How much weight do you guys put into which direction the overall market might go when you're considering purchasing a "value stock." If you think it's underpriced, are you generally happy to buy it regardless of market sentiment and then add even more to your position if it follows the rest of the market down?

For example, I've been watching tons and tons of high yield stocks get clobbered since may (REITs, MLPs, Mining stocks etc..) and I would like to enter positions but I'm overall bearish for the market going forward and so far have been hesitant to pull the trigger.

If these companies I'm following closely (NLY for example) have lost 40%+ while the market has trended upwards...how much more downside room is there if the overall market was too reverse to the downside? Am I correct in thinking that $ that can move the market (institutions) have already exited these positions and therefore wouldn't fall nearly as much as the broad market?

I guess I'm asking If I'm thinking in the right direction. I look for sectors / asset classes totally out of favor (and in this case the extra benefit of high yield) and then look for index funds or time willing, relevant companies. So as you can imagine my most used screener is 52 Week Low companies.

Another example of assets that peak my contrarian tendacy right now is Bonds. I sold out of Bonds in Late spring and have followed them closely since. How do you determine when a broad asset class has sold off enough?

Do all my questions come down to time-horizons? I guess when I have income again (student now) I can take better advantage of these contrarian views and just buy the falling crap and Hold it until it returns to favor? Once again I'm very interested at the moment because the "falling crap" happens to have rediculous yields attached to it. So in my mind, I'm getting a premium for holding this stuff until it returns to favor.

See buffets speech to students on YouTube.

If you are a long term value investor you buy when its cheap. He said he doesn't take macro into account at all because good businesses can handle any economy.

With that said, I doubt he was a buyer the days around when they lowered the US credit rating. Some things are just common sense.

Id consider buying but leaving some ammo to average down as it drops if u think its a good buy and u don't see a huge green spike soon.

this bet isnt dependent on keystone. suncor has been cheapest big oil for a while now. also fully integrated. we've owned them from 30 for about a year. you wont make a fortune on it but it will probably go to 60 by the end of the decade

yeah i found a british drillbit manufacturer that is selling like 2x 2012 earnings (no special items or anything) and less then 30% book value with little debt. Book value is almost all tangible assets too. They said in their annual report that they are preparing for rougher times now. But how long do these down cycles last? Stock seems soo insanely cheap. Its a microcap obv. Untill 2012 all their cash from operations went into capital exp.

It depends. If they are cheap enough that you won't mind (are planning on) piling more in if they get cheaper (and your reasons for thinking they are undervalued haven't changed), then you can ignore sentiment. I just did that with mortgage reits and municipal bonds over the last few days.

If you have a short time horizon, it is not a good idea. If something has just fallen in price for good reason (like it is a crappy business) and that good reason is likely to continue, it is not a good idea. If you are going to poop yourself if what you buy drops another 20%, it is not a good idea.

Undervalued stuff can continue to get more undervalued and sometimes the market is right about a company's or industry's future prospects.

I think you could buy the most undervalued asset and put options on the most overvalued assets. I was thinking some put options on TLT or some stock with p/e of 100.

Looks like the judge upheld the 1.17 billion in damages against MRVL. Oh well, regardless of the outcome it was going to be appealed to the Fed Circ. anyway which actually knows things about patents.

Still going to hold for awhile.

thoughts? I didnt really study gillette or intel, so i dont know if their moat is as strong. Intel got their moat from the constant need of faster chips, but now that need is gone (or not nearly as strong) they are slowly losing that moat. But gillette still has theirs. But there obviously is way less brand loyalty in infrared technology, so it seems FLIR is more similar to intel, so their moat can never be as strong? As there seems to be less need for constant improvement in technology in the infrared industry.

Finally cut GRVY for a 30% loss. All catalysts are spent and it looks like RO2 was a big flop. No more play left in it.

Bought MSN @ $1.70, and ACW @ $5.47. From seeing ahnuld's posts, I think ACW is a very ahnuld-esque investment so I will give it a try even though it's not really my cup of tea.

Current holdings: AGO, PRSC, MRVL, AAPL, REGI, ACAS, MSN, ACW.

What do you think about Gundlach saying that 530 is a ceiling for AAPL and that all of the easy money has been made from 425?

I think he's right. Naj's January thesis clearly did not play out.
I'm waiting for the stock to pop over 500 at either earnings or at the new product release on the 10th and then I will sell it. I'm up 12% in 8 months, so I can't really complain, and I already have a replacement holding in mind.

I am also very curious as to what ahnuld would think about ACW.

DWA has had an amazing 6 months, almost up 100%. With Disney paying 7.4 billion for Pixar and assuming that DWA is worth half of Pixar then DWA's current valuation of 2.4 billion still has some room to run...

It sounded like you were wanting to buy more around a 1.2 billion valuation for DWA earlier this year. Good pick.

How much more room to run and why?

I brought ACW up to him a few weeks ago. I think he's looking into them currently so hopefully he gets back. Coliseum currently has a fairly large bet on ACW; however, unlike their other large holdings (RURL, Benihana, LHCG, PRSC) they are currently not on the board of ACW. The stake appears to be passive for now but that could obviously change.

