| DON'T BUY | | Lehman Brothers Holdings | LEH-N | 14.780 | US Housing Market: There is nothing more out of favour right now than financials, consumers and housing stocks. You should only invest in businesses that you personally understand and it is his view that nobody can really understand the business of an investment bank right now. | 2008-08-27 | |
| Comment | | Home Depot | HD-N | 27.170 | This is a company that you can analyze. They are still making money despite all the problems in housing. He prefers Lowes (LOW-N) because they are the better company with better prospects. Trades at a low multiple. | 2008-08-27 | |
| Comment | | Lowes Companies Inc. | LOW-N | 24.600 | He prefers this company to Home Depot (HD-N). | 2008-08-27 | |
| Comment | | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Index Trading: First principle is that the market itself is going to be pretty good at reading that data and it will be hard for you to out guess that. If you are going to time the market it would be when there is maximum pessimism. Also, when the market stops going down on really bad news that is an indication that you can step up. | 2008-08-27 | |
| DON'T BUY | | Fannie Mae | FNM-N | 6.480 | In most people's mind, the US government supports the debt of Fannie Mae (FNM-N) and Freddie Mac (FRE-N) so their debt is secure. The question is, what are they going to do with the stocks, and very importantly the preferred stocks. They are down about 50% and there is a lot of concern that they could get wiped out. | 2008-08-27 | |
| DON'T BUY | | Freddie Mac | FRE-N | 4.750 | In most people's mind, the US government supports the debt of Fannie Mae (FNM-N) and Freddie Mac (FRE-N) so their debt is secure. The question is, what are they going to do with the stocks, and very importantly the preferred stocks. They are down about 50% and there is a lot of concern that they could get wiped out. | 2008-08-27 | |
| Comment | | Walt Disney | DIS-N | 31.760 | His company doesn't like the movie business. He owns this one because of ESP and theme parks. Movie business is a classic “no barrier to entry” business. Historically it hasn't been a very good business. | 2008-08-27 | |
| DON'T BUY | | Time Warner Inc | TWX-N | 15.880 | His company doesn't like the movie business. He owns Disney (DIS-N) because of ESP and theme parks. Movie business is a classic “no barrier to entry” business. Historically it hasn't been a very good business. | 2008-08-27 | |
| BUY | | Aflac Inc | AFL-N | 56.240 | Insurance. Japanese-based. Has been very strong with 15% growth each year. Trades at a multiple below 12. You have to be careful with insurance companies and what they own as asset mix. | 2008-08-27 | |
| DON'T BUY | | Pfizer Inc | PFE-N | 19.080 | Owned it about a year ago with a theory that their drugs were worth what the stock price was going at hand you would make money on all the new drugs they developed. The problem is, they haven't developed any new drugs in almost 3 years. Would prefer Merck (MRK-N). | 2008-08-27 | |
| Comment | | Pepsi | PEP-N | 69.200 | Great brand. Trading at about 17X forward earnings, that is not nearly as cheap as many other companies. You won't be hurt by this long-term. Have been hurt by higher costs. Sugar is a huge cost factor for their products. | 2008-08-27 | |
| Comment | | Coca-Cola Company | KO-N | 53.790 | Trading at about 17X forward earnings, that is not nearly as cheap as many other companies. You won't be hurt by this long-term. Have been hurt by higher costs. Sugar is a huge cost factor for their products. | 2008-08-27 | |
| DON'T BUY | | General Motors Corporation | GM-N | 10.200 | Unfortunately, It has reached a point that not only do they not have a sustainable competitive advantage, actually have a sustainable disadvantage in their cost structure. The brand is not as strong today. A lot of debt. | 2008-08-27 | |
| DON'T BUY | | Visa Inc. | V-N | 74.450 | A great company, but trading at a huge multiple because they don't have the credit card risk that an individual bank does. Growth stock. Can’t get comfortable with the valuation. | 2008-08-27 | |
| Comment | | Diageo PLC | DEO-N | 72.590 | Surprised that the alcohol/average stocks have not done better. Input costs have been high with a grain going up. Long-term this is a defensive stock but probably without a lot of massive growth. | 2008-08-27 | |
