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 Strategies & Market Trends | Value Investing

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To: E_K_S who wrote (45304)11/6/2011 11:46:00 AM
From: tonto   of 51626
 
They also have outstanding aggregate reserves and are a national leader.

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To: Madharry who wrote (45307)11/6/2011 2:19:50 PM
From: Spekulatius   of 51626
 
re NS, NSH
>>would you say that the current dividend is safe for the next decade and is likely to increase some?<<

A decade is a long time. I think a distribution cut is only possible if Asphalt refining margins go from bad to worse (Asphalt is ~20% of their cash flow) or current expansion project's don't pan out or something else happens that I can't foresee (rapidly rising interest rates).

I believe the most likely scenario is slowly (<5%/annually) rising distributions for NS and more rapidiy (5-10%) rising distributions for NSH. NSH clearly carries higher risk but also has a higher reward. I think there is also a significant chance that NS and NSH are going to be combined at some point (Similar to what happened at Magellan or EPD/EPE), which probably results in windfall for NSH.

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To: Rainmaker888 who wrote (45309)11/6/2011 4:51:55 PM
From: Paul Senior1 Recommendation   of 51626
 
Speaking for myself, I hold this view:

The universe of "high quality large caps" is small. The universe of small caps is far larger.

There seems to me always to be many more opportunities to buy cheap small caps than there are opportunities to buy cheap or cheaper-than-usual "high quality large caps".

What makes "high quality large caps" get cheap? A missed earnings report. A brokerage downgrade. An unforeseen event - building destroyed, government investigation, legal assault, weather issue. These things though are, imo, generally viewed as temporary -- after all we're talking about the big and strong companies --- "high quality large caps". What makes these stocks get really cheap? Fear. Market panic. The entire market dropping.

Therefore it's my opinion cheap small caps can usually be found and bought. But to be have an opportunity to buy from among a number of "high quality large caps" when this latter universe is really cheap --- that is unusual. And to be taken advantage of by investors, esp. those who are Buffett moat-seeking types.

That is what you are seeing here from some posters. "High quality large caps" seldom mentioned as value buys, recently now being reported as being purchases.

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To: Rainmaker888 who wrote (45309)11/6/2011 7:59:13 PM
From: J Mako2 Recommendations   of 51626
 
We can understand this by looking at an (hypothetical) extreme case.

Say T-bond yield is 5% at the moment. Suddenly, one day, your neighbor got into a nasty divorce settlement and needs cash quick. He wants to sell you all his T-bond at 15% yield.

Would you jump right into it instead of putting your money into other investments? Why?

Instead of thinking in terms of large caps vs small caps, think risk, certainty of cashflow, certainty of valuation and discrepancy between price and value.

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To: Sergio H who wrote (45290)11/6/2011 8:01:36 PM
From: J Mako   of 51626
 
Thanks Sergio!

I didn't know Moodys's rates are freely available on its web.

Cheers.

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To: Spekulatius who wrote (45311)11/7/2011 1:09:06 AM
From: Madharry1 Recommendation   of 51626
 
thank you . I will investigate furthur.

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To: Paul Senior who wrote (45312)11/7/2011 1:27:06 AM
From: Madharry   of 51626
 
OT would anyone like to guess who had the highest weighing in the xlf as of 11/4/11 ? if you get it right, give yourself a pat on the back for your knowledge of financial markets.

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To: Paul Senior who wrote (45312)11/7/2011 1:33:23 AM
From: Madharry   of 51626
 
What i wonder about some of these large caps is how easily can they expatriate their off shore profits.
This friend of mine used to be the manager of an austalian subsidiary of a big pharma company. and he told me that back in the day they would throw these lavish parties because they couldnt take the money out of the country anyway. Someone i follow has recommended that I buy cds in a foreign country paying a high rate of return but one of my concerns besides confiscation is the possiblity that i can put the money in but may not be able to take it out.

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To: Paul Senior who wrote (45173)11/7/2011 1:39:02 AM
From: Madharry   of 51626
 
makes for exciting reading : ( i think this is still my single biggest investment)


seekingalpha.com 

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To: Paul Senior who wrote (45312)11/7/2011 9:26:37 AM
From: Rainmaker888   of 51626
 
Great, explanation, many thanks Paul.

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