(Month 7) – Up 10.02% – Bridgepoint Edu. up 88% – TAM Deep Value Stock Portfolio

Johnny HopkinsTAM Portfolio Money Game Comments

Today is the end of month seven of The Acquirer’s Multiple $45,000 – Deep Value Stock Portfolio – Real Money Game, and the portfolio is up 10.02% since inception, compared to 10.49% for the comparative Russell 3000 (INDEXRUSSELL:RUA).

The Deep Value Stock Portfolio – Real Money Game means I’m investing my entire superannuation valued at $45,000 into a real life Acquirer’s Multiple Portfolio and documenting it here.

The plan is to build my portfolio over the next twelve months and ongoing. After twelve months I’ll have thirty stocks equally weighted in the portfolio, then I’ll re-balance each position after one year and one day to minimize tax.

Read More

Seth Klarman – ETF’s Provide Value Investors With A Distinct Advantage. Here’s Why.

Johnny HopkinsSeth Klarman Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Seth Klarman.

Back in February this year, Klarman released The Baupost Group’s 2016 year end letter in which he discusses the impact of ETF’s on the hedge fund industry and why ETF’s present long-term value investors with a distinct advantage. It’s a must read for all investors.

Here’s an excerpt from that letter:

Read More

Robert (Bob) Olstein – The Advantages Of Active Investing Over Passive Investing

Johnny HopkinsRobert Olstein Comments

One of the investors we follow closely at The Acquirer’s Multiple – Stock Screener is Robert Olstein.

Olstein is Chairman and Chief Investment Officer of Olstein Capital Management and serves as Head Portfolio Manager of the Olstein All Cap Value Fund and Co-Portfolio Manager of the Olstein Strategic Opportunities Fund. Olstein has long been recognized as one of the financial community’s most astute research analysts and money managers. Widely acknowledged as a leading expert in corporate disclosure and reporting practices, in 1971 Olstein co-founded The Quality of Earnings Report, which pioneered the use of forensic accounting techniques to identify positive or negative factors affecting a company’s future earnings power.

Last year, Olstein did a great interview with Fox Business in which he discusses the advantages of active investing over passive investing. He also discusses the difference between investment decisions and market decisions, and why he doesn’t spend a lot of time talking to management. It’s a must watch for all investors.

Read More

Bill Miller – To get different results than others, one needs to invest differently

Johnny HopkinsBill Miller Comments

One of our favorite investors here at The Acquirer’s Multiple – Stock Screener is Bill Miller.

Miller is the founder of Miller Value Partners, and currently serves as the Chairman and Chief Investment Officer, and the Portfolio Manager for Opportunity Equity and Income Opportunity Strategy. Prior to Miller Value Partners, Bill and his partner, Ernie Kiehne, founded Legg Mason Capital Management and served as portfolio managers of the Legg Mason Capital Management Value Trust from its inception in 1982. Miller took over as sole manager in December 1990 and served in this role for the next 20 years.

As of December 2016 the Miller Value Partners had $1.87 Billion in assets under management (AUM).

Miller recently released his quarterly summary which included a piece on the importance of investing differently than everyone else if you want to be a successful long-term value investor. He says, “We really couldn’t care less if the immediate quarter was a little weaker, or stronger, than expected.”, when asked about the short-term future of Apple. Miller’s focus is clearly on the longer-term. It’s a must read article for all investors.

Here’s an excerpt from that article:

Read More

Chuck Akre: How To Identify Compounding Machines | Talks at Google

Johnny HopkinsChuck Akre Comments

One of our favorite investors here at The Acquirer’s Multiple – Stock Screener is Chuck Akre.

Akre is the Managing Member, Chief Executive Officer and Chief Investment Officer at Akre Capital Management. Akre has been in the securities business since 1968. He founded Akre Capital Management in 1989 and relocated the business to Middleburg, Virginia, in 2002, where it still resides.

Akre is famous for his investment approach which he believes is perfectly captured by the visual of a “three-legged stool.” Akre says, “This metaphoric three legged stool describes what we look for in an investment: (1) extraordinary business, (2) talented management and (3) great reinvestment opportunities and histories. I have an old three-legged milking stool in our conference room and it is clear by looking at it that it is sturdy and durable.  We believe our stool is just as sturdy and durable based on our many years of experience!”

One of the best resources for investors is the series of presentations at Google by a number of investing gurus called Google Talks. One of our favorites is Akre’s presentation in which he discusses identifying businesses that are compounding machines, it’s a must watch for all investors:

Read More

Warren Buffett: Berkshire’s Earnings Aided By America’s Economic Dynamism

Johnny HopkinsWarren Buffett Comments

One our favorite investors here at The Acquirer’s Multiple – Stock Screener is of course Warren Buffett.

