Whitman Finding Bargains through Graham & Dodd, with a Twist

The Financial Post of Canada takes an interesting look today at the Benjamin-Graham-esque approach that longtime market-beater Marty Whitman uses to pick value stocks. According to The Post’s Levi Folk, Whitman’s strategy is based on the “net-net” approach that Graham and David Dodd laid out in their 1934 classic Security Analysis. (Net-nets are firms whose liquidation values are significantly greater than their market capitalizations, after all liabilities are factored in.) Whitman — who “is finding bigger discounts in the market than at any time in his 50-plus year career”, according to Folk — makes four alterations to the net-net method.

Gross: Investing “Revolution” Is On

In his April market commentary on PIMCO’s web site, bond guru Bill Gross says that we’ve entered a new world of economics and investing, one in which “there should be no doubt that the bull markets as we’ve known them are over and that the revolution is on. Investing is no longer child’s play.” Gross says that the future of investing will depend on the future of the global economy, and the future global economy “will likely be dominated by delevering, deglobalization, and reregulating. … We do not envision a mean reversion, cyclically oriented future, but instead a new world […]

Stocks for The Long Run — Riskier than Stocks for The Short Run?

In his latest column for The New York Times, Mark Hulbert highlights an interesting new study that examines the concept of long-term risk in the stock market. The study, performed by University of Chicago Booth School of Business Professor Lubos Pastor and Wharton School Professor Robert F. Stambaugh, questions whether the concept of mean reversion really indicates that stocks are less risky over the long run, a theory that has been espoused by many investors and academics, most notably Jeremy Siegel. Siegel’s research has shown that stock returns have shown a remarkable tendency to revert to about 7 percent per […]

Tilson Turns Bullish on a Few Financials

Whitney Tilson, whose calls about the housing bust, financial crisis, and huge government bailout have proved prescient over the past year, tells CNBC that after making a bundle shorting financial stocks he’s now finding some good long opportunities in the sector. “Valuations have compressed so much we actually flipped around and went long some financials such as American Express and Wells Fargo,” says Tilson, who runs T2 Partners and is also a Kiplinger’s columnist. “I think there’s a 70% chance Wells Fargo makes it without any kind of catastrophic outcome in which case it’s a $40-$60 stock. And at current […]

Top Timing Newsletter Turning Bullish

The Cabot Market Letter — one of the top-performing newsletters of the past decade — is moving back into stocks, seeing the odds as “increasingly good” that the market has bottomed. “We’ve had the snapback; we’ve had the rally,” Michael Cintolo, the newsletter’s editor, wrote yesterday. “And while a technical correction is quite possible from here, the odds are increasingly good that the ultimate low of the bear market has passed, and that buying select leading stocks now will pay off in the weeks and months ahead.”