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Strategies & Market Trends : Value Investing

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To: Bob Rudd who wrote (6858)4/20/1999 7:48:00 PM
From: Michael Burry  Read Replies (2) of 62493
Re: AMZN, AAPL, my port

Thanks. It's up again. Maybe I'll get a chance to short it a third time.

Today I messed around with my portfolio.

I'm out of Brazil. After liquidating 1/2 positions in Unibanco and Telesp Cellular a few points ago, I got out entirely today. Hopefully they'll get acutely undervalued again.

Also sold half my Mattel, half my Callaway and the remaining half of my Finish Line after their recent jumps. And I got out of Noble Drilling. I like all these but seems to me that they've all jumped for no good fundamental reason other than returning to near-fair valuation after steep undervaluation. This was my reasoning for getting out of Tricon Global, so watch these rocket ;0

And I'm out of BHP. Old Broken Hill was supposed to be a 50% gainer in two years, not three months. I'll take it.

What did I buy? Apple (AAPL).

First off, think about the market cap: 5.88 billion. For Apple. This is a company that I think has gotten its ducks in a row, and once it fights through all the resistance in the 30's and 40's can spring ever higher. One of those stocks we'll look back on and say, "I could've had it at 15X earnings, 6X operating cash flow." For value investors the interesting thing is the $11.36/share in cash net of debt. This means the enterprise itself is trading at just about 4X operating cash flow. The company is a cash machine of late, and is carrying virtually no inventory. This is a company that seems to me to have really righted itself. But the current investors are too concerned with every little $1 fluctuation to let it go higher. And the value investors are too scared away by the technology and/or hating to buy a stock that's doubled in the last few years. The enterprise is well under sales, and the company is under 3X book despite ROE IMO sustainable in the 20-30% range.

Still with about 23% cash to spend myself.


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