7 Key Tips to Value Investing

My early days of investing involved some speculative purchases of Priceline and Kmart.  The first one turned out great and inspired a passion for investing.  The second one?  Not so much.  Kmart was bankrupt when I bought it, and I soon learned that meant shareholders might receive absolutely nothing when the company emerges from bankruptcy.  I learned the most important lesson of all from the Kmart failure:  never lose money.  Here’s a look at why that’s important, and some other key tips I’ve mastered over the years.  If you have any other tips, leave them in the comments.

Narrow Focus

1.  Never Lose Money.

Warren Buffett’s number one rule is never to lose money.  His rule number two is to never forget rule number one.  That’s how important this is.  After all, when you lose money, you have to gain an even higher return just to return to where you began.  For example, if you invest $1000 in Company A and the investment falls to $500, at that point, you have to double your money just to get your investment back.  So the key, of course, is to avoid investing in companies that may drop in value.  That’s easier said than done, but the simplest way to do that is by only investing in companies that have strong financials.  Look at the balance sheet to review things like the company’s current ratio, amount of long-term debt, amount of intangible assets, and other key items indicating whether the company’s financial accounts are in good order (for more information about reading balance sheets, check out the ModernGraham Academy’s Intro to the Balance Sheet course).  Look also at the income statement to review whether the company has achieved a profit consistently over time, and if the net income of the company has grown over time.  Good financials don’t guarantee an investment will not lose money, but they sure help.

2.  Invest.  Don’t Speculate.

The first chapter of Benjamin Graham’s classic The Intelligent Investor deals specifically with the difference between investing and speculating.  In general, pure investing promises a safety of principal and an adequate return, and anything else is speculating.  In reality, there are no investments that completely promise a safety of principal (not even treasury bonds anymore!).  My belief is that the line should be drawn in that an investment provides a return through capital gains as well as income, so long as the investment itself does not involve so much risk that it would effectively be speculating.  Therefore, common stocks that pay dividends may qualify as investments, while common stocks that don’t pay dividends are speculative.  After all, if there is no dividend income, you are merely speculating that the company will grow in value.  If there is dividend income, you may be speculating about the growth of the company, but you are also investing in the return of your investment through the dividend payments.  Dividends are key to investing wisely.  Don’t forget that.

3.  Don’t Invest on Margin.

Graham also said that “In our conservative view every nonprofessional who operates on margin should recognize that he is ipso facto speculating…”  This is absolutely true.  Buying on margin involves speculating that your purchase will not only provide safety of principal and an adequate return, but that the return will also be greater than the cost of borrowing.  An intelligent investor does not know how soon the return will be achieved, because of the uncertainty that is inherent in the market (see the next point about Mr. Market).  Rather, the intelligent investor knows only that his investment should not decrease in value and should provide an income.  As a result, guessing about whether a return will be adequate in time to beat a given cost of capital is speculating on its face.

Mr. Market

4.  Don’t Listen to Mr. Market.

The classic story of Mr. Market, as told by Graham in chapter 8 of The Intelligent Investor, explains in essence that the market is irrational.  The intelligent investor will do research and arrive at a given value for an investment, and the market will say the investment is worth something completely different on day one.  Then on day two, there will be a whole new value from the market.  Some days, the market will be right, but most days the market is wrong.  On the best days for intelligent investors, the market is crazy stupid, and opportunities for profit exist.  The best thing to do is to ignore the daily swings of the market, but pay attention to the trend in price of your investments.  Know how much the companies are worth, and don’t be afraid to make a move when the market is way off from where you believe the value lies.

Castle

5.  Don’t Forget a Margin of Safety.

Humans make mistakes.  All intelligent investors are human (or at least as far as I know…).  Therefore, intelligent investors will make mistakes.  By leaving yourself a margin of safety in your valuation, you can account for the inevitable mistake.  Think of your safety margin like the moat that helps protect your principal which is the castle.  For me, I use multiple safety margins.  First, the ModernGraham valuation formula estimates a growth rate based on the growth in the normalized earnings per share, then it decreases that estimate by 25% before using it in the valuation (the total possible growth rate is also capped at 15% per year).  Then, once the valuation is complete, I only will purchase a stock if it is trading at less than 75% of the value I’ve calculated.  Together, these safety margins help protect from loss of principal, thus helping to achieve Buffett’s number one rule (see above).

6.  Don’t Listen to Bad Management.

When an investor purchases common stock in a corporation, the investor becomes an owner of the company.  Many investors forget this concept, instead simply viewing the purchase of stock as a way to make a quick buck.  This attitude can lead to loss of principal if the investor is not paying attention to the performance of company management and it turns out the management makes terrible decisions.  Intelligent Investors take advantage of owning a share of the company and become involved in exercising shareholder rights.  This doesn’t necessarily mean becoming an activist, but it does mean reading the annual reports and participating in shareholder meetings either in person or via proxy ballot.  As a shareholder, your vote counts.  Use it.

7.  Don’t Stop Reading.

Always look to learn more about value investing, or any other endeavor you pursue.  Grow your understanding of what you are doing and you will become better at it.  For value investing, begin by reading Graham’s The Intelligent Investor, if you haven’t done so already.  Graham’s Security Analysis is also useful, but is a much more technical book.  After that, read some of the Berkshire Hathaway shareholder letters.  Check out more of our site here at ModernGraham, or visit other blogs such as Value Investing News, CSInvesting, or some of the others in our blogroll in the left sidebar.  There is a lot of good material out there for learning, and I hope you never stop striving to research.

What other tips do you have for value investors?

Photo Credit:  Benjamin Clark

Added and Updated Valuations – 11/9/09

Here are the new valuations added to our site in the past week.  To view more, click on browse valuations in our navbar.  We now have 125 in the database including all 30 components of the Dow Jones Industrial Average!

There were no companies scheduled for updates this week.

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not own any of the above companies at time of publication.

Online Red Kettle 2009: Launch

I have decided to hold a campaign to raise money this holiday season for The Salvation Army.  Each Sunday I will post an update on the progress of the campaign, and give a little information about The Salvation Army.  The initial goal is $150, but I believe that can easily be reached and raised.  If every reader of ModernGraham gives just $1, we can help make a difference!

