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  • C.W.R. commented on MritikCapital's article 43 min ago
    Silver Wheaton – Streaming Value
    One of the gurus I pay attention to is Marc Faber (publisher of “Gloom Boom Doom Report") who advocates a balanced approach to investing given the...
    View all 4 comments
    C.W.R. 05-26 01:17
    • Silver Wheaton is the king of silver stocks.

      Not bad recommendation to buy now.

      Phenomenal fundamentals, clearly a beaten down stock of an excellent company. Silver and SLW may fall another 50% before a continued rise in both the precious metals and miners, but nevermind that, it is definitely not a bad buy today. I am really tempted, but want to wait until it is sub-20.
  • swnyc2 commented on batbeer2's article 1 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 28 comments
    swnyc2 05-26 00:30
    • Batbeer2,

      Thank you for a wonderful analysis and including lots of references about PostNL. It certainly seems like a very cheap stock.

      >>See if the GF crowd can poke some holes in the thesis.
      Given your request, I have several questions I was hoping you might address:

      1. Perhaps I missed this, but what happened in May 2011? The price of the ADR (PNLYY) was fairly stable until then. It had varied between $13-$30. However, after the spin off of TNT, the price of PNLYY rapidly decreased to ~$2.60 per ADR. Also, TNTEY's price rapidly decreased as well in the second half of 2011. What was the rationale for the spin off TNT? Usually companies do that to increase shareholder value. In this case the exact opposite seems to have occurred.

      2. Is it fair to value TNT Express at market value? At first, this seems quite rational. However, based on what I know about the stock, I wouldn't buy it. In the international shipping business, size should matter. However, TNT is a distant fourth when it comes to size. With revenue of ~$9 billion, it is far smaller than UPS ($54 B), Deutsche Post ($56 B), and FEDEX ($56 B). Furthermore, TNT's revenue is not growing quickly. In fact, its decreasing. TNT's revenue has decreased 5% in the last year, while the revenue of its three larger competitors has grown. Other comparator's are unfavorable as well. For example, TNT has an ROE of only 1.3%. For UPS and Deutsche Post, ROE is 15%. For FDX, ROE is 11%. With little to no moat and given the fact that the EU has basically declared it will not be bought, I don't see a bright future for TNT.

      3. While it's a neat idea, I think it's overly simplistic to compare the efficiencies of Dutch and Austrian mail delivery simply by comparing land areas and populations. Perhaps there are other significant differences between the countries? For example, is there a difference between the two countries in the fraction of the population that lives in cities?

      4. The last reference you supplied goes to great length assessing the expected future decrease in business (3-6% per year over the next decade). If this is really the case, is it fair to value the company at 5x earnings?

      5. >> My only hope of winning the contest is if Deutsche post or Österreichische post are reading this stuff
      Really? Do you think the Dutch politicians would let PostNL be taken over by a company from another country? I will defer to you on this one, since you are Dutch and I have not been to the Netherlands, but I could never envision the U.S. government letting a foreign company take over the U.S. postal service.

  • created personal space. 1 hr ago
  • ptuls commented on Jae Jun's article 5 hr ago
    Does the Magic Formula Really Work?
    Magic. That’s what you need to beat the market and that’s what the Magic Formula is supposed to do. As a result of brilliant marketing,...
    View all 2 comments
    ptuls 05-25 20:05
    • Was Greenblatt's tests limited to only a market capitalization of $50 million and above? Could it be that he also included the small caps in his comparison?
  • Supermandilon77 made a stock note of $GG: Gold 7 hr ago
    $GG: Gold
    Comment
  • MritikCapital commented on MritikCapital's article 8 hr ago
    Silver Wheaton – Streaming Value
    One of the gurus I pay attention to is Marc Faber (publisher of “Gloom Boom Doom Report") who advocates a balanced approach to investing given the...
    View all 3 comments
    MritikCapital 05-25 17:27
    • Hi Trinath, Prathi,
      Thanks for reading the article and your comments.
  • MritikCapital commented on MritikCapital's article 10 hr ago
    DIRECTV – Exceptional Execution, Diligent Capital Allocation
    I came across DirecTV (DTV) two years ago when I started reading about Ted Weschler and Todd Combs, the two portfolio managers that had been hired by...
    View all 44 comments
    MritikCapital 05-25 15:38
    • Hi Vgm,
      Very interesting info about the insider buy. I have sold puts on CHK and will wait for being assigned. They have good assets and now they have good share holder friendly management. Nobody can predict the commodity price though. You acted bravely when everyone was fearful last year. Great for you and wish you success with your investment.
  • tmuscat commented on page 11 hr ago

