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Friday Value Overview
Posted by: Steven Kiel (IP Logged)
Date: July 15, 2011 01:25PM

The close of the week brings us big news from Google (GOOG), a piece on Charlie Munger, Carl Icahn’s Clorox (CLX) offer and his comments about Procter & Gamble (PG), Kimberley-Clark (KMB), and Colgate-Palmolive (CL), Citigroup (C) earnings, and the latest edition to CNBC’s Squawk Box.

Google reported blow-out earnings, both with revenue and earnings, in their release yesterday. Shares skyrocketed higher, adding more than $20 billion to their market cap. Adding the value equivalent of a group of pre-IPO companies in just one day is not an easy thing to do. Some are even chattering that Google is now, again, a growth company. A few more days like this and it certainly will be growing out of the value camp it's been stuck in over the last few years.

Alice Schroeder of The Snowball fame has a piece in Bloomberg today highlighting Charlie Munger stepping back from public life a bit, and rightfully bemoaning the loss. With the final Wesco/Morning with Charlie meeting over, I'm afraid we'll only be left with the opportunity to hear his wit once a year, at the Berkshire Hathaway (BRK.B) annual meeting. Schroeder recalls some of Munger's best moments, his criticism of internet stock valuations in the late '90's, his Wesco withdrawal from the U.S. League of Savings Institutions in the late '80's, and, now, his classic pronouncement to the Greeks that they need to grow up. It's hard to believe he's 87, and it's hard to believe he believes it's time for us to get a new cult hero.

Carl Icahn has put out an offer to buy Clorox for $76.50 per share. Icahn already owns 9.4% of the company. It appears he is trying to drum up interest for other strategic buyers to make a move, and he mentioned some, including Procter & Gamble, Kimberley-Clark, and Colgate-Palmolive. Alternatively, Icahn could spin off some of Clorox's segments to unlock their value. Shares are already near 52 week highs, but still more than 3% off of the offer price. It seems like Icahn has been busy lately. It appears he believes he has a lot of targets out there that are significantly undervalued. That bodes well for us as value investors.

A day after J.P.Morgan’s solid earnings, Citigroup does the same. Revenue fell slightly but earnings beat estimates on lower losses at Citi Holdings, the portion of the bank that Vikram Pandit is trying to sell or unwind. If you trust their book value, this puts their P/B ratio at less than 0.7. Bill Ackman and Bruce Berkowitz, each of whom are major holders, should be happy about Citigroup’s direction. At some point these names will be popular again and should drive the overall market.

New York Times Dealbook and Too Big To Fail author Andrew Ross Sorkin is joining CNBC’s Squawk Box. In my opinion, Sorkin is one of the most insightful writers around and he’ll be a major plus to the station. Squawk Box is my favorite show on the network and not nearly as frenetic as the rest of the way. I’m looking forward to the new format.

Disclosure: Long GOOG, BRK.B



Guru Discussed: Carl Icahn: Current Portfolio, Stock Picks
Bruce Berkowitz: Current Portfolio, Stock Picks
Stocks Discussed: GOOG, BRK.B, BRK.A, CLX, PG, KMB, CL, JPM, C,
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