Murray Stahl

Murray Stahl

Last Update: 2014-11-13

Number of Stocks: 509
Number of New Stocks: 12

Total Value: $7,757 Mil
Q/Q Turnover: 4%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Murray Stahl Watch

  • Murray Stahl’s Horizon Kinetics Comments on Royal Gold Inc

    An idiosyncratic security with benefits – a diversifier

    Let’s find a contrasting investment to a utility index or a REIT index, which are front and center as bond substitutes or asset allocation building blocks. They are therefore closely governed in valuation and price behavior by the asset flows of index investors and, so, might be particularly vulnerable to a rise in interest rates. Consider, instead, a very distinctive security like Royal Gold, Inc (RGLD). It is categorized in financial securities databases like a gold mining company. Yet it does not do any mining, and on a balance sheet and income statement basis has as little in common with gold mining as Microsoft (MSFT): it has virtually no property, plant, or equipment, it carries no net debt, it has extremely high after-tax cash flow margins—well over 50%. Microsoft’s are roughly 25%. Its financial statements and casually observable economics say that it really does not belong with the gold mining group.


  • Murray Stahl’s Horizon Kinetics 3Q 2014 Commentary

    This year’s commentaries review some of the surprising ways in which scientific-seeming or rule-based approaches to investing, which are now the norm and implemented via exchange-traded funds (ETFs) and index-based mutual funds, are foiled in practice by the social science reality of the fluid marketplace. A formulaic approach can work for a while, until a sufficient number of additional investors apply it. Their aggregate actions impact the supply/demand balance, valuations change, and the formula can no longer work. In reviewing some popular building blocks of the asset allocation model of investing, we have, hopefully, demonstrated:

    -That an emerging markets index probably does not contain much in the way of emerging markets exposure, so much as exposure to large, relatively mature companies, many of which are exporters that, economically, are really global companies, not local. That the historical excess returns recorded by emerging markets indexes are probably not a reliable set of figures. That a non-indexed approach, or a different form of index, could better capture the local-economy potential of emerging markets.


  • Murray Stahl on Icahn Enterprises

    Murray Stahl (Trades, Portfolio): My favorite stock at the moment is Icahn Enterprises, which is something we have owned for, I think, 14 years, and it is our third-largest holding. As you know, it is comprised of an assortment of assets. It owns Apple (AAPL) and other securities. It owns two assets that trade more or less at their stated net asset value, but I think they are undervalued. One of them is the Fontainebleau Hotel and Casino in Las Vegas, which owns an 80% completed building. All around that casino there is building activity going on and then there is this hulk. It cost about $3 billion to construct that structure to be 80% complete. To construct it today would cost even more. That is an asset that could be monetized and could be worth a lot of money. We should mention that Icahn Enterprises bought the Fontainebleau Hotel and Casino for 10 cents on the dollar in 2008 or 2009. That $2 billion is not on the balance sheet; only a couple hundred million dollars is on the balance sheet.

    Another asset that Icahn Enterprises owns is American Railcar Leasing (ARII). Leasing railcars means primarily leasing tanker cars. The company leases other cars, too, but primarily tanker cars. Because the United States is finding oil in all sorts of places that it did not find oil before and because there is no pipeline capacity to get it to market, the only way to get it to market is by rail lines. In theory you could build pipelines except most people do not want to have a pipeline across their property, or anywhere near a property, or even through their town. As a practical matter you cannot build the pipelines.


  • FRMO Corporation's 2014 Annual Meeting of Shareholders Transcript

    Murray Stahl (Trades, Portfolio): Thank you, Therese, and thanks, everybody, for coming today.

    I was very fortunate when beginning to write the annual Letter to Shareholders to be apprised of an event that you may have read about in that letter. The idea was that we as a corporation were lacking in certain corporate governance formalities and requirements, one of which happened to be the lack of a compensation committee, and I took the occasion to comment on that. I hope you’ll understanding that I did it tongue in cheek. Corporate governance is a very serious matter, but in our case the recommendation of a certain proxy firm was to withhold the vote from us for, among other reasons, the lack of corporate governance relating to management compensation.