Dynamic fundraising meter for your Red Kettle campaign.
Personal fundraising widget for 2009 Red Kettle campaign

From The Salvation Army’s international website, here is an overview of the organization:

The Salvation Army is an integral part of the Christian Church, although distinctive in government and practice. The Army’s doctrine follows the mainstream of Christian belief and its articles of faith emphasise God’s saving purposes. Its objects are ‘the advancement of the Christian religion… of education, the relief of poverty, and other charitable objects beneficial to society or the community of mankind as a whole.’*

The movement, founded in 1865 by William Booth, has spread from London, England, to many parts of the world.

Raised to evangelise, the Army spontaneously embarked on schemes for the social betterment of the poor. Such concerns have since developed, wherever the Army operates, in practical, skilled and cost-effective ways. Evolving social services meet endemic needs and specific crises worldwide. Modern facilities and highly-trained staff are employed.

The need for modern facilities and longer-term development is under continual review. Increasingly the Army’s policy and its indigenous membership allow it to cooperate with international relief agencies and governments alike. The movement’s partnership with both private and public philanthropy will continue to bring comfort to the needy, while the proclamation of God’s redemptive love offers individuals and communities the opportunity to enjoy a better life on earth and a place in Christ’s everlasting Kingdom.

*Salvation Army Act 1980

Please donate to the ModernGraham Online Red Kettle campaign for The Salvation Army as you are able.

44 Must Read Articles – ModernGraham’s Friday Linkfest #4

chainlinkEach Friday, I will be posting a list of the best links of the week.  I’ll collect what I find most interesting during the week, and will take submissions of articles that readers find interesting.

Best of the week from ModernGraham’s Reading List:

ModernGraham’s Friday Linkfest #3

chainlinkEach Friday, I will be posting a list of the best links of the week.  I’ll collect what I find most interesting during the week, and will take submissions of articles that readers find interesting.

Best of the week from ModernGraham’s Reading List:

Now, some other thoughts – I received a few submissions this week but they were all from the bloggers themselves.  As the goal of this linkfest is to highlight what people find to be the best reads of the week, I am not including submissions from the author of the article/post.  If you are a blogger and want to be included here, please submit something that you have READ, not written.

A review of the rules of the ModernGraham Friday Linkfest:

  • The deadline is Wednesday nights at midnight.
  • If you have a blog of your own, please do not submit your own posts.  If you include a link to your website in the remarks section of the submitting form, I will be sure to note (and link to) your site.
  • A preference is made towards posts and articles that deal with investing; however, there are countless other topics that are extremely interesting.  The “deal with investing” guideline will be defined very broadly.
  • I will separate the links that I find interesting from the links that are submitted by others.
  • Please submit as many articles that you want; however, if you are planning to submit more than 2 or 3, please e-mail me direct with a list.  If you submit 5 or more, I will separate your submissions from the rest.

Photo provided by lodefink on flickr.

http://feedproxy.google.com/~r/Dividends4life/~3/jduEpnpr6Os/

Insights on Mr. Market #1

Mr. Market always is moving his pricing back and forth.  For a value investor following Benjamin Graham’s intelligent investing guidelines, that often provides opportunities to buy low and sell high; however, it can be difficult to understand Mr. Market’s motives.  In this series, we will provide links to various resources and articles related to Mr. Market’s current behavior.

Adam Hewison of INO.com’s Market Club presents a video S&P 500 Update July 1st.

The Reformed Broker examines some statements made by Bill Gross of PIMCO.

Random Roger looks at weighting ETF portfolios.

TheStreet.com provides some Dividend Stocks for the Week and Jim Cramer gives his Take on Headline Stocks.

TraderFeed’s Trading with Odds on Your Side and When Volatility is Falling but Stocks Aren’t Rising.  TraderFeed also takes a look at the S&P 500.

Bespoke Investment Group’s A Wild Ride So Far.

Barron’s looks at Trucking Stocks from a technical standpoint.

A look at Apple vs RIMM.

Great Wall Street Journal articles (may need a subscription):  Payrolls Data Roil Markets andMarketWatch Hot Stocks Video.

The Kirk Report has many more useful links.

Additional Tools:

Warren Buffet calls Value Line, “An incredible value! I don’t know of another system that’s as good.” Outperforming the DOW by 18 to 1 over 41-years — we’ve delivered 23,211% gains for investors in our portfolio of #1-ranked stocks. Click here to sign up for Value Line Investment Survey’s 13-week Trial.

Recommended Books for understanding Mr. Market:

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street

The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist

Valuation Index

Updated as of July 20, 2017:

Here is a list of all companies currently covered by ModernGraham, as of the date listed above.  Clicking on the company name will bring you to the latest valuation of the company published by ModernGraham.