    tmuscat 05-25 14:56
    • Intrinsic value is $14.
      Growth value is $62.
      Fair value $101
      Can someone tell me which is which because I am lost???
      tm.
      tmuscat27@yahoo.com if someone would likt ot comment.
      tx
  • vgm commented on MritikCapital's article 12 hr ago
    DIRECTV – Exceptional Execution, Diligent Capital Allocation
    I came across DirecTV (DTV) two years ago when I started reading about Ted Weschler and Todd Combs, the two portfolio managers that had been hired by...
    View all 43 comments
    vgm 05-25 13:56
    • Mritik, Sersoylu,

      Totally agree on CHK. In the past few days CHK chairman Archie Dunham made a personal buy of 450,000 shares at a cost of $9.4M
      http://blogs.barrons.com/stockstowatchtoday/2013/05/23/finding-insider-buys-in-a-sea-of-sales/?mod=yahoobarrons

      I loaded up on CHK during the swoon a year ago.
  • batbeer2 commented on batbeer2's article 12 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 27 comments
    batbeer2 05-25 13:35
    • Yeah.

      Quoting the author of that piece :

      The short-thesis is based on following key points:


      1) The passage of liberalization of postal service in the Netherlands in 2009 has opened up the domestic mail market to competition from foreign as well as domestic players.
      2) The company
      3) Secular declines in mail volumes are likely to add incremental pressure on
      4) Valuation is expensive on current cash flow estimates and will likely get significantly more expensive in the next 2-3 years

      With due respect, this is magnificently formulated nonsense.

      1) Prices have not dropped. They've gone up.
      2) PostNL is not the high cost player. In fact, they are the only profitable player. The two challengers that took on PostNL after the liberalization (Sandd and Selektmail) never made any money. They've now combined in a effort to gain market share. The combination is still not profitable.
      3) This is not a high fixed cost business. In fact I know of very few businesses are as asset light as this one. This is a labor intensive business with with mainly variable costs.
      4) The thesis here was that PostNL would be the unprofitable stub without TNT. As it turns out, the reverse has been proved to be the case. The consistent profitability of the old combination are there for all to see? Clearly, it wasn't TNT generating those profits.

      IMO the biggest mistake here is the blind assumption that the business is capital intensive and thus has high fixed costs. A two second check of the numbers immediately shows this to be wrong. Granted, it's the consensus view.... but it's very very wrong.

      @ Swnyc2
      I'll be back about O-post. reading up a bit on the regulations and revenue breakdown. Good question.

  • gusto.duel commented on batbeer2's article 12 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 26 comments
    gusto.duel 05-25 13:11
  • Canadian Value posts: 14 hr ago
    Notes From The Ira Sohn Conference - Ackman, Li Lu, Druckenmiller and More
    Here are the notes from the 2013 Ira Sohn Conference in New York: Ira Sohn Conference by ValueWalk.com <iframe...
    Comment
  • Canadian Value posts: 14 hr ago
    Epoch Investment's Bill Priest Tells Wealthtrack Where To Find Opportunities
    Epoch Investment Partners’ Bill Priest searches for yield in a wide universe; Brown Brothers Harriman & Co.'s Tim Hartch keeps a narrow focus. Find out where these two global investors with world-class track records discuss where they are seeing...
    Comment
  • Dividend posts: 14 hr ago
    My 3 Favorite High-Yields With Low Debt And Payout Ratios
    Yesterday, I made a screen of Dividend Contenders with low long-term debt to equity ratios as well as slim payouts. Today I'd like to widen the latest screen to High-Yields with a market capitalization over $300 million USD. Most of the high-yielding...
    Comment
  • MritikCapital commented on MritikCapital's article 15 hr ago
    DIRECTV – Exceptional Execution, Diligent Capital Allocation
    I came across DirecTV (DTV) two years ago when I started reading about Ted Weschler and Todd Combs, the two portfolio managers that had been hired by...
    View all 42 comments
    MritikCapital 05-25 10:36
    • DTV is looking to bid on Hulu (once more). Lets wait and see how this goes. I think it is highly like that DTV wont win the bidding as the crowd is getting too big. I hope they wont make any deal that wont make economic sense. It will be interesting to see sale price of Hulu with 3.5 million paid subscribers. NFLX has 33+ million subscribers and is valued currently at 13B. The current bidder list includes YHOO, KKR, Silver Lake, DTV, TWC, Guggenheim Digital and Chernin Group LLC.
  • tmuscat left Sally Jones a message on the message board 15 hr ago
  • Sally Jones posts: 16 hr ago
    Texan Super-Investor Yacktman’s Eleven Sells
    World-renowned value investor Donald Yacktman is president and co-chief investment officer of Yacktman Asset Management LP, in Austin, Texas. Yacktman’s recently updated portfolio shows 52 stocks, one of them new, with a total value of $19.5 billion...
    Comment
  • swnyc2 commented on batbeer2's article 19 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 25 comments
    swnyc2 05-25 06:51
    • Batbeer2,