I took a quick look at them but nothing really stood out to me. Their F P/E appears cheap and the company has a lot of expensive debt at the moment. Coliseum moved to restructure debt at RURL and PRSC so that could be a play here. I'm waiting to see if Coliseum tries to get a seat on the board.

If you look at who is holding and buying, I think Coliseum wants to remain a passive investor in view of the more interesting activist entities that are doing their thing (Littlejohn, Cetus - which is also Littlejohn, and Sankaty - which is Bain capital).

The interesting takeaways are that Littlejohn has a member on the board, Sankaty is the underwriter of the present debt of ACW as well as a major shareholder, and the investment is luring a lot of capital from value investing funds like Coliseum and also Frontier Capital Management, which just bought a 5% stake in June.

If you look at Littlejohn's history, you find that 1) they specialize in turning companies like ACW around, and 2) when they invest over 30 mil, those companies get sold within a time frame of 2-5 years They have bought over 10 million shares with the combined Cetus and Littlejohn investments, and they must really have a knack for this thing for Coliseum et al. to suddenly buy huge stakes into the company even though there isn't really any news. Nobody is looking at this thing on motley fool, SA or any of the other lol armchair analyst sites. So either all these value investment funds are horrifically wrong for riding Littlejohn's jock since there is not much in terms of margin of safety, or Littlejohn will get this thing sold and everyone wants a piece of that. I'm leaning towards the latter since presumably these people are savvy and would not make such outlandish buyins without expecting something big.

Management's goal is a double digit EBITDA margin, which is 60-75 mil on expected revenues of 600-650 mil after their recent sale of one of their divisions. At first glance, it looks like they're going to get it.

This is not accurate, I sold 50% of my position avg price $13.25 (maybe lucky me?) . But I'm still holding a significant position. The judge did not uphold the damages -- that was an typo/mistake by reuters. The judge denied Marvell a mistrial, but she has not yet ruled on the request to reduce damages.

Oh. Laco got the $57.1 from Shingle -- but of course no more consulting/management fees. they're pretty much done with managing indian casinos.

Anyone getting into JC Penny? Ever since Bill Ackman dumped his shares, hedge funds started piling in and I just saw last night that Mark Cuban bought a million shares a few days ago.

Im long FIATY. Probably a little speculative but i like it.

Any thoughts on GRVY ? They are trading at less than cash value, but I have no ideas about the likelihood of them blowing it all or their game actually taking off.

Ok. I actually disagree with this. In my mind there are three kinds of moats...

1) Moats that exist because it would take a lot of money to compete with the company we are interested in.


2) Moats that would require a great deal of money spent over a reasonably long length of time.

3) Moats that would require a massive amount of time and money will basically not accelerate the process. (Vast amounts of money are often required)


The first kind of moat is the weakest because should the revenue model shift and make the business type more profitable big firms could easily arrive to compete.

The second kind of moat is somewhat common and often comes from R&D requirements to enter the field.

The third kind is very rare and very very powerful. Off the top of my head I can think of only two companies in the world that very clearly have this kind of advantage: Google and Coke. Coke has such market penetration, marketing clout, and distribution relationships combined with massive gross margins that they are very nearly unassailable. (And any real attempt to compete with Coke they have proven capable of repelling. Pepsi is no pushover, but they have lost the beverage war but good) Google has an algorithm that took thousands of man years of the best people money could buy to create... That they are trying as hard as they can to make better every single day.


If you have to buy a stock and hold it for 30 years (an absurdity) a really good start would probably be buying a company with the third kind of moat. They tend to be considerably safer than houses imo.

I gave up on GRVY and took a 30% loss. The last quarterly report indicates that RO2 is not doing well even in the americas and europe.

Also I think it's a value trap since I don't really see how the value is going to be unlocked as long as Gung-Ho controls 60% of the shares and doesn't care about the stock price.

Sold AAPL for a 12% gain over 7 months.
Bought RGA.

Current holdings: AGO, PRSC, MRVL, RGA, REGI, ACAS, MSN, ACW.

I looked over the financial statements of both shld and jcp. I don't see anything good and no improvements. Hayman and Cuban are both from Texas as is JCP. Eddie recently took over Sears as CEO. 4Q gets all the action.

JCP is looking really bad. If they change their strategy back to discount model are the customers coming back? The old model seemed to be losing to better competitors anyway but the new strategy was a disaster. Seems like irreparable harm has been done to this company.

They have $1.5 billion in cash (from debt) and they put a bean counter back in (which is bullish). But the losses are so deep.

Myron E. (Mike) Ullman, III, chief executive officer of jcpenney, said, "Since I returned to jcpenney four months ago, we have moved quickly to stabilize our business - both financially and operationally - and we have made meaningful progress in important areas of the business. There are no quick fixes to correct the errors of the past. That said, we have identified the challenges, put solid plans in place to address them and have experienced and capable people in key roles to do so.

Online sales were down 2.2% from the same period last year - a sequential improvement of over 1700 basis points when compared to the first fiscal quarter of 2013."

17% gain is not too shabby.