Ticker Name with Link
A Agilent Technologies Inc
AA Alcoa Corp
AAL American Airlines Group Inc
AAN Aaron’s, Inc.
AAP Advance Auto Parts, Inc.
AAPL Apple Inc.
AAXN Axon Enterprise Inc
ABBV AbbVie Inc
ABC AmerisourceBergen Corp.
ABT Abbott Laboratories
ACC American Campus Communities, Inc.
ACIW ACI Worldwide Inc
ACM Aecom
ACN Accenture Plc
ACXM Acxiom Corporation
ADBE Adobe Systems Incorporated
ADI Analog Devices, Inc.
ADM Archer Daniels Midland Company
ADP Automatic Data Processing
ADS Alliance Data Systems Corporation
ADSK Autodesk, Inc.
AEE Ameren Corp
AEO American Eagle Outfitters
AEP American Electric Power Company Inc
AES AES Corp
AET Aetna Inc
AFG American Financial Group Inc
AFL AFLAC Incorporated
AGCO AGCO Corporation
AGN Allergan plc Ordinary Shares
AHL Aspen Insurance Holdings Limited
AIG American International Group Inc
AIV Apartment Investment and Management Co
AIZ Assurant, Inc.
AJG Arthur J Gallagher & Co
AKAM Akamai Technologies, Inc.
AKRX Akorn, Inc.
ALB Albemarle Corporation
ALEX Alexander & Baldwin Inc
ALGN Align Technology, Inc.
ALK Alaska Air Group, Inc.
ALL Allstate Corp
ALLE Allegion PLC
ALXN Alexion Pharmaceuticals, Inc.
AMAT Applied Materials, Inc.
AMCX AMC Networks Inc
AMD Advanced Micro Devices, Inc.
AME AMETEK, Inc.
AMG Affiliated Managers Group, Inc.
AMGN Amgen, Inc.
AMP Ameriprise Financial, Inc.
AMT American Tower Corp
AMZN Amazon.com, Inc.
AN AutoNation, Inc.
ANF Abercrombie & Fitch Co.
ANSS ANSYS, Inc.
ANTM Anthem Inc
AON Aon plc Class A Ordinary Shares (UK)
AOS A. O. Smith Corp
APA Apache Corporation
APC Anadarko Petroleum Corporation
APD Air Products & Chemicals, Inc.
APH Amphenol Corporation
APOL Apollo Education Group Inc
ARE Alexandria Real Estate Equities Inc
ARLP Alliance Resource Partners, L.P.
ARRS ARRIS International plc
ARW Arrow Electronics, Inc.
ASH Ashland Global Holdings Inc.
ATI Allegheny Technologies Incorporated
AVB AvalonBay Communities Inc
AVGO Broadcom Ltd
AVP Avon Products, Inc.
AVY Avery Dennison Corp
AWK American Water Works Company Inc
AXP American Express Company
AYI Acuity Brands, Inc.
AZO AutoZone, Inc.
BA Boeing Co
BAC Bank of America Corp
BAX Baxter International Inc
BBBY Bed Bath & Beyond Inc.
BBT BB&T Corporation
BBY Best Buy Co Inc
BCR C R Bard Inc
BDX Becton Dickinson and Co
BEN Franklin Resources, Inc.
BF.B Brown-Forman Corporation
BGS B&G Foods, Inc.
BHI Baker Hughes A GE Co
BIIB Biogen Inc
BK Bank of New York Mellon Corp
BLK BlackRock, Inc.
BLL Ball Corporation
BMS Bemis Company, Inc.
BMY Bristol-Myers Squibb Co
BRK.B Berkshire Hathaway Inc.
BSX Boston Scientific Corporation
BWA BorgWarner Inc.
BXP Boston Properties, Inc.
C Citigroup Inc
CA CA, Inc.
CAG Conagra Brands Inc
CAH Cardinal Health Inc
CAM Cameron International Corporation
CAT Caterpillar Inc.
CB Chubb Ltd
CBG CBRE Group Inc
CBS CBS Corporation
CCE Coca-Cola European Partners plc Ordinary Shares
CCI Crown Castle International Corp. (REIT)
CCL Carnival Corp
CELG Celgene Corporation
CENX Century Aluminum Co
CERN Cerner Corporation
CEVA CEVA, Inc.
CF CF Industries Holdings, Inc.
CFG Citizens Financial Group Inc
CFNL Cardinal Financial Corporation
CFR Cullen/Frost Bankers, Inc.
CGI Celadon Group, Inc.
CGNX Cognex Corporation
CHCO City Holding Company
CHD Church & Dwight Co., Inc.
CHE Chemed Corporation
CHK Chesapeake Energy Corporation
CHRW C.H. Robinson Worldwide Inc
CHS Chico’s FAS, Inc.
CHSP Chesapeake Lodging Trust
CHTR Charter Communications, Inc.
CHUY Chuy’s Holdings Inc
CI CIGNA Corporation
CIEN Ciena Corporation
CIG Companhia Energetica de Minas Gers CEMIG
CINF Cincinnati Financial Corporation
CIR CIRCOR International, Inc.
CKH Seacor Holdings, Inc.
CL Colgate-Palmolive Company
CLD Cloud Peak Energy Inc.
CLF Cliffs Natural Resources Inc
CLGX Corelogic Inc
CLH Clean Harbors Inc
CLI Mack Cali Realty Corp
CLMS Calamos Asset Management, Inc
CLW Clearwater Paper Corp
CLX Clorox Co
CMA Comerica Incorporated
CMC Commercial Metals Company
CMCSA Comcast Corporation
CME CME Group Inc
CMG Chipotle Mexican Grill, Inc.
CMI Cummins Inc.
CMO Capstead Mortgage Corporation
CMP Compass Minerals International, Inc.
CMS CMS Energy Corporation
CMTL Comtech Telecomm. Corp.
CNC Centene Corp
CNK Cinemark Holdings, Inc.
CNMD CONMED Corporation
CNO CNO Financial Group Inc
CNP CenterPoint Energy, Inc.
CNSL Consolidated Communications Holdings Inc
CNX CONSOL Energy Inc.
COF Capital One Financial Corp.
COG Cabot Oil & Gas Corporation
COH Coach Inc
COHR Coherent, Inc.
COHU Cohu, Inc.
COL Rockwell Collins, Inc.
COLB Columbia Banking System Inc
COO Cooper Companies Inc
COP ConocoPhillips
COR CoreSite Realty Corp
