I think Warren Buffett is the greatest equity investor the world has ever known. I’m not alone in my opinion. #-ad_banner-#His investing style is rooted in the value investing teachings of his mentor Benjamin Graham.  As Buffett would explain it, he just sits around and waits for fat pitches where a company is clearly worth a lot more than its stock price implies. When something is obviously mispriced (read: undervalued), Buffett buys — and he buys with conviction. It sounds simple, but it isn’t.   What Buffett fails to mention is that when something is obviously cheap… Read More

I think Warren Buffett is the greatest equity investor the world has ever known. I’m not alone in my opinion. #-ad_banner-#His investing style is rooted in the value investing teachings of his mentor Benjamin Graham.  As Buffett would explain it, he just sits around and waits for fat pitches where a company is clearly worth a lot more than its stock price implies. When something is obviously mispriced (read: undervalued), Buffett buys — and he buys with conviction. It sounds simple, but it isn’t.   What Buffett fails to mention is that when something is obviously cheap to him, it often looks cheap for good reason to the rest of us. In fact, Buffett’s most successful investments have often been stocks that the rest of us are afraid to buy. A perfect example: One of Buffett’s greatest investments was American Express (NYSE: AXP). In retrospect, his investment in this world-class company may look like a no-brainer. But at the time, it was a complicated and nerve-racking prospect.  In 1964, American Express shares dropped by 50% as the result of fears over potential liability the company had in relation to the infamous salad oil… Read More

“One man’s trash is another man’s treasure.” That’s an appropriate saying for an investor looking for bargains in the stock market. I spend a lot of time looking through beaten-down stocks trying to find an overlooked jewel. I believe I found one recently in Penn West Petroleum (NYSE: PWE), which many investors have been throwing into the trash bin. #-ad_banner-#Shares of Penn West would need to triple to get back to where they were just two years ago — but I think that triple is possible.   I’m not suggesting it will happen overnight, but with… Read More

“One man’s trash is another man’s treasure.” That’s an appropriate saying for an investor looking for bargains in the stock market. I spend a lot of time looking through beaten-down stocks trying to find an overlooked jewel. I believe I found one recently in Penn West Petroleum (NYSE: PWE), which many investors have been throwing into the trash bin. #-ad_banner-#Shares of Penn West would need to triple to get back to where they were just two years ago — but I think that triple is possible.   I’m not suggesting it will happen overnight, but with the plan that Penn West has in place, it can happen. The nice part about Penn West is that as an investor buying today, you can lock in a 7% dividend yield. That means you get paid nicely while you wait for the plan to be executed and the shares to go up. What Caused PWE To Collapse? I’m bullish on Penn West going forward, but I don’t dispute for a minute that the share price drop over the past two years was warranted. This is a company that has struggled mightily. Shareholders are right to feel… Read More

After an exceptional five-year run, U.S. stock markets are now touching all-time highs. It follows that stocks here at home are not nearly as attractively priced as they were at the start of this run.#-ad_banner-# I’m not suggesting that the U.S. markets are going to collapse, but I do think that it is time to start looking around the globe for better valuations.      One place to start looking might be China. While the U.S. markets have roared back from the financial crisis, the Chinese market is only at a third of its pre-financial crisis… Read More

After an exceptional five-year run, U.S. stock markets are now touching all-time highs. It follows that stocks here at home are not nearly as attractively priced as they were at the start of this run.#-ad_banner-# I’m not suggesting that the U.S. markets are going to collapse, but I do think that it is time to start looking around the globe for better valuations.      One place to start looking might be China. While the U.S. markets have roared back from the financial crisis, the Chinese market is only at a third of its pre-financial crisis high. Investing in a Chinese company isn’t particularly hard. You don’t have to go to the trouble to obtain direct access to the Shanghai market itself. There are plenty of Chinese companies listed here in the U.S. One attractively valued Chinese stock I’ve been looking at is Kingold Jewelry (Nasdaq: KGJI). For good reason, U.S.-listed Chinese companies have gotten a bit of a bad rap in recent years.  There have been several instances where investigative work by savvy short sellers has revealed several U.S.-listed Chinese companies as nothing more than frauds. Now-delisted companies like Sino-Forest and Rino International spring to… Read More

