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Howard Marks underpriced asset characteristics


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In Howards new book he described undepriced assets as having the following characteristics:

 

1. Little known or nor fully understood

2. Fundamentally questionable on the surface

3. Controversial, unseemly or scary

4. Deemed inappropriate for "respectable portfolios"

5. Unappreciated, unpopular and unloved

6. Trailing record of poor results

7. Recently the subject of disinvestment versus accumulation

 

I know we have had some good examples from some high tech cos (MSFT, HPQ) and financials (BAC, C) but what are other industries/segments have folks been finding underpriced assets in?  One of the segments I have found is radio/TV.  There are at least 9 firms selling at less than 5x TTM FCF.  (SGA, SALM, EMMSP, EVC, ETM, BLC, SBGI, TVL and NXST).  Some with modest amounts of debt. (SGA, EMMSP (post transaction), SALM, EVC, BLC, SBGI and TVL).  I know these meet criteria 2 so I thought I would see what others thoughts are.

 

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Oil and gas is very cheap. Discounting like $65 to $75 oil with Brent at $110. Its a bet on a none recession though and global growth.....

 

Anything levered is cheap (SD, ATPG, RJET, PNCL, MERC). Anything in a turn type situation or which features unpredictable / slightly declining cash flows is cheap (Primus Telecom, FTR). FTR is very cheap and features a 10% yield it should run with rates staying low for 2 years.

 

Best buy and Western Digital are also cheap.

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In Howards new book he described undepriced assets as having the following characteristics:

 

1. Little known or nor fully understood

2. Fundamentally questionable on the surface

3. Controversial, unseemly or scary

4. Deemed inappropriate for "respectable portfolios"

5. Unappreciated, unpopular and unloved

6. Trailing record of poor results

7. Recently the subject of disinvestment versus accumulation

 

I know we have had some good examples from some high tech cos (MSFT, HPQ) and financials (BAC, C) but what are other industries/segments have folks been finding underpriced assets in?  One of the segments I have found is radio/TV.  There are at least 9 firms selling at less than 5x TTM FCF.  (SGA, SALM, EMMSP, EVC, ETM, BLC, SBGI, TVL and NXST).  Some with modest amounts of debt. (SGA, EMMSP (post transaction), SALM, EVC, BLC, SBGI and TVL).  I know these meet criteria 2 so I thought I would see what others thoughts are.

 

Packer

 

Level 3 Communications (LVLT)  has all seven of the characteristics.

 

Also, Howard Marks initiated holdings in Level 3 Communications Inc. in the first quarter of this year.

 

His purchase prices were between $0.98 and $1.47, with an estimated average price of $1.28.  His holdings were 10,000,000 shares as of 03/31/2011.

 

Did Howard Marks write the book on Level 3?

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