One of the best resources for investors is Berkshire Hathaway’s Annual Reports and the associated Chairman’s Letters which are are full of investing nuggets. Berkshire’s recently released 2016 Annual Report provides lots of great commentary and investing gems including the following on why the company continues to be aided by what Buffett terms – America’s Economic Dynamism. It also provides a brief history lesson on America’s economic growth since 1776. It’s a must read for all investors.

Here’s an excerpt:

Read More

Howard Marks – Warns Investors to Invest When Optimism Is Low, Not High

Johnny HopkinsHoward Marks Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Howard Marks.

Howard Marks is Chairman and Co-Founder of Oaktree Capital Management, the world’s biggest distressed-debt investor. He’s known in the investment community for his “Oaktree memos” to clients which detail investment strategies and insight into the economy, and in 2011 he published the book The Most Important Thing: Uncommon Sense for the Thoughtful Investor.

In a recent interview with CNBC, Marks warned investors that a lot of optimism has been factored into the stock market since election day and investors should invest when optimism is low, not high. It’s a must watch for all investors:

Read More

Jamie Dimon – Stock Buy-Backs Are A Great Option At The Right Price

Johnny HopkinsJamie Dimon Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Jamie Dimon.

Dimon is the Chairman and CEO of JP Morgan Chase. Dimon became CEO on January 1, 2006, and one year later also became Chairman of the Board. He was named President and Chief Operating Officer upon the company’s merger with Bank One Corporation on July 1, 2004. Dimon joined Bank One as Chairman and CEO in 2000, and engineered a dramatic turnaround—taking the bank from a half-billion-dollar loss in 2000 to record earnings of $3.5 billion in 2003—before its merger with JPMorgan Chase.

In 2012 Dimon wrote a great piece on why stock buy-backs are a great option at the right price and why he likes tangible book value as a valuation metric, it’s a must read for all investors.

Here’s an excerpt from that article:

Read More

Brian Rogers, T Rowe Price: Doubt Everything, Believe Nothing – Be Wary Of “It Stocks”

Johnny HopkinsBrian Rogers Comments

One of the funds that we watch closely here at The Acquirer’s Multiple – Stock Screener, is T Rowe Price.

T Rowe Price recently announced that its Chairman and CIO Brian Rogers would retire in March 2017, but would continue on the Board as a non-executive chair. Rogers joined T. Rowe Price as a portfolio manager in 1982. Previously, he served as portfolio manager of the U.S. Large-Cap Equity Income Strategy and the Equity Income Fund for 30 years, beginning with their inception in 1985. From 1994 to 2003 he was the first manager of the U.S. Value Equity Strategy and the Value Fund, and he was a founding member of the team managing the U.S. Large-Cap Value Equity Strategy from 2000 to 2015. He was elected to the firm’s Board of Directors in 1997, joined the Management Committee in 2003, and was named Board chair in 2007.

Recently, Rogers did an interview with WealthTrack in which he shared some of the most important investing lessons that he has learned over the past 30 years. While all of these lessons are insightful the one that struck a chord with me was – Doubt Everything, Believe Nothing and Avoid the “It Stocks”. Rogers is referring to investing in the latest highly publicized companies where a lot of the valuation has already been factored in, it’s a must watch for all investors.

Read More

Jeff Ubben: ValueAct to Return $1.25 Billion To Investors Citing Overvaluation

Johnny HopkinsJeff Ubben Comments

One of the funds we follow closely here at The Acquirer’s Multiple – Stock Screener is ValueAct Capital Management, run by Jeff Ubben.

Bloomberg recently reported that Valueact had decided to return $1.25 billion to investors in May because of concerns that company valuations are expensive, it’s a must read for all investors.

Here’s an excerpt from that article:

Read More

Dodge & Cox: The 6 Characteristics of Successful Active Investors

Johnny HopkinsDodge & Cox Comments

One of the funds we like to watch closely here at The Acquirer’s Multiple – Stock Screener is Dodge & Cox.

In 1930, in the midst of the Great Depression, Van Duyn Dodge and E. Morris Cox formed a partnership to provide investment counsel. Their confidence in this endeavor was fortified by Morrie Cox’s conviction that “well-conceived professional investment management could bring the force of some order into a rather chaotic investment world.”

The Dodge & Cox investment approach stresses evaluation of risk relative to opportunity. A strict price discipline — steering clear of popular choices that come at a price premium it would rather not pay. As of March 2017, Dodge & Cox had $63.4 Billion in assets under management.

