This month's Magic Formula Newsletter pick is trading at under 6x trailing earnings and currently sports a dividend yield of almost 6%.
But those stats may actually understate just how attractive the company is. There are several clues that indicate the company is worth materially more than today's price. To highlight just a few
- A board member and respected value investor activist acquired almost all of his stake in the company at prices 20-40% higher than today's
- The company repurchased ~50% of their shares outstanding at prices a bit higher than today's prices
- The company recently refinanced some debt and eliminated their dividend covenants, which should allow for a meaningful boost to the dividend. The company could easily afford to pay a dividend that would give them a yield of 15%+ at today's prices and still allow them to pay down debt.
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3. Buffett-Munger Best Bargains Newsletter recommends companies that have high business quality, but traded at undervalued prices. A younger Buffett would buy this kind of companies. It is published on the third Friday of each month.
Also don’t miss:
August's pick is a bank with a checkered past that was heavily involved in subprime lending. The bank was required to wind down all subprime products and is in the process of liquidating. The bank has sold their loan portfolio and deposits to a Pennsylvania bank, which is pending approval. The bank is selling for 56% of adjusted book value. Upon sale completion book value will be mostly liquid cash.
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