Tilson On The Three Most Dangerous Words In Investing

Even the most astute investors can fall prey to emotions and behavioral biases, and in a recent interview value guru Whitney Tilson talks about how to keep those emotions and biases in check. “There is no sure-fire way to get rich quickly,” Tilson tells Steve Forbes. “In fact the pursuit of that usually leads to ruin. The best way I know to get rich long term is to invest prudently and conservatively and not try and get rich quick, but try and get rich slowly, basically. Especially in an environment like this where the stock market is hitting new highs […]

Tilson Talks Valuations, Profit Margins

Top manager Whitney Tilson says the environment has become tough for value investors, but adds that he’s still finding some bargains out there. “This is not an ideal environment for a value investor like me because to find wonderful bargains it helps to have some distress in the market — or at least some area of the market — but there’s very little of this today,” Tilson wrote in his latest quarterly letter (hat tip to ValueWalk.com). “The major indices are at or near all-time highs and, for example, the VIX, a volatility measure of the S&P 500, dropped 30% […]

Tilson On His New Strategy

In his annual letter to clients, top value investor Whitney Tilson says he is getting back to basics now that he is managing money on his own. “I truly believe that less is more,” writes Tilson in his first annual letter since he and former business partner Glenn Tongue parted ways. “Going forward, the funds I manage will be concentrated in my very best, carefully researched investment ideas, with approximately 15 meaningful positions on the long side and a similar number of (much smaller) positions on the short side. My target portfolio exposure is 80-100% long and 15-30% short. In […]

Where Tilson Is Finding Value

Top value investor Whitney Tilson recently gave an extensive presentation at the Value Investing Congress, saying he is “cautiously optimistic” that the U.S. economic recovery will continue and offering some of his top investing ideas. “I am cautiously optimistic that a tepid economic recovery will continue in the U.S.,” Tilson said, “but with the S&P 500 up more than 16% YTD, the markets have already had a good year so I don’t see much upside unless the economy really takes off, which I think is unlikely.” (A tip of the hat to Business Insider for posting the presentation.) He also says several factors […]

Tilson: China Is “Completely Uninvestable”

While Chinese stocks have fallen in recent months, top value investor Whitney Tilson isn’t seeing value in the Asian giant. In fact, he says China is “uninvestable”. In an email to ValueWalk.com, Tilson explains how his father appears to have been scammed after recently buying a product from a Chinese website, “yet another case study that reinforces my belief that if you do business or invest in China or with Chinese companies, there’s an alarmingly high likelihood that you will get scammed”. Tilson says that rather than trying to address fraud, the Chinese government “instead … attacks those who seek […]

Contrarian Picks for the Gurus

In his latest Nasdaq.com column, Validea CEO John Reese looks at some stocks that have been hit hard in the market’s recent downturn, and which now look like bargains.  Reese talks about how top value investors like Whitney Tilson and Warren Buffett use downturns as opportunities to add to their favorite picks — not reason to flee the market. “In the dozen-plus years that I’ve been studying history’s most successful investors, I’ve found that far more often than not they use an approach like Buffett or Tilson — that is, they buy fundamentally sound stocks that others are shunning,” he […]

Tilson on Handling Short-Term Trouble

Value fund manager Whitney Tilson, who has a solid long-term track record but has struggled over the past month, recently talked with CNBC about how to handle short-term losses. Tilson says that as long as he still has strong conviction in his picks, he’ll use short-term declines as opportunities to add to those positions, which he says he’s been doing recently. “A bumpy ride in the short term is fine for us as long as we make very nice money in the long term,” he says. He says he thinks stocks — particularly U.S. stocks — look “pretty cheap” right now, and says he’d be […]

Tilson on “Panicked Headline Investing”

In a recent interview with CNBC, Whitney Tilson talked about why his firm likes to invest in firms that are the subject of “panicked headline investing”. Tilson says that “we love buying stocks when we think the sellers don’t care about price,” and cites BP as an example, saying that the oil giant had such negative publicity after its Gulf of Mexico spill that investors lost sight of value and sold the stock indiscriminately. He’s made a handsome profit on the stock since then, and says he finds similar panic-triggered opportunities quite often. But he says the key is to […]

