Deary Diary,
I just bought CROX at $4.99 per share, about $0.07 per share below listed Working Capital in "Value Line." My previous average purchase price was $9.77 per share. I'm loving this.
CROX announced a softening international market for its shoes and earnings guidance downward. If CROX were not in the shoe business, I'd be worried, but it satisfies a basic human need with no debt. Someone will buy the company for more than Working Capital, if all else goes wrong. We just don't want the CFO to suddenly resign without comment or an SEC investigation about accounting irregularities; otherwise, we're great!
Gene
Friday, July 25, 2008
Wednesday, July 16, 2008
Arbitrage
Dear Diary,
Mr. Buffett's secret weapon in a bear market is "arbitrage." The specific kind is known as a "cash on sale or liquidation" or "workout." I've been watching the Anheuser Busch (BUD) deal for $70 a share in cash, due to be done 12-31-08, along with the AHG deal for $21 a share, due to be done 09-30-08. I'll be reading through "The New Buffettology" to get specifics on how to handle the deal. This is my first arbitrage, only because I've not found a singe company in a year with an expanding Net Profit Margin with my "Holy Grail" criterion.
Tempur-Pedic (TPX) appears to carry over 8 times its Net Profit in Long term Debt, but it is trading at just over 2 times its Working Capital of $2.97 per share. If it drops more, I'll take a nibble at it, I think, as the Long term Debt Ratio issue should resolve itself when the recession ends and earnings pick up.
Gene
Mr. Buffett's secret weapon in a bear market is "arbitrage." The specific kind is known as a "cash on sale or liquidation" or "workout." I've been watching the Anheuser Busch (BUD) deal for $70 a share in cash, due to be done 12-31-08, along with the AHG deal for $21 a share, due to be done 09-30-08. I'll be reading through "The New Buffettology" to get specifics on how to handle the deal. This is my first arbitrage, only because I've not found a singe company in a year with an expanding Net Profit Margin with my "Holy Grail" criterion.
Tempur-Pedic (TPX) appears to carry over 8 times its Net Profit in Long term Debt, but it is trading at just over 2 times its Working Capital of $2.97 per share. If it drops more, I'll take a nibble at it, I think, as the Long term Debt Ratio issue should resolve itself when the recession ends and earnings pick up.
Gene
Wednesday, July 9, 2008
CROX Near Working Capital
Dear Diary,
I just picked up more Crocs, Inc. (CROX) at $8.15 per share. My read of Mr. Buffett in "The Money Masters," indicates that he thinks the greatest business in the world should be able to be purchased at or below their Working Capital in a recession/ bear market. Crox holds about $5.06 of Working Capital per share, according to my read of "Value Line."
Tempur-Pedic International (TPX) is trading at a p/e ratio of 7, so I have their annual report on the way to me for next week's reading. They indicate $210 million in Working Capital with outstanding shares of $74 million for 2008.
My CPA informs me that the endowment has been approved by the State of Texas.
Gene
I just picked up more Crocs, Inc. (CROX) at $8.15 per share. My read of Mr. Buffett in "The Money Masters," indicates that he thinks the greatest business in the world should be able to be purchased at or below their Working Capital in a recession/ bear market. Crox holds about $5.06 of Working Capital per share, according to my read of "Value Line."
Tempur-Pedic International (TPX) is trading at a p/e ratio of 7, so I have their annual report on the way to me for next week's reading. They indicate $210 million in Working Capital with outstanding shares of $74 million for 2008.
My CPA informs me that the endowment has been approved by the State of Texas.
Gene
Tuesday, July 1, 2008
How to Know You're A Value Investor
Dear Diary,
You know you are a Value Investor when you get excited in a bear market, like we are experiencing now!
The DOW is down over 20 % since last June, and I'm lovin' it.
I bought up some Coach, Inc. (COH) yesterday at $29 and change, plus a minimal brokerage fee.
American Eagle Outfitters (AEO) is getting hammered down to $13 per share, due to the loss of top executives that resulted from a 9% loss in sales last quarter. This could be serious, but I think the brand is powerful enough to handle the upset. This is the kind of situation that made Mr. Buffett rich. It appears to me to be a natural downturn in the business between cycles during a recession, and the executives are just reacting to personal embarrassment, as they interpret it.
Croc.'s Inc. (CROX) continues downward to a p/e ratio of 5.3 or $7.50 a share, I read. I'll buy more of this to bring my average buy price below $10 per share.
Later,
Gene Chapman
You know you are a Value Investor when you get excited in a bear market, like we are experiencing now!
The DOW is down over 20 % since last June, and I'm lovin' it.
I bought up some Coach, Inc. (COH) yesterday at $29 and change, plus a minimal brokerage fee.
American Eagle Outfitters (AEO) is getting hammered down to $13 per share, due to the loss of top executives that resulted from a 9% loss in sales last quarter. This could be serious, but I think the brand is powerful enough to handle the upset. This is the kind of situation that made Mr. Buffett rich. It appears to me to be a natural downturn in the business between cycles during a recession, and the executives are just reacting to personal embarrassment, as they interpret it.
Croc.'s Inc. (CROX) continues downward to a p/e ratio of 5.3 or $7.50 a share, I read. I'll buy more of this to bring my average buy price below $10 per share.
Later,
Gene Chapman
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