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Four Guru Stocks near New Lows: FBN, HOME, NKTR, PETS

February 07, 2011 | About:
The new 52 week low list is one of the best places for value investors to look for new ideas. Overlapping that list with stocks that gurus own helps to narrow it down and gives a great starting point for new research. Sometimes you can find a good “dogs of the guru” stock in this list, and other times you can see a guru dollar cost averaging into a position. At the same time, it’s also useful to see some of the mistakes made by well known investors. Those mistakes often end up on this list.

The four stocks below come from GuruFocus’s 52-week Low Guru Stocks screen, which is available with GuruFocus’s premium service. Each stock is within 1% of its 52 week low and is owned by at least two gurus.

Furniture Brands (FBN): Furniture Brands produces brands like Thomasville and Broyhill. They have company stores and also sell to other retailers. The stock has dropped 16% since reporting disappointing earnings on February 2. Chuck Royce owns 3.4 million shares, about 6% of the company, and purchased more shares on January 13. Steve Cohen, Jim Simons, and Hotchkis & Wiley own shares as well.

Home Federal Bancorp (Home): Four gurus own this $181 million bank located in Idaho and serving Idaho and Oregon. Shares neared 52 week lows after a disappointing earnings report on January 28. They’re still paying a 2.1% dividend and are in a strong position as they integrate LibertyBank, an FDIC-assisted transaction, from last year. From the conference call, it sounds as if that integration was taxing on their resources and they’ve been slow to capitalize on the new assets. Net interest margin was compressed because of the integration, and they should be able to put those assets to work at a higher rate in the future. John Keeley owns nearly 9% of the bank, and Marty Whitman, Jim Simons, and Hotchkis & Wiley are the other holders.

Nektar Therapeutics (NKTR): Nektar dropped on a 19 million share issuance. The sale raised $220 million, but the payoff is not in the near future. Nektar needed the funds to continue to develop its pipeline of drugs, most of which are in the early testing stages. The payoff could be huge, but it will be a bumpy ride for shareholders along the way. Three gurus own the stock: RS Investment Management, Primecap Management, and Columbia Wanger. There haven’t been any purchases since the 3rd quarter in 2010.

PetMed Express (PETS): PetMed Express dropped in early January because of a Piper Jaffray report and $12.50 price target. Since then earnings have come out with lower revenue and income YoY. Going forward, the pet health product retailer is facing a variety of pricing and competitive challenges, both online and off. The dividend yield is 3.3%, though, and the balance sheet is strong. The balance sheet is most likely why Jim Simons and Chuck Royce own shares. Both added throughout 2010, and Royce now owns more than 4% of the company.

Disclosure: No positions

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About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

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