Holding Company At A Discount

When a holding company for a group of businesses or a closed-end mutual fund is trading at a discount to its holdings or to its book value, it is usually because there is a track record of poor capital allocation decisions at the company. But this is not always the case; sometimes discounts are just plain unwarranted, which could present compelling opportunities for value investors. Capital Southwest may be one example. It has been discussed on this site before, but while its price hasn't changed, its portfolio has continued to increase in price.

The Little Book That Builds Wealth: Chapter 5

Morningstar's equity research director authored this book on identifying companies with competitive advantages. Dorsey separates competitive advantages into four categories, providing a framework for understanding how wide a moat a company really has. The book is full of examples of companies Dorsey believes have moats, and the reasons why their moats are likely to last - or not!

The Little Book That Builds Wealth: Chapter 4

Morningstar's equity research director authored this book on identifying companies with competitive advantages. Dorsey separates competitive advantages into four categories, providing a framework for understanding how wide a moat a company really has. The book is full of examples of companies Dorsey believes have moats, and the reasons why their moats are likely to last - or not!

Incestuous Companies

Previously, stocks have been discussed on this site where it appeared that the founder's descendant was destroying the value of the company's remarkable collection of assets. Unfortunately, this type of occurrence is all too common among firms where management succession is chosen based on blood rather than merit.

Aztec: Just How Long Is Your...Term?

As value investors, we know we are supposed to think long-term. But just how long is that term supposed to be? Some are probably looking for price appreciation just one year out, whereas others might be looking three years, five years or even ten years out. With a company called Aztec Land and Cattle, however, you might be looking at significant appreciation about 30 years out. Oddball Stocks has an intriguing post on this company that owns a ton of acres in Arizona but trades as if each acre of that land is worth only $49. The company has a development plan that may take years or even decades to bear fruit, but where the payoff is likely to be large. Are you prepared to wait?

Telefonica A Long-Term Buy

Shares of global telecom giant Telefonica (TEF) have been decimated lately as most Spanish stocks (even those cross-listed in the U.S. like Telefonica) have taken a beating due to the economic crisis in Spain. But while Spain does suffer from a recessionary environment and an unemployment rate of 23%, the market has likely overreacted when it comes to Telefonica: its shares are down 43% in the last year, even though only 30% of the company's profits come from Spain, whereas over half of the company's profits come from a healthily growing Latin American market.
Read more...

Remember The Bad

A fascinating article in the NY Times describes why we experience loss aversion, a tendency that appears to play a large role in how prices move in the market.