CORE Core-Mark Holding Company, Inc.
COST Costco Wholesale Corporation
COTY Coty Inc
CPB Campbell Soup Company
CPF Central Pacific Financial Corp.
CPLA Capella Education Company
CPRT Copart, Inc.
CPS Cooper-Standard Holdings Inc
CPSI Computer Programs & Systems, Inc.
CPT Camden Property Trust
CRAY Cray Inc.
CRC California Resources Corp
CREE Cree, Inc.
CRI Carter’s, Inc.
CRL Charles River Laboratories Intl. Inc
CRM salesforce.com, inc.
CROX Crocs, Inc.
CRR CARBO Ceramics Inc.
CRS Carpenter Technology Corporation
CRVL CorVel Corporation
CRY Cryolife Inc
CRZO Carrizo Oil & Gas Inc
CSCO Cisco Systems, Inc.
CSGS CSG Systems International, Inc.
CSL Carlisle Companies, Inc.
CSRA CSRA Inc
CST CST Brands Inc
CSX CSX Corporation
CTAS Cintas Corporation
CTL Centurylink Inc
CTRE Caretrust REIT Inc
CTS CTS Corporation
CTSH Cognizant Technology Solutions Corp
CTXS Citrix Systems, Inc.
CUB Cubic Corporation
CUBI Customers Bancorp Inc
CUZ Cousins Properties Inc
CVBF CVB Financial Corp.
CVCO Cavco Industries, Inc.
CVG Convergys Corp
CVGW Calavo Growers, Inc.
CVLT CommVault Systems, Inc.
CVS CVS Health Corp
CVX Chevron Corporation
CWT California Water Service Group
CXO Concho Resources Inc
CXW Corecivic Inc
CY Cypress Semiconductor Corporation
CYH Community Health Systems
D Dominion Energy Inc
DAKT Daktronics, Inc.
DAL Delta Air Lines, Inc.
DAN Dana Inc
DAR Darling Ingredients Inc
DBD Diebold Nixdorf Inc
DCI Donaldson Company, Inc.
DCOM Dime Community Bancshares, Inc.
DD E I Du Pont De Nemours And Co
DDD 3D Systems Corporation
DE Deere & Company
DEI Douglas Emmett, Inc.
DFS Discover Financial Services
DG Dollar General Corp.
DGX Quest Diagnostics Inc
DHI D.R. Horton, Inc.
DHR Danaher Corporation
DIS Walt Disney Co
DISCA Discovery Communications Inc.
DISCK Discovery Communications Inc.
DLPH Delphi Automotive PLC
DLR Digital Realty Trust, Inc.
DLTR Dollar Tree, Inc.
DNB Dun & Bradstreet Corp
DNR Denbury Resources Inc.
DO Diamond Offshore Drilling Inc
DOV Dover Corp
DOW Dow Chemical Co
DPS Dr Pepper Snapple Group Inc.
DRI Darden Restaurants, Inc.
DTE DTE Energy Co
DUK Duke Energy Corp
DVA Davita Inc
DVN Devon Energy Corp
EA Electronic Arts Inc.
EBAY eBay Inc
ECL Ecolab Inc.
ED Consolidated Edison, Inc.
EFX Equifax Inc.
EIX Edison International
EL Estee Lauder Companies Inc
EMN Eastman Chemical Company
EMR Emerson Electric Co.
ENDP Endo International plc – Ordinary Shares
EOG EOG Resources Inc
EPD Enterprise Products Partners L.P.
EQIX Equinix, Inc.
EQR Equity Residential
EQT EQT Corporation
ES Eversource Energy
ESRX Express Scripts Holding Company
ESS Essex Property Trust Inc
ESV ENSCO PLC
ETFC E*TRADE Financial Corp
ETN Eaton Corporation, PLC Ordinary Shares
ETR Entergy Corporation
EVHC Envision Healthcare Corporation
EW Edwards Lifesciences Corp
EXC Exelon Corporation
EXPD Expeditors International of Washington
EXPE Expedia Inc
EXR Extra Space Storage, Inc.
F Ford Motor Company
FAST Fastenal Company
FB Facebook Inc
FBHS Fortune Brands Home & Security Inc
FCX Freeport-McMoRan Inc
FDX FedEx Corporation
FE FirstEnergy Corp.
FFIV F5 Networks, Inc.
FIS Fidelity National Information Servcs Inc
FISV Fiserv Inc
FITB Fifth Third Bancorp
FL Foot Locker, Inc.
FLIR FLIR Systems, Inc.
FLR Fluor Corporation (NEW)
FLS Flowserve Corp
FMC FMC Corp
FOSL Fossil Group Inc
FOXA Twenty-First Century Fox Inc
FRT Federal Realty Investment Trust
FSLR First Solar, Inc.
FTI TechnipFMC plc Ordinary Share
FTR Frontier Communications Corp
FTV Fortive Corp
GAS AGL Resources Inc.
GD General Dynamics Corporation
GE General Electric Company
GG Goldcorp Inc. (USA)
GGP GGP Inc
GHC Graham Holdings Co
GILD Gilead Sciences, Inc.
GIS General Mills, Inc.
GLW Corning Incorporated
GM General Motors Company
GME GameStop Corp.
GNW Genworth Financial Inc
GOOG Alphabet Inc
GOOGL Alphabet Inc
GPC Genuine Parts Company
GPN Global Payments Inc
GPS Gap Inc
GRMN Garmin Ltd.
GS Goldman Sachs Group Inc
GT Goodyear Tire & Rubber Co
GWW W W Grainger Inc
HAL Halliburton Company
HAR Harman International Industries Inc
HAS Hasbro, Inc.
HBAN Huntington Bancshares Incorporated
HBI Hanesbrands Inc.
HCA HCA Healthcare Inc
HCN Welltower Inc
HCP HCP, Inc.
HD Home Depot Inc
HES Hess Corp.
HIG Hartford Financial Services Group Inc
HOG Harley-Davidson Inc
HOLX Hologic, Inc.
HON Honeywell International Inc.
HP Helmerich & Payne, Inc.
HPE Hewlett Packard Enterprise Co
HPQ HP Inc
HRB H & R Block Inc
HRL Hormel Foods Corp
HRS Harris Corporation
HSIC Henry Schein, Inc.
HST Host Hotels and Resorts Inc
HSY Hershey Co
HUM Humana Inc
IBM International Business Machines Corp.
ICE Intercontinental Exchange Inc