| Comment | | Constellation Brands Inc | STZ-N | 21.030 | Beer consumption has been flat to slightly down which is surprising. Also input costs have been high with grain going up. Long-term this is a defensive stock but probably without a lot of massive growth. | 2008-08-27 | |
| BUY | | IBM | IBM-N | 123.380 | Was very much out of favour 3 years ago when he bought it. Very pleased with how well it has done. Globally, companies are trying to take costs out of their businesses. Trading at about 13X forward earnings. Has been helped by the weaker US$. | 2008-08-27 | |
| DON'T BUY | | Bank of America | BAC-N | 29.650 | If he was forced to pick one US financial, this would be okay but they bought countrywide and they took on a massive mortgage exposure. A relatively strong investment banking business. He would suggest you not buy any but if you had to, this would be a safe one to buy. | 2008-08-27 | |
| Comment | | JP Morgan | JPM-N | 37.140 | This is the one US financial that he does own. Good management. Balance sheet is very strong. | 2008-08-27 | |
| Comment | | A Comment -- General Comments From an Expert | A Commentary | 0.020 | US Interest Rates: At this point the Fed is more likely to increase interest rates then cut further. Probably a consensus view, which is why the US$ has started to become stronger. More important are borrowing rates and these have gone up significantly. | 2008-08-27 | |
| TOP PICK | | Toyota | TM-N | 88.000 | Probably his most favourite stock in the world. Think they will earn about $9 a share this year so you are getting one of the great, most respected companies in the world with the best technology and the best brands for about 10X earnings. | 2008-08-27 | |
| TOP PICK | | Omnicom Group | OMC-N | 42.420 | World's largest advertising agency. Continues to increase earnings every year. Use to trade at around 25X and 30X forward earnings but is now down around 12X or 13X forward earnings. Their business continues to be global. The shift towards web based advertising is a positive in that they don't have to hire actors, etc. 1.4% yield. | 2008-08-27 | |
| TOP PICK | | Carnival Corp. | CCL-N | 36.230 | Cruise lines. The cost to buying a new cruise ship is in enormous. Demographics of the cruise business are great. Number of people taking cruises is going up every year. Think they can beat earnings estimates over the long term. Trading at about 12X forward earnings. Yield of 4.4%. | 2008-08-27 | |
| DON'T BUY | | Apple | AAPL-Q | 174.670 | Big multiple and too expensive for him. | 2008-08-27 | |
| Comment | | CitiGroup | C-N | 21.060 | Dividend is not safe. It doesn't make a lot of sense for them to continue to pay out the dividend while they are continuing to raise more and more equity. There is a lot of risk priced into the stock. You could have a 50% upside from here, but it is not for the faint of heart. | 2008-05-21 | |
| DON'T BUY | | Visa Inc. | V-N | 80.850 | Was a relatively hot IPO. Trading at a pretty full multiple. People are hoping there is going to be significant international growth. Discover (DFS-N) and American Express (AXP-N) are both cheaper and he would rather own American Express. | 2008-05-21 | |
| DON'T BUY | | General Electric | GE-N | 30.990 | Selling off some of their historic products and trying to focus more. Feels this is the right thing. Had a big negative surprise last quarter in their financial division. There could be more land mines in this part of their portfolio. Yield of 4%. | 2008-05-21 | |
| DON'T BUY | | Pfizer Inc | PFE-N | 20.010 | Candidates in the presidential race have not been positive on pharmaceutical companies. The problem with this company however is the lack of a pipeline. Most of the earnings are coming from some products that are going to go off patent in the next couple of years. Has become more and more expensive to generate new drugs. The dividend could be a potential trap and could be lowered. | 2008-05-21 | |
| Comment | | McGraw Hill | MHP-N | 41.180 | Industry took a hit today and as there were charges against Moody’s (MCO-N) as they had made some mistakes in calculating ratings for some European products and both stocks were hit hard. Relatively cheap and he is looking hard at this one. | 2008-05-21 | |
