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Tuesday Value Overview

Tuesday’s edition has more insider trading info (the good kind) on Kraft (KFT), MF Global (MF), and J.P. Morgan (JPM). I’ve also got a link to a great new blog I discovered today. David Einhorn reports on Seagate (STX), Apple (AAPL), Microsoft (MSFT), and Yahoo (YHOO). Finally, we may have another entrant into the race for president, and it’s not Rick Perry. If you’ve followed the financial news, you’ve seen all of the insider buying lately. A CNBC article says it’s the most buying since 1998. “The data suggests these insiders see major value in their company stocks at current levels and are looking to put their personal money to work to buy on the cheap.” They point out insider purchases from a number of companies including Kraft, MF Global, and J.P. Morgan. This tells me that many of these stocks are cheap and management and directors know it. After all, those insiders should have the best view on their own businesses.

I came across Dr. Ed’s blog today and I recommend taking a look. He has an interesting post about railcar loadings. He looks at the last 26 weeks of railcar loadings and it appears that economy is improving. He’s got a nice chart comparing them to the S&P 500 Transportation Index. Dr. Ed believes demand has picked up based on that information, and it’s hard to disagree.

David Einhorn’s 13F came out and it appears he upped his allocation in a few tech stocks. This GuruFocus article highlights Einhorn’s purchases in the second quarter of Microsoft, Seagate, and Apple. He releases his Q2 letter last month, so we already know the general direction of his thinking. Now we have the specific share counts. Seagate shares dropped significantly last month and Einhorn is sitting on a paper loss. Back then he also detailed his sale of Yahoo. A stock he had bought in the first quarter and which promptly had some of its Chinese assets raided. He has since sold out of Yahoo.

On the political front, Congressman Paul Ryan, he of the “Path to Prosperity” authorship, is reportedly reconsidering his vow not to run for president. If he does decide to, he would be a breath of fresh air in the field. He’s serious, smart, and doesn’t bow to the partisan rants coming out of Washington. Love or hate his plan, he has spent a number of years learning the intricacies of the federal budget and is the best salesman Republicans have to reform spending and reduce the deficit. The partisan attacks against his plan are nearly always disingenuous. It would be a welcome sight to see him and President Obama on the same stage in a debate.

Disclosure: Long MSFT

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.

Visit Steven Kiel's Website


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