The year was 1992 and young Jan Koum had nothing… He was 16 years old and, with his mother and grandmother, had just left their native country of Ukraine to move to California. They made ends meet with the assistance of food-stamps and a grueling work schedule of cleaning and babysitting. It wasn’t exactly the lifestyle of the rich and famous that he probably witnessed on American TV. But today, Koum’s net worth exceeds $6 billion. #-ad_banner-#Many of you are probably more familiar with the acquisition of the mobile-messaging company Koum founded, WhatsApp, than you are with Koum himself. Thanks to… Read More

The year was 1992 and young Jan Koum had nothing… He was 16 years old and, with his mother and grandmother, had just left their native country of Ukraine to move to California. They made ends meet with the assistance of food-stamps and a grueling work schedule of cleaning and babysitting. It wasn’t exactly the lifestyle of the rich and famous that he probably witnessed on American TV. But today, Koum’s net worth exceeds $6 billion. #-ad_banner-#Many of you are probably more familiar with the acquisition of the mobile-messaging company Koum founded, WhatsApp, than you are with Koum himself. Thanks to the $19 billion acquisition of WhatsApp by Facebook (Nasdaq: FB) in February, Jan Koum achieved the American Dream. It’s a lot easier said than done to build a company from scratch like Koum did and sell it for millions or billions of dollars. And Mr. Koum isn’t the first person to strike it rich when his company was acquired by a larger company. Nor will he be the last. The acquisition of WhatsApp by Facebook was just one of the many merger & acquisitions (M&A) stories that have bombarded the headlines recently. M&A have been heating up… You might recall… Read More

As is often the case with an extended bull market, value is now trumping growth.  #-ad_banner-#Many once-soaring tech stocks have come crashing downward in 2014, even as some once-loathed sectors are heating up. And few sectors were as disliked as the insurers, which have been among the deep value plays in this bull market. Back in April 2013, I noted that Protective Life (NYSE: PL), for example, sported a stunning 23% free cash flow yield.  And a month later, I noted that many insurers, including Protective Life, traded at a considerable discount to book value. This insurer is no longer a deep… Read More

As is often the case with an extended bull market, value is now trumping growth.  #-ad_banner-#Many once-soaring tech stocks have come crashing downward in 2014, even as some once-loathed sectors are heating up. And few sectors were as disliked as the insurers, which have been among the deep value plays in this bull market. Back in April 2013, I noted that Protective Life (NYSE: PL), for example, sported a stunning 23% free cash flow yield.  And a month later, I noted that many insurers, including Protective Life, traded at a considerable discount to book value. This insurer is no longer a deep bargain, now that Japan’s Dai-ichi has announced plans to buy it for $5.7 billion. Notably, Protective Life carries just $4.2 billion in tangible book value, implying a nice premium to book in this purchase price. Why would Dai-ichi pay such a stiff price? Because the Japanese financial services firm realizes that the U.S. insurance market is on the cusp of a cyclical upturn, thanks to rising insurance premiums. Insurers always have pricing power when companies start to feel more optimistic about business conditions. In fact, Dai-ichi intends to use Protective Life as a platform to acquire other, smaller… Read More

There are several ways to define value, but our favorites typically offer juicy income streams or a deep wellspring of net assets that are actually worth more than the share price. It’s nice to find stocks that offer high dividend yields or trade below book value, but one group of stocks checks both boxes. Value squared, if you will. I’m talking about the mREITs (mortgage real estate investment trusts), which buy mortgages at a discount to their face value. You already know the sector is cheap when you see these kinds of dividend yields. And the view sharpens once… Read More

There are several ways to define value, but our favorites typically offer juicy income streams or a deep wellspring of net assets that are actually worth more than the share price. It’s nice to find stocks that offer high dividend yields or trade below book value, but one group of stocks checks both boxes. Value squared, if you will. I’m talking about the mREITs (mortgage real estate investment trusts), which buy mortgages at a discount to their face value. You already know the sector is cheap when you see these kinds of dividend yields. And the view sharpens once you look at their balance sheets. Every one of these mREITs trades for less than tangible book value. #-ad_banner-#As a quick recap, these mREITs borrow low-rate, short-term debt and use the funds to buy bonds consisting of pools of mortgages guaranteed by government-sponsored giants Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC). They also use leverage to amplify their profits. The borrow-to-buy strategy worked like a charm in the years after the Great Recession, as mortgage bonds sold at very low prices on fears of a further housing slump. As the housing market has stabilized, the mortgage… Read More

For those that don’t know, in addition to being the Chief Strategist behind StreetAuthority’s Stock of the Month newsletter, I’m also an avid poker player. I first picked up poker more than a decade ago, well before it was all over television. But I wasn’t after the big jackpot like most of the people who’ve taken up the game. I simply thought poker could make me a better investor. Poker has a lot in common with investing — and no, I’m not talking about luck. In poker, you don’t get the luxury of making your moves in a vacuum or… Read More