      >> I've figured that out now. Oesterreichische post delivers a lot of unaddressed mail (advertising) as well as regular mail.

      Out of curiosity, how did you "figure it out?" From looking at the financial reports?
  • batbeer2 commented on batbeer2's article 20 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 24 comments
    batbeer2 05-25 05:46


    • >> I am also curious as to how they can earn as much as they do when they have 80% as many employees as PostNL but just half the revenue?

      I've figured that out now. Oesterreichische post delivers a lot of unaddressed mail (advertising) as well as regular mail Their per capita volume is therefore higher. PostNL does not (I believe it's not allowed under Dutch regulations). If the EU standardizes the national regulations, either O-post has a big problem or PostNL has a huge opportunity.

      >> What's PostNL's competitive advantage in the international business if NL is not the origin or destination?

      None. BUT

      NL is the destination or origin of A LOT of stuff throughout Europe. NL may be small but the country is basically a delta where the major rivers of Western Europe converge. Quite a few fellow Dutchmen would consider my English subpar. As a matter of fact, my teachers usually considered it subpar.

      You will be hard pressed to find a Dutchman (or Belgian) who doesn' t speak either English, German or French very well while having a pretty good grasp of the other two. That can't be said of the French or Germans.

      The point here being that NL generates a lot of International traffic (including letters and small packages). That's not going to change anytime soon.

2013-05-25

  • buynhold commented on batbeer2's article 23 hr ago
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 23 comments
    buynhold 05-25 02:16
    • Batbeer,

      What's PostNL's competitive advantage in the international business if NL is not the origin or destination? They may be more efficient than the incumbent universal service provider in Italy/UK/France, but they will need to compete on equal footing with other private carriers.

      Any idea what Össi post's pension expenses are? I am also curious as to how they can earn as much as they do when they have 80% as many employees as PostNL but just half the revenue?

