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Opportunistic Coat-tailing

Davy Bui

Davy Bui

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In the recently published biography of Warren Buffett, titled The Snowball, a young and not-yet wealthy Charlie Munger asks Buffett how to get rich by investing. Munger and Buffett would later become one of the most famous pairings in all of business but at that time, Buffett advised his new friend, “Coat-tail, Charlie, you’ve got to coat-tail.”

This screen is derived from the premise of coat-tailing. After all, if it’s good enough for Buffett, it’s good enough for us. Using the gurufocus' premium screening tools, I selected a handful of the most renowned value investors who file SEC 13F-HR filings. These names included Warren Buffett, Seth Klarman, Joel Greenblatt, Tweedy and Browne, Bruce Berkowitz, Michael Price, Mohnish Pabrai and Jean-Marie Evelliard among others.

To be even more opportunistic, I looked for new recent selections where the stock price is below the managers’ estimated average entry point. I whittled down the list to the following names:

  • AEterna Zentaris, Inc. (AEZS)
  • Huron Consulting Group Inc. (HURN)
  • Seacoast Banking Corporation of Florida (SBCF)
  • WHX Corporation (WXCO)
  • Infinity Pharmaceuticals, Inc. (INFI)
  • Fuqi International, Inc. (FUQI)
  • DURECT Corporation (DRRX)
  • Biogen Idec Inc. (BIIB)
  • Atrinsic, Inc. (ATRN)
  • Alkermes, Inc. (ALKS)
  • Interactive Brokers Group, Inc. (IBKR)  


Members can review the valuation spreadsheet for these stocks.

Despite adding a wide swath of money managers, my screen showed little activity from most managers during the last filing period covering Q3 2009, with Michael Price and Jean-Marie Evelliard comprising nearly the entire list, save one entry from Mohnish Pabrai. With the exception of Biogen Idec (BIIB), they were all small-caps under $1B. Evelliard is perhaps more adventurous than other value investors but we should also keep in mind his holdings may be filed under First Eagle and thus encompass other funds managed by the company. Either explanation may account for the high number of speculative pharma stocks under his name.

Of course, blind coat-tailing of professional money managers is never recommended. Bear in mind that SEC 13F-HR filings are outdated, incomplete pictures -- the guru you blindly follow into a stock could be the person selling to you. Rather, this list should be used as a starting point for research and evaluation.

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Davy Bui

http://enlightened-american.com


Rating: 3.2/5 (10 votes)

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