Shane

Oldschoolsting - Yes, I have my final interview on wednesday. There were 300 applicants and it has come down to me and one other person in a 7 hour interview... Please wish me luck! My strategy, if anyone is interested, was pretty simple: 1. contact every single asset manager I have ever heard of... literally. I wrote letters to Mason Hawkins even. I would shadow any person who would let me. 2. Read everything I can get my hands on, every finance student can talk about what they teach you in college... but I don't think many have studied famous investors. 3. Stick to local firms - I honestly believe I got to this far in the interview process because I was passionate and was highly interested in staying in the area. They expressed concern I would leave to go to NY. I'd like to note to SD and Others - I understand your points and considered them, unfortunately (Or fortunately) my passion has shifted over time and I love analyzing stocks... I could not imagine a job I would like more out of college, I stay up late in the bloomberg room on campus until my GF makes me come home every night haha. Thank you all for the advice.

Thanks everyone!

This hurts, bought at $4.01 and sold at $9.45...

Are there any blogs out there you all highly recommend a young/inexperience investor read? I'm especially interested in dividend payers / micro-caps. An example of what I find useful - The discussion with HarryLong and others on the board regarding Insurers, I had no clue where to begin with insurers until reading this. I can model in Excel/do some EPV & Multiples but I don't have any knowledge of the nuances in various industries. Also I view blogs as a way to get idea's to invest in, This is less interesting to me as I am hopefully starting a job at a fund soon and will likely invest in the fund.

I think this is a very interesting concept, I know Seth Klarman has mentioned he prefers to find companies who were recently kicked out of an index... your capitalizing on something I haven't heard of before. Are you suggesting MSFT will gain based on the rebalancing of the index because MSFT will become a larger position in the Index?

When investing do any of you consider the implications of the macro-oriented views? I like Jim rogers and Jeremy Grantham a lot, I'm terribly under-qualified to formulate my own opinions on the subjects they often talk about... But it's hard to ignore them. I guess the answer is the focus a little more on companies which do not have high commodity costs or that can easily pass on costs to customer?

The argument may be logical for the inheritance tax, but it is immoral IMO. If someone were to accumulate wealth, that is their property... it should be dispensed as they see fit. I think it is very commendable that one would choose to distribute their money but I find it corrupt to force them to. I personally will leave my children with enough as I decide, and the rest will be donated... but I strongly disagree with the government taking the money of a deceased person and using it as they see fit.

Thanks Myth, that is enormously helpful. So instead of market cap you use Enterprise value? What if the firm has a negative enterprise value, what is the logic behind not using the market cap? So if you can get 14-20% FCF yield (or a 5-7x multiple on FCF) and you like management/company/etc... you consider this a buy... correct?

Myth, I've read you mention EPV before. Can someone correct me on this really simple valuation? BIP - Brookfield Infrastructure Partners BV - $21.47 EPV = 148,000,000 x 1/.08 (AFFOx1/WACC) = $1.8 billion / Units = $11.4 per unit I used AFFO because it appears MLP's structured like this are often evaluated by this instead of earnings. If you add BV + $11.4 per unit you get $33. So if I think management is good, the business will remain this profitable over time, and the economic conditions are favorable I should consider this undervalued?

I've read Bruce Greenwald's Value Investing book, there are a few points which I am a bit foggy on and was hoping someone could help me out here. EPV = Adjusted Earnings + 1/WACC = Ok makes sense gives you a reasonable multiple to put on the earnings assuming they are stable. Then you add the adjusted assets and subtract the adjusted liabilities, here is where I am confused. Lets say I find a company selling at book value + $10 and the EPV i assign to the business is $10. So I would say this is a fairly valued business. Now what If i determine the book value is $20 more than what the balance sheet shows. The business now sells for a substantial discount to Intrinsic value - but unless they are going to sell assets or in some other way show the market that these assets are undervalued who cares? It will never be brought to light and the stock will continue to trade at old BV + $10 EPV. check out CSWC - this is a business development company selling at .6 BV, and it has consistently been available at a big discount to BV. I've seen some 13G's where someone wanted management to spin off or separate the companies to bring the price back up... but it does not happen. It's there for everyone to see bit nobody buys it up to its full price, I think this is called a conglomerate discount. Is this what they call a value trap???

