Stingy Investor The Rothery Report
  Home | Articles | Screens | Brokers | Tools | Links | SNW | Rothery Report
 
MoneySaver Articles
 3 Stingy Stocks for 2014
 4 Graham Stocks for 2014
 8 Stingy Stocks for 2013
 6 Graham Stocks for 2013
 9 Stingy Stocks for 2012
 8 Graham Stocks for 2012
 Simple Way 2011
 5 Stingy Stocks for 2011
 7 Graham Stocks for 2011
 Simple Way 2010
 5 Stingy Stocks for 2010
 8 Graham Stocks for 2010
 Simple Way 2009
 Timing Temptation
 19 Stingy Stocks for 2009
 4 Graham Stocks for 2009
 Simple Way 2008
 Active at Passive Prices
 Unbundling ETFs 2008
 5 Stingy Stocks for 2008
 5 Graham Stocks for 2008
 Is your index too active?
 Graham's Simple Way
 Canadian Graham Stocks
 5 Stingy Stocks for 2007
 8 Graham Stocks for 2007
 Top SPPs
 The Simple Way
 A hole in your IPO?
 Monkey Business
 8 Stingy Stocks for 2006
 Graham Stock Gainers
 Blue-Chip Blues
 Are Dividends Safe?
 SPPs for 2005
 Graham's Simplest Way
 Selling Graham Stocks
 RRSP Money Market Funds
 Stingy Stocks for 2005
 High Performance Graham
 Intelligent Indexing
 Unbundling Canadian ETFs
 A history of yield
 A Dynamic Duo
 Canadian Graham Stock
 Dividends at Risk
 Thrifty Value Stocks
 Stocks in Short Supply
 The New Dividend
 Hunting Goodwill
 SPPs for 2003
 RRSP: don't panic
 Desirable Dividends
 Stingy Selections 2003
 10 Graham Picks
 Growth Eh?
 Timing Disaster
 Dangerous Diversification
 The Coffee Can Portfolio
 Down with the dogs
 Stingy Selections
 Frugal Funds
 Graham Revisited
 Just Spend It
 Ticker Temptation
 Stock Mortality
 Focus on Fees
 SPPs for the Long Term
 Seeking Solid Stocks
 Relative Strength
 The VR Approach
 The Irrational Investor
 Value Investing
 Eye on PI

MoneySense Articles
 Cdn Top 200 2013
 US Top 500 2013
 Retirement 100: 2012
 Buffett Buys
 FB IPO
 Stocks that pay
 Value in the S&P500
 Cdn Top 200 2012
 US Top 500 2012
 Retirement 100: 2011
 Where to invest $100k
 Where to invest $10k
 Summer Simple Way
 A crystal ball for stocks?
 Cheap & safe
 Risky business
 Cdn Top 200 2011
 US Top 500 2011
 Retirement 100
 Dividend investing
 Value investing
 Momentum investing
 Low P/E P/B
 Dividends
 Dividend growers
 Cdn Top 200 2010
 US Top 500 2010
 Graham's prescription
 Income 100: 2009
 The case for optimism
 Cdn Top 200 2009
 U.S. Top 500 2009
 Wicked investments
 Simply spectacular
 Income 2008
 Small stocks, big profits
 Cdn Top 200 2008
 US Top 500 2008
 Value that sizzles
 So simple it works
 Income 100
 No assembly required
 Investing by the book
 Cdn Top 200 2007
 US Top 500 2007
 Invest like the masters
 A simple way to get rich
 Top Trusts 2006
 Stocks for cannibals
 Car bites dogs
 Cdn Top 200 2006
 US Top 1000 2006
 So easy, so profitable
 Top Trusts 2005
 Dogs of the Dow
 Top 200 2005
 Money for nothing
 Yield of dreams
 Return of the master

Globe & Mail Articles
 Indexing advice
 Media-shy stocks
 Curse of size
 Market uncertainty
 Be even lazier
 Scary beats safe
 Small, illiquid, value
 Use the numbers
 What value is good value?
 Sculpt for value
 Value vs CAPE
 Graham Rules
 CAPE vs PeakE
 Top value ratio
 Low Beta
 Value and dividends
 Walter Schloss
 Try unloved AIG
 Why I'm a value investor
 New world of ETFs
 Low P/Es possible
 10 yielders
 Be happier
 Long-Short
 Dividend Downside
 Shiller's P/E
 Copycat investing
 Cashing in on class
 Index roulette
 Theory collides
 Diving too deep
 3 retirement villains
 Scourge of inflation
 Economic omens
 Analyst Expectations
 Value stock scarcity
 It's all in the index
 How to pick good funds
 Low Beta Wins
 Hunt for dividend stocks
 Think garage sale

Advisor's Edge Articles
 Passive Rebundling
 Doing the math

Norm Speaks
Flip Books



A Dynamic Duo

Two remarkable value gurus provide free advice in their regular reports. Naturally, these reports should be on every investor's reading list.