2013-05-24

  • Supermandilon77 made a stock note of $CIM: 50Mil Share by guru 05-24 21:23
    $CIM: 50Mil Share by guru
    Comment
  • mla commented on Vera Yuan's article 05-24 19:29
    What Can We Earn If We Invest in the Top Five Holdings of the Baupost Group?
    Seth Klarman, the renowned value investor, is the founder of the Baupost Group. He is the author of the very famous book, "Margin of Safety:...
    View all 1 comment
    mla 05-24 20:29
    • Interesting though that in scenario #2 he did well from '09 on (S&P 92% cumulative return vs. 169% for Baupost). It was the big hit in '07 and '08 that did him in on this measure.
  • Monica Wolfe posts: 05-24 17:25
    Daniel Loeb's Top Three Increases of the First Quarter
    Billionaire Daniel Loeb of Third Point LLC has a portfolio consisting of 40 stocks, 12 of those being new buys, valued at $5.3 billion. Loeb is well known in the financial world for writing public letters in which he expresses disapproval of the...
    Comment
  • Sally Jones posts: 05-24 17:17
    Real-Time Rodeo and Round Up - Reduction Trades
    The month of May is when rodeo season heats up around the U.S. and cowboys, just like investors, prove their timing, finesse and skill in riding something risky and unpredictable. A review of the GuruFocus "Real Time Picks" report shows the month of May...
    Comment
  • Monica Wolfe posts: 05-24 17:11
    Leon Cooperman's First Quarter Increases
    Leon Cooperman’s current portfolio contains 81 stocks valued at over $6.5 billion. Leon Cooperman increased his holdings in 31 stocks in the most recent quarter; the following five companies represent Cooperman’s five largest increases of the...
    Comment
  • Monica Wolfe posts: 05-24 17:08
    John Griffin's Top 5 Increases of the First Quarter
    John Griffin is the president of Blue Ridge Capital, an investment partnership that he founded in 1996. Blue Ridge’s Investing Philosophy states that the investment firm seeks absolute returns by investing in companies who dominate their industries and...
    Comment
  • Vera Yuan posts: 05-24 17:06
    What Can We Earn If We Invest in the Top Five Holdings of the Baupost Group?
    Seth Klarman, the renowned value investor, is the founder of the Baupost Group. He is the author of the very famous book, "Margin of Safety: Risk-Aerse Value Investing Strategies of the Thoughtful Investor." As a very conservative investor, he often...
    Comment
  • Sally Jones posts: 05-24 16:47
    Buffett Disciple Mohnish Pabrai - A Mosaic of Major Trades
    Investor Mohnish Pabrai pays homage to his favorite guru Warren Buffett in more ways than one. Pabrai imitates Buffett’s investing style, and has written books about it. Pabrai also emulates his elder teacher’s philanthropy. Pabrai is the managing...
    Comment
  • Canadian Value posts: 05-24 16:41
    Would You Believe Jim Rogers Is a Big Fan of Investing in North Korea?
    That isn't a typo. One of Rogers' favorite places to invest right now is North Korea. You would think that would be one of his least favorite given the obvious political risks involved. So why does the investment biker like one of the original members...
    Comment
  • Holly LaFon posts: 05-24 14:57
    'Magic Formula' Inventor Joel Greenblatt New Buys Rundown
    Joel Greenblatt believes that anybody can invest like a pro and invented a famous “magic formula” to ensure – or at least enhance the probability of – success for non-professionals. The basics of his formula investing technique involve purchasing...
    Comment
  • Cyberdragon made a stock note of $DXM: Paul Johnson long it 05-24 13:40
    $DXM: Paul Johnson long it
    Comment
  • batbeer2 commented on Canadian Value's article 05-24 13:30
    Paul Tudor Jones Doesn't Think Women with Children Have the Ability Focus Intensely Enough to Trade
    The University of Virginia held symposium in last month that featured Paul Tudor of Tudor Investment Corporation, Julian Robertson of Tiger...
    View all 1 comment
    batbeer2 05-24 14:30
    • Yeah.... but trading less often is a good thing no?
  • Canadian Value posts: 05-24 13:14
    Paul Tudor Jones Doesn't Think Women with Children Have the Ability Focus Intensely Enough to Trade
    The University of Virginia held symposium in last month that featured Paul Tudor of Tudor Investment Corporation, Julian Robertson of Tiger Management and John Griffin of Blue Ridge Capital. The question was posed as to why the panel included only rich,...
    Comment
  • ghodadra1 made a stock note of $UFS: VALUATION 05-24 11:48
    $UFS: VALUATION
    Comment
  • Holly LaFon posts: 05-24 11:00
    Hotchkis & Wiley Webinar Highlights - A Review of the Current High-Yield Environment
    On our April 17th webinar, Mark Hudoff, portfolio manager of the Hotchkis & Wiley High Yield strategy shared his thoughts on the current opportunities and challenges in the high yield marketplace. The following recap highlights his views. Top 10...
    Comment
  • GuruFocus posts: 05-24 09:31
    Screen for High Dividend Stocks – All-In-One Screener
    If you are an income investor and looking for companies that pay high dividend and are growing their dividends, an easy place to go is GuruFocus All-In-One Screener. This pre-existing screen will allow you to screen for stocks that meet the following...
    Comment
  • Dividends4Life posts: 05-24 09:26
    John Wiley & Sons (JW-A) Dividend Stock Analysis
    Linked here is a detailed quantitative analysis of John Wiley & Sons (JW-A). Below are some highlights from the above linked analysis: Company Description: John Wiley & Sons produces print and electronic products, providing content and solutions to...
    Comment
  • batbeer2 commented on batbeer2's article 05-24 09:24
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 22 comments
    batbeer2 05-24 10:24
    • $3.85 of TNT value per PostNL ADR.

      One PostNL ADR gets you less than one TNT share..... hope this helps.
  • Dividend posts: 05-24 09:17
    My 4 Favorite Dividend Contenders with Highest Dividend Growth Potential
    When I consider buying a stock, I always look at the fundamentals of a company. The current yields and P/Es are a first step but both are only two of hundreds criteria. To evaluate the future dividend growth you should definitely look at the debt...
    Comment
  • Canadian Value posts: 05-24 09:13
    Kyle Bass Comments on Rising Japanese Bond Yields - Thinks Massive Japanese Easing Plan Needs to Be Larger
    Japanese yields are going higher despite the massive amount of easing by the Japanese government. Kyle Bass believes that this is because of something the Japanese government didn't foresee. He calls it the "rational investor paradox." A rational...
    Comment
  • swnyc2 commented on batbeer2's article 05-24 09:08
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 21 comments
    swnyc2 05-24 10:08
    • Batbeer2,

      Do you have a typo for the value of TNT express (you quoted $3.85 per ADR)?
      Did you mean $5.85??

