Who We Are

Manifest Investing is a web-based investing system including research and features/tools for stock and fund screening as well as resources for portfolio design and management.  The community and content stream generates a continuous flow of actionable ideas.  We seek and deliver “elegant simplicity” by focusing on a small number of factors and characteristics that really matter.  Features and regular webcasts feature demonstrations of analysis and methods. Our focus is on demystifying investing — particularly when it comes to the design and management of a portfolio — enabling anyone to experience successful investing with their personal investing or retirement plans. We endorse and encourage investment clubs as vehicles for support and group learning.

Mark Robertson (markr@manifestinvesting.com) is founder and Managing Partner of Manifest Investing, served as senior contributing editor for Better Investing and has worked with successful investment clubs and individual investors since 1993. He has appeared on National Public Radio, CNBC and ABC to discuss long-term investing. He has also worked with Smart Money, Barron’s, Money magazine and the Motley Fool and been covered by the Chicago Tribune, Wall Street Journal and MarketWatch as well as a number of local publications.

Kurt Kowitz (kurtk@manifestinvesting.com) co-founder and Technology Manager, is responsible for web site development, operations and customer service. Kurt was largely responsible for the development of online data in support of software and web-based delivery at NAIC.  As father to two young boys, Kurt is interested in long-term investing for purposes of college one day and retirement another:  Responsibly Lazy Shopping

For more on getting started at Manifest Investing: Guided Tour — The Basics

Ken Kavula (kkavula1@comcast.net) has served the modern investment club movement in a wide variety of leadership volunteer positions. A retired educator, he is regarded as a small company champion and respected speaker nationwide. Ken also belongs to four investment clubs, including two Model clubs and a family club.

Little Nudges Can Make A Difference

Elegance and Simplicity

Cy Lynch (celynch@att.net) is a respected and experienced long-term investor and educator. Cy is a frequent contributor at MANIFEST, providing regular educational topics and a knight of the Round Table series.

Muskrat Pageantry

Rites of Spring

Of Chopping Cows & Analyst Networks

 

Mcmanus hugh

 

Hugh McManus (hughmcmanus@gmail.com) is a pharmaceutical scientist, successful long-term investor and renowned advocate at investment education conferences. A frequent contributor to MANIFEST, Hugh is also a knight, participating in our Round Table series.

Things That Go Bump In The Night

Oracle Corp (ORCL)

The 6th selection in our annual stock selection countdown is Oracle Corp (ORCL).

No, there’s no particular connection between the water-logged feathered creatures shown here and the America’s Cup yachts captained by Larry Ellison.

The connection is that every year around the winter solstice, we’ve selected Oracle during the countdown. The 2011 entry was a little weaker (-4.9% relative return) but the 2012 edition was one of the better performers, checking in with a total return of 29.3% for a relative return of +12.0%! On average, pretty solid performance over the last couple of years.

Operationally, Oracle continues to fire on all cylinders.

Little Nudges Can Make A Difference

Originally Published: November 2010 (Expected Returns newsletter)

If you’ve ever wondered how the “little things” in life make a difference, we invite you to spend a few moments with career teacher and retired principal Ken Kavula and his wife Natalie. Scores of investors have been favorably affected and influenced by them. Natalie is a career teacher also. They have both served as volunteers for the national umbrella organization for investment clubs (NAIC) and have delivered a number of educational opportunities and events for investors in all parts of our community. Based on the impact, it’s clear that sometimes “little things” aren’t so little, after all. As Ken often reminds, small companies can deliver large impact on our investing journey.
Investing together is something Ken and Natalie Kavula enjoy. This photo, taken after Ken received a lifetime achievement award for excellence in volunteerism, is from an NAIC national convention. Ken stipulates that any first person “I” in this story should really be a “we”. Natalie and Ken are partners and their family investments are jointly managed. That includes studying, buying, maintaining and selling! “We do it all together and we wouldn’t have it any other way.”

For more: Little Nudges Can Make A Difference

Qualcomm (QCOM)

Christmas Countdown (2013)

It’s the day that we’ve dreaded for a while during this year’s countdown. It’s the day where cold hands meet … well, relatively warmer flesh. It’s the sort of thing that can make you go “Moo!” And we’ll reminisce along with eight maidens with the fifth selection of our 2013 countdown.

It still ranks as one of the most jarring experiences of a lifetime of investing.

My investment club owned a sizable stake in Qualcomm (QCOM) during the waning days of 1999 and we watched as the stock price rocketed during the Christmas holiday season back during the final weeks of December 1999.