  • Murray Stahl’s Horizon Kinetics Comments on TRI Pointe Homes

    TRI Pointe Homes (TPH) is a recent addition to some of our portfolios. It was founded in the depths of the Credit Crisis in 2009 by former homebuilding industry executives. Their objective was to acquire land lots in distressed regions, particularly in California and Colorado, which could be utilized for future home construction. TRI Pointe was certainly not alone. A number of companies led by astute investors acquired enormous amounts of land in heavily distressed areas such as California, Arizona, and Nevada.

    In 2010, real estate investor Barry Sternlicht capitalized TRI Pointe with $150 million of equity through his Starwood Capital private equity fund. Mr. Sternlicht became Chairman of TRI Pointe and received roughly 39% equity ownership of the company. Given his real estate experience, it is not surprising that he chose a vehicle that will ultimately benefit from a sustained recovery in the residential housing market.


  • Horizon Kinetics Second Quarter 2014 Commentary

    The Shaky Foundations of Asset Allocation Practices, Continued

    Our 1st Quarter letter addressed the question of whether some basic presumptions of asset allocation work in the real world the way every one presumes them to… such as whether emerging markets equities actually outperform developed markets, whether the historical rate of return from the stock market can be repeated or is, indeed, even valid, and so forth. Understanding these questions can hardly be more critical, since we all invest based on these foundational assumptions. One element such models share is that in the freedom of the marketplace, any rigid, definitional approach will come to be invalid, later if not sooner, since investors do react to new information and, thereby, alter supply and pricing. If a particular sector is discovered to be superior or to outperform, will not capital flow into it and inflate the price? And at what degree of price inflation does the sector become a source of average or negative, rather than superior, return?


  • Murray Stahl’s Horizon Kinetics Comments on Platform Specialty Products

    A recent purchase in certain strategies is Platform Specialty Products (PAH). Like Wendy’s (WEN), this stock does not trade at a presently low price-to-earnings, or P/E ratio; in fact, it’s somewhat high. However, the company incorporates many predictive attributes that are suggestive that its revenues and earnings several years from now will be far higher than they are today. As a U.S. company, PAH is new, having been listed on the NYSE only since this past January. Its operating business, though, has been around for over 90 years, and PAH was trading on the London Stock Exchange when it was acquired this past October for $1.8 billion by what is known as a blank-check company. The current stock market value is $2.4 billion. A blank check company raises equity capital in order to acquire a target, often within a specified window of time, and this particular one was organized by three well- known parties: Nicolas Beggruen, through his investment company Beggruen Holdings; Bill Ackman, through his hedge fund Pershing Square; and Martin Franklin. At year-end they each controlled, respectively, 6.5 million, 33.3 million, and 7.3 million shares. Martin Franklin is also the founder and Executive Chairman of Jarden Corp (JAH), which is a significant holding in the Core Value and Strategic Value strategies, among others. The same three, also through a blank check company, brought Burger King (BKW) public again in mid-2012.

    PAH produces specialty chemicals for a wide range of industries. It manufactures over 1,000 compounds, and its largest customer represents only 3% of sales. It exhibits very little cyclicality. Energy costs are only 2% of sales. It’s important to qualitatively differentiate the nature of the PAH chemicals business from that of the typical chemicals company. These particular chemicals are often proprietary both as to makeup (the company has over 750 patents) and process. Their employees spend considerable time with customers guiding them as to how to use these chemicals, often in multi-step processes, such as might be used to enhance the performance of a circuit board. PAH refers to these as dynamic chemistries and seeks out markets requiring highly technical post-sale customer service. What PAH sells tend to represent a very small portion of the cost of a customer’s product, yet are important to the product’s function or appearance. According to the company, customer retention is very high because the cost savings from switching to another provider are modest, while the switching costs are high due to process complexities and quality control requirements.


  • Murray Stahl’s Horizon Kinetics Comments on Wendy’s Company

    As the investing world continues to embrace indexation, it assists us in sourcing truly attractive investments in areas that are structurally overlooked (or created) by the mainstream. Wendy’s, a relatively recent purchase and significant holding, is one example.

