Our investment process is both qualitatively and quantitatively intensive. Throughout the course of a year we look at hundreds of companies. Most of them receive only a cursory look – we don’t like the business, the valuation is too stretched, or we simply have no insight into the business. We usually glance at them and [...]
I don’t run, I don’t lift weights, and I don’t frequent a gym. I admire those who do, but that’s not for me. In the summer I ride a bicycle to work; in the winter my kids and I ski. Alpine skiing is probably the laziest winter sport ever invented — gravity takes you down, [...]
One of my brightest childhood memories is of skiing. I spent my childhood in Murmansk, a port city up in northwest Russia (located above the Arctic Circle). Incidentally, it was the birthplace of the fictional submarine Red October from the movie The Hunt for Red October. On Sundays, my family – my father and mother, [...]
My presentation at Value Investing Congress Value Investor Congress Las Vegas 2013 – I Like Big Dividends and I Cannot Lie – Vitaliy Katsenelson by VitaliyKatsenelson
If I were a dividend, I’d fire my press agent. I’d be jealous and feel neglected because stock prices get a lot more attention than they deserve. The only time dividends make headlines is when they get reduced, because dividend cuts (or omissions) often go hand in hand with stock price declines. The stock is [...]
When Hewlett-Packard Co. is discussed in the media, it is portrayed as a PC company. On the surface, that makes sense: HP is the largest PC maker in the world, and personal computers are 30 percent of its revenue. But — and this is a very important but — PCs today represent only 10 percent of HP’s operating [...]
Investment mistakes usually fall into one of three categories: analysis, behavior or bad luck. In October 2011, after the shares of Hewlett-Packard Co. had been halved from about $48 earlier that year, I made a case for the stock. That was a mistake. There was no bad luck. I made several errors in my analysis. In this column I want [...]
Michael Dell should ask himself a simple question: “Who is my daddy?” He says his current daddy — Wall Street’s army of sell-side analysts and impatient investors with their insatiable thirst for short-term results — makes it impossible for him to transform Dell from a PC maker into a technology services company. He doesn’t want Wall [...]
Berkshire Hathaway buying Heinz is unlike any deal Buffett has ever done. In his past deals he was always a passive owner – he let existing management continue to run the company. In this case 3G, a private equity firm that has done terrific turnarounds in the past, will be the new management. They are [...]
Earlier this week I wrote about the psychological challenges that Apple shareholders face. I also discussed the evolution of Apple’s “i” gadgets — the iPod, iPhone and iPad — and how they have created an ecosystem unlike those of other technology companies. Apple’s ecosystem is an important and durable competitive advantage; it creates a tangible switching [...]
So many articles have been written recently about Apple — defending it or explaining why this glorious fruit will turn into a shriveling pumpkin by midnight (with Samsung’s help) — that I really haven’t felt the need to contribute to the unending debate. But then Apple’s stock crashed to $450 last month, and we bought a [...]
Months before the recent Sturm und Drang surrounding nutritional-supplement maker Herbalife, my firm took a long, hard look at the company. On the surface it was a value investor’s dream: great balance sheet, high return on capital, high revenue and earnings growth, and attractive valuation. Of course, there was one problem: The validity of its multilevel marketing [...]
In this segment I am discussing Herbalife with Jeff Macke
I was on Yahoo! Breakout with terrific Jeff Macke discussing Apple ….
ARMED WITH fancy, Nobel Prize–winning equations and Greek terminology such as beta, portable alpha, neutered theta and sigma-squared delta (okay, I made up the last two), an army of consultants evaluates mutual fund and hedge fund manager performance on a monthly and quarterly basis, ignoring the fact that in the short run stock movements are [...]
The part I hate about writing is the first paragraph — the introduction. You have to say something pithy that grabs readers’ attention and sets the tone. Sometimes the intro comes naturally; most of the time it doesn’t. I wanted to write an article about health maintenance organizations, but after staring at the computer screen [...]
Not to buy is an active decision. I took a serious look at Helmerich & Payne and, though we really liked the company, my conclusion was not to buy the stock at this price (see analysis). However, this research was not a complete waste of time, because at a lower price, in the $20-30s, HP [...]
In this series of several articles I’ll discuss my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011. The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly [...]
I sang love serenades to Microsoft in the December issue, but a few weeks ago we sold our shares of Microsoft. Because we believe the stock is undervalued, that decision was not easy. What changed? A very important part of my thesis was the success of Windows 8, an operating system that Microsoft made for both PCs and [...]
I did FOX Business interview about Facebook. I am tired of writing and talking about it as much as everyone else is tired of hearing about it. So I am going on Facebook hiatus for a (long) while. My last comment will be this. I got a question from a reader asking me if my [...]
Best Buy Co. shareholders are lucky that CEO Brian Dunn pulled a “Mark Hurd” and resigned as a result of allegations of an inappropriate relationship with a staffer. Dunn was not the right person to lead Best Buy into battle against online-only competitors that use the company’s spacious stores as showrooms for their products. Dunn [...]
Being politically correct has never been my strongest quality; therefore I’ll say this: I don’t feel sorry for Facebook’s new shareholders. Despite NASDAQ technical glitches and analysts sharing changes in estimates for the near quarter only with big clients, the Facebook initial public offering (IPO) was a success. Yes, a success. See, the IPO market [...]
http://www.institutionalinvestor.com/blogarticle/3032107/Why-Facebooks-IPO-Valuation-is-Insane.html I was recently on CNBC discussing the Facebook valuation, which I believe is priced for out-of-this-world perfection. The easiest way to assess the insanity of Facebook’s valuation is by comparing it to Google’s. Facebook is set to go public at a sweet valuation of $100 billion, and it has estimated revenue for 2012 of [...]
While attending Berkshire Hathaway’s annual meeting, I was interviewed by Matt Nesto of Yahoo! Breakout about Microsoft, EA, Facebook.
Here is a thought for an eager Facebook investor: Google revenue – $40 billion; market capitalization $200 billion (plus $40 billion of cash). Facebook revenue $4 billion; market capitalization $100 billion. So Facebook has to grow revenue 10x for you to double your money. Good luck! follow on twitter Vitaliy N. Katsenelson, CFA, is Chief [...]
I have to confess, I am tired of writing “structured” articles, the ones where I have to limit my thoughts to 800 words. So with this email I am taking a break. This is an unstructured stream of thought, in no particular sequence. Deadline to register for VALUEx Vail is May 1st. I am [...]
Best Buy’s CEO Brian Dunn did a courageous and proper thing for shareholders by resigning. He was not the right person to lead Best Buy into battle against online-only competitors that use Best Buy’s spacious and beautiful stores as the showroom for their products. To make things even worse, smart cell phones make comparison shopping [...]
On the surface Xerox Corp. smells a lot like its Nifty 50 brethren, once-hotter-than-the-sun-but-now-bankrupt Eastman Kodak Co. and Polaroid Corp. Its stock has gone nowhere since forever. But Xerox was not your typical overvalued blue chip of the 1990s, like Cisco Systems, Johnson & Johnson and Microsoft Corp., whose earnings have tripled or quadrupled since [...]