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August, 2007: 11 19 26 28
Disclaimer - IMPORTANT - Read this first!
| Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing. |
8/11/07-Since the last entry (just before my vacation began), our Leapin' Lizards (LL) pick, MM, has been held over a year, and so it will be sold at the early market price Monday morning. It will be removed from the LL open positions portfolio, and its closed position info recorded, based on the 7/7/06 to early 8/13/07 per share performance. Through the close of trading on 8/10/07, after subtracting a commission (while not counting any dividends), MM has been up 46.61% in the past 12(+) months.
Since the last entry too, our Classic Value (CV) pick, PFE, has been held over a year, and so it will be sold at the early market price Monday morning. It will be removed from the CV open positions portfolio, and its closed position info recorded, based on the 7/13/06 to early 8/13/07 per share performance. Through the close of trading on 8/10/07, after subtracting a commission (while not counting any dividends), PFE has been up 4.30% in the past 12(+) months.
Also since the last entry, our Leapin' Lizards (LL) pick, AE, has been held over a year, and so it will be sold at the early market price Monday morning. It will be removed from the LL open positions portfolio, and its closed position info recorded, based on the 7/24/06 to early 8/13/07 per share performance. Through the close of trading on 8/10/07, after subtracting a commission (while not counting any dividends), AE has been down 35.59% in the past 12(+) months.
Since the last entry as well, our Leapin' Lizards (LL) pick, VLO, has also been held over a year, and so it will likewise be sold at the early market price Monday morning. It will be removed from the LL open positions portfolio, and its closed position info recorded, based on the 8/2/06 to early 8/13/07 per share performance. Through the close of trading on 8/10/07, after subtracting a commission (while not counting any dividends), VLO has been up 0.83% in the past 12(+) months.
Since the last entry, our Classic Value (CV) pick, SEB, has been held over a year too, and so it will likewise be sold at the early market price Monday morning. It will be removed from the CV open positions portfolio, and its closed position info recorded, based on the 8/11/06 to early 8/13/07 per share performance. Through the close of trading on 8/10/07, after subtracting a commission (while not counting any dividends), SEB has been up 34.17% in the past 12 months.
My top-ten equities for mention today are: AHL; BKR; BRK/A (BRK/B); CDI; CMKG; KEQU; NSHA; NSIT; VLGEA; and VSEC.
The focus this time is on a new Leapin' Lizards (LL) selection, CDI Corp. (CDI) (recent price $28.44). CDI's trailing price to earnings ratio is 19.35. The forward P/E is estimated as 16.07. The asset's market-capitalization size is micro-cap: $577.67 million. CDI Corp. has a 1.80% dividend with a dividend payout ratio of 0.30. The PEG ratio is 1.04. CDI's shareholder equity to total assets ratio is 0.72. The price to sales ratio is just 0.39. CDI's price to book value is below average at 1.57. There is positive free cash flow. Return on equity is 9.77%. Debt to equity is only 0.02. The current ratio is 2.82. CDI's share price is up 40.79% in the past 52 weeks (compared with a 14.75% increase in that period for the S&P 500 Index). The stock has low price to sales, low debt, a reasonably low PEG ratio, and moderate upward momentum in its favor.
CDI Corp. will be added to our LL tracking portfolio (as well as to our personal nest egg) at its market price early on Monday, 8/13/07.
8/19/07-Since the prior entry, our Leapin' Lizards (LL) pick, BAMM, has been held over a year, and so it will be sold at the early market price Monday morning, removed from the LL open positions portfolio, and its closed position info recorded based on the 8/18/06 to early 8/20/07 per share performance. Through the close of business 8/17/07, after subtracting a commission (while not counting any dividends), BAMM has been down 14.37% in the past 12(+) months.
My top-ten equities for mention today are: ASPV; AVCI; BRK/A (BRK/B); FTO; NVR; PTEN; RAIL; RCMT; VSH; and WDC.
The focus for the current entry is on a new Classic Value (CV) asset, Vishay Intertechnology, Inc. (VSH) (recent price $12.97). VSH's trailing price to earnings ratio is 16.63. The asset's market-capitalization is small-cap: $2.42 billion. Vishay Intertechnology, Inc., has no dividend. The PEG ratio is 0.89. The price to sales ratio is also 0.89. VSH's price to book value is just 0.74. There is positive free cash flow. Return on equity is 4.86%. The shareholder equity to total assets ratio is 0.67. Debt to equity is just 0.19. The current ratio is 2.99. This stock has low PEG, low price to sales, low price to book value, and low debt in its favor. It meets Ben Graham value and safety criteria as a bargain stock.
Vishay Intertechnology, Inc., will be added to our CV tracking portfolio at its market price as of early trading on Monday, 8/20/07.
8/26/07-In the last entry, I noted that BAMM had been held over a year and so was due to be sold, but neglected to mention that, in July, 2007, it had distributed a special ($3.00 per share) dividend to shareholders. This added benefit of ownership resulted in the asset being mildly profitable if held through the year-and-a-day period recommended (for securities that have not meanwhile been bought out for cash).
