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   Strategies & Market TrendsValue Investing


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To: Robohogs who wrote (56678)1/18/2016 3:34:21 PM
From: Graham Osborn
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PSRs like PEs are getting misleading. If Company X has MC 100M and does 100M bond offering to buy Company Y resulting in double sales for consolidated Company XY, shareholders haven't gained any return on capital yet your PSR (assuming the stock doesn't move) is cut in half. For that reason I prefer EV/ Rev. Of course there is the cyclical nature of some businesses at play as well.

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To: Robohogs who wrote (56677)1/18/2016 3:41:59 PM
From: Graham Osborn
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I'm seeing the same thing. I did a screen today for MC > 1B, EV > 3*MC and these debt-laden stocks (including many large banks) are in a bear market every bit as bad as 08. The crisis everyone keeps worrying about is already half through here. However FANG, real estate, healthcare and other large pockets continue to carry the market. I'm not expecting a bounce off the 08 lows this time though, pessimist that I am ;)

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To: Paul Senior who wrote (56686)1/18/2016 4:36:06 PM
From: Touching
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Hi all, I'm new here. I practice value investing.
@Paul: what about CF? Did you had a look to the company? They are the biggest, with Yara, in the nitrogen field. In Q3 2015 they gave a pretty wide picture on geopolitical scenarios affecting the fertilizers in 2016, 2017, 2018 an how they are going to allocate cash.
ADM is a nice play. It does not pass my quantitative screen for moat, but it scream in my value screen as undervalued relatively to industry, sector, market and on a DCF projection basis ( price/fair value < 0.65 ). It has a nice risk/reward profile based on historic valuations as well.

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To: richardred who wrote (56687)1/18/2016 5:52:26 PM
From: Touching
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it looks like a nice play. if you can stomach the volatility it could generate very good returns. From the numbers profitability is top, margin are very good, the price is close or below fair value, growth prospects are good.
analyze very well the competitive advantages in terms of products, suppliers, customers, competitors

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To: Spekulatius who wrote (56684)1/18/2016 6:03:10 PM
From: Jurgis Bekepuris
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In the first part of the roundtable there's a lot of thrashing and tea leave reading very similar to this thread. If these guys were held accountable for their macro predictions, most of them would be out of jobs long ago. Cudos to Witmer and Gabelli who mostly did not get involved in the talking head seance.

The section on stock selections and ideas is more interesting. Yes, a bunch of ideas that have been mentioned here and CoBF.

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To: Paul Senior who wrote (56686)1/18/2016 7:16:18 PM
From: Investor2
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Hi Paul Senior. Hope you've been well in this "correction" environment.

What do you think about XOM or CVX from a valuation standpoint?

Thanks,

I2

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To: Jurgis Bekepuris who wrote (56692)1/18/2016 8:18:03 PM
From: Spekulatius
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The stock picking part is definitely more interesting than the macro part. I do think it is interesting what these guys are thinking in terms of macro, since they represent the big houses somewhat.

Other than that, I agree with buying when a stock appears to be cheap. However, I also try to take into account what the macro could look like and what it means for certain sectors. Value investors always seem to underestimate the headwinds that a bad macro (or micro) can create for a certain industry. For example, I thought that VALE @$15 looked really cheap, as it was close to book and has some of the lowest costs in the industry. But with Brazil and Iron ore prices going to the toilet simultaneously, the stock easily hits $2 and I am not sure it's attractive here. A very small position only, but still. Mistakes can get costly....

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To: Graham Osborn who wrote (56688)1/18/2016 9:37:50 PM
From: Robohogs
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I hate PSR as it does miss cap structure.

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To: Spekulatius who wrote (56694)1/18/2016 10:01:29 PM
From: Jurgis Bekepuris
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Other than that, I agree with buying when a stock appears to be cheap. However, I also try to take into account what the macro could look like and what it means for certain sectors. Value investors always seem to underestimate the headwinds that a bad macro (or micro) can create for a certain industry. For example, I thought that VALE @$15 looked really cheap, as it was close to book and has some of the lowest costs in the industry. But with Brazil and Iron ore prices going to the toilet simultaneously, the stock easily hits $2 and I am not sure it's attractive here.
I really don't want to get involved into macro-or-not-macro meta discussion.

However.

You are doing Monday morning quarterbacking with your VALE example. You know now that Brazil went to toilet and iron ore went too. But did you really have enough info to make macro call beforehand?

Same with oil. Now everybody "knows" that oil was supposed to go to $30. Where were all the experts when it was $100? OK, forget about that, where were they all when oil bounced to $60 last year?

Do you really think you can call macro events? If so, how about couple predictions from here (with time intervals and without vague hand waving), so we can learn how good you are?

Mike Burry is probably the only value investor who has made great macro calls. Buffett is pretty lousy on macro. Most other big name value investors are either macro-agnostic or underperforming or both. (Actually, nowadays, it's hard to find big name investors who long term outperform, but that's another discussion).

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To: Spekulatius who wrote (56684)1/18/2016 11:13:34 PM
From: Jurgis Bekepuris
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BTW, 2015 roundtable picks beat the market significantly if you discard the crazy permabears (Marc Faber and Felix Zulauf). This is surprising, since it's better result than a lot of mutuals, hedgies and overall famous investors.

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