My take on some recent information concerning stocks discussed earlier in this blog:
- DELL-- worth waiting for as its balance sheet only improves from a previously strong position and it grows overseas. I intend to double my stake at $19 or below and it's hanging just above that now.
- COLM-- was downgraded by a Citi analyst a few days ago on speculation that back orders have fallen off. Fundamentals and balance sheet are both extremely strong as is the opportunities in Europe and Asia. A senior officer (the COO) resigned recently and it's difficult to attach significance to this, but it always gets my attention. Very strong insider buying going on. Holding for 18 months+
- Schering-Plough SGP-- has spiked up from $14 (my entry point) to just under $17 after the market realized that the huge 26% sell off reaction to the cardiology panelists' comments on Vytorin was not justified. Several analysts (including Morningstar, my favourite) models suggest that SGP is worth $30/share with Zetia and Vytorin sales dropping to zero-- which they will not. What academic cardiologists/pharmacologists don't seem to realize is that adverse drug affects are much more important to patients than they are to doctors and many patients are prepared to pay more in order to avoid even nuisance side effects like cough and swollen ankles, particularly when these drugs need to be taken life-long. Many patients cannot tolerate statins, the cheaper and possibly slightly more effective competitive drug class. I doubled my stake at $14 and will hold for the long term in my RRSP.
- Legg-Mason LM--- despite Bill Miller having the worst quarter in 26 years in his Value Trust fund, LM has rebounded from $50 to $60. The new CEO recently bought $1000000 worth of common shares out-of-pocket and the gurus are buying LM aggressively. I have a fairly large stake in my RRSP and intend to hold for the long term.
- Brookfield BAM-- just completed a billion dollar share buy back. It continues to make careful acquisitions. It has increased slightly from a support level of $26 to $28 currently. I will happily buy more if and when it drops to $24 or less. This is also a very long term hold.
- Georgia Gulf GGC-- the Royal acquisition debt weighs heavily on the company's balance sheet and with many of its plants idled, cash flow is an issue. The share price has rallied on a hope and a dream that the US recession has peaked-- from $4 at its nadir to just under $8. It wouldn't take much bad news for the banks to call in their covenants/loans. I am hoping that the share price will come up to $10 (Morningstar's FMV) and then I will sell one third of my stake. After another quarter, I'll reassess whether to hold on to the remainder. If the economy turns around, I suspect that GGC will be acquired.
- Popular BPOP-- has rallied from it's nadir at $8 up to close to $12 and has continued to pay a generous dividend, while divesting itself of its underperforming mainland assets to pay down debt. It is still trading at below book value and has a "forward" P/E of 11 (estimates are duly pessimistic. Reasons to hold on to this one include the 5.65% dividend and the fact the bank is essentially a monopoly in its region (Puerto Rico). If it can survive the downturn, and it looks like it will as it is extremely well capitalized, one can expect the stock to increase by 50% or so to its FMV. I will hold for 18 months to 3 years. If the bank has not learned its lesson and starts to make stupid and expensive acquisitions on the mainland again, I will sell before that.
I have just read the Q4 BBSI conference call and the annual report for SEB and am more convinced than ever that they remain excellent long and intermediate term investments. As they have both made relatively large share price gains very recently, I hope to wait for a pull back to add to existing positions.
HOG, PHG, SPLS, COV commentary to come soon.
l
Posts
No comments:
Post a Comment