There have now been a total of 102 stock purchases and redemptions among the closed position records of the Leapin' Lizards (LL) plus the Classic Value (CV) portfolios. Of these, 33, or slightly less than a third, have resulted in a net loss. There have thus been at least 2 winners for each loser. Taking the portfolios together as a whole, with equal (50/50) investments in the LL and in the CV assets, one's odds of an overall winning outcome are excellent.
The compound annual performance after commissions, but not counting other than special, one-time dividends, for the LL portfolio closed positions was 17.64% over the entire period, 10/4/04 through the last completed transaction, on 8/20/07.
That for the CV portfolio was 20.36%. (It is still too early to say, however, if the risk-adjusted return of the CV portfolio would be higher over the long-term than that of the LL portfolio.)
A 50/50 investment in each portfolio's assets would have resulted in a compound annual performance of exactly 19.00%. Conservatively, the regular dividends would have added at least 1% a year. Hence, the 50/50 investor's compound annual total return would have been 20% or better, about twice or more what one could have expected from such major averages as the S&P 500 Index.
The recent volatility in the markets has not been kind to our open positions, particularly the value plus momentum LL portfolio. But the portfolios have weathered market gyrations before. The approach I suggest, of putting half one's assets into a strategy similar to that of the LL holdings and half into a CV investment method, then holding each till the shares are bought out for cash or for at least a year-and-a-day (whichever earlier) has an excellent chance of providing better returns and lower risk than with the major indexes, even through periods of market instability such as this. For most assets, profits would also be treated as long-term gains and be eligible for favorable tax treatment.
Furthermore, if one were to have followed the advice here to have some of her or his holdings in money markets or other cash reserves and some in relatively low risk bond assets, one would be able to rebalance after times when equities have fallen significantly, while also having one's total portfolio protected from some of the volatility. In this way, one may reasonably hope to achieve a total portfolio return of about 15%, and yet with far lower risk of permanent portfolio loss than if the entire investment were in one of the major indexes.
Since the last entry, our Classic Value (CV) pick, AIRT, has been held over a year, and so it will be sold at the early market price Monday morning. It will be removed from the CV open positions portfolio, and its closed position info recorded, based on the 8/23/06 to early 8/27/07 per share performance. Through the close of trading on 8/24/07, after subtracting a commission (while not counting any dividends), AIRT has been up 11.19% in the past 12(+) months.
My top-ten equities for mention today are: INXI; KEQU; MALL; MM; NSHA; NSIT; PCR; RCMT; USTR; and VSEC.
The focus this time is on a new Leapin' Lizards (LL) selection, RCM Technologies, Inc. (RCMT) (recent price $8.02). RCMT's trailing price to earnings ratio is 13.78. The asset's market-capitalization size is nano-cap: $95.52 million. RCM Technologies, Inc., has no dividend. The PEG ratio is 1.01. RCMT's shareholder equity to total assets ratio is 0.80. The price to sales ratio is just 0.44. RCMT's price to book value is below average at 1.09. There is positive free cash flow. Return on equity is 8.52%. Debt to equity is 0.00. The current ratio is 3.03. RCMT's share price is up 61.37% in the past 52 weeks. The stock has low price to sales, low debt, relatively low PEG ratio, below average price to book value, and upward momentum in its favor.
RCM Technologies, Inc., will be added to our LL tracking portfolio at its market price early on Monday, 8/27/07.
8/28/07-Since the prior entry, our Leapin' Lizards (LL) pick, SCSC, has been held over a year, and so it will be sold at the early market price Wednesday morning, removed from the LL open positions portfolio, and its closed position info recorded based on the 8/28/06 to early 8/29/07 per share performance. Through the close of business 8/28/07, after subtracting a commission (while not counting any dividends), SCSC has been down 8.49% in the past 12(+) months.
My top-ten equities for mention today are: ACE; AFG; AXS; HCC; MTG; NVR; PMI; RDN; SCA; and WDC.
The focus for the current entry is on a new Classic Value (CV) asset, American Financial Group, Inc. (AFG) (recent price $28.67). AFG's trailing price to earnings ratio is only 8.57. The forward P/E is estimated at 8.36. The asset's market-capitalization is mid-cap: $3.42 billion. American Financial Group, Inc., has a 1.30% dividend with a dividend payout ratio of 0.11. The PEG ratio is just 0.78. The price to sales ratio is 0.80. AFG's price to book value is below average, at 1.20. There is positive free cash flow. Return on equity is 14.99%. Debt to equity is just 0.30. The current ratio is 1.83. This stock has low P/E, low PEG, low price to sales, low price to book value, and low debt in its favor. It meets Ben Graham value and safety criteria as a bargain stock.
American Financial Group, Inc., will be added to our CV tracking portfolio (and our personal nest egg) at its market price as of early trading on Wednesday, 8/29/07.
Disclaimer and Disclosure Statement
Neither I nor Investor's Journal will be responsible for losses by anyone who obtained ideas from this site.
This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.