Dear Diary,
I just picked up shares of HUN for $13.52 per share, plus a minimal brokerage fee. The sale is to close "October 2" and represents a 107% gain over 6 weeks, based on my math. The close is to be at $28.00 cash. Buffett says that these 100% deals don't always get closed because of financing, etc., but some do work out. Broad diversification in the field is the key to the most stable returns Buffett has ever known.
CROX continues to sit at about $4 per share, but "Value Line" indicates it thinks the stock has $16 per share in it over the coming few years. I agree. This is a situation where the company is sitting in the economic downturn and opening a new production facility, the latter being Buffett's favorite dynamic and the former being probably his second favorite dynamic. My average purchase price is $8.98 per share.
American Eagle Outfitters (AEO) is also sitting still at about $14 per share or 8 times earnings. It's all about the economic downturn.
Out of the 75 stocks in my long term non-arbitrage investment universe, only 16 have a widening Net Profit Margin. HANS is on target to hit $40 per share or 20 times earnings within the next several months.
Gene
Monday, August 25, 2008
Sunday, August 10, 2008
My 1st Arbitrage
Dear Diary,
I bought shares of AHG for $19.44 per share on August 5, 2008 for sale by September 30, 2008 at $21, an 8.01% gain in 61 days, or a 47.87% annualized gain. This is my first arbitrage ever.
HANS has been meeting all the "Holy Grail" criterion, so I should see a 100% gain from its recent selling price near $20 per share to $40 within the next 8.14 months on average. It is currently selling at $23 and change after a 30% gain in earnings announced August 8th.
Gene
I bought shares of AHG for $19.44 per share on August 5, 2008 for sale by September 30, 2008 at $21, an 8.01% gain in 61 days, or a 47.87% annualized gain. This is my first arbitrage ever.
HANS has been meeting all the "Holy Grail" criterion, so I should see a 100% gain from its recent selling price near $20 per share to $40 within the next 8.14 months on average. It is currently selling at $23 and change after a 30% gain in earnings announced August 8th.
Gene
Friday, July 25, 2008
CROX DOWN!
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
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
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
Monday, June 16, 2008
No ANF, More CROX
Dear Diary,
After a week of studying Abercrombie & Fitch (ANF), I decided to pass on a purchase this morning at $70 per share, or about 11.5 times expected earnings per share over the next 12 months ($6.05). I don't like the 1.76 Current Ratio.
In a recession, great stocks can sell at 6 to 10 times earnings, so I've been more conservative than buying at Relative Value to the 30 Year Treasury Bond recently. Plus, I want to get back into making the money from the Holy Grail criteria that I've already discussed. All I see in the ballpark right now is American Eagle Outfitters (AEO) and Croc's Inc. (CROX), so I bought CROX this morning to catch that position up with AEO.
I will say that I was in Wal-Mart yesterday and saw some "clogs" for sale that look a good deal like Crocs, without the little jewelery, so I don't know if CROX has a vast future before it, but I do see a recovery from its current 6 times expected earnings per share.
My CPA and I are working up the paperwork on an endowment to fund projects dear to my heart. I really have no great need for personal wealth, but I do feel we need a vehicle to do our fellow man a good turn. It makes us work harder. It will fund medication for leper cures, cancer treatment, purchasing slaves their freedom in Africa, etc.
Gene
After a week of studying Abercrombie & Fitch (ANF), I decided to pass on a purchase this morning at $70 per share, or about 11.5 times expected earnings per share over the next 12 months ($6.05). I don't like the 1.76 Current Ratio.
In a recession, great stocks can sell at 6 to 10 times earnings, so I've been more conservative than buying at Relative Value to the 30 Year Treasury Bond recently. Plus, I want to get back into making the money from the Holy Grail criteria that I've already discussed. All I see in the ballpark right now is American Eagle Outfitters (AEO) and Croc's Inc. (CROX), so I bought CROX this morning to catch that position up with AEO.
I will say that I was in Wal-Mart yesterday and saw some "clogs" for sale that look a good deal like Crocs, without the little jewelery, so I don't know if CROX has a vast future before it, but I do see a recovery from its current 6 times expected earnings per share.
My CPA and I are working up the paperwork on an endowment to fund projects dear to my heart. I really have no great need for personal wealth, but I do feel we need a vehicle to do our fellow man a good turn. It makes us work harder. It will fund medication for leper cures, cancer treatment, purchasing slaves their freedom in Africa, etc.
Gene
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