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Announcement: Q&A with Newest Guru Zeke Ashton

March 28, 2011 | About:
gurufocus

gurufocus

353 followers
GuruFocus is pleased to announce that our latest guru, Zeke Ashton, will be answering reader questions this week. Ashton is the founder and managing partner of Centaur Capital Partners, a Dallas-based asset management company, where he manages approximately $110 million. Centaur Capital Partners is also the general partner and investment advisor to the Centaur Value Fund, a long-biased, value-oriented private investment partnership.

Centaur Capital’s risk management strategy has resulted in it decreasing only 6.9% in 2008, compared to the 37-40% declines of the S&P and NASDAQ composite indexes. The Centaur Value Fund had gained 134 percent by the end of IQ09, while the NASDAQ composite returned 15 percent and the S&P 500 index -0.3 percent.

Overall, the hedge fund has had an annualized return since inception of CVF +17% per year vs. S&P500 +6.6%.

Centaur’s investment philosophy is based on value principles. Ashton selects stock investments according to true business value as reflected by asset value, cash flow generation, management quality, and the competitive advantages of the underlying businesses when stocks are available at compelling prices, his website states.

Additionally, Ashton manages the Tilson Dividend Fund, where he chooses stocks he believes are undervalued by at least 50%, and usually concentrates his best investment ideas.

The Tilson Dividend Fund has had outstanding results. Its 5-year cumulative gain in 2010 was 58.7%, and its 5-year cumulative for the S&P500 was 12.2%.

YearReturn (%)S&P500 (%)Excess Gain (%)
201020.6415.15.5
200943.9826.517.5
2008-20.55-3716.5
2007-0.635.61-6.2
200615.7515.79-0.0
5-Year Cumulative58.712.246.5


Ashton’s top holdings are LH, CLMS, TTT, BBY, MVC, NOC.

Prior to founding his own firm, Aston was a full-time analyst and writer at The Motley Fool. While at the Motley Fool, he organized seminars on biotech and small-cap stock investing, wrote investment strategy columns, and was co-creator and editor of subscription newsletters. Ashton was also previously employed in Switzerland at Infiniti Systems as a senior analyst and project manager, and in New York for Wall Street Systems, where he was an analyst and project manager and did consulting for clients in Europe. Ashton graduated from Austin College with degrees in Economics and German.

For Zeke to answer your investing questions, simply submit them in the comment box below. We will compile the questions and send them to Zeke.

About the author:

gurufocus
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.8/5 (32 votes)

Comments

go_loe
Go_loe - 3 years ago
Any reasoning for the holding TTT?
paulwitt
Paulwitt - 3 years ago
Hi Zeke,

GuruFocus posts current portfolios on their website and I see in your portfolio that you have puts on the SPDR KBW regional bank etf. Since I think financials are slightly undervalued, can you discuss the bearish call? Thanks.

cirros
Cirros premium member - 3 years ago


Hi Zeke

What is the most important ratio you look at when valuing a company?

Thanks

Mark
dheerajgrover
Dheerajgrover - 3 years ago


Hi Zeke,

I see BBY as one of your important holdings. I have been looking closely at BBY from last few months specifically when it has declined more than 20% since December 2010.

Market is really worried about BBY loosing market share to discounters like Walmart and Target as well as to the online titan Amazon. My analysis suggest that BBY is loosing share only in the price sensitive entry level gadgets as it focuses on improving its profitability (margins have improved over last couple of years and gross profit margins have also improved) also YOY declines have come due to delay in adoption of 3D and IPTV's in the TV market segment (biggest for BBY), most probably due to weak consumer spending on the discretionary items like TV. BBY has also faced difficult comparisons due to high increase in same store sales in 2009 (bankruptcy of Circuit City)

Believe BBY is most focused on providing latest and greatest technology to early adopters and its competitive advantange lies in people having the ability to go the store and try the different gadgets and get their questions answered from a knowledgable staff and that his helping BBY hold their end of the market. I also believe shift towards mobile technologies and small store formats is a step in right direction

I also analyzed ROIC for BBY and it is in upper teens again providing ample proof that their competitive advantage is intact and business model is sound.

What are your views on BBY?

Regards,

Dheeraj Grover

albo
Albo premium member - 3 years ago
ZEKE - I notice you are holding calls on CSCO & MSFT. What is your outlook for each

of these companies over the next 12 months? Thanks.
gurufocus
Gurufocus premium member - 3 years ago
Hi Zeke!

You did very well in 2008, when the market lost 37%. What do you think you did right in 2008? If there is a lesson you learned in 2008, what is it? what would you do differently?

Thank you for taking questions from our readers!