  • batbeer2 commented on batbeer2's article 05-24 09:05
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 20 comments
    batbeer2 05-24 10:05
    • Hi Swnyc2,

      Good thoughts,wrong frame.

      Macro:
      The governments of:
      - Italy
      - UK
      - France
      ....

      would crawl naked over hot broken glass to get a similar service at the same cost to taxpayers. Stamps are more expensive there and still government has to fork over money to pay for the system. Dutch taxpayers know it and so do UK taxpayers not to mention the Italians. It's an outright postal strike (unions!) that scare the politicians as well as the voters, not costs.

      Lower-level:
      The government has an obligation to provide a universal postal service. PostNL provides this.... but at a cost. The day the universal service becomes unprofitable, the government is on the hook to pay for the difference...... or allow PostNL to raise prices. They typically choose the latter. They will tell voters that prices are still lower than elsewhere which sounds reasonable enough. Of course, NL is a small place with a lot of people. High density.

      In short, PostNL's infrastructure, including its postoffices (service points) and letterboxes are paid for. Any synergies that they generate off that is for shareholders. Of course, PostNL shoves as much cost as it can into the universal postal service part of the business. As long as stamps cost less than elsewhere in the EU, they can and do get away with it.

      For those who would deem this less than ethical, I would refer them to the macro points I mentioned above.

      Bit level:
      PostNL always has a "free" service point within a few miles. They are free to earn as much as they like in the package delivery business. That part of the business is unregulated and open to all. Of course, PostNL has head start there (literally). Consumers can dispatch packages when and where they like. For consumers or soho businesses, this is a major selling point. The competition (Fedex et al) need to dispatch a courier to collect the package. PostNL only dispatches a courier to deliver.

      Fedex works great for business to business and business to consumer. Especially if the collecting courier can pick up multiple packages in one trip (Amazon). It doesn't work for consumer to consumer. It's simply more convenient for the sender to walk to the postoffice. Waiting for a courier is inconvenient. Especially if you had to go buy a box or container to pack the goods. If your're at the shop already, you're better off dispatching the package on the spot.

      I think that's why the international business is growing. Packages sent from NL are retained within PostNL's distribution network if they know they can profitably deliver. If not, they can always offload the package on Fedex or for that matter TNT. PostNL obviously knows where most of their packages are headed. They can opportunistically set up local delivery networks at the destination (as long as it's within the EU). London is becoming big. This makes sense since the UK is a major trading partner of NL.

      In short,
      I believe there's room to earn some money here for some time to come.

  • RLPIA wrote a new blog 05-24 08:44
    Morning Coffee Pre-Market Wall Street News
    Durable Goods Beats Forecast. Orders for U.S. durable goods increase more than economists had estimated in April. Bookings for equipment, mea
    Comment
  • swnyc2 commented on batbeer2's article 05-24 07:48
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 19 comments
    swnyc2 05-24 08:48
    • Batbeer2,

      Here's my concern:
      The post office is heavily regulated. They cannot set their own prices. Post offices around the world are often forced to provide services and keep under performing offices open because elected officials are trying to please their electorate. The Dutch government is likely no different. Their goal is not to make a profit or return cash to shareholders. If they see cash being returned to shareholders, they will likely delay future price increases to try to please the electorate. They will do everything they can to wring cash out of the company.

      Your thoughts?
  • toponemike commented on seb1215's article 05-24 07:13
    Warren Buffett’s “Two-Column Valuation Method”
    Warren Buffett revealed his magical “Two-Column Valuation Method” investment process for the first time publicly on page 6 of Berkshire...
    View all 4 comments
    toponemike 05-24 08:13
    • your facts are wrong, starting from the first sentence

      Buffett introduced the 2 column approach far early than 2010
  • Dividend Growth Investor posts: 05-24 07:05
    Best Brokerage Accounts for Dividend Investors
    When I first started dividend investing, I was looking for the lowest commission possible. I ignored any other features of a stock brokerage, since I viewed the brokerage industry as one that provides a commoditized service. Back in 2008 – 2010 I was a...
    Comment
  • batbeer2 commented on batbeer2's article 05-24 06:31
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 18 comments
    batbeer2 05-24 07:31
    • Hi Buynhold,

      >> What am I missing here?

