Banks also did very well today. Analyst Dick Bove thinks they’ve got much more room to run though. He lists seven banks trading below tangible book value. Think of these kind of like net-nets, only with the potential for improper reserves. The way to guard against that is to choose the banks with good management. J.P. Morgan and BNY Mellon are two on the list with great management. Valuations across the space are much lower than they should be. For those two banks to be trading this cheap, you should know that the recent bank sell-off was more emotional than anything else.
Forbes points out that a group of gurus has been buying into Mosaic. James Tepper, Daniel Loeb, Richard Perry, Andreas Halvorsen, and John Paulson are among the big buyers. The stock was up 4.7% today but is still down on the year. It appears the stock is very reasonably priced, trading at just 12 times earnings, below its historical average.
If you haven’t already, I suggest you read Geoff Gannon’s piece on GuruFocus, Barnes & Noble: Anatomy of a Screw Up. For all investors, I think it would be worthwhile to focus on your mistakes more than your wins. Being intellectually honest with yourself maybe one of the most important traits for a value investor. Doing it publicly keeps you honest. I had bought into Barnes & Noble as well and don’t regret it at all. My thesis was slightly different than Geoff’s, but his ideas did play a part in my thought process. That’s another good lesson. Don’t blindly follow another investor’s ideas. Certainly look to them for inspiration or to round out your research, but you have to own your position.
Disclosure: Long BRK.B, XL