IDXX IDEXX Laboratories, Inc.
IFF International Flavors & Fragrances Inc
IIVI II-VI, Inc.
ILG ILG Inc
ILMN Illumina, Inc.
IM Ingram Micro Inc.
IMO Imperial Oil Ltd (USA)
INDB Independent Bank Corp
INFY Infosys Ltd ADR
INGN Inogen Inc
INGR Ingredion Inc
INN Summit Hotel Properties Inc
INT World Fuel Services Corp
INTC Intel Corporation
INTL INTL Fcstone Inc
INTU Intuit Inc.
IOSP Innospec Inc.
IP International Paper Co
IPAR Inter Parfums, Inc.
IPCC Infinity Property and Casualty Corp.
IPG Interpublic Group of Companies Inc
IPGP IPG Photonics Corporation
IPHS Innophos Holdings, Inc.
IPI Intrepid Potash, Inc.
IPXL Impax Laboratories Inc
IR Ingersoll-Rand PLC
IRBT iRobot Corporation
IRDM Iridium Communications Inc
IRM Iron Mountain Incorporated (Delaware) REIT
ISCA International Speedway Corp
ISRG Intuitive Surgical, Inc.
ITG Investment Technology Group
ITRI Itron, Inc.
ITT ITT Inc.
ITW Illinois Tool Works Inc.
IVC Invacare Corporation
IVZ Invesco Ltd.
JACK Jack in the Box Inc.
JBHT J B Hunt Transport Services Inc
JBL Jabil Inc
JBLU JetBlue Airways Corporation
JBT John Bean Technologies Corp
JCI Johnson Controls International plc Ordinary Share
JCP J C Penney Company Inc
JEC Jacobs Engineering Group Inc
JJSF J & J Snack Foods Corp
JKHY Jack Henry & Associates, Inc.
JLL Jones Lang LaSalle Inc
JNJ Johnson & Johnson
JNPR Juniper Networks, Inc.
JOY Joy Global Inc.
JPM JPMorgan Chase & Co.
JW.A John Wiley & Sons Inc
JWN Nordstrom, Inc.
K Kellogg Company
KALU Kaiser Aluminum Corp.
KAMN Kaman Corporation
KATE Kate Spade & Co
KBH KB Home
KBR KBR, Inc.
KELYA Kelly Services, Inc.
KEX Kirby Corporation
KEY KeyCorp
KEYS Keysight Technologies Inc
KFY Korn/Ferry International
KHC Kraft Heinz Co
KIM Kimco Realty Corp
KIRK Kirkland’s, Inc.
KKR KKR & Co. L.P.
KLAC KLA-Tencor Corp
KLIC Kulicke and Soffa Industries Inc.
KLXI KLX Inc
KMB Kimberly Clark Corp
KMI Kinder Morgan Inc
KMPR Kemper Corp
KMT Kennametal Inc.
KMX CarMax, Inc
KN Knowles Corp
KND Kindred Healthcare, Inc.
KNX Knight Transportation
KO The Coca-Cola Co
KOP Koppers Holdings Inc.
KOPN Kopin Corporation
KORS Michael Kors Holdings Ltd
KR Kroger Co
KRA Kraton Corp
KRC Kilroy Realty Corp
KRG Kite Realty Group Trust
KS KapStone Paper and Packaging Corp.
KSS Kohl’s Corporation
KSU Kansas City Southern
KWR Quaker Chemical Corp
L Loews Corporation
LABL Multi-Color Corporation
LAD Lithia Motors Inc
LAMR Lamar Advertising Company
LANC Lancaster Colony Corp.
LB L Brands Inc
LCI Lannett Company, Inc.
LDL Lydall, Inc.
LDOS Leidos Holdings, Inc.
LDR Landauer Inc
LECO Lincoln Electric Holdings, Inc.
LEG Leggett & Platt, Inc.
LEN Lennar Corporation
LFUS Littelfuse, Inc.
LGIH LGI Homes Inc
LGND Ligand Pharmaceuticals Inc.
LH Laboratory Corp. of America Holdings
LHCG LHC Group, Inc.
LHO LaSalle Hotel Properties
LII Lennox International Inc.
LITE Lumentum Holdings Inc
LKQ LKQ Corporation
LL Lumber Liquidators Holdings Inc
LLL L3 Technologies Inc
LLTC Linear Technology Corporation
LLY Eli Lilly and Co
LM Legg Mason Inc
LMNX Luminex Corporation
LMOS Lumos Networks Corp
LMT Lockheed Martin Corporation
LNC Lincoln National Corporation
LNN Lindsay Corporation
LNT Alliant Energy Corporation
LOCO El Pollo LoCo Holdings Inc
LOGM LogMeIn Inc
LOW Lowe’s Companies, Inc.
LPNT LifePoint Health Inc
LPSN LivePerson, Inc.
LPT Liberty Property Trust
LPX Louisiana-Pacific Corporation
LQDT Liquidity Services, Inc.
LRCX Lam Research Corporation
LSTR Landstar System, Inc.
LTC LTC Properties Inc
LTXB LegacyTexas Financial Group Inc
LUK Leucadia National Corp.
LUV Southwest Airlines Co
LVLT Level 3 Communications, Inc.
LXP Lexington Realty Trust
LYB LyondellBasell Industries NV
LYV Live Nation Entertainment, Inc.
M Macy’s Inc
MA Mastercard Inc
MAA Mid-America Apartment Communities Inc
MAC Macerich Co
MAIN Main Street Capital Corporation
MAR Marriott International Inc
MAS Masco Corp
MAT Mattel, Inc.
MCD McDonald’s Corporation
MCHP Microchip Technology Inc.
MCK McKesson Corporation
MCO Moody’s Corporation
MDLZ Mondelez International Inc
MDT Medtronic plc. Ordinary Shares
MET Metlife Inc
MHK Mohawk Industries, Inc.
MKC McCormick & Company, Incorporated
MLM Martin Marietta Materials, Inc.
MMC Marsh & McLennan Companies, Inc.
MMM 3M Co
MMP Magellan Midstream Partners, L.P.
MNK Mallinckrodt PLC
MNST Monster Beverage Corporation
MO Altria Group Inc
MON Monsanto Company
MOS Mosaic Co
MPC Marathon Petroleum Corp
MRK Merck & Co., Inc.
MRO Marathon Oil Corporation
MS Morgan Stanley
MSFT Microsoft Corporation
MSI Motorola Solutions Inc
MTB M&T Bank Corporation
MTD Mettler-Toledo International Inc.
MTSC MTS Systems Corporation