    The Wendy’s Company (WEN) has long been unloved. It is the world’s third largest hamburger-oriented quick service restaurant (“QSR”), behind McDonald’s (MCD) and Burger King (BKW). A common criticism is that it has chronically underperformed its larger peers in many key areas, particularly profit margins. Accordingly, the company “screens” poorly by nearly every quantitative measure of business performance and valuation. The stock price was essentially unchanged for 2010, 2011, and 2012. Although it has almost doubled during the past year, it is lower now than it was over 10 years ago, in 2003. However, many of our most successful investments over the past two decades have been in companies that, like Wendy’s, underperform their competitors. Operational/financial underperformance is, in fact, an opportunity, if the underlying business is fundamentally viable and an actionable plan exists to improve operating performance.


  • Tennessee Whiskey: The Ultimate Profit Machine

    It’s known that American brown spirits are provided throughout the world by very few companies, such as Diageo Plc (ADR) (DEO) and BEAM Inc. (BEAM). However, while these firms focus on Scotch and Bourbon, Brown-Forman Corporation (BF.B) holds the leading market share of Tennessee Whiskey via its famous Jack Daniel’s brand. Despite a distribution scale six times smaller than Diageo, this beverage manufacturer has the most solid balance sheet in the industry, and the longest market presence with its 142 years of family owned business experience. Thus, investment gurus like Steven Cohen (Trades, Portfolio) and Murray Stahl (Trades, Portfolio) recently added more of this company’s shares to their portfolio, hoping to gain future profits. A bet well placed, in my view.

    A Tennessee Crown Jewel in the World


  • Murray Stahl on Ascent Capital

    In the case of Ascent, again, it's really not the purpose of this call to talk about investments of that type, but just understand that the strategic thrust is to put together a string of acquisitions in burglar alarms, because the whole idea is that burglar alarms are very similar to the cable business, and you know who orchestrates the big mergers in the cable business. It really isn't that different, and with the rise of technology there are all sorts of services that are possible to provide over the conventional burglar alarm wire, and we're in the first inning of seeing those advances happen. And, of course, if you follow Ascent, you'll know it's a small cap company that doesn't have a lot of float, and it's a volatile stock.... It goes up a lot, it goes down a lot and I guess that's the nature of the beast.

    Source: FRMO Corp. Q2 2014 Conference Call


  • Murray Stahl on Sears Hometown

    Suffice it to say this much: in the case of Sears Hometown (SHOS) I have some stock. I'm not selling mine. It's a big factor in appliances. There are 22 million shares outstanding and you know what appliances are tied to. Appliances are basically tied to two things—home sales and home renovations. So it's a nice balance sheet. It certainly doesn't have any major liabilities. If and when —maybe I should say when and not if—home sales and home renovation activity in this country return to normal, there's a lot of operating leverage for Sears Hometown. If they don't, well then the share price reflects it.

    Source: FRMO Corp. Q2 2014 Conference Call


  • A Look at the Profitability of a Boston Brewer

    The domestic beer market is characterized by vast competition, as much as consumer preferences. While imported AB InBev and MillerCoors concentrate 80% of the overall market, Boston Beer Company Inc. (SAM) is most popular along the East Coast. In fact, not only is this craft brewer the fourth-largest in the U.S., but it’s also the largest publicly traded brewer nationwide. Under its flagship brand, Samuel Adams, the firm has achieved large scale, having sold 3.4 million barrels of beer in 2013 alone.

    While craft beer still remains one of consumers' preferred beverages in the domestic market, competitors like Anheuser Busch Inbev SA (ADR) (BUD), which offered premium light beers, have been swapped for other craft brewers trying to imitate the Samuel Adams brand. And although the company enjoys a narrow economic moat rating, competition is heating up among privately owned brewers, like AB InBev, New Belgium and MillerCoors, which are planning to take over Boston Beer’s market share.


  • Murray Stahl's Horizon Kinetics on Texas Pacific Land Trust

    Texas Pacific Land Trust (the “Trust”) will be the last example of a company that despite being much higher in price than it was a year ago, is actually cheaper. The Trust was actually Horizon Kinetics’ first research report. At that time, in early 1995, it traded at $4.00 per share. At yearend 2013, the shares closed at $99.99, which works out to about a 19% annualized return.



