Turnaround
The markets have seemingly found their footing in the past few days. The downturn in stock prices was not pretty, but we took the weakness as an opportunity to add positions. This is not easy in a down market but it is vital to good investment performance. As is our style, we tended to add companies that have been out of favor, closer to 52 weeks lows than highs. Media and cable have been highlights, with Comcast (CMCSA) and Viacom (VIAB) being added to accounts. Both stocks generate cash and are in businesses impervious to foreign competition. Both should perform well in an economic upturn as well as in an atmosphere of world tensions. CMCSA, of course, has been down since its bid for Disney. This has frozen potential institutional buyers of the stock while they wait for the bid to play out. In the meantime CMCSA trades at a marked discount to other cable operators even as it is widely perceived to be the best managed operator. The company continues to add high margin capabilities such as HDTV, pay per view and video on demand, with VOIP coming soon. High sped internet access is only getting bigger. We believe a price under $29 represents a good entry point here. Viacom continues to frustrate, but the value and cash generated by the company should lead to a higher stock price in the months and years ahead.
- posted by Jay @ 1:31 PM

 
Waiting for Value in Tough Times
The last week has been challenging as even the most stable stocks declined and then recovered in a volatile environment. Although this can be tough to sit through, long term positions based on a value proposition should provide staying power. Indeed, accounts with cash to spare can now move to deploy it into the types of suddenly cheaper investments that have gotten tougher to find over the past year. We remain convinced that "true value will out" in the end. Our job (and yours) is to accept downward pressure in the knowledge that new investments beckon and old investments will withstand pressure because they were made on real fundamentals and not on hopes that others will always be willing to pay more than us.
- posted by Jay @ 10:32 AM