In a globally connected world, viruses can spread quickly. From influenza to dengue fever to herpes to HIV, viral contagions can spread at an alarming pace.  Trouble is, it’s difficult to identify permanent cures to viral diseases. For example, even though doctors completely understand how the flu virus works, millions… Read More

Successful value investors often work in relative obscurity, delivering steady, market-beating returns over decades. Jeremy Grantham is an investor that has been following a value approach to the markets since at least 1977, when he co-founded global investment management firm GMO. Over the years, GMO has grown to manage more than $100 billion in assets but is still relatively unknown. Grantham applies a classic Graham and Dodd value approach to the markets. Benjamin Graham and David Dodd wrote the original textbook on value investing, Security Analysis,… Read More

Successful value investors often work in relative obscurity, delivering steady, market-beating returns over decades. Jeremy Grantham is an investor that has been following a value approach to the markets since at least 1977, when he co-founded global investment management firm GMO. Over the years, GMO has grown to manage more than $100 billion in assets but is still relatively unknown. Grantham applies a classic Graham and Dodd value approach to the markets. Benjamin Graham and David Dodd wrote the original textbook on value investing, Security Analysis, in the 1930s. Warren Buffett would later study under Graham. And while countless investors have read the original and revised editions of Security Analysis, only a few have mastered the concepts. The very best value investors, a group that includes Buffett and Grantham, add a unique perspective to their study. In the case of Grantham, his success is at least partly due to his ability to spot bubbles. He may know more about bubbles than any other investor. In a recent letter to investors, Grantham wrote,… Read More

The recent pullback in the stock market brings a silver lining for some companies. Those firms that have announced new or extended stock buyback programs can now retire more shares for… Read More

Investing in turnaround stocks can be quite profitable if you follow one simple rule: Only focus on companies that have identified the source of their woes and have delineated clear and workable solutions to stabilize and rebuild operations. For struggling global construction firm McDermott International (NYSE: MDR), the path to a turnaround has been spelled out for investors. Now it’s time to execute on that plan.#-ad_banner-# A quick glance at McDermott’s business model suggests… Read More

Investing in turnaround stocks can be quite profitable if you follow one simple rule: Only focus on companies that have identified the source of their woes and have delineated clear and workable solutions to stabilize and rebuild operations. For struggling global construction firm McDermott International (NYSE: MDR), the path to a turnaround has been spelled out for investors. Now it’s time to execute on that plan.#-ad_banner-# A quick glance at McDermott’s business model suggests this company should be flourishing. It has deep expertise in the construction of massive offshore energy platforms. In recent years, major oil companies have waded deep into the Atlantic Ocean as they seek to replace the output of fast-depleting onshore oil fields. For example, the Lula oil field off the coast of Rio de Janerio might hold up to 8 billion barrels of oil and is currently being developed by Brazil’s Petrobras (NYSE: PBR). But McDermott has stumbled badly, thanks to a series of managerial missteps. Most notably, the company has been unable to complete contracts under budget, turning potentially… Read More

Two key issues have been in play in the stock market as we head into the long Labor Day weekend. Read More

On Aug. 27, the market did something it hasn’t done in more than a year. On both the New York Stock Exchange and the Nasdaq composite index, the number of stocks making new 52-week lows exceeded the number of stocks making new 52-week highs. Although this reversal is leading to a lot of hand-wringing among technical analysts, fundamental… Read More

On Aug. 27, the market did something it hasn’t done in more than a year. On both the New York Stock Exchange and the Nasdaq composite index, the number of stocks making new 52-week lows exceeded the number of stocks making new 52-week highs. Although this reversal is leading to a lot of hand-wringing among technical analysts, fundamental analysts have a different take. Fresh lows can point the way to deep value opportunities — if you heed a few key caveats.#-ad_banner-# First, you need to be sure that the stocks making fresh lows already fully reflect a period of weakness to come. If the estimates for the next quarter still look too high, then you may as well be patient until those decks have been cleared. Second, you want to be sure that they sport value metrics that represent real value. There is a wide variety of stocks that have fallen sharply in the past few weeks and… Read More

It’s the dream of every investor to find a stock that is down on its luck and ride it higher to riches. These are the turnaround stories: companies that for whatever reason have struggled but are finding… Read More

In doing a GARP screen the other day, I was surprised by the top five picks it turned up. But before I reveal their names, you might be wondering, “What the heck is GARP?”#-ad_banner-# If you’ve never heard of GARP, it has nothing to do with the John Irving novel “The World According to Garp.” GARP’s roots go back to a 1949 book, “The Intelligent Investor,” by Benjamin Graham, which has the distinction of being called “the best book on investing ever written” by… Read More

In doing a GARP screen the other day, I was surprised by the top five picks it turned up. But before I reveal their names, you might be wondering, “What the heck is GARP?”#-ad_banner-# If you’ve never heard of GARP, it has nothing to do with the John Irving novel “The World According to Garp.” GARP’s roots go back to a 1949 book, “The Intelligent Investor,” by Benjamin Graham, which has the distinction of being called “the best book on investing ever written” by Warren Buffett. Known as the father of security analysis and value investing, Graham believed investors should consider both future growth (measured through fundamentals) and present price of a stock to identify value. I set my GARP screen to evaluate companies based on dividend growth rate, trailing price-to-earnings (P/E) and price-to-book (P/B) ratios, earnings per share (EPS) growth,… Read More

There’s no such thing as a free lunch, but spinoff companies are as close to free as you can get.  When a company is spun off, there’s a high level of forced selling. One of the best ways to think about spinoffs: “There’s a natural constituency of sellers and not a natural constituency of buyers,” according to “Margin of Safety” author and hedge fund manager Seth Klarman. Simply, many shareholders who own shares of the… Read More

There’s no such thing as a free lunch, but spinoff companies are as close to free as you can get.  When a company is spun off, there’s a high level of forced selling. One of the best ways to think about spinoffs: “There’s a natural constituency of sellers and not a natural constituency of buyers,” according to “Margin of Safety” author and hedge fund manager Seth Klarman. Simply, many shareholders who own shares of the parent company are not interested in owning the spinoff. This can be for a variety of reasons, such as different business fundamentals, weak management, or negative cash flow. In most cases, investors are selling the company for no good reason. While on the other side, the buyers are limited, as the market is inefficient in digesting data on new spinoff companies.  Spinoffs Versus The Market  Yet, over the long term, spinoff… Read More

As the market reaches near record highs, it’s becoming harder to find value.  Historically, the average price-to-earnings (P/E) ratio of the S&P 500 is about 15.  Today, the average is 19. Read More