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The Stingy News Weekly (02/26/2012)


"In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time - none, zero. You'd be amazed at how much Warren reads - at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out."
- Charlie Munger


New @ StingyInvestor

Investing theory collides with new facts
"It makes one wonder just how long the long-term should be when studying stocks. Even the 5 decades from 1951 to 2003 weren’t sufficient to suss out the weakness in the lowest decile of P/B stocks. Might more trouble might be revealed if the numbers are tracked back another 25 years – or followed forward for another 25?"


A crystal ball for stocks?
"At a very deep level, we're all suckers for patterns. The problem is, it's easy to stumble on erroneous patterns in large mounds of data. You can see the result on TV almost every night in the form of new medical breakthroughs. You know, titillating things like the discovery that eating yellow foods decreases the risk of having a heart attack. But after loading up on squash and turning a strange shade of pale, another study might come along that refutes the first and instead points to the cancer causing properties of yellow food. It's a wonder health-conscious people eat anything all. (Rest assured yellow foodies, these examples are fictitious.) The problem being, just because you've spotted a pattern doesn't mean that it's predictive or, in math speak, correlation does not prove causation. All too often what the researcher actually uncovered occurred simply by chance. That doesn't keep our love of predictable patterns from infiltrating the markets in all sorts of unexpected ways."


Stingy Links

Berkshire Hathaway 2011
"At our limit price of 110% of book value, repurchases clearly increase Berkshire’s per-share intrinsic value. And the more and the cheaper we buy, the greater the gain for continuing shareholders. Therefore, if given the opportunity, we will likely repurchase stock aggressively at our price limit or lower. You should know, however, that we have no interest in supporting the stock and that our bids will fade in particularly weak markets. Nor will we buy shares if our cash-equivalent holdings are below $20 billion. At Berkshire, financial strength that is unquestionable takes precedence over all else."


Is 'derisking' even riskier?
"When you 'derisk,' be sure you understand whether you are eradicating risk—or just replacing old risks with new ones."


Canadian audits of China firms
"Canada’s audit regulator has demanded accounting firms fix deficiencies in their audits of 12 China-based companies whose shares trade on Canadian stock exchanges, saying their work has been a “disappointment.”"


Negative real rates of return
"If it's just you on a desert island and you have to bury food in the ground for safe keeping chances are you will dig up less food than you bury. In general investing only makes sense when there is seasonality, which is why tropical animals don’t do it. And, animals that do invest always take a loss even if they invest in the form of fat stores. However, because the marginal product of labor is vastly different between the spring and the winter it is worth it in utility terms even if the material return is negative. That humans don’t always take a loss is why the world we live in is so vastly different. Our world changes over time because we can use our brains to think of ways to get more out than we put in. However, this is a special case and should not be taken as some basic property of the world. Its just not."


Goodnight Sunshine
"Germany once prided itself on being the “photovoltaic world champion”, doling out generous subsidies—totaling more than $130 billion, according to research from Germany’s Ruhr University—to citizens to invest in solar energy. But now the German government is vowing to cut the subsidies sooner than planned and to phase out support over the next five years. What went wrong?"


RIP: Walter Schloss
"Walter Schloss, the money manager who earned accolades from Warren Buffett for the steady returns he achieved by applying lessons learned directly from the father of value investing, Benjamin Graham, has died. He was 95."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)1535
Verizon (VZ)1245
Merck (MRK)2415
Pfizer (PFE)3425
Johnson & Johnson (JNJ)2315
General Electric (GE)3435
Procter & Gamble (PG)1324
EI DuPont (DD)4144
Intel (INTC)5314
Kraft (KFT)1434
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Chevron (CVX)5454
JP Morgan Chase (JPM)5533
Hewlett-Packard (HPQ)5552
Exxon Mobil (XOM)5342
Intel (INTC)5314
Microsoft (MSFT)5213
American Express (AXP)4221
Wal-Mart (WMT)4353
EI DuPont (DD)4144
Boeing (BA)4152
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Chevron (CVX)54542.71
JP Morgan Chase (JPM)55333.29
Intel (INTC)53143.60
Pfizer (PFE)34254.05
Merck (MRK)24154.29
EI DuPont (DD)41444.33
Microsoft (MSFT)52134.39
General Electric (GE)34354.45
Exxon Mobil (XOM)53424.71
Wal-Mart (WMT)43535.20
Notes | More Info...


US Stock SummaryYieldP/EV.R.
EI DuPont (DD)YYY
Intel (INTC)YYY
Chevron (CVX)YY
Exxon Mobil (XOM)YY
General Electric (GE)YY
JP Morgan Chase (JPM)YY
Merck (MRK)YY
Microsoft (MSFT)YY
Pfizer (PFE)YY
Wal-Mart (WMT)YY
AT&T (T)Y
American Express (AXP)Y
Boeing (BA)Y
Hewlett-Packard (HPQ)Y
Johnson & Johnson (JNJ)Y
Kraft (KFT)Y
Procter & Gamble (PG)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Enerplus (ERF)1515
Sun Life Financial (SLF)0555
TransAlta (TA)4345
BCE Inc. (BCE)3245
Canadian Oil Sands (COS)5225
Penn West Petroleum (PWT)3525
Bank of Montreal (BMO)5435
Shaw (SJR.B)3235
ARC Resources (ARX)1215
CIBC (CM)5235
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Research In Motion (RIM)5550
Iamgold (IMG)5322
Brookfield (BAM.A)5542
Teck Resources (TCK.B)5433
Bombardier (BBD.B)5153
Agrium (AGU)5351
Canadian Oil Sands (COS)5225
CIBC (CM)5235
Barrick Gold (ABX)5222
Husky Energy (HSE)5444
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Canadian Oil Sands (COS)52251.98
TransAlta (TA)43452.19
CIBC (CM)52352.23
Bank of Montreal (BMO)54352.29
Husky Energy (HSE)54442.44
Power Corp of Canada (POW)45552.52
BCE Inc. (BCE)32452.63
National Bank (NA)43342.86
Shaw (SJR.B)32352.97
Bank of Nova Scotia (BNS)43343.05
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
CIBC (CM)YYY
Canadian Oil Sands (COS)YYY
BCE Inc. (BCE)YY
Bank of Montreal (BMO)YY
Husky Energy (HSE)YY
Shaw (SJR.B)YY
TransAlta (TA)YY
ARC Resources (ARX)Y
Agrium (AGU)Y
Bank of Nova Scotia (BNS)Y
Barrick Gold (ABX)Y
Bombardier (BBD.B)Y
Brookfield (BAM.A)Y
Enerplus (ERF)Y
Iamgold (IMG)Y
National Bank (NA)Y
Penn West Petroleum (PWT)Y
Power Corp of Canada (POW)Y
Research In Motion (RIM)Y
Sun Life Financial (SLF)Y
Teck Resources (TCK.B)Y
Notes...



The Rothery Report
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The Rothery Report provides research on select deep-value stocks in North America. Discover overlooked and undervalued stocks in quarterly investment reports which provide detailed analysis of Canadian and U.S. stocks. Weekly email news and additional updates keep subscribers informed about new opportunities and developments.

Rothery Report Performance
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Graham Value Stocks
(Learn More)

The Graham Value Stocks letter is designed for investors who want to keep up with our sensational stock selection methods inspired by Benjamin Graham. We comb through mountains of data to highlight U.S. and Canadian stocks that we believe to be both cheap and relatively safe.

Graham Portfolio Performance
(12/2009 to 12/2011)
Simple WayDividend WayDefensive
+32%C+2%U-6%C+15%U+18%U



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