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Delphi's Scott Black: 'Individual Stocks Still Cheap'

August 20, 2013 | About:

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AlbertaSunwapta
AlbertaSunwapta - 11 months ago
So he's a bit of a macro forecaster too.

What I found a few years ago was that moving into cash rich companies did little to nothing to lessen the impact of a major and rapid market decline. With the exceptions of Berkshire Hathaway and Loews, none deployed their cash opportunistically in the market decline. Berkshire Hathaway of course was very opportunistic but Loews simply dealt with CNA's issues. The cash rich tech companies sat with their cash. As a result, I had to double or triple up on companies like Apple (when it fell to $90) to gain any lasting advantage from their balance sheet strength. The corporate cash might have slightly lessened their M2M declines and hence portfolio volatility, but as a buy and hold investor, their earnings strength would enable them to survive anyway, so the cash levels almost become meaningless.

As a deep value investor Black must realize that his perceptually tainted positions could mark-to-market at incredible deep value declines in an overall market decline so it seems he is willing to buy and hold through such major market declines. His unit holders though may develop a different attitude. Black will have to point to the great error of unit holders post 2009 in Bruce Berkowitz's fund in order to hold back the outflows.

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