| TOP PICK | | Carnival Corp. | CCL-N | 37.430 | Not buying for the 4% dividend yield but for the long-term growth prospects for the industry as people globally take more cruises. On every additional passenger, the fare goes right to the bottom line. | 2008-05-21 | |
| TOP PICK | | Toyota | TM-N | 100.190 | Highest quality automotive company in the world. Great position in fuel inefficient cars with their hybrid technology becoming more and more valuable every day. Have a reputation for fuel efficiency. Cost advantages with lower-cost plants around the world. There is a good Asian growth story. Very cheap at 10.5X forward earnings. | 2008-05-21 | |
| TOP PICK | | Energizer Holdings Inc. | ENR-N | 81.630 | Manufacture Energizer batteries, own Schick razors and have just bought Playtex. #2 player in both batteries and razors. Trading at a low multiple of 10X forward earnings. | 2008-05-21 | |
| DON'T BUY | | Boeing | BA-N | 81.190 | Good management. Stock was not that cheap as they have a real backlog of orders on their planes and they benefit from the defence industry. Stock dropped today when the CEO some challenges that were facing the airline industry. Still not cheap enough for him. | 2008-05-21 | |
| SELL | | NYSE Group | NYX-N | 67.620 | Exchanges are having an interesting situation. A couple have done very well because they have particular monopolies in their contracts. This one doesn't, so they have been losing shares. Doesn't like the long-term outlook for this. | 2008-02-20 | |
| SPECULATIVE BUY | | UBS AG | UBS-N | 33.760 | Love their asset management business, the world's largest. Also have a great balance sheet. Big exposure to mortgages so had a big write-off. Stock has been hit very hard and is essentially trading on the value of the asset management business. There could still be more land mines. Believes in this for the long-term. | 2008-02-20 | |
| SPECULATIVE BUY | | Bank of America | BAC-N | 42.970 | Held up better than a number of the other big banks. Made a controversial move of buying Countrywide Financial (CFC-N). Good dividend yield. Expects upside, but there is the risk of finding another big problem in the Countrywide portfolio. | 2008-02-20 | |
| SPECULATIVE BUY | | IndyMac Bancorp | IMB-N | 7.400 | Seems to be a survivor. Has actually picked up nicely this year after having dropped close to 80%. However, if subprime mortgages and mortgage default rates and up being worse than expected, the stock could go down in half. Not for the faint of heart. | 2008-02-20 | |
| DON'T BUY | | General Electric | GE-N | 34.360 | Doesn't own this because of GE Capital, their financial subsidiary. The stock is down because people are worried about what might be in GE Capital. Too much uncertainty. He would like to see a lot of disclosure. | 2008-02-20 | |
| DON'T BUY | | Pfizer Inc | PFE-N | 22.470 | Their pipeline has just not produced new drugs. When you buy this stock now, you are getting a series of cash flows on the existing drugs, but a lot of them are coming off patent. Just acquired a company that has a very small drug, which to him, is a sign of desperation. | 2008-02-20 | |
| SPECULATIVE BUY | | CitiGroup | C-N | 25.490 | A stock that could double from here, but big, big problems in the portfolio. Still own about $43 billion in leverage loans that they can't sell and will mean additional write offs. M & A business has slowed down. Also seeing an uptick in problems in consumer loans. Good dividend, but it could be cut. This information is public so the company is trading at one of the lowest multiples to book in the last 20 years. Not for the faint of heart. | 2008-02-20 | |
| TOP PICK | | Sotheby's | BID-N | 34.090 | Stock has been hit almost 50% because of one bad art auction that didn't go as well as expected. Thinks that hedge funds, Russian and Middle Eastern money is going to continue to buy art. Art is a great inflation hedge. | 2008-02-20 | |
| TOP PICK | | Jones Lang Lasalle Inc. | JLL-N | 75.740 | Chicago-based real estate company. One of the 2 largest real estate money managers. Have about $50 billion in real estate money that they run for pension funds and endowments. Also do a lot of outsourcing work for large companies. Stock has dropped because of concerns about commercial real estate. Recently posted good numbers. Oversold. | 2008-02-20 | |
