Chesapeake ($CHK) and an “I Told You So” Moment
For the past decade energy has been the hottest ticket in Oklahoma. It supports our economy and community recreation, arts and sports. With their phenomenal expansion in Oklahoma City Chesapeake and CEO Aubrey McClendon have been the cornerstone of the “new” energy giants. As a resident of Tulsa, OK I have been able to witness this firsthand. I have found a few undervalued energy and energy-services companies that returned a handsome profit. Chesapeake is not one of them. In fact, I never invested in Chesapeake. Some of...
read moreYou Should Know Joel Greenblatt
Warren Buffett is the name generally discussed by value investors as the pinnacle of investment success. He deserves every accolade thrown his way, and rightly so: he has amassed more wealth in his lifetime than almost anyone else in the history of the world, and he did by intelligent investing. But today’s value investors have heroes other than Buffett that deserve just as much attention and study. One of these is Joel Greenblatt. Joel Greenblatt built most of...
read moreAcquisitions as Confirmation of Value
Receiving positive confirmation is always nice, especially when it involves thousands of dollars of your own money. Value investors receive confirmation of their stock valuations as their purchases reach target price and are sold off. Another easy way to receive confirmation of your valuation is when another company moves to acquire your current holding at or close to your own target price. As everyday investors we try to understand what we invest in, but we do not know the intricacies of industries in which we have never been...
read moreBe Wary of Valuing Conglomerates
Some companies do one thing and do it well. Apple ($AAPL) creates personal computing and communications products. Goodyear ($GT) makes tires and rubber products. Valuing these types of companies is fairly straightforward – the business is easy to understand and comparables are easy to find. But what about a company that has several different lines of business? For example, 3M ($MMM) offers industrial products, display and graphics products, consumer health products, office supplies and more. General Electric ($GE) is a...
read moreNetflix ($NFLX): Undervalued or Underperforming?
The DVD and streaming behemoth Netflix (NFLX) is down nearly 75% from it’s 52-week high of $304.79 to a new 52-week low of $78.63. This selloff is due to the combination of a price increase and a mismanaged attempt at separating out streaming content and DVDs, which led to 800,000 customers ending their subscriptions in the third quarter. What most people are not talking about is the trouble on horizon for Netflix’s streaming content. In 2010 the movie studios regarded streaming as insignificant revenue – icing on the cake...
read moreDo Formulas Really Work?
Stocks are not always priced correctly. If they were priced correctly at all times the only way to make money in the market would be buy-and-hold strategies for long-term growth. Even if they don’t realize it most investors gain by making a move on a company before the masses make the same move. Options traders do this by shorting a company they believe will decrease in price. Value Investors do this by taking a long position in a company they believe will increase in price. As investors we like mispriced stocks; they are the...
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