  • Murray Stahl's Horizon Kinetics on DreamWorks Animation

    DreamWorks Animation, about the 3rd largest holding in the Core Value strategy, more than doubled this year, and is about 35% higher than when the position size was increased this past June. Yet, I believe that the shares are cheaper today than they were 12 or 18 months ago. Until then, DreamWorks did one thing: it made animated movies, and it was analyzed and valued as such. We thought it did two things: the movie making and, over time, the building of its movie library, which may be valued separately and had the characteristics of a dormant asset. Here’s what has happened in the past 18 months or so, none of which has yet had time to make an appreciable, visible impact upon revenues or earnings:



  • Murray Stahl's Horizon Kinetics on Sears Canada

    It can take weeks or even months to qualify a security or sector for purchase in our portfolios. Recently, it required not so many days, perhaps a Horizon Kinetics record, and it couldn’t have been done without the assistance of the press. This is the article that caught my eye some weeks ago. Note the decisive, emotive terminology. From the headline itself: “Sears Canada…In Bid to Survive”, and from the 2nd sentence in its own standalone paragraph: “…lightens its ballast in a bid to stay afloat.”



  • Murray Stahl's FRMO Corporation - 2013 Annual Meeting of Shareholders (Transcript)

    FRMO Corporation Annual Meeting of Shareholders

    Tuesday, August 27, 2013


  • Horizon Kinetics Third Quarter Commentary

    No one can accuse us, in these pages, of not being diligent in using our words, though we have been accused at times of using too many. So this review switches modalities somewhat, with more exhibits and fewer words. What won't switch are the themes, which are as relevant as ever: 1) the important and dysfunctional ways in which indexation is affecting security valuations, risk, and returns; and 2) the antithesis of indexation—active management and individual security selection, of which we, certainly, are practitioners.

    Prices in the marketplace are made by the marginal, or last, buyers or sellers—it's not the 99%+ of Apple (AAPL)'s shareholders who determine its price, but the net buying or selling pressure of the fractional percent who are transacting on a given day. It's certainly not us: we've been accused of harboring really long-term holding periods—years and even decades. Granted, we inhabit one end of the spectrum. So, here are some recognizable benchmarks: the annual turnover rate for IBM (IBM)(the proportion of its outstanding shares traded each year) is about 83%; the figure for ExxonMobil (XOM) is 68%. The average mutual fund has 68% annual turnover.  

  • Horizon Kinetics - Canadian Real Estate Companies and REITs (December 2013)

    In their continued search for yield, many investors have turned to Real Estate Investment Trusts (“REITs”). These companies pay out a significant percentage of their earnings as dividends; accordingly, they have historically provided a high level of income. However, a high dividend payout ratio leaves little in the way of earnings that can be reinvested in the business, such that the REIT must sell more shares in order to acquire additional income‐producing properties. Lately, in order to support continued dividend increases—which are required to support continued share issuance—many REITs have also resorted to reducing their capital expenditures below the levels that will ultimately be required to properly maintain their properties. We have previously touched on these and other risks associated with investing in American REITs and, for the most part, prefer to implement any real estate exposure through owner‐operated real estate development and management companies rather than through REITs. Real estate developers frequently have dormant assets, in that undeveloped land generates no cash flow, which makes such developers more difficult to value using standard metrics such as capitalization rates, price to earnings ratios and adjusted funds from operations multiples. Furthermore, their value‐creating projects are generally very long‐term in nature, which reduces their utility to investors focused on near‐term results.

    Broadly speaking, Canadian‐listed companies trade at a discount to their United States‐listed peers, providing an opportunity to invest in high quality North American companies at attractive valuations.  

  • Interview with Murray Stahl of Horizon Kinetics (May 2013)

    To Each His Own

    Horizon Kinetics’ Murray Stahl invests with the same long-term, contrarian approach that he wants management of his portfolio companies to employ.   

  • Murray Stahl’s $6.4 Billion Horizon Kinetics Sells Out Six Companies in First Quarter

    The New York-based mutual fund company Horizon Kinetics is dedicated to the pursuit of independent, creative thought and its application to investing. In the recent portfolio update of Horizon Kinetics, led by chairman, CIO and co-founder Murray Stahl, GuruFocus research shows 442 stocks, 62 of them new, with a total value of $6.4 billion and a quarter-over-quarter turnover of 9%. The Horizon Kinetics portfolio is weighted with top sectors consumer cyclical at 32.5%, real estate at 20.4% and ETF, options, and preferred at 14.8%.

    GuruFocus research also shows that Murray Stahl sold out holdings in six companies in the first quarter of 2013. Here are the details of his sell-out trades, as of March 31, 2013:  

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