With a cost basis of less than $5, we watched the price soar to a split-adjusted $200 in short order. I’ll make a really long story really really short by simply reminding any and all of us to do all we can to avoid letting the tax impact of a decision get in the way of making a decision that should be made.

Here’s a look at the stock price versus the return forecasts some 13-18 years ago. The key takeaway is that when a stock has a return forecast of -29%, it’s probably prudent to think about making some sort of a selling decision.

Fast Forward to The Present

Leaving the “ghosts” of Christmas Past behind — we turn to present day conditions at the communications juggernaut. Based on sales growth forecast of 16%, net margin expectations of 33.5% and projected average P/E of 17x, the projected annual return (PAR) is 18-19% with a top shelf quality rating.

The following chronicle is the same information (but tracked monthly) over the last five years — illustrating that the return forecast has rarely been higher than current levels, triggering our interest in the stock.

Annual Dashing of Sugar Plum Visions

Wall Street analysts are a fascinating bunch and a bit of a mystery. Why? Because the vast majority of the time they’re an exuberantly optimistic lot. Visions of 15% earnings growth dance perpetually in their heads and the 15% long-term forecasts roll reliably year in and year out. If the current year is “n”, then n+1 and n+2 are virtually always robust.

But the fourth quarter arrives, year-in and year-out … and they turn grinchy. Some years they’re more grinchy than others and the current edition fits that bill. Where once visions of 12-14% year-over-year change in aggregate EPS forecasts danced in their heads, this has been replaced by a somber 6-8% (and they’re not done yet — they still have 10-14 days to reduce their 2012 forecasts.) 🙂

Barry Ritholtz reports regularly on this and recently reminded that dancing on and dashing sugar plums into mincemeat is common fare at this time of year. See: Analysts Get Gloomy Right On Schedule

As we’ve been pointing out for several months, there’s been considerable optimism baked into the overall forecasts — and one of the reasons that the current “recovery” still feels a tad recessionary can be seen in the accompanying figure.

Note the sugar plum optimism for 2013 forecasts. Also note that although only “8% of precincts are reporting” with 2014 forecasts so far … as they roll in, they appear headed for the time-honored land of 15% year-over-year growth — no matter what history suggests.

History suggests that they’re always 50% high (15% forecast versus 8-10% actual) and that studious investors are well-advised to completely ignore analyst consensus estimates when it comes to % EPS Growth.

We do. And the sugar plums are grateful.

VL Low Total Return Screen (12/21/2012)

Why do we pay attention to the Value Line weekly updates? Because a number of highly successful long-term investors cite Value Line as one of their favorite trusted resources.

“I don’t know of any other system that’s as good… The snapshot it presents is an enormously efficient way for us to garner information about various businesses… I have yet to see a better way, including fooling around on the internet, that gives me the information as quickly.” — Warren Buffett, Berkshire Hathaway, 1998 Annual Meeting speaking about The Value Line Investment Survey.

“[Value Line is]…the next best thing to having your own private securities analyst.”
—Peter Lynch, One Up On Wall Street

In our case, we’ve found the low total return forecasts for all companies to be among the most compelling opinions/forecasts while we either (1) search for opportunities or (2) practice effective stewardship when it comes to staying vigilant about our current holdings.

Materially Stronger: None

Materially Weaker: Neutral Tandem (IQNT), NII Holdings (NIHD), Marvell Tech (MRVL), Adtran (ADTN), Rite Aid (RAD), Cisco Systems (CSCO), F5 Networks (FFIV), Regis (RGS)

Point-and-Figure (PnF) Trend Source: Stockcharts.com

Intelligent Investing

Among the library of investment books promising no-fail strategies for riches, Benjamin Graham’s classic, The Intelligent Investor, offers no guarantees or gimmicks but overflows with the wisdom at the core of all good portfolio management.

“If you read just one book on investing during your lifetime, make it this one.” — Fortune magazine.

I’ve read it at least two, maybe three, times. Maybe it has something to do with falling leaves and spending a few quiet moments during autumn beside the pond in my back yard. As we embark on a series of case studies and research into what George Nicholson called, “Broadening Your Investment Management Program,” I found myself spending time with Benjamin Graham’s “The Intelligent Investor” again. Warren Buffett knew Graham well (Ben taught Warren how to invest as his professor at Columbia and as a professional colleague) and says, “I read this book as a 19-year-old. I thought then that it was by far the best book about investing ever written. I still think it is.” If you’re serious about learning to invest intelligently, how can you avoid it?

The Intelligent Investor is a book for true investors … inherently for the longer term and requires a commitment of effort. The true investor uses discipline, research, and his analytical ability to make unpopular but sound investments in bargains … Graham coaches the investor to develop a rational plan for buying stocks and bonds, and he argues that this plan must be a bulwark against emotional behavior that will always be tempting during abrupt bull and bear markets.