      1) The conection with Berkshire Hathaway :o)

      In the Berkshire Q&A session, Munger commented on the postal service in Italy. The problems there are well known. The postal service there is simply not trusted. Guess who is growing in that market?

      It may be worthwile to track the percentage of demestice revnue as compared to the international operations.

      2) For myself, I'm still trying to figure out just how Össi post is able to earn more than my estimate of earnings for PostNL. PostNL should be able to earn twice the EBIT. If I figure that out, I may have an idea of where PostNL currently has inefficiencies. In other words, where they can gain operational efficiency now that they are a pure-play.

      But yes I don't think of PostNL as a growth business.
  • buynhold commented on batbeer2's article 05-24 06:08
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 17 comments
    buynhold 05-24 07:08
    • Batbeer,

      As always, a very interesting, off-the-beaten-track idea!

      1. I like to look at businesses as if they were unlevered (for an apples to apples comparison with others). It also gives me a very conservative appraisal. If I do that (payoff the debt and add back the interest expense), I get a 45% discount to estimated IV vs a 60%+ discount based on your valuation. Still impressive!

      2. Given that interest rates are at multiple decade lows, I am not worried about pension liabilities. In the medium to long-term, they are likely to get revised down as rates eventually revert back up.

      3. 50% of their revenue comes from domestic mail delivery, which is declining at a mid-single digit rate (presumably a secular trend with paper mail). As this neighbor of yours has to now deliver fewer & fewer pieces on his route, it will hit the bottom line even more. At best, regular price increases + scaled-back delivery schedules (the government may limit this) may allow them to offset this, but I don't see much chance for an increasing earnings coupon here. Worst case this decline can more than offset all benefits from the growing and high-margin parcel segment, and you could get a decreasing intrinsic value over time, narrowing the margin of safety while one waits.

      What am I missing here?
  • yoramhtm made a stock note of $GE: General Electric Looks Like It’s Becoming The Shareholder-Friendly Company It Once Was 05-24 04:38
    $GE: General Electric Looks Like It’s Becoming The Shareholder-Friendly Company It Once Was
    Comment
  • yoramhtm made a stock note of $CSL: Carlisle Companies Inc: Fundamental Stock Research Analysis 05-24 01:37
    $CSL: Carlisle Companies Inc: Fundamental Stock Research Analysis
    Comment
  • yoramhtm made a stock note of $SLW: Silver Wheaton – Streaming Value 05-24 01:31
    $SLW: Silver Wheaton – Streaming Value
    Comment
  • batbeer2 commented on batbeer2's article 05-24 00:34
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
    View all 16 comments
    batbeer2 05-24 01:34
    • Hi portfolio14,

      >> Is that what you mean by "risk"?

      If discount rates for pension liabilities drop further, the discounted value of future obligations rises. If that is not offset by gains in the pension fund, they will have to come up with the cash. The asset side of the fund has performed magnificently in recent months but that doesn't mean it will in future. In any case, c

2013-05-23

  • cdubey commented on Chandan Dubey's article 05-23 23:39
    A Dissenting Review of 'The Outsiders' by Thorndike
    "The Outsiders" is a book which was published at the end of 2012 and has been recommended by Charlie Munger. The book is the result of a flawed...
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    cdubey 05-24 00:39
    • You have convinced me that KPN was probably not a great example. I don't have an example to replace it either.

      I repeat the lines (from you) which I completely agree with.

      >Not trying to fight and I still agree the method is flawed. I agree with you in that: Not all management >that is shareholder friendly will produce above average results. Especially if the business or industry >are bad or in a phase of obsolescence. But if you find a company that has a durable moat in a good >industry, how management allocates capital will impact your investment return. And if they allocate it >by giving back to share holders as dividends or share repurchases when prices are low, that >generally will enhance your investment returns.

      And add some more lines.

      Being great at anything involves a lot of luck. It takes ability for sure -- but luck is pretty important too. The book underplays its contribution.

      *Any* decision has a chance of looking wrong at the benefit of hindsight. And I mean *any*. Should you acquire, or not acquire a company. Should you pay debt or buyback stock. Should you pay dividend or not. Should you spinoff, sell for cash or sell for stock. Every one of these decisions may come back to bite you -- even if you made them correctly depending on the information you had at the time.

      There are times when you make the wrong choice -- even when you had the necessary data to make the correct one. These are avoidable and might contribute positively to your performance.