Successful investing is all about figuring out what something is worth and then paying significantly less than that for it. If you can do that over and over again, you’ll have found yourself a recipe for success.#-ad_banner-#​ It sounds easy, but of course it isn’t. It takes a lot of hard work and patience to find situations where the market is offering up such juicy bargains.  I believe that there is one such bargain sitting in plain view today. This is a well-known company that I think offers investors the chance to buy a dollar’s worth of assets… Read More

Successful investing is all about figuring out what something is worth and then paying significantly less than that for it. If you can do that over and over again, you’ll have found yourself a recipe for success.#-ad_banner-#​ It sounds easy, but of course it isn’t. It takes a lot of hard work and patience to find situations where the market is offering up such juicy bargains.  I believe that there is one such bargain sitting in plain view today. This is a well-known company that I think offers investors the chance to buy a dollar’s worth of assets for 25 cents. The evidence to support that valuation is quite compelling, but the question of when that value might be realized is difficult to answer. The company I’m talking about is Sears Holdings (Nasdaq: SHLD).  Many people are familiar with the Sears story. Hedge fund manager Eddie Lampert gained control of Kmart in 2003 by buying up the company’s debt and exchanging that debt for equity during bankruptcy proceedings. That was a home run for Lampert. Then in 2004, Lampert had Kmart acquire Sears to form Sears Holdings. Investors were thrilled with this hedge fund star taking control of two… Read More

A long time ago, I learned that style counts for absolutely zero points in investing. Investing is all about results.#-ad_banner-#​ Borrowing a great investment idea from someone else is just as good as coming up with a great idea on your own. All that matters is compounding your investments at as high a rate as possible while minimizing your risk.  I’d even argue that it would be smarter to use ideas from successful investors because that adds one more layer of due diligence to your own — a layer that happens to have been performed by a respected… Read More

A long time ago, I learned that style counts for absolutely zero points in investing. Investing is all about results.#-ad_banner-#​ Borrowing a great investment idea from someone else is just as good as coming up with a great idea on your own. All that matters is compounding your investments at as high a rate as possible while minimizing your risk.  I’d even argue that it would be smarter to use ideas from successful investors because that adds one more layer of due diligence to your own — a layer that happens to have been performed by a respected investor. A couple of years ago, Warren Buffett hired two portfolio managers to take over part of Berkshire Hathaway’s (NYSE: BRK-B) investment portfolio. Each of the men were originally given about $2.5 billion (subsequently increased to $4 billion) to manage. With Buffett now 83 years old, the plan was (and still is) for these two men to eventually handle the investing duties for the bulk of Berkshire’s enormous portfolio. One of those portfolio managers is Ted Weschler, who, before joining Berkshire in 2011, managed a hedge fund called Peninsula Capital Advisors. From 2000 through 2011, Weschler’s… Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. Read More

There are many different approaches that an investor can use to succeed. The key is to find the approach that works for you.#-ad_banner-#​ Personally, I operate best when I think of a stock as a small ownership interest in a company and not a piece of paper to be traded on a frequent basis. My approach is to buy shares in a company I like at an attractive valuation and let management build wealth for me over the long term.  That said, if I had the ability to be a market timer, that is what I would do. It would be far less stressful (not to mention rewarding) if I could accurately time the low point for a stock and buy only then.  Ordinarily I’m very skeptical of my ability to pick the bottom for a stock — but today, I have a pretty good feeling about one. The company is Canadian light oil producer Lightstream Resources (OTC: LSTMF). I think this month could represent a long-term bottom for a company turning a corner. Lightstream has a market capitalization of over $1 billion and production exceeding 46,000 barrels of oil equivalent (BOE) a day. If you name a… Read More

Every quarter, many of us in the investing world eagerly anticipate the SEC filings that the world’s largest (and greatest) investment managers are required to file. #-ad_banner-# There is no single 13F that is more eagerly anticipated than that of Berkshire Hathaway’s (NYSE: BRK-B) Warren Buffett. The Oracle of Omaha isn’t just one of the greatest stock pickers the world has ever seen. He is also one of the most selective. He seldom makes a significant new addition to his portfolio, usually instead preferring to add to existing positions or buy nothing at all. So when he makes a big… Read More