MANIFEST contributor Ken Kavula often speaks of discipline as the greatest gift bestowed by George Nicholson, Jr. upon the modern investment club movement. Graham and Buffett mention patience and discipline frequently and routinely. On the next few pages, we’ll share some of the highlights from the book. My copy is dog-eared, highlighted and yes, I’ve even written notes in it. Relax, Sister Rita Claire taught me that it was OK to write in books and bend pages so long as it didn’t say “Property of St. John’s” inside the front cover.

In the most recent edition, Jason Zweig makes a solid contribution with editorial remarks and commentary as a continuous “side bar” throughout the book. In his introduction, Zweig listed his interpretation of Graham’s common sense and core principles. Here is how I’d play them back:

1. A stock is not a ticker. Think ownership in an actual business.

2. The market is a pendulum. Momentum creates opportunity during both bear and bull markets.

3. The value of any investment is merely a function of its current price. That value is established by the projected return which is based on the current price and a reasonable expectation for a future price.

4. Insist on suitably high projected returns (but not too high) to build a margin of safety into the decisions you make.

5. Invest with patient confidence.

“If you have built castles in the air, your work need not be lost, that is where they should be. Now put the foundations under them.” — Henry David Thoreau, Walden

Hmmm. If memory serves, Thoreau used to spend quite a bit of time by the pond, also. Interesting that Zweig chose that for the first comment. We’ll now dig in to some of the highlights from my dog-eared pages …

The Myth of 15% Growth

Graham spends time defining investing vs. speculating and investing defensively vs. what he referred to as “enterprising investing.” Our community of investors would easily qualify for the enterprising label.

Many of our colleagues still believe that the magic 15% number cited by NAIC/Better Investing refers to growth characteristics. It doesn’t.

“… only 8-of-150 largest companies on the Fortune 500 managed to increase their EPS at least 15% for two decades during 1960-1999.”

“… only 10% of large U.S. companies increased EPS by 20% for at least five consecutive years, only 3% achieved this for 10 years straight; and not a single one had done it for 15 years in a row.”

The 15% refers to long-term annualized returns for total portfolios.

Market Fluctuations

Common stocks, even of investment grade (relatively high-quality), are subject to recurrent and wide fluctuations in their prices. The intelligent investor should be interested in the possibilities of profiting from those pendulum swings. Every investor who owns common stocks must expect to see them fluctuate in value over the years. [195]

The investor with a portfolio of sound stocks should expect prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. Remember that market quotations are there for convenience, either to be taken advantage of or to be ignored. Never buy a stock because it has gone up or sell one because it has gone down. [206]

Patient Focus — Things That Matter

“… investors who receive frequent news updates on their stocks earned half the returns of investors who got no news at all. [223]

Consider this another important attribute of investment club practices, the notion of meeting monthly. In some cases, reactive decisions to events that were not made have turned out to be some of the best decisions overall.

Researchers Brad Barber and Terrance Odean divided thousands of traders into five tiers based on their turnover. Those with less frequent transactions (at the left) kept most of their gains. Impatient and hyperactive traders make yacht payments for somebody else. (Source: Barber and Odean, University of California at Davis, and Berkeley, respectively.)

The Math — Keep It Simple

… in 44 years of Wall Street experience and study, I have never seen dependable calculations made about common stock values, or related investment policies, that went beyond simple arithmetic or the most elementary algebra. Whenever calculus is brought in, or higher algebra, you could take it as a warning signal … of substituting theory for experience … or to give speculation the deceptive guise of investment. [282]

Occam was right about his razor.

This is the prevailing thinking behind our emphasis on (1) top-line growth, (2) profitability and (3) reasonable and considered forecasts for P/E ratios … and the math behind it all is relatively simple.

Aggregate Forecasts

…individual forecasts can be wide of the mark. Our general view is that composite or group estimates are likely to be a good deal more dependable than those for individual companies. [288] Think dashboard averages. Think MIPAR.

Smartly Own

When you buy a stock, you become an owner of the company. … there is just as much reason to exercise care and judgment in being an owner as in becoming a stockholder.” [499]

The prudent homework and diligence shouldn’t end when the purchase decision is made. Proportion your time and attention appropriately between candidates for purchase and your holdings.

Trapping Bulls & Quality

George Nicholson warned of swapping high-quality for lower quality stocks as bull markets rage as one of the most dangerous things that an inexperienced investor could do.

