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The Stingy News Weekly (01/29/2012)


"Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."
- Warren Buffett


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3 villains can steal your retirement dreams
"Building a strong financial castle to fund your retirement is hard. If you’re not careful, you may discover a hole in your vault and three villains sneaking off with the family jewels."


Stingy Links

Is the Value Effect Seasonal?
"This paper extends the research on value premium by examining patterns of seasonality exhibited in the book-to-market effect in major global equity markets. The results provide evidence supporting the January effect in the value premium phenomenon. Using stock market indices for Asia Pacific Europe, Australasia, and Far East (EAFE) and Europe, with and without the U.K., Scandinavian countries, the U.K., U.S., and Japan form 1975 through 2007, the paper provides out-of-sample evidence from twenty-one countries that comprise different index portfolios. As a robustness measures, we use regression analysis, paired means tests, and non-parametric tests to examine whether the persistence of the anomalous January value premium is real and significant. The annualized excess January value premium ranges from 42.96 percent for Scandinavian countries to 9.24 percent for EAFE markets with 20.28 percent for U.S. Even though such a predictable pattern exists, our analysis suggests that large standard deviations would not allow a viable investment strategy."


How to buy a company for no money down
"At the beginning of 2012, for example, there was a grand total of 12 TSX-listed stocks which met the Ben Graham test. They had a median market capitalization of $100-million and a float of perhaps half that – barely sufficient to create a portfolio for a small investor. More important, the net-net valuation assumes that all of the current assets can be liquidated at 100 cents on the dollar. This is a reasonable assumption for cash and short-term investments, generous for accounts receivable and heroic for inventory. In addition, the decision to ignore all long term assets may be prudent with regard to intangibles, but many established companies hold undervalued fixed assets on their balance sheet. This is not a new problem, of course, and twenty five years ago I received screens from the New York-based brokerage firm Oppenheimer that addressed these issues. The official name was the collateral value screen, but Norm Weinger of Oppenheimer referred to it as his “Buy a company, no money down” list."


Invest like a legend: David Dreman
"How I'd invest $100,000 right now: I’d put it in good-quality stocks in a portfolio large enough to diversify, or, for the average investor, an index fund. Stocks have traditionally gone up if we see inflation coming. We’re not seeing much inflation yet, but we’ve been printing an awful lot of money in the United States, they’ve printed $7 trillion since 2008. I’ve never seen the two not meet."


Active or passive? Process should drive choice
"Too many view passive and active investment as mutually-exclusive strategies decided upon via some quasi-political debate. On the contrary, I view active and passive as two strategies on the same continuum. Indeed, the ETF industry – once synonymous with passive investing – has created a blurring of the lines between active and passive strategies. The likes of Fundamental Indexing, equal-weighted indexes and other quant-driven indexes are pushing so-called ‘passive’ approaches closer to the active management side of the spectrum. That notwithstanding, as highlighted in my most recent Investment Executive article I am indifferent between passive and active investing – a view shared by my HighView partners and, accordingly, written into our firm’s investment philosophy."


The constancy of safe asset demand
"The findings are preliminary, but the authors calculate that the safe asset share — the percentage of safe assets to total assets in the US economy — has been roughly the same since 1952, at about 33 per cent."


China housing set for hard landing
"The numbers are grim: China's property bubble is heading for a spectacular burst, and its effect on the country's economy will be widespread."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)3535
Verizon (VZ)3345
Merck (MRK)1415
Pfizer (PFE)3425
General Electric (GE)3435
Johnson & Johnson (JNJ)1315
Procter & Gamble (PG)2324
EI DuPont (DD)4144
Intel (INTC)5314
Chevron (CVX)5454
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
Microsoft (MSFT)5213
Intel (INTC)5314
American Express (AXP)4221
Coca-Cola (KO)4113
Wal-Mart (WMT)4252
EI DuPont (DD)4144
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
AT&T (T)35352.55
Chevron (CVX)54542.57
Verizon (VZ)33452.82
JP Morgan Chase (JPM)55333.08
Intel (INTC)53143.60
Pfizer (PFE)34253.64
Microsoft (MSFT)52133.92
General Electric (GE)34354.27
EI DuPont (DD)41444.31
Coca-Cola (KO)41134.59
Notes | More Info...


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



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Enerplus (ERF)5515
Sun Life Financial (SLF)2555
TransAlta (TA)3445
BCE Inc. (BCE)2135
ARC Resources (ARX)1215
Husky Energy (HSE)4445
Penn West Petroleum (PWT)2525
Canadian Oil Sands (COS)5225
CIBC (CM)5235
Power Corp of Canada (POW)4455
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Research In Motion (RIM)5550
Brookfield (BAM.A)5442
Iamgold (IMG)5312
Bombardier (BBD.B)5153
Enerplus (ERF)5515
Agrium (AGU)5351
Inmet Mining (IMN)5411
Canadian Oil Sands (COS)5225
CIBC (CM)5235
Teck Resources (TCK.B)5432
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Enerplus (ERF)55151.01
Canadian Oil Sands (COS)52252.04
CIBC (CM)52352.14
Husky Energy (HSE)44452.29
Power Corp of Canada (POW)44552.34
Sun Life Financial (SLF)25552.39
Bank of Montreal (BMO)44352.40
TransAlta (TA)34452.48
Manulife (MFC)45542.68
National Bank (NA)43342.80
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
CIBC (CM)YYY
Canadian Oil Sands (COS)YYY
Enerplus (ERF)YYY
Husky Energy (HSE)YY
Power Corp of Canada (POW)YY
Sun Life Financial (SLF)YY
TransAlta (TA)YY
ARC Resources (ARX)Y
Agrium (AGU)Y
BCE Inc. (BCE)Y
Bank of Montreal (BMO)Y
Bombardier (BBD.B)Y
Brookfield (BAM.A)Y
Iamgold (IMG)Y
Inmet Mining (IMN)Y
Manulife (MFC)Y
National Bank (NA)Y
Penn West Petroleum (PWT)Y
Research In Motion (RIM)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
(03/31/2001 to 12/31/2011)
Average Capital Gain
35.1%



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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