For those that don’t know, in addition to being the Chief Strategist behind StreetAuthority’s Stock of the Month newsletter, I’m also an avid poker player. I first picked up poker more than a decade ago, well before it was all over television. But I wasn’t after the big jackpot like most of the people who’ve taken up the game. I simply thought poker could make me a better investor. Poker has a lot in common with investing — and no, I’m not talking about luck. In poker, you don’t get the luxury of making your moves in a vacuum or without consideration for the dynamics other players bring to the game. It also takes patience and foresight to win consistently. And sometimes, it’s not about winning, but simply knowing when to cut your losses. #-ad_banner-#When put in those terms, it’s easy to see how playing poker can make you a better investor. It’s easy to spot an inexperienced player at a poker table. He’ll be the guy who plays nearly every hand. He’s probably grown up watching televised poker, where folded hands are edited out to highlight the relatively few contested hands. In his limited view, he believes by playing… Read More

He is the richest person in history. Warren Buffett? At his peak, Buffett’s wealth is less than one-fifth this man’s fortune. Bill Gates doesn’t even come close. Neither does Wal-Mart founder Sam Walton or telecom magnate — and one of the richest men in the world — Carlos Slim. None of these men can hold a candle to the $336 billion fortune (adjusted for inflation) amassed by a name synonymous with wealth… John D. Rockefeller. #-ad_banner-#But when I tell you I’ve found what I call my “Rockefeller” investment, I’m not saying it because I think it will make us billionaires… Read More

He is the richest person in history. Warren Buffett? At his peak, Buffett’s wealth is less than one-fifth this man’s fortune. Bill Gates doesn’t even come close. Neither does Wal-Mart founder Sam Walton or telecom magnate — and one of the richest men in the world — Carlos Slim. None of these men can hold a candle to the $336 billion fortune (adjusted for inflation) amassed by a name synonymous with wealth… John D. Rockefeller. #-ad_banner-#But when I tell you I’ve found what I call my “Rockefeller” investment, I’m not saying it because I think it will make us billionaires — even though I’d love to be able to say that. No, I call it my “Rockefeller” investment because of what this company invests in. This stock owns a rare breed of assets that are nearly impossible for small investors like you and me to purchase directly. Typically, only major companies or industrial titans like Rockefeller can buy them. Most people know Rockefeller became rich via his company, Standard Oil. And while I want to invest in the same sort of business that he did, my “Rockefeller” pick has nothing to do with oil. But that’s fine by me, because… Read More

A few weeks ago, I told you about a simple strategy that’s never lost money. Put simply, the longer you hold an investment, the better your chances of making a profit. The S&P 500 has never had a losing 20-year span, going all the way back to the 1950s. The key is finding a handful of companies that enjoy huge (and lasting) advantages over the competition… companies that pay their investors each and every year by dishing out fat dividends… and companies buying back massive amounts of their own stock. Once you find them, the strategy is simple — just… Read More

A few weeks ago, I told you about a simple strategy that’s never lost money. Put simply, the longer you hold an investment, the better your chances of making a profit. The S&P 500 has never had a losing 20-year span, going all the way back to the 1950s. The key is finding a handful of companies that enjoy huge (and lasting) advantages over the competition… companies that pay their investors each and every year by dishing out fat dividends… and companies buying back massive amounts of their own stock. Once you find them, the strategy is simple — just buy their shares and hold “Forever.” #-ad_banner-#But if you want to see the best reason why investing “Forever” is the smartest way to let the market make you wealthy, pay attention to the table below… I ran a simple stock screen on my research team’s Bloomberg terminal. I wanted to find all the stocks in the United States that have returned more than 500% in the past year. To make sure we were dealing with solid companies, I only included companies with positive earnings. And to weed out the fly-by-night penny stocks, I had to kick out anything with a… Read More

Working for StreetAuthority, I do a lot of different things. In the course of a day, I may be writing an article… discussing potential picks with our staff… researching the next investing hotspot… even going over Stock of the Month ideas with my colleagues. And with so much going on, I actually find myself a little frazzled as the day goes on. To combat this, I try to get to work about an hour earlier than the rest of the staff. Sometimes I simply work from home before I get into the office.  I don’t do this to show off. I’ve simply found… Read More

Working for StreetAuthority, I do a lot of different things. In the course of a day, I may be writing an article… discussing potential picks with our staff… researching the next investing hotspot… even going over Stock of the Month ideas with my colleagues. And with so much going on, I actually find myself a little frazzled as the day goes on. To combat this, I try to get to work about an hour earlier than the rest of the staff. Sometimes I simply work from home before I get into the office.  I don’t do this to show off. I’ve simply found I can do more in that one hour (when I can simply focus on one task without distraction) than I can in two hours when the rest of the staff has the office buzzing. Turning off the background noise allows me to simplify things — and get better results. #-ad_banner-#What does this have to do with investing? A ton. Why Diversification Is Like Drinking From a Fire Hose Sometimes the investing waters are as clear as mud to retail investors. After all, there are literally thousands of potential plays out there. You could try to play a rebound in… Read More

