes from its ability to do more with less: to find (or copy) more efficient ways to do what it is we want to do. Why is it that some countries are able to create so much more with its workers than others? In The Power of Productivity, William Lewis takes the reader through a tour of several countries, both rich and poor, and a multitude of industries to explain current wealth disparities.

Conventional wisdom

Analyzing And Investing In Community Banks

When the stocks in your universe are no longer as undervalued as they used to be, you *could* lower your standards and keep investing. Alternatively, you could expand your universe. That's what I'm trying to do, as I dip my foot into the financials pool. Reading David Moore's book, Analyzing and Investing in Community Banks, was a helpful step in this process.

Dialed In To FTE

It has become a lot harder to find hated names on the public exchanges. As the rising tide of the market has lifted many sectors, long-term value investors are sitting on growing cash positions, lusting for the long-gone pessimism of 2009. Read more...

More Trannies For You

Great news for investors! Another source of free conference call transcripts has emerged, over at Earnings Impact. They assure me that they "will

Subscribers: Take Note

My site's statistics tell me that several hundred of you still keep up with this site via Google Reader. Unfortunately, in less than a month, Google Reader is shutting down. If you still want access to the content on this site

Clash of the Cultures

John Bogle created the first index fund, back in 1975. As the founder of Vanguard and its CEO over a long tenure, he made a career out of making it cheaper for investors to share in the wealth generated by capitalism. Unfortunately, the mutual fund business has taken a turn for the worse in recent decades. In Clash of the Cultures, Bogle sounds off on the industry he helped make enormous, as he believes investors are getting the short end of the stick.

The Checklist Manifesto

Yeah, it's a book about checklists. Sounds ridiculous, right? Well, to me as well. But it felt like half of my Twitter feed was recommending it, so I finally got around to reading it. I'm glad I did.

Cash Burning A Hole In Your Pocket? Jump In A LAKE

It has been a disastrous year for Lakeland Industries (LAKE), and its stock price reflects this. While the rest of the market reaches for new highs, shares of Lakeland are getting bent over; shares are down 70% from their 2012 highs! But has the market overreacted?

A Universe From Nothing

I recently had a chance to read A Universe From Nothing, a Charlie Munger book recommendation.

On Selling Microsoft

A few years ago, I recommended Microsoft (MSFT) as a potential value investment. Since then, this cash cow has continued to generate enormous returns on its capital. But two unrelated developments now make it a 'sell' candidate in my opinion. Read more...

Manhattan Bridge To Somewhere

The oldest member of this site's Stock Ideas page is Manhattan Bridge Capital. In the last six months, however, this company has seen its shares rise some 65%! As a result, it becomes the latest stock to move to the Value In Action page.

The Charisma Myth

Charisma is something non-founder CEOs are simply born with...or is it? Most people believe CEOs rise to the top of their fields because of some innate quality that makes people follow them. But Olivia Cabane argues that charisma is learned; some may pick it up more naturally, but with the right tools anyone can learn it. In The Charisma Myth, she describes how.

Cisco: Let Me See That LONG

Cisco has a dominant market share in an industry where scale is advantage. Considering this, its market price a couple of years ago was laughable. But it only looks laughable in retrospect. When I brought up the stock as a potential investment at that time, though commenters on this site generally agreed that the company was undervalued, commenters throughout the rest of the web (e.g. through Seeking Alpha) saw the company through Mr. Market's eyes. Here are some of the bewildering comments I received after arguing the stock is undervalued:

IFON You Up With A Deal

InfoSonics (IFON) was already a deep net-net when it reported results earlier this week. But after reporting an EPS loss of 5 cents, the shares were pulverized, causing the company to lose almost one-third of its market cap, or 16 cents per share. Blood in the streets.

My Years With General Motors

Alfred Sloan became CEO of General Motors in 1923, and stayed on for several decades. In that time, he transformed GM from a rag-tag collection of unfocused, poorly-performing businesses into the largest company in the world. In My Years With General Motors, he discusses how he did it. Bill Gates calls his book "[P]robably the best book to read if you want to read only one book about business."

Hammond Manufactures Value

Hammond Manufacturing (HMM.A) makes products like transformers, racks, enclosures and casing for the electrical products industry. You might expect a company in this industry to barely earn its cost of capital - and you'd be right. What you might not expect is that this consistently profitable company is a net-net and trades barely over 1/3 of it's book value!

hhgregg Management Rips Off Shareholders

hhgregg has always struck me as a rather shareholder-friendly company. So it caught me off-guard when hhgregg's management decided to re-price its underwater options. Such actions are a huge red flag for investors.