MU Micron Technology, Inc.
MUR Murphy Oil Corporation
MYL Mylan N.V.
NAVI Navient Corp
NBL Noble Energy, Inc.
NBR Nabors Industries Ltd.
NDAQ Nasdaq Inc
NE Noble Corporation Ordinary Shares (UK)
NEE NextEra Energy Inc
NEM Newmont Mining Corp
NFLX Netflix, Inc.
NFX Newfield Exploration Co.
NI NiSource Inc.
NKE Nike Inc
NLSN Nielsen N.V. Ordinary Shares
NNN National Retail Properties, Inc.
NOC Northrop Grumman Corporation
NOV National-Oilwell Varco, Inc.
NPK National Presto Industries Inc.
NRP Natural Resource Partners LP
NSC Norfolk Southern Corp.
NTAP NetApp Inc.
NTRS Northern Trust Corporation
NUE Nucor Corporation
NVDA NVIDIA Corporation
NWL Newell Brands Inc
NWS News Corp
NWSA News Corp
O Realty Income Corp
OI Owens-Illinois Inc
OKE ONEOK, Inc.
OLN Olin Corporation
OMC Omnicom Group Inc.
ORCL Oracle Corporation
ORLY O’Reilly Automotive Inc
OXY Occidental Petroleum Corporation
PAYX Paychex, Inc.
PBCT People’s United Financial, Inc.
PBI Pitney Bowes Inc.
PCAR PACCAR Inc
PCG PG&E Corporation
PCLN Priceline Group Inc
PDCO Patterson Companies, Inc.
PEG Public Service Enterprise Group Inc.
PEP PepsiCo, Inc.
PFE Pfizer Inc.
PFG Principal Financial Group Inc
PG Procter & Gamble Co
PGR Progressive Corp
PH Parker-Hannifin Corp
PHM PulteGroup, Inc.
PKI PerkinElmer, Inc.
PLD Prologis Inc
PM Philip Morris International Inc.
PMD Psychemedics Corp.
PNC PNC Financial Services Group Inc
PNR Pentair plc. Ordinary Share
PNW Pinnacle West Capital Corporation
PPG PPG Industries, Inc.
PPL PPL Corp
PRGO Perrigo Company plc Ordinary Shares
PRU Prudential Financial Inc
PSA Public Storage
PSX Phillips 66
PVH PVH Corp
PWR Quanta Services Inc
PX Praxair, Inc.
PXD Pioneer Natural Resources
PYPL Paypal Holdings Inc
QCOM QUALCOMM, Inc.
QEP QEP Resources Inc
QRVO Qorvo Inc
R Ryder System, Inc.
RAI Reynolds American, Inc.
RAVN Raven Industries, Inc.
RBC Regal Beloit Corp
RDC Rowan Companies PLC
REGN Regeneron Pharmaceuticals Inc
RF Regions Financial Corp
RHI Robert Half International Inc.
RHT Red Hat Inc
RIG Transocean LTD
RL Ralph Lauren Corp
ROK Rockwell Automation
ROP Roper Technologies Inc
ROST Ross Stores, Inc.
RRC Range Resources Corp.
RSG Republic Services, Inc.
RTN Raytheon Company
SAIA Saia Inc
SAIC Science Applications International Corp
SAM Boston Beer Company Inc
SANM Sanmina Corp
SBNY Signature Bank
SBRA Sabra Health Care REIT Inc
SBSI Southside Bancshares, Inc.
SBUX Starbucks Corporation
SCAI Surgical Care Affiliates Inc
SCG SCANA Corporation
SCHL Scholastic Corp
SCHW Charles Schwab Corp
SCI Service Corporation International
SCLN SciClone Pharmaceuticals, Inc.
SCSC ScanSource, Inc.
SCSS Select Comfort Corp.
SCVL Shoe Carnival, Inc.
SE Spectra Energy Corp.
SEE Sealed Air Corp
SEIC SEI Investments Company
SEM Select Medical Holdings Corporation
SENEA Seneca Foods Corp
SF Stifel Financial Corp
SFBS ServisFirst Bancshares, Inc.
SFNC Simmons First National Corporation
SGMS Scientific Games Corp
SHLM A Schulman Inc
SHOO Steven Madden, Ltd.
SHW Sherwin-Williams Co
SIG Signet Jewelers Ltd.
SIGI Selective Insurance Group
SIVB SVB Financial Group
SJI South Jersey Industries Inc
SJM J M Smucker Co
SKT Tanger Factory Outlet Centers Inc.
SKYW SkyWest, Inc.
SLAB Silicon Laboratories
SLB Schlumberger Limited.
SLCA U.S. Silica Holdings Inc
SLG SL Green Realty Corp
SLGN Silgan Holdings Inc.
SLM SLM Corp
SLW SWISS LIFE HLDG SF 5,10
SM SM Energy Co
SMCI Super Micro Computer, Inc.
SMG Scotts Miracle-Gro Co
SMP Standard Motor Products, Inc.
SMRT Stein Mart, Inc.
SMTC Semtech Corporation
SNA Snap-on Incorporated
SNCR Synchronoss Technologies, Inc.
SNH Senior Housing Properties Trust
SNI Scripps Networks Interactive, Inc.
SNPS Synopsys, Inc.
SNV Synovus Financial Corp.
SO Southern Co
SON Sonoco Products Co
SONC Sonic Corporation
SPG Simon Property Group Inc
SPGI S&P Global Inc
SPH Suburban Propane Partners LP
SPLS Staples, Inc.
SPN Superior Energy Services, Inc.
SPOK Spok Holdings, Inc.
SPPI Spectrum Pharmaceuticals, Inc.
SPSC SPS Commerce, Inc.
SPTN SpartanNash Co
SPXC SPX Corp
SR Spire Inc
SRCL Stericycle Inc
SRDX SurModics, Inc.
SRE Sempra Energy
SSD Simpson Manufacturing Co, Inc.
SSI Stage Stores Inc
SSP E. W. Scripps Co
SSTK Shutterstock Inc
STBA S & T Bancorp Inc
STC Stewart Information Services Corp
STE Steris PLC
STI SunTrust Banks, Inc.
STL Sterling Bancorp
STLD Steel Dynamics, Inc.
STMP Stamps.com Inc.
STRA Strayer Education Inc
STT State Street Corp
STWD Starwood Property Trust, Inc.
STX Seagate Technology PLC
STZ Constellation Brands, Inc.
SUP Superior Industries International Inc
SUPN Supernus Pharmaceuticals Inc
SVU SUPERVALU INC.