      But there are times that a decision which was correct soured because of changing conditions. If a CEO does not need to make these kind of decisions often -- he might be better off than the one who had to. Because sooner or later the luck turns.

      It is true that the virtues extolled by the book may lead you to find good CEOs and better investment candidates -- and probably that is the major contribution. But there is no discussion on how the ability of the CEO is only part of the picture. And even a great CEO may fail if luck turns against him.
  • LuciusAgora made a stock note of $ROL: Orkin pest control 05-23 20:38
    $ROL: Orkin pest control
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  • portfolio14 commented on batbeer2's article 05-23 18:30
    Value Idea Contest - PostNL at 3x Earnings
    PostNL (PNL) is the Dutch postal service. By law, the company may charge $0.60 for carrying a letter from Breda to Borger. The U.S. postal service...
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    portfolio14 05-23 19:30
    • Hi Batbeer2,

      This is a brilliant find!

      Two questions:

      1. You said it was a "risk" they had to reserve more for the already overfunded pension liability. Is it really a risk? They just put the money aside. It means they are forced to have a bigger capital base and it reduces ROC. Is that what you mean by "risk"?

      2. Do you know if I can follow you via RSS or email alert? (i.e. via some kind of push service) Even I have enough IQ to read Graham's Security Analysis cover to cover, I'm not smart enough to figure out how to navigate GF's site...
  • vgm commented on Barel Karsan's article 05-23 17:41
    Overstock.com Oversold?
    Shares of Overstock.com (OSTK) are held by value investor extraordinaires Prem Watsa and Francis Chou. But the stock has languished as of late,...
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    vgm 05-23 18:41
    • Good call Karsan and Ramands! A 5-bagger within a year.
  • Sally Jones posts: 05-23 17:28
    PRIMECAP Management Sells 11 – Wal-Mart, Kohl’s, Progressive
    Third from the top, right below Warren Buffett and Dodge & Cox, the mutual fund firm PRIMECAP Management has a total value of $67.8 billion. The firm manages Vanguard’s PRIMECAP Fund, Vanguard Capital Opportunity Fund, and Vanguard PRIMECAP Core Fund,...
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  • Monica Wolfe posts: 05-23 17:20
    Insider Trends in the Financial Services Sector
    Over the past seven days, 73 separate insider buys have been reported in 42 different financial services companies. These companies reported that their insiders bought a minimum of 100 company shares. On the other side, there were 138 insiders selling at...
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  • Sally Jones posts: 05-23 17:16
    ‘Margin of Safety’ Seth Klarman’s First Quarter Selling
    Fascinating online discovery… You can either buy Seth Klarman’s lucid book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor” for around $2,000 plus shipping, or you can download it for free as a pdf file. An...
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  • Monica Wolfe posts: 05-23 17:13
    David Herro's Top 5 Increases and Decreases of the First Quarter
    David Herro has managed the Oakmark International Fund (OAKEX) since 1995 and the Oakmark Global Select Fund (OAKWX) since 2006. In 2012, Herro’s return was 29.22%, an excess gain of 13.8% over the S&P500’s return. Since the fund’s inception in...
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  • Sally Jones posts: 05-23 17:09
    Multifaceted Michael Dell Sells
    Billionaire investor Michael Dell, CEO and founder of Dell Inc. (DELL) once said, “Technology is about enabling human potential.” He forever changed the world with his unique vision of what IT was and could be. One of the richest people in the world,...
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  • FAST Graphs posts: 05-23 17:08
    Carlisle Companies Inc: Fundamental Stock Research Analysis
    Before analyzing a company for investment, it’s important to have a perspective on how well the business has performed. Because at the end of the day, if you are an investor, you are buying the business. The FAST Graphs™ presented with this article...
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  • Holly LaFon posts: 05-23 17:01
    Wharton Prof Siegel Not Seeing End of Bull Run
    <div class="nobrtable"><object id="cnbcplayer" height="380" width="400" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,0,0" ><param name="type"...
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  • Holly LaFon posts: 05-23 16:59
    Seabreaze's Doug Kass Contradicts Goldman Sachs, Thinks Valuations Are 'Peak-Like'
    Doug Kass of Seabreaze Partners believes Goldman Sachs is wrong on their bullish statements on the market. <div class="nobrtable"><object id="cnbcplayer" height="380" width="400" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000"...
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  • Enjoylife commented on Chandan Dubey's article 05-23 16:58
    A Dissenting Review of 'The Outsiders' by Thorndike
    "The Outsiders" is a book which was published at the end of 2012 and has been recommended by Charlie Munger. The book is the result of a flawed...
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    Enjoylife 05-23 17:58
    • Hi Chandan,

      Again thanks for the fast response.