GuruFocus.
ycoquoz
Ycoquoz - 3 years ago
Hi Zeke,

What did you specifically see in LH that you did not see in DGX? Was the decision to open a position in LH based solely on the company being very undervalued in your view, or also on your forecast of the future of medical diagnostic services?

Lastly, would you ever open parallel positions in the top two companies of a certain sector assuming they are both quite similar and both offer a very comparable margin of safety (i.e. LH and DGX?)

Best,
gamjones12
Gamjones12 premium member - 3 years ago
Hi Zeke,



Thanks for taking the time to answer our questions. What is your process for analyzing qualitative aspects of a business (do you read annual reports, investor presentations, etc)? Given the many different companies and industries you analyze, what helps you get up to speed quickly in understanding company and industry specifics?

After studying different investment gurus I’ve noticed that some utilize DCF models, while others prefer to utilize a target rate of return based on Free Cash Flow Yield plus a conservative long term growth rate. Are these both sound strategies? What method do you utilize for valuation?

Thanks again!

hpmst3
Hpmst3 - 3 years ago
Hi Zeke,

Thank you for taking the time to answer questions!

1. What ratio screens with numbers do you like to use or see before doing further research on a company?

2. Why do you own Calamos?

3. Why is Calamos's free cashflow higher than its earnings year after year?

4. After doing research on Calamos, have you found anything about the company which you do not like? Are there any negatives associated with owning Calamos as an investment?


Thanks,

Hugh
travisgallatin
Travisgallatin - 3 years ago
Hi Zeke,

I read in your prospectus for TILDX that you write covered call options to generate income. How do you evaluate the options? Do you have a typical time frame and how far out of the money are they usually? How have the options affected your returns? I would think that it would limit them in a bull market but that doesn’t seem to have been the case.

bmc2323
Bmc2323 - 3 years ago
Hi Zeke,

I was wondering about the ttt stock. I find it hard to find information on Michael Smith. I was wondering what you know about him. Where I could find more information about him? Are you holding on to the khd dividend or did you sell it?

Thanks for your time.
tkpnaig
Tkpnaig - 3 years ago


Hi Zeke,

What is your take on looking at Seadrill and SFL as an income plus growth stock ?

Thanks for your attention.

Naig
TickerTapeParade
TickerTapeParade - 3 years ago
Hi Zeke,

I find that perhaps the most difficult aspect of investing is screening for good investment ideas. Could you discuss some ways a small investor without access to resources such as Capital IQ or Compustat can effectively find potential investments? Would you recommend a top-down approach (developing a broad thesis based on macro ideas then drilling down to specific companies), a bottom-up approach (finding individual stocks that appear undervalued based on some ratio) or something entirely different?

Thanks for answering our questions.
Adib Motiwala
Adib Motiwala - 3 years ago
Hi Zeke,

Thanks for taking time to answer our questions.

1) Do you look for the same margin of safety on each stock you buy or does it depend on the industry, predictability of the past results of the company in question?

2) Does growth play a part in your stock selection and the valuation of the stock in question?

3) What is your preferred valuation method?

4) Do you pay attention to macro events and how does it help your investing?

5) Apart from buying, it is very important to stay abreast with your portfolio companies and also know when to sell. Can you provide some insights on how you stay current with your investments and also how you determine the time to sell.

thanks

Adib
the stig
The stig - 3 years ago
hi zeke

Why did Matt Richey leave Centaur to return to the Motley Fool?

have you been able to generate and analyze investment ideas without his input?

What was your process when you were partners and has that undrgone significant changes with his departure?

jack
Kristi
Kristi - 3 years ago
Hi Zeke,

What do you think of M&A, restructure, or one-time event for the company?

Will you pay more attention on these stocks while these events were announced?

What's the major concern while you analyze these events? (like what ratio)

Thank you

Kristi

gurufocus
Gurufocus premium member - 3 years ago
1. You have a lot Puts, Calls in your portfolio. Do you use them for the purposing of hedging?

2. Can you explain how you hedge your portfolio risk?

3. What do you like about Laboratory Corp? It is your largest holding?

Thanks again!
Bertrand
Bertrand premium member - 3 years ago
Hi Zeke

Thank you for taking the time to answer our questions.

I've read in one of your articles, where you explain the difference between "home run" investing à la Eddie Lampert and "high probability" investing à la Seth Klarman, that the number of stocks a value investor chooses to have in his portfolio largely depends on his own personality. You yourself have stated that you put yourself more in the "high probability" investing camp.

If you look back over the years since the start of your fund, had you focused only on your top 10-12 ideas on a yearly basis and allocated more cash to those top 10-12 positions as opposed to having a portfolio of 20-40 positions would your returns have been substantially higher (or lower), and if so by how much ?

Many thanks for your feedback and insight.

Best

Bertrand

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