Alco-Stores: Large Shareholder Disappears

As previously discussed on this site, shares of Alco-Stores (ALCS) trade at a deep discount to the company's net current assets. While that discount started to narrow late last year, it started to widen again over the last few months. At the same time, a large shareholder (who previously owned more than 15% of this illiquid stock), started to sell piecemeal! My guess is that the latter may have been causing the former.

Walking to Value

I recently watched Jim Chanos' April 5th presentation. He provides the latest update on his China thesis, including some great commentary in the Q&A session that follows the presentation...

Rise and Fall of the Third Reich

The Rise and Fall of the Third Reich is a book that all policy makers should read. It details the rise and fall of Adolf's leadership of Germany, including both the external (e.g. deficits, debt, The Depression) and internal (organization, oration, trickery) conditions that allowed him to thrive.

EZCorp As Pie

Though the rising market has definitely made it harder to find value, some companies nevertheless are falling through the cracks. I recently read a compelling case for investing in cash advance provider EZCorp here. The company trades with a P/E of 6 and debt that is offset by minority stakes in two publicly traded companies.

Solving the Ridley

Lately, some of the longest-standing names on the Stock Ideas page have been graduating to the Value In Action page. The latest stock to make this transition is now Ridley Inc, maker and distributor of animal feed products.

Canam: Sold

One of the longest-standing members of the Stock Ideas page is Canadian manufacturer Canam Group. Today, Canam trades near multi-year highs, and so I've sold out of my position.

Barbarians at the Gate

The LBO craze of the 1980s culminated in the massive buyout of RJR Nabisco in 1989. Barbarians at the Gate takes the reader through the twists and turns that finally led to the consummation of this deal.

Karsan Value Funds: 2013 Q1 Results

Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site.

GameStop: Still In Business?

GameStop (GME) has been one of the more controversial stock ideas I've written up. Today, however, the stock is up almost 70% since it was first written up on this site. As such, GameStop becomes the latest company to join this site's Value In Action page.

Right from my first article on this company some three years ago (all of them are browse-able here), I began to receive a number of bearish comments on the stock. Short interest on this stock has reached upwards of 50%, with the very smart Jim Chanos among them. As a result, I think this investment illustrates some very important lessons that every value investor should remember.

iGo Buy This Stock; Where Do *You* Go?

Shares of iGo (IGOI) fell a whopping 35% yesterday, as the market soured on the company's latest financials and an announcement that a partnership with Texas Instruments (TXN) will not go forward. Value investors who are sitting on bloated cash positions thanks to the market's runup should probably take a close look at this one.

Edumacation

As for-profit education stocks have continued to fall in the face of market strength, I have become more and more interested in this sector. But every company I've come across in this space seems to have a at least one risk I'm not comfortable with. For example, Career Education Corp is dirt cheap, but could face huge liabilities from a previous life. Corinthian Colleges is also dirt cheap, but may have to seriously dilute its shareholders if a regulatory decision doesn't go its way.

Chocolates On The Pillow Aren't Enough

The Chairman of Loews Hotels tells the reader how to please the customer in Chocolates On The Pillow Aren't Enough. As the long-time chief executive of the luxury hotel chain, Tisch likely has a number of insights he can share about how Loews has identified ways to further connect with its customers and their wallets.

G. Willi Rises

Just six months ago, G. Willi-Food was brought up on this site as a potential value investment. The stock has since rallied some 65%, offering investors an excellent exit opportunity.

Repeatability by Zook

Chris Zook's Repeatability may be the worst business book I've ever read. It's not that this book about building enduring businesses did not make sense. Just the opposite, in fact; it made perfect sense. But to me that's why it is so potentially dangerous. It draws its conclusions (and therefore its advice) erroneously, in my opinion. But by making its conclusions plausible, it can probably convince a lot of readers to follow courses that may not be justified.

Distressed Debt Analysis

Equities are not the only area in which the principles of value investing apply. Investors of a value mindset can also take part in the debt market. But for most of the public debt that's out there, potential upside is low (how much above par can a company's debt trade? Not much). The situation is different for distressed debt, where securities can trade well below par. An investor who finds mis-priced distressed debt securities can therefore profit to a similar extent as an equity investor.

