With Japan down 7% on Thursday, will we hunt or taper today?
Companies of Interest
Screening Criteria: (1) Included in the update universe for this week’s release by Value Line, (2) Return forecast at least 5% (percentage points) greater than the average return forecast and (3) MANIFEST quality rank (percentile) at least 60, i.e. all “Excellent” and “Good” companies in top two quintiles eligible.
Materially Stronger: Amerisource (ABC), Bruker (BRKR), Meridian Bioscience (VIVO), Navistar (NAV), Illumina (ILMN), Analogic (ALOG), Medical Action Industries (MDCI)
Materially Weaker: Cutera (CUTR)
The Value Line low total return forecast is 6.5%, down from 6.7% last week.
The Growing Chasm
I think the problem/challenge/opportunity is at least one quantum order larger than the national debt we face. (Yes, you read that right … and I’m serious.)
The following five minute video illustrates the deep distribution imbalance of wealth in as powerful a delivery as I’ve seen in some time.
Wealth re-distribution by confiscation is a flawed mechanism, particularly when it is fueled by envy and dipped in a Robin Hood aura.
Looking at the accompanying graphic and fully absorbing the video, we’re getting further and further from a long-term program of education and equity participation in this country, a campaign that would hold/deliver many long-term solutions to clear and present challenges and opportunity for a better future.
Sadly, over the last several years, the chasm has widened. If we’re going to turn the tide, a prolonged educational effort is essential.
Companies of Interest
Materially Stronger: Cognizant Technology (CTSH), Legg Mason (LM), ACI Worldwide (ACIW), AON (AON), Amazon (AMZN), Mastercard (MA), Yahoo! (YHOO), Bank of America (BAC), AOL (AOL), LinkedIn (LNKD)
Materially Weaker: Baidu (BIDU), Bank of Hawaii (BOH), RealNetworks (RNWK)
The Value Line low total return forecast is 6.7%, unchanged from last week.
Mindray Medical (MR) is a developer, manufacturer and marketer of medical devices. From its main engineering and manufacturing base in China, and through a global distribution network, Mindray supplies a broad range of products across three segments:
- Patient monitoring and life-support products
- In-Vitro diagnostics
- Medical imaging systems
Nothing wrong with these fundamentals … trends in place, growth at 15%, net margin forecast at 18% and a reasonable projected average P/E in the 20x range.
The recent price gains have “consumed” some of the return forecast — but the PAR is still at relatively high levels, particularly when considering the median return forecast (MIPAR) is near 6%.
Although Mindray is pushing towards long-term resistance and an overbought RSI, there’s a chance that the persistent fundamentals (see business model analysis) will finally “take out” the resistance level. Momentum (ROC) has been strong so we disregard the RSI levels.
About The Conference
Since 1996, the world-renowned Sohn Investment Conference has been the premier investment forum, bringing together the world’s savviest investors to share fresh insights and strategies in support of pediatric cancer research and treatment.
Wall Street’s best and brightest investors participate in this unique, “must attend” event to share their expertise with an audience of more than 3,000 people, comprised of portfolio managers, asset allocators and private investors. Most speakers manage large proprietary investment portfolios that have outperformed the market for many years and do not share their insights in any public forum, but they volunteer their time to the Conference for the benefit of the Foundation. All contributions support the Foundation’s mission to support pediatric research and care.
Notes From The Ira Sohn Conference 2013 (via Joshua Brown)
WSJ’s Live Blog (Wall Street Journal)
I wasn’t invited to share any investment ideas, at least not until next year — so here’s my 2013 Sohn Shopping List — we’ll take a look at some of these.
These screening results are based on:
- MANIFEST Rank in top percentile (MANIFEST Ranking >= 99)
- Positive Price Momentum (Rate-of-Change, ROC, technical indicator)
- Positive Price Pressure (based on PnF price target vs. current price)
Here’s the roll call of selections based on $100 invested in each idea at the close on 5/7/2013 (immediately preceding the conference). Note that a number of selections are not covered (at least not yet) by MANIFEST and that the entries in red are short sale suggestions by Messrs. Chanos, Gundlach and Jacobson. It’s not unusual to see an event or listing of stocks like these hedge fund selections to include a number of Jeremy Grantham’s flaky stocks.
And Ackman’s selection of Procter & Gamble (PG)? C’mon, man. Ack. We can only assume he’s too preoccupied with his Icahn jousts to avoid phoning it in. Nothing against PG, great company, but at a return forecast in low single digits?
Mindray Medical (MR) is our entry with honorable mention to Fossil (FOSL) and Synchronoss Tech (SNCR).
The Learning Never Stops
One of your all-time favorite cover stories dealt with the combination of well-placed skepticism and the conscious decision to “leave the couch” as a long-term investor. In a nutshell, we asked, “Can investing really be this simple?” The answer is wrapped in over seven decades of experience and deployed regularly with measured courage. At the same time, we recognize that the learning quest is a never-ending road. We believe in Occam’s Razor. You could say that our cornerstone is trend reversion centered on imagination and long-term time horizons. This month we visit some letters, questions and commentary … celebrating your curiosity and achievements. Can old dogs learn new tricks? What about young dogs?
We share the following blog post and some subscriber correspondence. Names are withheld, but you know who you are out there … and some have been paraphrased to combine multiple letters and comments into digest form.
As a kid, they were among the moments I dreaded most. The “choosing of sides” on the playground or the sandlot were gut-wrenching moments because I often didn’t merit selection as a draft choice. “What about him?” “Oh yeah … he can be on your team if you want.”
Things are not always what they seem.
I had pretty good hands and was pretty good at catching a football. When it came to basketball, there were times when I heard, “Wow, the ‘fat kid’ can really shoot.” Funny, but if I close my eyes and listen, I can still hear those words.
Fast forward a few decades. We were on a mission trip in West Virginia taking up residence in a Scout camp in the mountains. We decided to play a pickup game of basketball. My friend Don and I smiled at each other as the muscle-bound high school seniors and college freshman in the group loaded up their rosters with their colleagues. We were left standing on the sidelines. Make no mistake. It’s still pretty gut-wrenching to endure this rite of passage as an “old man” but we suspected that we had the unknowing youngsters in our crosshairs. Don and I ended up on the same team. Amusement transformed into amazement as the “old men” taught the punks a thing or two. I think Don made about ten closely guarded shots in a row. Me too.
Our message is simple. Whether you’re talking about old books or old dogs, be careful about the judgments you make based on the cover. In some cases, maturity is just what you need and it can prevail over youthful exuberance.