| TOP PICK | | USG Corp. | USG-N | 33.410 | Largest manufacturer of wallboard. Warren Buffett is the largest owner at 17%. Thinks the stock has come down too far. It will have short-term trouble as the number of new homes built goes down. Long-term population is going to increase and this is what drives home construction. Could be volatile in the next 6 to 9 months. | 2008-02-20 | |
| Comment | | 3M Co. | MMM-N | 79.940 | 2 reasons to buy the stock. 1) George Buckley, the CEO is a great manager. 2) Their history of innovations. They continue to produce great products. Hasn't checked the numbers for the multiples yet. | 2008-02-20 | |
| Comment | | Monsanto Company | MON-N | 119.050 | A growth stock. It can do very well. Have gotten past people's concerns on biotech seeds so growth prospects are spectacular. He couldn't buy as it is not trading at a value that makes sense to him. | 2008-02-20 | |
| BUY | | Toyota | TM-N | 113.250 | (A Top Pick Dec 19/07. Up 10%.) Loves Toyota. Only trading at about 11 multiple. It keeps going up but the earnings keep going up even faster. | 2008-02-20 | |
| TOP PICK | | Accenture Ltd. | ACN-N | 34.960 | Consultants. They have continued to post great numbers. Their quarterly profit was up 30% from a year ago. Revenue is up 19%. Trades at around 14X earnings. A great company. More than half of their business is outside of the US and Canada. Cheap. | 2007-12-19 | |
| TOP PICK | | Toyota | TM-N | 105.580 | This is one of the great global companies. Has a great market position right now with a reputation for fuel economy and environmentally friendly. They have about a $2000 cost advantage over the big 3 in the US. Trades at about 10X earnings. | 2007-12-19 | |
| TOP PICK | | UBS AG | UBS-N | 45.480 | The leading money management firm in the world. Asset management companies are trading at about 17X, 18X and even 19X forward earnings and that's when trades at about 9X. AAA balance sheet. Has a wonderful money management business. Ridiculously under priced. | 2007-12-19 | |
| BUY | | Capital One Financial Corp | COF-N | 46.000 | Forward PE of about 6.75. They have a great franchise and a great brand. They have had an ability to pick the people they send a credit card to. Default statistics have been better than the market. Not for the faint of heart but if you are willing to take some risks it is worth it. | 2007-12-19 | |
| DON'T BUY | | Pfizer Inc | PFE-N | 23.270 | He threw in the towel last quarter and sold his holdings. The problem is they just haven't been developing new drugs and as time goes by, you get closer to patent expiration. | 2007-12-19 | |
| BUY | | Johnson & Johnson | JNJ-N | 67.320 | Very high-quality company. There are some issues around their stent business, but long-term it doesn't get much better. Trades at historically low multiple of about 15X. | 2007-12-19 | |
| BUY | | Morgan Stanley | MS-N | 50.080 | Market has been excessively negative. Their core money management business, asset management business, investment banking business, high net worth and brokerage businesses are all in very good shape. Trades at less than 10X next year's earnings. Close to 1.5X book. | 2007-12-19 | |
| DON'T BUY | | Goldman Sachs | GS-N | 204.160 | Has had a spectacular quarter, but in his opinion it is too much in favour. Trades at about 2.3X book, which is too high for him. | 2007-12-19 | |
| BUY | | CitiGroup | C-N | 30.210 | Has gone down too much. Big losses in their mortgage portfolio, but fundamentally it is a short-term issue. Next year they will still have very strong global retail banking, global credit card businesses and global commercial banking businesses. Their investment banking and equities business is in good shape. Trading at about 8X next year's earnings. | 2007-12-19 | |
| DON'T BUY | | Blackstone Group LP | BX-N | 23.510 | A wonderful company and they have made a lot of money for themselves. He doesn't like the model of taking a private equity firm public and trying to capitalize those performance and money management fees. There is just too much incentive now to grow assets, which is not going to be in the best interests of those underlying limited partners. Believes the right model for them is a partnership. | 2007-12-19 | |
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