Wednesday, March 27, 2013


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.

Friday, March 22, 2013

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.

Tuesday, March 19, 2013

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.

Thursday, March 14, 2013

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.

Wednesday, March 13, 2013

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.

Friday, March 8, 2013

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.

Wednesday, March 6, 2013

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!

Friday, March 1, 2013

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.