Here we find Graham’s own warning on the same behavior: The risk of paying too high a price for good-quality stocks — while a real one — is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that chief losses to investors come from the purchase of low-quality companies at times of favorable business conditions. [516]

Translation: Avoid lower quality companies when MIPAR is in single digits.

Investing is most intelligent when it is most businesslike … disciplined … and superior results are possible. Thanks, Ben (and Jason Z.)

rue21 (RUE)

 

rue21 (RUE) is the 4th company in our annual stock selection countdown. RUE is a specialty retailer of private label apparel and accessories. The company offers an assortment of fashion merchandise at value prices, primarily catering to the teenage demographic. Products offered include graphic t-shirts, denim, dresses, belts, jewelry, handbags, footwear and intimate apparel.

The company was selected by Pittsburgh’s own Nick Stratigos during the February 2012 edition of our monthly Round Table. Nick is the reigning individual stock picking champion for our annual Groundhog Challenge and RUE has delivered a +3.3% relative return (vs. Wilshire 5000) since the time of selection.

With a sales growth forecast of 13%, net margin estimated at 4.7% and a projected average P/E of 18x, the return forecast is approximately 17%. RUE has a quality rating of 70.2 (Excellent).

We’d like you to invite us to come see you.

 

Beyond Football (by Mitch Albom)

This was originally published on November 11, 2007 as we celebrated the success of our son’s high school football team.  As you’ll see, it’s about much more than football — and it still ranks as one of my all-time favorites.

I recently finished reading Mitch Albom’s latest, Have A Little Faith, and believe it ranks right up there with Tuesdays With Morrie … and thought it might be time to revisit this article from two years ago as Mitch covered Alex’s football team. To this day, Alex’s experience with Coach Patritto, Coach Mullins and his team mates ranks as one of our lifetime favorite moments of Thanksgiving. And for those of you who tire about the football game deluge at this time of year, this might help you to see beyond the GAME.

As many of you know, our son Alex is a senior defensive tackle for the Rochester Adams Highlanders. We featured a look at Alex during a growth study on the subject of forecasting when performing investment analysis. Update: He’s now closer to 6-2 and 230 lb and still eating entire pizzas and multiple bowls of cereal, so he’s not done growing yet. Why the obsession with football? I think the following column by Mitch Albom, nationally-syndicated columnist and author of the best-seller “Tuesdays with Morrie”, gives you a pretty good idea that although we’re talking about football … we’re talking about much more than football.

LOOK OVER JORDAN, WHAT DO YOU SEE?
Rochester teen defies stereotypes as school makes run for football glory

November 11, 2007

BY MITCH ALBOM, FREE PRESS COLUMNIST

Friday night, at a high school football playoff game, it was damp and cold, and the players bounced on their toes to keep warm. Near the Rochester Adams bench, amidst all these bigger teenagers, stood Jordan Kidder, barely five feet tall, with glasses and braces, a school cap, a jersey, a varsity jacket and a job to do.

“Watch this for me, Jordan, OK?” a player said, running over.

“OK,” he said.

“Some water, Jordan,” another said.

“Here,” he said, handing over a bottle.

“How’s it going, Jordan?” another said, slapping his hand.

“Going good,” he said, slapping back.

As the game went on, he didn’t throw a pass or make a tackle, he never pulled on a helmet, but when the Highlanders scored, he clapped his gloves hard, and when the kicker needed a tee, he made sure it was there, and when the team went to halftime, he went with them, getting the guys whatever they needed, encouraging them to keep fighting.

As student manager, Jordan Kidder, 18, has a unique job. As a young man with Down syndrome, he has a unique life. He doesn’t quite look like the guys on the team, isn’t quite as big, doesn’t speak the same way, maybe moves a little differently. And in high school, where being “different” can be a curse, you might think the other players have been teaching him something.

Truth is, he has been teaching them.

“I didn’t really know what to make of Jordan when we met,” admits Josh Renel, Adams’ star running back, who now picks up his buddy every Tuesday en route to team dinners at Buffalo Wild Wings, “but Jordan has shown me you can’t really judge a person by what he looks like. He’s just like any one of us.”

The story behind his name

Just like any one of us. That sentence would have been laughable 18 years ago, when Cynthia Kidder was pregnant. Tests showed the likelihood of serious problems, and it was politely suggested she terminate the pregnancy. In fact, today, when a prenatal diagnosis is given of Down syndrome, studies suggest up to 90% of women choose to do just that.

Cynthia refused.

“If I have a child with problems,” she said, “it’s still my child.”