But distressed debt investing appears much more complicated than equity investing. Not only does one have to understand the business well enough to estimate its earnings power (as the equity investor must do), one must also understand the legal issues and motives of various other stakeholders. To help me understand these and other issues related to investing in debt from a value point of view, I recently read Distressed Debt Analysis by Moyer, which is kind of like a Securities Analysis for debt investors.

Value Fail: SuperValu

When I brought up SuperValu (SVU) as a potential value investment a few years ago, many of you warned me against it. I wish I had listened! The grocer got squeezed on all fronts, including but not limited to: food inflation, competition, and perhaps most importantly, debt.

Getting Schooled By Career Education Corp

The for-profit education sector has been hit hard by the market, and for good reason. This industry utilized dishonest marketing practices and drove its enormous growth using massive amounts of federal funding that was rubber stamped by public servants asleep at the wheel. But the party's now over; new rules and additional oversight have pushed many companies in this sector into the red, causing massive losses. But has the market overreacted? Perhaps in some cases. For example, Career Education Corp (NASDAQ: CECO) trades at a 43% discount to its net cash position!

Heidrick & Struggles

I like buying into businesses with variable cost structures. These kinds of companies have somewhat of a protected downside; when things go south, costs can be removed such that the firm may remain profitable, subject to a period of adjustment. Executive search firm Heidrick & Struggles (HSII), which saw its shares fall 20% on Tuesday, appears to have such a model.

Filings Notification (Canada and US)

I'm excited to announce some new features on conferencecalltranscripts.org. The grandest new feature is the ability for users to receive notifications not just when a company has a new transcript, but when it issues a new filing as well. This applies for Canadian and US companies for now. As far as I know, this is the only place where you can get free notifications when Canadian-listed companies make regulatory filings; hopefully you find this feature as useful as I have! Click the "Get Notified" tab on the homepage to create/edit your portfolio (or click here) and select whether you want to receive notifications on filings.

In addition, some functionality was added so that you can opt to receive notifications on transcripts only when the transcript is free. Quite a few event transcripts cost more than $100 to purchase, and if you don't want to be notified when such a transcript exists, you now have that option on your portfolio page.

And finally, you can now fit (hopefully?) your entire portfolio onto the site. Restrictions have been removed such that you can now add up to 50 companies into your portfolio.

So to summarize, conferencecalltranscripts.org is now a site where you can view company filings and earnings call transcripts (no matter where they may be on the web), get notified when a new transcript/filing is issued (for up to 50 companies), and choose to receive notifications only when free content is available.

As always, if you have any more suggestions on how the site could be more useful to you, please let me know!

Why Nations Fail

I recently had the pleasure of reading Why Nations Fail by Daron Acemoglu. It is an excellent book that I recommend to everyone interested in what makes some states wealthy and others poor and battle-torn.

USA Mobility: Cheap, But For How Long?

Though the market has risen considerably over the last few months, not every stock has been lifted by the tide. Shares of cash-cow USA Mobility (USMO) have flat-lined. As cash has continued to accrue, the valuation has become more compelling. USA Mobility now appears on the Magic Formula screener, both because it is cheap (P/E of 6), and because it generates strong returns on capital (2011 ROE of 40%).

Bloopers at Blyth

Herbalife (HLF) has been under the microscope lately as large money managers have taken turns offering their opinions (backed by capital) of where the stock is going. But all multi-level marketing (MLM) firms have been affected, as if you buy into the short thesis of Herbalife, it's not a stretch to envision the same circumstances taking down a company like Blyth (BTH), which sells a similar product (Visalus, for weight loss) in a similar way (MLM) to the same market.

But while Herbalife got a boost from all the longs that jumped in after its price fell, shares of Blyth aren't far from their 52-week lows, despite the market run-up. Shares have been pushed down by short-sellers; in fact, Blyth leads the market in terms of short-interest, with short-interest representing a whopping 63% of its float! But this is a profitable, 35 year-old company that trades at a P/E under 7!

My Dell Went Mmm

On May 23rd 2012, I was feeling pretty giddy about a purchase I had made in shares of Dell, tweeting:

"Caught a falling knife by the name of $DELL today. In a few yrs, expecting cuts healed and new knife to be used to open bags of money"

Such overconfidence is strongly discouraged, and will often get you killed.