SWK Stanley Black & Decker, Inc.
SWKS Skyworks Solutions Inc
SWM Schweitzer-Mauduit International, Inc.
SWN Southwestern Energy Company
SXC SunCoke Energy Inc
SXI Standex Int’l Corp.
SXT Sensient Technologies Corporation
SYF Synchrony Financial
SYK Stryker Corporation
SYKE Sykes Enterprises, Incorporated
SYMC Symantec Corporation
SYY SYSCO Corporation
T AT&T Inc.
TAP Molson Coors Brewing Co
TBI Trueblue Inc
TCBI Texas Capital Bancshares Inc
TCF TCF Financial Corporation
TCO Taubman Centers, Inc.
TDC Teradata Corporation
TDG TransDigm Group Incorporated
TDS Telephone & Data Systems, Inc.
TDW Tidewater Inc.
TDY Teledyne Technologies Incorporated
TECD Tech Data Corp
TECH BIO-TECHNE Corp
TEL TE Connectivity Ltd
TER Teradyne, Inc.
TESO Tesco Corporation (USA)
TEX Terex Corporation
TFX Teleflex Incorporated
TGNA Tegna Inc
TGT Target Corporation
THC Tenet Healthcare Corp
TIF Tiffany & Co.
TJX TJX Companies Inc
TMK Torchmark Corporation
TMO Thermo Fisher Scientific Inc.
TRIP Tripadvisor Inc
TROW T. Rowe Price Group Inc
TRV Travelers Companies Inc
TSCO Tractor Supply Company
TSE:ARE Aecon Group Inc
TSE:CEU CES Energy Solutions Corp
TSE:CFP Canfor Corporation
TSE:CG Centerra Gold Inc.
TSE:CGX Cineplex Inc
TSE:CHE.UN Chemtrade Logistics Income Fund
TSE:CIX CI Financial Corp
TSE:CJR.B Corus Entertainment Inc.
TSE:CLS Celestica Inc
TSE:CM Canadian Imperial Bank of Commerce
TSE:CNQ Canadian Natural Resources Limited
TSE:CNR Canadian National Railway Company
TSE:CP Canadian Pacific Railway Limited
TSE:CPG Crescent Point Energy Corp
TSE:CPX Capital Power Corp
TSE:CR Crew Energy Inc
TSE:CRR.UN Crombie Real Estate Investment Trust
TSE:CSH.UN Chartwell Retirement Residences
TSE:CSU Constellation Software Inc.
TSE:CTC.A Canadian Tire Corporation Limited
TSE:CU Canadian Utilities Limited
TSE:CUF.UN Cominar REIT
TSE:CVE Cenovus Energy Inc
TSE:CWB Canadian Western Bank
TSE:DDC Dominion Diamond Corp
TSE:D.UN Dream Office Real Estate Investment Trst
TSE:IGM IGM Financial Inc.
TSE:IMG IAMGOLD Corp
TSE:INE Innergex Renewable Energy Inc
TSE:IPL Inter Pipeline Ltd
TSE:ITP Intertape Polymer Group
TSE:IVN Ivanhoe Mines Ltd
TSE:JE Just Energy Group Inc
TSE:KDX Klondex Mines Ltd
TSE:KEL Kelt Exploration Ltd
TSE:KL KIRKLAND LAKE GOLD LTD
TSE:KXS Kinaxis Inc
TSE:LIF LABRADOR IRON ORE ROYALTY CORPORATION
TSE:LNR Linamar Corporation
TSE:LUC Lucara Diamond Corp
TSE:LUN Lundin Mining Corporation
TSE:SAP Saputo Inc.
TSE:SCL Shawcor Ltd
TSE:SES Secure Energy Services Inc
TSE:SGY Surge Energy Inc
TSE:SJ Stella-Jones Inc
TSE:SJR.B Shaw Communications Inc
TSE:SLF Sun Life Financial Inc
TSE:SMF Semafo Inc.
TSE:SNC Snc-Lavalin Group Inc
TSE:SPB Superior Plus Corp.
TSE:SPE Spartan Energy Corp
TSE:SRU.UN Smart REIT
TSE:SSL Sandstorm Gold Ltd
TSE:SSO Silver Standard Resources Inc.
TSE:STN Stantec Inc.
TSE:SU Suncor Energy Inc.
TSE:SW Sierra Wireless, Inc.
TSE:TA TransAlta Corporation
TSE:TCL.A Transcontinental Inc.
TSE:TCN Tricon Capital Group Inc
TSE:TD Toronto-Dominion Bank
TSE:TECK.B Teck Resources Ltd
TSE:tFII TFI International Inc
TSN Tyson Foods, Inc.
TSO Tesoro Corporation
TSS Total System Services, Inc.
TWX Time Warner Inc
TXN Texas Instruments Incorporated
TXT Textron Inc.
UA Under Armour Inc
UAA Under Armour Inc
UDR UDR, Inc.
UHS Universal Health Services, Inc.
ULTA Ulta Beauty Inc
UNH UnitedHealth Group Inc
UNIT Uniti Group Inc
UNM Unum Group
UNP Union Pacific Corporation
UPS United Parcel Service, Inc.
URBN Urban Outfitters, Inc.
URI United Rentals, Inc.
USB U.S. Bancorp
UTX United Technologies Corporation
V Visa Inc
VAR Varian Medical Systems, Inc.
VFC VF Corp
VIAB Viacom, Inc.
VLO Valero Energy Corporation
VMC Vulcan Materials Company
VNO Vornado Realty Trust
VRSK Verisk Analytics, Inc.
VRSN Verisign, Inc.
VRTX Vertex Pharmaceuticals Incorporated
VTR Ventas, Inc.
VZ Verizon Communications Inc.
WAT Waters Corporation
WBA Walgreens Boots Alliance Inc
WDC Western Digital Corp
WEC WEC Energy Group Inc
WFC Wells Fargo & Co
WFM Whole Foods Market, Inc.
WHR Whirlpool Corporation
WIN Windstream Holdings, Inc.
WM Waste Management, Inc.
WMB Williams Companies Inc
WMT Wal-Mart Stores Inc
WNR Western Refining, Inc.
WPX WPX Energy Inc
WR Westar Energy Inc
WRK WestRock Co
WU The Western Union Company
WWW Wolverine World Wide, Inc.
WY Weyerhaeuser Co
WYN Wyndham Worldwide Corporation
WYNN Wynn Resorts, Limited
X United States Steel Corporation
XEL Xcel Energy Inc
XL XL Group Ltd.
XLNX Xilinx, Inc.
XOM Exxon Mobil Corporation
XRAY DENTSPLY SIRONA Inc
XRX Xerox Corp
XYL Xylem Inc
YUM Yum! Brands, Inc.
ZBH Zimmer Biomet Holdings Inc
ZION Zions Bancorp
ZTS Zoetis Inc