Sanjeev, Your always very helpful, thank you! mhdousa - Just noticed I left you out, my apologies thanks for the insight.

Parsad, Chou now runs quite a few funds, as someone who has never worked in the industry this might be an incorrect assumption, but do you think he is spread too thin? I have a very hard time balancing work/school/and personal investing, I think running more than a 1-2 funds would be a monumental task. Does he have a team of analysts (If so are they good?), or is he a one-man show? I am very interested in finding an active manager to invest with, I like that he has solid performance and people here have some personal knowledge of him which allows me to feel more comfortable... also because I don't do anything with derivatives it's attractive that he does.

Parsad, Are you saying that his american fund is similar to a hedge fund because of the derivatives option?

vinod1 - I checked your link again (Notes on security analysis) and its down, any way I could get those notes from you?

Anyone have any thoughts on this investor? I am interested in following investors of micro-caps to learn from them, however, I have been following his fund on gurufocus for a while and it seems his fund is doing rather poorly. It is very difficult for me to find any long-term performance for him as there doesn't seem to be much on the web, it seems he is highly regarded.

Hello, sorry to bring up old questions. I am really confused as to how you all are getting a 15%+ FCFY. I went back to september and check out the price: Market value of 7.4 billion. FCF is CF from Operations - Capital Expenditures... so in 2009 (How are you finding annual data for 2010?) I see them as having roughly 725 million (FCFhttp://finance.yahoo.com/q/cf?s=FTR&annual) This comes out to less than 10% FCFY. What am I doing wrong here? Are you guys making adjustments to Operating cash flows?

Great Stuff, I appreciate the direction.

Some people like Jeff Auxier seem to be able, without much help, analyze 20+ companies a week. I do not completely analyze my stocks (I'm not competent at valuation models yet), but I do lots of due diligence on management... It could take me 2 weeks to feel comfortable that I know their 5 year history! Granted I only do this for 1-2 hours a day in my free time... but given I was wondering how many equities you all go through in a week?

Thanks Myth!

Thank you for the suggestions, I'm placing an order for greenwalds book and hopefully the library will get security analysis back soon! I do plan on taking the CFA after graduation but my studies are leaving me with little time to do much else.

Hello, I have been working on some stock valuation and I am having a really tough time online finding how value investors find specific price targets. I have thought about buying security analysis, but I think it might be too outdated now. Are there any books you think are particularly useful for value investors to create valuation models? I am trying to start a mock portfolio of micro-caps from a recommendation of a local fund manager, he says its good to show successes and mistakes via personal analysis so my future employer will know I have put in the effort to do it on my own.

Yes thanks for everyone and their insight!

whoops

What is the ticker symbol for Bronco, I've never heard of it.

I'm not sure I understand what you mean by main street experience, can you please explain that? I see your point, that having my salary in a seperate industry than my investments would give me diversification and allow me to weather harsh times more profitably, but I that isn't necessarily considering pay or portfolio diversification. Most people coming out of my science program aren't making very much money, right now is especially bad as its largely based on construction in the private sector. Also wouldn't a properly diversified investment portfolio address the issue of having your eggs all in one basket? My goal is to be independent by 45, to no longer have a boss. At this point I would hope to be able to manage my own money and live my life as I see fit. I have no problem with temporarily sacrificing whatever it takes for this, I am extremely frugal and at 24 have a very sizeable amount of savings. In order to meet this goal I will need to combine frugality with a moderately high income for my goals to be achieved, and I think that prospects in environmental science are weak for this.