Back in December of 2016 the firm released an article called, Understanding the Case for Active Management. It provides a solid case for the Active vs Passive Debate by focusing on a longer term prospective. The article highlights the six characteristics of successful active investors and states that many investors go astray by overreacting to short-term results and losing sight of their long-term investment horizon: They become too active in managing their active managers – its a must read for all investors.

Read More

Jim O’Shaughnessy: Human Beings Are Hardwired To Fail In The Stockmarket | Talks at Google

Johnny HopkinsJames O’Shaughnessy Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Jim O’Shaughnessy.

O’Shaughnessy has long been recognized as one of America’s leading financial experts and a pioneer in quantitative equity analysis, he has been called a “world beater” and a “statistical guru” by Barron’s. In February 2009, Forbes.com included O’Shaughnessy in a series on “Legendary Investors” along with Benjamin Graham, Warren Buffett, and Peter Lynch.

O’Shaughnessy is also the Chairman and CEO of O’Shaughnessy Asset Management (OSAM). Also serving as the Chief Investment Officer of the firm, and ultimately responsible for OSAM’s investment strategies. He directs the Senior Portfolio Manager, Director of Research, and the Portfolio Management Team and helps to set the agenda for the team. As of December 2016, O’Shaughnessy Asset Management had $4.22 Billion in assets under management (AUM).

O’Shaughnessy recently did a presentation for the folks at Google where he discusses how human beings are hardwired to fail in the stockmarket, it’s a must watch for all investors.

Read More

Wallace (Wally) Weitz – Business value “reality” exerts a “gravitational pull” on its stock price

Johnny HopkinsWally Weitz Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Wallace (Wally) Weitz.

Weitz is founder and co-chief investment officer of Weitz Investments. Weitz has spent over three decades putting his instinct for opportunity to work for shareholders. Influenced by the value investing model of Benjamin Graham and Warren Buffett, steadily produced outstanding results on the funds that he’s managed. He manages Partners III Opportunity Fund and co-manages Partners Value Fund and Hickory Fund.

As of December 2016 the Weitz Value Fund had $683 Million in assets under management (AUM).

Weitz Investment Management recently released its Q1 2017 shareholder letter in which Weitz says, “Business value “reality” exerts a “gravitational pull” on its stock price”. It’s an important concept for value investors to understand.

Here’s an excerpt from that letter:
Read More

Bill Nygren – Doesn’t think there’s reasons to believe the stock market is expensive

Johnny HopkinsBill Nygren Comments

One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Bill Nygren.

Bill Nygren has been a manager of the Oakmark Select Fund (OAKLX) since 1996, Oakmark Fund (OAKMX) since 2000 and the Oakmark Global Select Fund (OAKWX) since 2006.

As of December 2016 the Oakmark Select Fund had $5.17 Billion in assets under management (AUM).

In a recent interview with CNBC Nygren discusses why he doesn’t think there’s reasons to believe the stock market is expensive right now.

Read More

Mohnish Pabrai – Market Commentary March 2017

Johnny HopkinsMohnish Pabrai Comments

One of our favorite investors at The Acquirer’s Multiple  – Stock Screener is Mohnish Pabrai.

Mohnish Pabrai is the Founder and Managing Partner of the Pabrai Investments Funds, the founder and CEO of Dhandho Funds, and the author of The Dhandho Investor and Mosaic – Perspectives on Investing.

Following is a recent interview that Pabrai did with CNBC regarding his outlook on the remainder of 2017. In this interview Pabrai says Jeff Bezos is one of the top five business leaders in the last 100 years, he also explains why tech companies today are different to those in 2000, and why Google is the ultimate Dhandho business.

Read More

Amazon Has Changed The Entire Business Ecosystem Forever – Prof. Scott Galloway (NYU Stern)

Johnny HopkinsAmazon, Scott Galloway Comments

Scott Galloway is a Professor of Marketing at NYU Stern School of Business where he teaches Brand Strategy and Digital Marketing to second-year MBA students and is the author of the Digital IQ Index ®, a global ranking of prestige brands’ digital competence. In 2012, Professor Galloway was named “One of the World’s 50 Best Business School Professors” (Poets & Quants).

Galloway was elected to the World Economic Forum’s “Global Leaders of Tomorrow,” which recognizes 100 individuals under the age of 40 “whose accomplishments have had impact on a global level.” Professor Galloway has served on the board of directors of Eddie Bauer (Nasdaq: EBHI), The New York Times Company (NYSE: NYT), Gateway Computer, and Berkeley’s Haas School of Business. He received a BA from UCLA and an MBA from UC Berkeley.

Following is a presentation where Galloway speaks at L2’s Amazon Clinic about how Amazon is changing the traditional business ecosystem forever. Not only has Amazon changed consumer shopping habits, it has changed the relationship between shareholders and investors. Investors are no longer satisfied with steadily growing profits; instead they seek fast growth and strong vision – even at the expense of profitability. It’s a must watch for all investors.