Tilson: Big Value in Big Caps

Whitney Tilson is finding some of the best opportunities in the market in some of the market’s largest companies. “It’s one of the most attractive areas in the market,” he tells CNBC. “They’re incredible companies that are earning profits and trading at 10 to 12 times earnings with strong balance sheets and they’re returning cash to shareholders — they’re not exciting but if you’ve got a 5-10 year horizon and you want to earn better returns than Treasurys I think they’re the way to go.” Tilson counts Berkshire Hathaway, Coca-Cola, and McDonald’s among his current big-cap favorites. He also offers his […]

How Many Stocks Is Enough?

How many stocks should an investor own in order to diversify away stock-specific risk? Some interesting data shows that it may be fewer than you think. The data comes from hedge fund guru Joel Greenblatt’s book, You Can Be A Stock Market Genius, and was highlighted by top value investor Whitney Tilson a few years back (and recently reprinted on The Motley Fool website). According to Greenblatt’s book, the risk-reduction benefits of adding more stocks to your portfolio significantly decreases once you get to about 20 or so stocks. Tilson, citing the data, said that “owning two stocks eliminates 46% of […]

Tilson On Financials, And The Importance Of Discipline

Whitney Tilson says he doesn’t think the U.S. is headed for financial Armageddon, which means numerous bargains — including several in the financial sector — are available right now. “Yes and no,” Tilson says when asked by Forbes’ Steve Forbes if there are more bargains in the market than there were in 2008. “In terms of just pure, crazy cheap 20 cent dollars out there, it’s nothing like late 2008, early 2009. On the other hand, the world then was on the edge of Armageddon. … Things were cheaper then, but you were taking much greater risk. Today, if you […]

Tilson: Plenty of Values Right Now

Whitney Tilson says the U.S. economy is in better shape than most people think, and he is finding big value in a number of prominent companies’ shares. “The U.S. has already gone through and emerged from the subprime debt crisis,” Tilson tells MarketWatch. “There’s still an overhang and it has to work its way through,” he adds, but he says the U.S. is further along in resolving its problems than many other parts of the world. Tilson is finding opportunities in several areas of the market, including bank stocks like Goldman Sachs, Citigroup, and JP Morgan Chase and tech stocks […]

Tilson: Economy Hanging In; Market Cheap as It’s Been Since ’09 Bottom

Whitney Tilson, who has an exceptional long-term track record but has struggled of late, says several economic indicators — including Warren Buffett — are leading him to believe that the U.S. economy will avoid major crises in the next few years. And, he says stocks are as attractive as they’ve been since the 2009 bottom. “We are closely monitoring developments and have been increasing our short exposure selectively,” Tilson and Glenn Tongue write in a recent letter to investors, “but we remain substantially net long because, unlike 2008, when we were convinced that the bursting of the housing bubble was […]

Tilson & Heins on Staying Disciplined

Warren Buffett has said that investing is simple, but it’s not easy, and in their latest Kiplinger’s column, value investors Whitney Tilson and John Heins explore that subject. “In The Little Book That Beats the Market, published in 2005, star money manager Joel Greenblatt describes a ‘magic formula’ for success that ranks stocks based on only two factors: share price relative to a firm’s earnings and return on capital,” Tilson and Heins write. “After reading his book, we asked Greenblatt if widespread adoption of his simple plan might undermine its effectiveness. He was unconcerned: ‘Value investing strategies have worked for […]

Tilson & Heins on “Lottery” Picks

While they are value investors, Whitney Tilson and John Heins say that it’s okay to swing for the fences on riskier stocks. “Overpaying for stocks is always a bad idea,” the duo writes in their latest Forbes column. “But there are times when the market offers what we consider mispriced options on success. We will happily make an investment even when we know there’s a decent chance we’ll lose most or all of our money, as long as the upside is great enough to offset the risk. If we’re investing $100 in something that has a 70% chance of being […]