At the time, she was confident. She had a big job in New York, she had two other sons. She could handle it. But when the child arrived, she recalls, “People didn’t say, ‘Congratulations.’ They said, ‘So … I hear you had the baby.’ ”

A dire life was predicted for her son: heart defects, smaller limbs, almond-shaped eyes, low muscle tone, learning disabilities. All the typical stuff with Down syndrome, a chromosomal abnormality that usually affects cognitive ability, physical growth and facial appearance — in other words, how you think, how you grow and how you look. He’ll never read, Cynthia was told. He’ll never do math. He’ll never do anything that’s not repetitive behavior. A doctor told her the “good” news: There were two Down syndrome kids he knew “who worked at a McDonald’s, wiping tables.”

Cynthia was drowning. She called a religious aunt and asked for support. Somehow the spiritual “Swing Low, Sweet Chariot” came up in the conversation, and the line, “I looked over Jordan and what did I see … a band of angels coming after me …”

The next day, she woke up feeling better.

She named her baby Jordan.

And from that day forward, the kid has been defying predictions. He learned to read — slowly, but he did. He learned to do math and science. He went to classes with other “normal” kids — at Cynthia’s insistence, and with help from the Rochester school system — and he made his own friends with an amazingly open and happy heart. One time, when Jordan was playing tag with some fellow grade-schoolers, Cynthia noticed they kept telling her son he was “it.” Worried, she quickly intervened, lecturing the boys on the rules. But later Jordan told her, “The first part of recess was more fun. I got to be ‘it’ the whole time.”

Cynthia and Jordan’s father held Jordan to the same standards as their other children. They found teachers who would do the same. As a result, Jordan has grown into a pretty typical teenager: He listens to Zebrahead on his iPod, watches pro wrestling (his favorite is A.J. Styles), scarfs down hamburgers and pasta, sings in the choir, and is even on the swim team. OK, so he almost always finishes dead last. What’s important to him is that he’s part of things.

Besides, at one swim meet, he finished next-to-last. You never saw anyone as happy with that result as Jordan was.

The story behind his role

But what Jordan really loves is the football team. He has been a student manager for four years, starting with the freshman squad and working his way up. He handles the equipment, distributes the water and consistently raises team spirit. The first day, he admits, “I was nervous. But I got over it.”

Why were you nervous?

“I’d never been on a football field.”

Were you worried they’d tackle you?

He explodes in an infectious laugh that could melt the hardest heart. “No. But one time, against Troy, I ran on the field for a tee, and they all came flying by me — whoosh, whoosh.”

Did you go down?

“No,” he laughs again. “I went in between them.”

Kids with Down syndrome are often described as having an almost supernatural effect on those who know them, a certain sweetness, innocence and nonjudgmental persona that, for want of a better phrase, chokes you up.

Tony Patritto, the Adams football coach, has that look often when he speaks about Jordan. Like so many others, he had never dealt with a Down syndrome kid, and his instinct, at first, was to pity and make concessions. Except Jordan kept coming late to science class. “I called him out,” Patritto says. “I took a chance.”

Jordan responded. And he has been part of Patritto’s world ever since. There’s a team gesture his Highlanders players use, a shark-like hand-to-the-forehead that signals “fins up” for defense. Whenever Patritto sees Jordan, in the hallway, in the locker room, “he gives me this huge grin and makes the ‘fins up,’ and it just makes my day.”

When you ask Patritto what Jordan’s duties are as team manager, he answers “to be with us.” When you ask Renel, the star running back, about Jordan’s popularity, he laughs and says, “You cannot not like him.” When you ask Jordan — who shaved his head with his teammates when the playoffs began — what he will miss most when football ends, he says, “My friends.”

And when you ask Cynthia Kidder, who now runs a national Down syndrome organization called Band Of Angels, dedicated to celebrating and supporting those with the disability, what she thinks about her son graduating next spring — and planning to go to college — she recalls how teachers once told her that by the fourth grade, Jordan might be able to make macaroni and cheese.

“I told them, ‘He lives in my house, I can cook for him. But I’m not a teacher. Can you teach him?’ ”

They have. And he has taught them. About stereotypes. About patience. About dealing with real problems and still maintaining an explosive laugh and a sly sense of humor. When Jordan was told a Free Press photographer was going to take his picture, he asked, “Can they take one of me and the cheerleaders?”

Adams won big Friday night, capturing a Division 2 regional championship, 49-10, over Farmington Hills Harrison. If the Highlanders (12-0) win two more games, they will be state champs, the Promised Land for a high school football team.

Then again, they may already be there. You look over Jordan and what do you see? A big-hearted teen flanked by a band of angels — teammates, teachers, family, friends — all loving someone “different” no differently than they love themselves.

If that’s not the Promised Land, what is?