      As far as the dates ending in 2011, you did that not me.
      I didn't pick the dates. I used the dates of your data. You showed financials and an earnings chart from 2003 to 2011.(Above) If you want us to look at a longer period then please include those numbers in the data.

      I strongly disagree that net income is not a good measure of profitability. It is flawed like all measures but it is what Ben Graham used in valuing businesses along with price to book. And P/E has been proven over and over again to be a good predictor of future returns. Price over earnings where earnings is just net income per share. You can actually get the P/E of any business by dividing the market cap by net income. There are always exceptions to any predictive metric but I believe earnings determine stock price. (I know nothing about National Grid so will not comment on that example.) You can argue there are better measures now but growing NI is still pretty damn important to any investments long term performance.

      Your KKPNY example again shows this net income concept as the earnings drop, so do the price. My point was the falling net income looked better on a per share basis because of the buybacks. However I still see it as a huge indicator of lacking pricing power and moat. FCF also shows the same trend with 2003 being $3.4B, 2007 being down to $2.7B, and 2011 being $2.4B. This downward trend is alarming any way you look at it.

      The book also never says that good capital allocators always buy back stock and ignore debt. Perhaps with KKPNY reducing debt should have been a bigger priority over repurchases. But that is the CEO's job to decide what is best. In the book, John Malone TCI CEO, bought back stock when it was cheap but issued stock to make aquisitions when it traded at a premium. When it traded at an average level he paid down debt. So their point was that a good CEO making the right decisions about allocation has a strong positive impact on return. That part I think is true and driven home by the book.

      Now let me be up front and say I know very little about the KKPNY company or their situation. But I do agree with the book concept that companies who use capital to repurchase shares and pay dividends are shareholder friendly and this behavior generally leads to better returns for shareholders.

      However if you see your business shrinking and your ability to pay debt waning then clearly survival through paying down debt becomes a more important place to allocate. If the CEO ignored this need and spent all the money on dividends or repurchases then the book would say that was a terrible allocation choice. Buffet who is given a chapter in the book, openly admits misallocating capital by keeping the weaving business open too long at Berkshire. If KKPNY is failing then the money should be directed at other businesses or given back to shareholders and discontinue as an ongoing concern.
      .

      You are wrong about any example in the book having Flat net income. Some companies choose not to focus on net income but all of them had impressive gains in net income during the CEO's tenure.

      For Ralston that you mention, the book doesn't say specifically what the net income did but on page 132 it states "During his (Stiritz- Ralston CEO) tenure, the business grew dramatically with operating profits increasing fifty fold through a relentless program of new product introductions and line extensions." So you take out the interest expense and operating income becomes Net Income. 50 fold increase is far from flat.

      Not trying to fight and I still agree the method is flawed. I agree with you in that: Not all management that is shareholder friendly will produce above average results. Especially if the business or industry are bad or in a phase of obsolescence. But if you find a company that has a durable moat in a good industry, how management allocates capital will impact your investment return. And if they allocate it by giving back to share holders as dividends or share repurchases when prices are low, that generally will enhance your investment returns.

      Thanks again for your contribution.

      Sincerely
  • posts: 05-23 16:47
    Meridian Funds Comments on Flower Foods
    Flower Foods (FLO), one of our larger holdings, makes fresh bread, snack cakes and pastries under the Nature's Own, TastyKakes and Mrs. Freshley's brands, among others. It is the second largest fresh bread company in the US and the largest in the...
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  • posts: 05-23 16:47
    Meridian Funds Comments on Affiliated Managers Group
    Affiliated Managers Group (AMG), one of our largest holdings, is an asset management company that typically acquires a significant ownership in growing boutique investment firms while retaining key investment principals to continue managing the...
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  • Holly LaFon posts: 05-23 16:46
    Meridian Funds Comments on Huron Consulting
    Huron Consulting (HURN), one of our larger holdings, is a leading provider of consulting services to the healthcare, higher education and legal markets. The company advises hospitals and universities on ways to cut costs, gain efficiencies and improve...
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  • prathidasari commented on MritikCapital's article 05-23 16:35
    Silver Wheaton – Streaming Value
    One of the gurus I pay attention to is Marc Faber (publisher of “Gloom Boom Doom Report") who advocates a balanced approach to investing given the...
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    prathidasari 05-23 17:35
    • Thanks Ravi, I am going to Invest some portion of my savings in this stock
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