Every quarter, many of us in the investing world eagerly anticipate the SEC filings that the world’s largest (and greatest) investment managers are required to file. #-ad_banner-# There is no single 13F that is more eagerly anticipated than that of Berkshire Hathaway’s (NYSE: BRK-B) Warren Buffett. The Oracle of Omaha isn’t just one of the greatest stock pickers the world has ever seen. He is also one of the most selective. He seldom makes a significant new addition to his portfolio, usually instead preferring to add to existing positions or buy nothing at all. So when he makes a big purchase of a new stock, it’s kind of a big deal. In the most recent quarter, Buffett revealed a rare new portfolio addition: Exxon Mobil (NYSE: XOM) — for a cool $3.4 billion. Even for Buffett, that’s a big purchase. Investors have been scrambling to answer two questions: Why is Buffett was buying Exxon — and why now? Buffett has been familiar with Exxon for decades, so what’s changed about the company that merits a $3.4 billion investment from Berkshire? It certainly isn’t because Exxon’s stock price has dropped: Exxon’s shares are actually close to all-time highs, and… Read More

As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and… Read More

As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and otherwise — was talking about Bezos, Amazon and drones. Bezos certainly knows how to create a buzz. What has yet to be seen is whether he can generate profits for Amazon shareholders. The Buzz Is Great — How About Some Profits? Amazon is a fantastic and innovative company. I don’t dispute that for a minute — I think that’s an inarguable fact. But another fact that I think investors should be aware of is that this company does not generate significant profits or free cash flow. It is a bit hard to believe considering that the company is well… Read More

It’s no secret that there’s a horizontal oil boom happening in the United States today. What is less appreciated is how unique this boom is to the United States. There are lots of places in the world that have oil in the ground that horizontal drilling and multi-stage fracturing could exploit. But more is required than just having the oil. The U.S. is unique in that it provides the perfect combination of the ingredients necessary to allow for the horizontal revolution to take off.#-ad_banner-# Let’s tick the boxes on these ingredients. First, the U.S. has the oil in the ground… Read More

It’s no secret that there’s a horizontal oil boom happening in the United States today. What is less appreciated is how unique this boom is to the United States. There are lots of places in the world that have oil in the ground that horizontal drilling and multi-stage fracturing could exploit. But more is required than just having the oil. The U.S. is unique in that it provides the perfect combination of the ingredients necessary to allow for the horizontal revolution to take off.#-ad_banner-# Let’s tick the boxes on these ingredients. First, the U.S. has the oil in the ground trapped in large quantities in tight/shale oil rocks that horizontal wells and multi-stage fracturing can exploit. Second, the U.S. already has in place a network of thousands of miles of pipelines that were originally used to develop conventional oil plays. Third, the U.S. has the thousands of drilling rigs required that are needed to drill these unconventional fields that have low rate wells and require constant drilling. Fourth, the U.S. has the thousands of skilled energy workers required to accomplish the massive amount of drilling, fracturing and completion work that is required. Fifth and perhaps most importantly, the United States… Read More

This month, the International Energy Agency released the 2013 version of its annual World Energy Outlook. Not surprisingly, the horizontal oil boom that has given birth to an oil production renaissance in the United States played center stage in the report.   However, some of what the IEA had to say about the U.S. horizontal boom may have caught some people by surprise.#-ad_banner-# The IEA sees the horizontal boom making the U.S. the world’s largest oil producer by 2015. No surprise there — the media is all over that story. But the IEA… Read More

This month, the International Energy Agency released the 2013 version of its annual World Energy Outlook. Not surprisingly, the horizontal oil boom that has given birth to an oil production renaissance in the United States played center stage in the report.   However, some of what the IEA had to say about the U.S. horizontal boom may have caught some people by surprise.#-ad_banner-# The IEA sees the horizontal boom making the U.S. the world’s largest oil producer by 2015. No surprise there — the media is all over that story. But the IEA also said that the horizontal oil boom will peak by the year 2020. (But it’s only just begun!) After 2020, the IEA sees American production hitting a brief plateau before heading back into permanent decline. That doesn’t sound like an oil boom — in the grand scheme of things, it’s barely a blip on the long-term radar. I don’t entirely agree with this view from the IEA, which I think massively underestimates the entrepreneurial spirit of the energy industry.  After all, the renaissance in U.S. oil production wasn’t led by supermajors like Exxon (NYSE: XOM) and Chevron (NYSE: CVX) —… Read More