Read More

Marty Whitman – Wall Street Just Doesn’t Get It!

Johnny HopkinsMarty Whitman Comments

One of our favorite investors here at The Acquirer’s Multiple – Stock Screener is Marty Whitman.

Whitman is the Chairman and Founder of Third Avenue. He’s recognized as a legend in the world of value investing and has proven for more than 50 years that active, opportunistic investors can find under-priced securities in companies with strong balance sheets.

One of our favorite Whitman interviews was one he did with WealthTrack back in 2013 in which he discusses his process for finding companies that are safe and dirt cheap. Whitman also says Wall Street is ignorant when its comes to understanding a company’s debt, credit worthiness, and earnings saying – they just don’t get it! It’s a must watch for all investors.

Read More

Bruce Berkowitz – There’s Light At The End Of The Tunnel

Johnny HopkinsBruce Berkowitz Comments

One of our favorite investors here at The Acquirer’s Multiple – Stock Screener is Bruce Berkowitz.

Berkowitz is the Founder and Chief Investment Officer of Fairholme Capital Management, and President and a Director of Fairholme Funds, Inc. In 2010, Berkowitz was named as the 2009 Domestic-Stock Fund Manager of the Year by Morningstar as well as the Domestic-Stock Fund Manager of the Decade (2000-2009), also by Morningstar. Most recently, he was named 2013’s Money Manager of the Year by Institutional Investor Magazine. 

As of December 2016, Fairholme Capital Management had $982.57 Million in assets under management (AUM).

One of our favorite Berkowitz interviews was one he did recently with WealthTrack. An exclusive interview with a deep value investor whose outstanding long term track record has been seriously tested in recent years. Here’s why Fairholme Fund’s Bruce Berkowitz says there is light at the end of the tunnel.

It’s a must watch for all investors.

Read More

Undervalued Movado Group Inc – FCF/EV Yield of 14%

Johnny HopkinsMOV, Stocks Comments

One of the cheapest stocks in our Acquirer’s Multiple, All Investable – Stock Screener is Movado Group Inc (NYSE:MOV).

Movado Group Inc (Movado) designs, sources, markets and distributes luxury watches. The company operates in both wholesale and retail segments throughout the U.S. and internationally. It has international operations in Europe, the Middle East and Asia. Its portfolio of brands includes Coach Watches, Concord, Ebel, ESQ Movado, Scuderia Ferrari Watches, HUGO BOSS Watches, Juicy Couture Watches, Lacoste Watches, Movado and Tommy Hilfiger Watches.

There’s no question that Movado has had a tough run lately due mainly to a difficult retail environment and disruption in its traditional luxury watch revenues caused by the introduction of smartwatches.

With smartwatch sales expected to reach a total value of $17.8 billion dollars in 2020 the company has started to make the necessary changes to compete in the smartwatch space. Movado’s second generation of Android Wear powered by the new Qualcomm Snapdragon Wear Processor means the company is now well positioned in the fully connected smartwatch space.

Movado recently announced its new partnership with Google in launching a new smartwatch collection called Movado Connect. This partnership means both companies can provide combined expertise in watchmaking, design and software that provide consumers with Movado’s traditional luxury watches powered by the latest, cutting-edge technology.

Movado has recognized that consumers are moving away from traditional retail outlets and towards purchases on smartphones and online. Evidence of this can be seen by the company’s online offering Movado.com, the company’s fastest growing business unit with double-digit increases in fiscal 2017. Movado has stated that it will be making significant increases in its digital media investment this year with close to fifty percent of its total media budget being spent on its digital and e-commerce business.

In addition to adding smartwatch technology to its range and increasing its digital and e-commerce footprint Movado has also made the difficult decision to implement a number of cost saving initiatives to overcome the current challenges facing the U.S. fashion watch category and its traditional retail channels. The cost cutting initiatives are expected to deliver $12 million in savings in fiscal 2018 and $50 million on an annualized basis.

Movado is an extremely well run company with a strong balance sheet and ability to generate solid free cash flows. In terms of Movado’s valuation, the company has a FCF/Price Yield of 10% (ttm), a FCF/EV Yield of 14% (ttm), and an Acquirer’s Multiple of 5.52, or 5.52 times operating earnings. When you consider that Movado has $474 million in equity and zero in intangibles that means the company has a TBV per share of $20.65, just 11% below its current share price of $23.25.

All of this combined with a quick ‘back of the envelope’ projected free cash flow calculation shows that Movado is clearly in undervalued territory.

You can find our full stock analysis on Movado Group Inc at ValueWalk here.