Defensive Stock Lists

The following companies have passed the requirements of the defensive investor, which include:
1)  Adequate size of the enterprise; Market cap greater than $2 billion,
2)  Sufficiently strong financial condition; Current Ratio greater than 2,
3)  Earnings stability; Positive Net Income for the last 10 years,
4)  Dividend record; Dividend payments for the last 10 years,
5)  Earnings growth; Increase of one-third in EPS in the past 10 years using 3 year averages at the beginning and end of the period,
6)  Moderate Price/Earnings Ratio; PE Ratio less than 20
7)  Moderate Price/Assets Ratio; PB Ratio less than 2.5 or multiple of PB and PE less than 50.
*The company must pass at least 6 of the 7 tests in order to be suitable for the defensive investor.

Our requirements for the defensive investor are based on Benjamin Graham’s The Intelligent Investor, but have been modernized and updated.

After screening the Russell 3000 for all of the companies that pass the requirements of the defensive investor, we sort them to provide a starting point for research.  Here are the results:

15 companies trading at greatest discount to intrinsic value:

PGR PROGRESSIVE CORP
VLO VALERO ENERGY CORP
NI NISOURCE INC
STFC STATE AUTO FINANCIAL
NFB NORTH FORK BANCORP
ATG AGL RESOURCES INC
ASH ASHLAND INC
BAC BANK OF AMERICA CORP
ZION ZIONS BANCORPORATION
MNI MCCLATCHY COMPANY
STZ CONSTELLATION BRANDS
TMA THORNBURG MORTGAGE
WFC WELLS FARGO & CO
CNB COLONIAL BANCGROUP
COP CONOCO PHILLIPS

15 companies with the lowest PE Ratio (calculated using Our Methods):

TOA TECHNICAL OLYMPIC
PGR PROGRESSIVE CORP
SPF STANDARD PACIFIC
BZH BEAZER HOMES USA INC
PHM PULTE HOMES, INC.
LUK LEUCADIA NATIONAL
CGI COMMERCE GROUP, INC.
MTH MERITAGE HOMES CORP
KBH KB HOME
MHO M/I HOMES, INC.
WHI W HOLDING COMPANY
AET  AETNA INC
OFG ORIENTAL FIN’L
OXY OCCIDENTAL PETROLEUM
MDC M.D.C. HOLDINGS, INC

15 companies with the highest Return on Invested Capital (ROIC) using Warren Buffet’s definitions of owner earnings and contributed capital:

RCII RENT-A-CENTER, INC.
DEBS DEB SHOPS, INC.
DLX DELUXE CORPORATION
HRB H&R BLOCK INC
PCU SOUTHERN COPPER CORP
NUE NUCOR CORPORATION
RYL RYLAND GROUP, INC
KCP COLE (KENNETH) PRODS
MDC M.D.C. HOLDINGS, INC
LEN LENNAR CORP
TTC TORO COMPANY (THE)
EXPO EXPONENT, INC.
LIZ LIZ CLAIBORNE, INC.
OSG OVERSEAS SHIPHOLDING
SEB SEABOARD CORPORATION

Defensive Stock Lists

The following companies have passed the requirements of the defensive investor, which include:
1)  Adequate size of the enterprise; Market cap greater than $2 billion,
2)  Sufficiently strong financial condition; Current Ratio greater than 2,
3)  Earnings stability; Positive Net Income for the last 10 years,
4)  Dividend record; Dividend payments for the last 10 years,
5)  Earnings growth; Increase of one-third in EPS in the past 10 years using 3 year averages at the beginning and end of the period,
6)  Moderate Price/Earnings Ratio; PE Ratio less than 20
7)  Moderate Price/Assets Ratio; PB Ratio less than 2.5 or multiple of PB and PE less than 50.
*The company must pass at least 6 of the 7 tests in order to be suitable for the defensive investor.

Our requirements for the defensive investor are based on Benjamin Graham’s The Intelligent Investor, but have been modernized and updated.

After screening the Russell 3000 for all of the companies that pass the requirements of the defensive investor, we sort them to provide a starting point for research.  Here are the results:

15 companies trading at greatest discount to intrinsic value:

PGR PROGRESSIVE CORP
VLO VALERO ENERGY CORP
NI NISOURCE INC
STFC STATE AUTO FINANCIAL
NFB NORTH FORK BANCORP
ATG AGL RESOURCES INC
ASH ASHLAND INC
BAC BANK OF AMERICA CORP
STZ CONSTELLATION BRANDS
ZION ZIONS BANCORPORATION
TMA THORNBURG MORTGAGE
MNI MCCLATCHY COMPANY
WFC WELLS FARGO & CO
CB CHUBB CORP (THE)
TOA TECHNICAL OLYMPIC

15 companies with the lowest PE Ratio (calculated using Our Methods):

FBP FIRST BANCORP
TOA TECHNICAL OLYMPIC
PGR PROGRESSIVE CORP
SPF STANDARD PACIFIC
BZH BEAZER HOMES USA INC
PHM PULTE HOMES, INC.
MTH MERITAGE HOMES CORP
KBH KB HOME
CGI COMMERCE GROUP, INC.
LUK LEUCADIA NATIONAL
MHO M/I HOMES, INC.
OXY OCCIDENTAL PETROLEUM
MDC M.D.C. HOLDINGS, INC
WHI W HOLDING COMPANY
AET AETNA INC

15 companies with the highest Return on Invested Capital (ROIC) using Warren Buffet’s definitions of owner earnings and contributed capital:

RCII RENT-A-CENTER, INC.
DEBS DEB SHOPS, INC.
DLX DELUXE CORPORATION
HRB H&R BLOCK INC
PCU SOUTHERN COPPER CORP
NUE NUCOR CORPORATION
RYL RYLAND GROUP, INC
KCP COLE (KENNETH) PRODS
MDC M.D.C. HOLDINGS, INC
LIFE LIFELINE SYSTEMS INC
LEN LENNAR CORP
EASI ENGINEERED SUPPORT
TTC TORO COMPANY (THE)
EXPO EXPONENT, INC.
LIZ LIZ CLAIBORNE, INC.

Value Investing Weekly – Issue 4

There was an article in today’s Wall Street Journal regarding bondholders demanding payment due to the lack of timeliness of firm’s reporting their earnings and other financial reports. Primarily, it was hedge funds holding bonds who where effectively placing the firm in default and in some instances demanding reorganization under the Federal bankruptcy laws. This led me to think about how Value Investors view topics including corporate governance and the responsibility of investors to enforce their interests in extreme instances.

Both Graham and Buffett stress the need that a firm’s management be in line with the interests of shareholders and understand who they are working for. In today’s corporate world, executives have large compensation packages and in turn are expected to produce results that benefit the shareholder. I believe that if management is out of line with shareholders, then they have the obligation to protect their investment and through proxy change management.

It is necessary to pay a premium to both recruit and retain solid management, but when the company is facing tough financial times this same management must be expected to share the burden. It is absurd to allow executives to enjoy their perk packages when earnings hit the wall and cuts are made to employment, dividends, and share price.

The costs associated with entering into bankruptcy proceedings are extremely expensive and should only be utilized under absolute extreme instances. Of course, only bondholders can enter into these types of legal engagements, but a diversified portfolio should include a minimum amount of debt instruments. We must embrace management and work together to attain the results both parties desire, but maintain a sense of scrutiny on their performance. It is vital as Value Investors that we keep an eye on the people who are controlling the companies that we own shares of.

On a completely side note, we here at ModernGraham.com, would like to congratulate Warren Buffett on the marriage to his long time companion Astrid Menks. We wish the best to the both, here is the article describing the events: Warren Buffett’s marriage.

 

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