The list of top-performing value investors is filled with names that have been praised in the public eye for decades — like Warren Buffett, for instance.  #-ad_banner-#Often, the investing methodology is similar among these gurus: Find solid companies with good management that are intrinsically undervalued and have long-term growth potential. One billionaire fund manager has taken this tried-and-true mantra and delivered eye-popping results for over 20 years now — while keeping a fairly low profile.  Donald Yacktman founded his fund, Austin, Texas-based Yacktman Asset Management, in 1992. Since then, he has garnered much respect from both the financial… Read More

The list of top-performing value investors is filled with names that have been praised in the public eye for decades — like Warren Buffett, for instance.  #-ad_banner-#Often, the investing methodology is similar among these gurus: Find solid companies with good management that are intrinsically undervalued and have long-term growth potential. One billionaire fund manager has taken this tried-and-true mantra and delivered eye-popping results for over 20 years now — while keeping a fairly low profile.  Donald Yacktman founded his fund, Austin, Texas-based Yacktman Asset Management, in 1992. Since then, he has garnered much respect from both the financial community and no doubt from his investors as well, who have taken his hard work and results straight to the bank. Together with his portfolio management team, which includes his son Stephen Yacktman, Donald Yacktman has set himself apart with research-driven ideas that have seen his assets under management grow at amazing rates. His most recent Form 13F shows his portfolio at nearly $24 billion mark and was at one point receiving inflows of $20 million a day.  With the recent release of his 13F for the first quarter of 2014, we can see how he is employing his fund’s… Read More

Investing in value stocks often means making counterintuitive decisions. We buy when everyone is selling and staying far away.  #-ad_banner-#Experienced investors know this as a truism, but it seems downright silly if you compare it to other situations. For example, if everyone is running away from a building, it probably makes sense to also keep away. You wouldn’t disregard the possible danger and rush in yourself, right? We have a built-in auto-response to stick with groups when facing the unknown. That crowd mentality is deeply ingrained in our psyche, and for good reason. That natural instinct to group… Read More

Investing in value stocks often means making counterintuitive decisions. We buy when everyone is selling and staying far away.  #-ad_banner-#Experienced investors know this as a truism, but it seems downright silly if you compare it to other situations. For example, if everyone is running away from a building, it probably makes sense to also keep away. You wouldn’t disregard the possible danger and rush in yourself, right? We have a built-in auto-response to stick with groups when facing the unknown. That crowd mentality is deeply ingrained in our psyche, and for good reason. That natural instinct to group together has kept us alive throughout the evolution of our species — those who ignored it aren’t here today. The environment of the financial markets is not the wild savannah, however. If you invest like everyone around you, your performance will match everyone around you as well. You have to break free of the pack and realize that, to quote the movie “Men in Black”: “A person is smart. People are dumb, panicky, dangerous animals.” Following the crowd may give you a little peace of mind in the moment, but it’s unlikely to profit you in the long run. Buying… Read More

In search of new investment ideas, it pays to run through several checklists every month.  #-ad_banner-#What stocks are hitting 52-week lows? Which ones sport low price-to-earnings (P/E) ratios? Which ones are being added to the portfolios of leading hedge funds and mutual funds? The reason for this digging is to see if any companies start to pop up in multiple areas. In my recent scans, the same name kept popping up everywhere… Bed, Bath & Beyond (Nasdaq: BBBY).  It’s a well-respected retailer that’s currently out of favor due to a temporary slowdown in profit growth — and it’s suddenly become… Read More

In search of new investment ideas, it pays to run through several checklists every month.  #-ad_banner-#What stocks are hitting 52-week lows? Which ones sport low price-to-earnings (P/E) ratios? Which ones are being added to the portfolios of leading hedge funds and mutual funds? The reason for this digging is to see if any companies start to pop up in multiple areas. In my recent scans, the same name kept popping up everywhere… Bed, Bath & Beyond (Nasdaq: BBBY).  It’s a well-respected retailer that’s currently out of favor due to a temporary slowdown in profit growth — and it’s suddenly become a favorite of value-oriented gurus. In just the past few weeks, we’ve learned that: •  Investment firm Brown, Brothers Harriman (which will have its 200-year anniversary in four years) just took a 5% stake in the retailer. •  In the first quarter of 2014, Robert Olstein, who runs the Olstein Funds, doubled his stake in Bed, Bath & Beyond by acquiring 78,000 more shares at an average price of $67 a share.  •  Also in the first quarter, Westport Asset Management bought a starter position of 90,000 shares at an average price of $67. Those funds are not happy to… Read More