The Berkshire Hathaway annual letter to shareholders has long been a must read. Aside from being one of the largest businesses in America, Berkshire Hathaway is best known for its majority owner and CEO, Warren Buffett. In the spring of each year Warren Buffett holds forth on a variety of interesting topics in his letter to shareholders.

A quick trip to Berkshire Hathaway's web site will reward the inquisitive with an archive of Buffett's letters since 1977. In the past, many investors would buy a share of Berkshire Hathaway's stock (BRK.A which closed at US$94,000 per share on March 8, 2004) just to get Buffett's letter to shareholders. Thankfully, the price of admission has been lowered to the cost of an Internet connection. If you're looking for a crash course in prudent investing then you would be well advised to read all of Buffett's letters.

In this year's letter, Buffett remains cautious on stocks: "We've found it hard to find significantly undervalued stocks, a difficulty greatly accentuated by the mushrooming of the funds we must deploy." So, what is Buffett doing with his spare change? "When we can't find anything exciting in which to invest, our 'default' position is U.S. treasuries, both bills and repos. No matter how low the yields on these instruments go, we never 'reach' for a little more income by dropping our credit standards or by extending maturities. Charlie and I detest taking even small risks unless we feel we are being adequately compensated for doing so." Buffett's continued caution has led to an expansion in Berkshire's cash hoard from about $10 billion last year to over $31 billion this year.

In other news, Buffett came out swinging against corporate America. First, he lambasted the upper crust on taxes: "If class warfare is being waged in America, my class is clearly winning. Today, many large corporations ... pay nothing close to the stated federal tax rate of 35%." Second, he went after management by saying, "in judging whether corporate America is serious about reforming itself, CEO pay remains the acid test. To date, the results aren't encouraging." The letter continues on to discuss many other subjects (including Buffett's concerns about the U.S. dollar) but I wouldn't want to spoil all the fun.

For Buffett fans, his letter is just a prelude to the Berkshire Hathaway annual meeting which inspires many to make an annual pilgrimage to Omaha. This year the Berkshire Hathaway annual meeting will be held at the Qwest Center in downtown Omaha on May 1. For those of us who are too frugal to make the trip, hedge fund manager Whitney Tilson takes copious notes at the annual meeting which can be found on his web site.

Savvy value investors shouldn't stop with Warren Buffett's letter. Another renowned value investor's reports are also well worth reading.

Martin Whitman provides his interesting take on value investing every three months in the Third Avenue Value Fund's (TAVF) quarterly report. Whitman founded the U.S.-based Third Avenue Value Fund and is the author of Value Investing: A Balanced Approach (ISBN: 0471398101), which is one of the more insightful books on value investing.

Martin Whitman's quarterly reports (from 1995 to 2004) can be found on the Third Avenue Fund's web site. Whitman is a deep value investor and often buys distressed debt at deep discounts. For instance, last quarter he started investing in scandal-plagued Parmalat. Whitman said, "Parmalat, a massive fraud, is an Italian-based worldwide company essentially selling dairy products. The fund established a toehold position based on the view that Parmalat seems reorganizable because it is likely that many of its businesses are well entrenched and profitable." If you think that such situations can't have a suitable margin of safety, or result in a profit, then you should take a look at the Third Avenue Value Fund's track record. According to Morningstar.com, the Third Avenue Value Fund beat the S&P500 by over 2% annually during the last ten years and it did so with below-average risk. Mind you, Whitman would likely have more than a few things to say about Morningstar.com's definition of risk.

Aside from a discussion of the fund's holdings, Whitman often takes on hot topics of the day. In this year's first quarter report, he bluntly reviewed the growing U.S. mutual fund scandals, "... rules and regulations have to aim for the lowest common denominator, i.e., the rules and regulations are designed to protect the public from incompetents, chiselers and crooks. The rules and regulations cannot be designed to make it easier for ethical, honest, money managers to function. Put simply, TAVF has to be subject to a lot of onerous, unneeded and superfluous rules and regulations because there are unethical, dishonest people in the industry."

I like Whitman's willingness to 'shoot from the hip' and address a variety of topics with his rare perspective as a veteran value investor.

So, when you have a spare moment, take a look at the letters from Buffett and Whitman. Both of these investors have posted volumes of material on the Internet at a cost that even Canadian MoneySaver members should appreciate.

First published in April 2004.

 
Discover top U.S. and Canadian value stocks in
The Rothery Report
It comes with the Stingy Stocks, Simple Way,
and Defensive Stocks letters.
About Legal Contact Us
Disclaimers: Consult with a qualified investment advisor before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...