Artio Shows You The Assets

Four short months ago, Artio was discussed on this site as a potential value investment. As the stock continued to fall, three short months ago I tweeted the following:

"Cash-flow positive money-manager Artio now trades for LESS than its net cash and investments"

One short day ago, Artio accepted an offer to be bought out for almost 15% more than its book value, which is about 50% higher than where it was trading at the time of the tweet. This was a kind of situation from which only a value investor could make money, thus offering a few lessons.

The Box

Levinson's The Box is a thorough guide to the history of the shipping container. You might think this would make for extremely dry reading,

Experiments Leading To Profits

"On the subject of economies of scale, I find chain stores quite interesting. Just think about it...You get a whole bunch of little laboratories out there in which you can conduct experiments" - Charlie Munger

Certain former market darlings are having a rough go of it these days. Though Mr. Market's mood has turned decidedly positive over the last 3 months, certain retailers remain mired at cyclical lows. The market has all but written off some of the country's largest electronics retailers, as they have seen declining sales and profits as a seemingly non-profit competitor continues to expand its reach.

But Mr. Market's outlook may be grossly wrong, having under-estimated the advantages some of these companies have combined with ROIC mean reversion. Now that the industry faces challenges, you are likely to see some of these advantages come to light once again.

TAT Technologies Rises

Stocks trading at discounts to their intrinsic values are harder to come by nowadays, but stocks rising towards their intrinsic values are more easily found. One example is TAT Technologies (TATT), which has traded at a discount to its net current assets for the better part of the last 5 years. TAT has been discussed on this site many times, most recently about 4 months ago. Since then, the stock is up more than 65%.

The Signal And The Noise

Nate Silver made headlines when he famously out-predicted much of the field during the recent Presidential race; he accurately predicted the outcome in all fifty states. But the truth is, it wasn't the first time he made headlines with successful forecasts.

While value investors know not to rely on forecasts (as discussed many times on this site), Silver has made a career out of it. In his book, The Signal and The Noise, he discusses the challenges facing forecasters and the ways in which forecasting can be improved.

Chaos Or Orderly?

Chaos Theory by Robert Murphy really tests the limits of how open your mind is. The book forces the reader to think outside the box that is the years of conditioning that have shaped our beliefs in the necessity of organized government.

Apple As The New RIM

As former market darling Apple (AAPL) has seen its stock price continue to fall, it has increasingly piqued the interest of value investors. At a market cap of $450 billion and twelve-month earnings of over $40 billion, Apple's P/E is barely over 10. Considering the company has no debt and cash equivalents of almost $140 billion, the valuation appears very compelling indeed.

Extremely Deceptive Chart

This is one of the most deceptive charts I've ever seen, straight out of the proxy statement of a company called Kulicke and Soffa Industries (KLIC):

Sangoma Drops Like A Rock

As the market advances, it becomes more difficult to find value. Individual stocks are rising, offering investors opportunities to cash out. One stock bucking this trend is Sangoma (STC), a profitable net-net which has lost one third of its value since November.

The Sleuth Investor

I first heard about The Sleuth Investor (a book by Avner Mandelman) through the valuable value sites csinvesting and Oddball Stocks. Two days ago, I discussed a book by a value investor who believes in the superiority of a purely quantitative approach to investing. While The Sleuth Investor is also by a value investor, it is in many ways the exact opposite; the author believes in the scuttlebutt approach to value investing, and offers some of his advanced techniques to the reader.

Quantitative Value

I haven't read it yet, but I very much look forward to reading the new book Quantitative Value By Tobias Carlisle. For those of you unfamiliar with this title, the book is written by the author of the value site Greenbackd, an extremely useful resource for value investors.

Unisys: All the Makings of Value

Global IT company Unisys has all the makings of a value stock. Its net cash position of $330 million provides safety in the event of a downturn and offers strong downside protection on the company's $760 million market cap. In recent years, the company has managed annual income of $200 million; it will not earn as much this year thanks to cutbacks in government spending, but the company remains solidly profitable.

Karsan Value Funds: 2012 Q4 Results

Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site

Market Manipulation, or Perfectly Innocent?

A couple of weeks ago, we saw what appears to be a mistaken filing on the part of a shareholder of Meade. Today, we take a look at another strange filing from a large shareholder of the company.