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The Stingy News Weekly (04/21/2013)


"The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions."
- Benjamin Graham


New @ StingyInvestor

Prem Watsa counsels cash
"Investors are often advised to buy low and sell high. But such advice has an under-appreciated corollary: They also have to be prepared to weather the bad times. All too many people crumble in the face of adversity and simply don't have any money left to buy when prices are low."


Cisco provides a lesson in patience
"We're fast approaching that special time of year when we celebrate the silly things our government spends money on by donating to the cause. Yes, it's tax time again."


Stingy Links

Why did baby catalogs arrive at our house?
"Marketing Genetics is a data company based in Nebraska. They gather up data that companies share with each other about purchasing behavior and sell it to other companies that are looking for certain types of customers. They've got a database of 100 million people and more than a billion transactions (most of those from the last couple of years). As they show in a sample report on their site, Marketing Genetics takes a company's data and creates a statistical profile of their best customers. Then they look for similar people within their own databases, so those companies can send these people catalogs or other direct mail. They call this Data Navigation Analysis (DNA)."


Meet the student who shook Austerians
"Herndon became instantly famous in nerdy economics circles this week as the lead author of a recent paper, 'Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,' that took aim at a massively influential study by two Harvard professors named Carmen Reinhart and Kenneth Rogoff. Herndon found some hidden errors in Reinhart and Rogoff's data set, then calmly took the entire study out back and slaughtered it."


The high dividend yield return advantage
"In the pages that follow, we set forth a number of studies, largely from academia, analyzing the importance of dividends, and the association of high dividend yields with attractive investment returns over long measurement periods. You may be familiar with our prior booklet, What Has Worked In Investing, where we provided an anthology of studies which empirically identified a return advantage for value-oriented investment characteristics. In the same spirit, we attempt to examine what some in our industry have referred to as the "yield effect"; i.e., the correlation of high dividend yields to attractive rates of return over long measurement periods. Much has been written about dividends, and what is contained herein is not meant to be an exhaustive analysis, but rather a sampling of studies examining the impact of dividends on investment returns. We hope it will provide you with added insight and confidence, as it did us, in pursuing a yield-oriented investment strategy."


A value tilt in disguise?
"The yield factor associated with high-dividend-yielding stocks actually detracted from performance."


Economic experts vs. average Americans
"The topics most covered in the economic literature, where economists agree among themselves the most, are also the topics in which their opinions are most distant from those of average Americans. This difference does not seem to be driven by knowledge, since informing people of the expert opinions does not have much impact on the responses of ordinary Americans. The explanation most consistent with our limited evidence is that people do not trust many of the implicit assumptions embedded into the economists' answers and that economists give them for granted."


What if they're wrong?
"Our debates, however, are based on a simple assumption that the set of numbers we use to measure the economy are accurate, or at least close enough. But what if they aren't? What if we are making powerful assumptions about the economy based on statistics that are at best half-right?"


The lure of hedge funds
"Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)1435
Verizon (VZ)1245
Intel (INTC)5435
Merck (MRK)1315
EI DuPont (DD)3145
General Electric (GE)3435
JP Morgan Chase (JPM)5534
Cisco (CSCO)4424
Microsoft (MSFT)4314
Pfizer (PFE)3314
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
JP Morgan Chase (JPM)5534
Chevron (CVX)5543
Exxon Mobil (XOM)5443
Caterpillar (CAT)5352
Intel (INTC)5435
UnitedHealth (UNH)4451
Cisco (CSCO)4424
IBM (IBM)4121
Travelers (TRV)4542
Microsoft (MSFT)4314
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Intel (INTC)54352.51
JP Morgan Chase (JPM)55342.55
Chevron (CVX)55432.90
Exxon Mobil (XOM)54433.47
Cisco (CSCO)44243.68
Caterpillar (CAT)53523.95
EI DuPont (DD)31454.76
Microsoft (MSFT)43144.80
General Electric (GE)34354.95
Pfizer (PFE)33145.16
Notes | More Info...


US Stock SummaryYieldP/EV.R.
Cisco (CSCO)YYY
Intel (INTC)YYY
JP Morgan Chase (JPM)YYY
Microsoft (MSFT)YYY
Caterpillar (CAT)YY
Chevron (CVX)YY
EI DuPont (DD)YY
Exxon Mobil (XOM)YY
General Electric (GE)YY
Pfizer (PFE)YY
AT&T (T)Y
IBM (IBM)Y
Merck (MRK)Y
Travelers (TRV)Y
UnitedHealth (UNH)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Penn West Petroleum (PWT)1535
Enerplus (ERF)0525
TransAlta (TA)0335
Crescent Point (CPG)1315
Canadian Oil Sands (COS)5225
Sun Life Financial (SLF)4455
Iamgold (IMG)5545
BCE Inc. (BCE)3135
CIBC (CM)5235
Bank of Montreal (BMO)5335
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
First Quantum (FM)5421
Iamgold (IMG)5545
National Bank (NA)5334
Imperial Oil (IMO)5341
TELUS (T)5443
Magna (MG)5452
Canadian Oil Sands (COS)5225
Agrium (AGU)5252
CIBC (CM)5235
Bank of Montreal (BMO)5335
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Iamgold (IMG)55451.10
Canadian Oil Sands (COS)52251.27
National Bank (NA)53341.74
Penn West Petroleum (PWT)15351.97
Sun Life Financial (SLF)44551.97
CIBC (CM)52352.05
Bank of Montreal (BMO)53352.23
TELUS (T)54432.55
Bank of Nova Scotia (BNS)43242.57
TD Bank (TD)43242.82
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
Bank of Montreal (BMO)YYY
CIBC (CM)YYY
Canadian Oil Sands (COS)YYY
Iamgold (IMG)YYY
National Bank (NA)YY
Penn West Petroleum (PWT)YY
Sun Life Financial (SLF)YY
TELUS (T)YY
Agrium (AGU)Y
BCE Inc. (BCE)Y
Bank of Nova Scotia (BNS)Y
Crescent Point (CPG)Y
Enerplus (ERF)Y
First Quantum (FM)Y
Imperial Oil (IMO)Y
Magna (MG)Y
TD Bank (TD)Y
TransAlta (TA)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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