Value Investing News - WU - Comments

He has money invested in a

JohannaBartley — Wed, 02 Jan 2008 21:15:54 -0500

He has money invested in a Dryer Parts plant, right? I wanna invest in that as well. That's something you'll always need so it's always gonna be there.

Where is the Value in WAMU?

Nick — Sun, 25 Nov 2007 12:07:20 -0500

I haven't looked too deeply into WAMU (WM) since last year but, I'd be shocked if you couldn't find a better Bank to be investing in. I posted this on Motley Fool CAPS last December and the only thing that has changed in my mind is a 50% reduction in price and I still don't see the value:

"[Washington Mutual has a] weak Home Mortgage portfolio and with the second stage of the housing crash just starting the foreclosures will start mounting up. That and a poorly executed expansion in retail banking will eat into its bottom line. Look out below. The only way this is on the way up is if its bought out." -12/22/06

Where do you see the value? Where do you see the value relative to other financials or banks? If you had to sum up their competitive advantage what would it be? This isn't an unregulated toll bridge where they can raise prices at will. Their advantage is "Free, Free, Free" would their customers leave if they raised prices? Is their cost of capital lower than other banks? I admit that their dividend yield and P/E are very attractive, but I bet with a little patience you could buy CITI or another Bank at a similarly attractive valuation. Buffett likes banks and he chooses to buy WFC, BAC, and USB. What do you see that he doesn't? Maybe the $15B market cap is too small for Buffett?

This year there will be many acquisitions and I do think that this could be a great play if they are bought out. I am very interested in your response. I'm not a fan of WAMU, but I might have missed something and I would hate to miss the 11% yield based on my bias. Let me know what you see.

Disclosure: I work for a bank and WAMU is a major competitor. Unfortunately I didn't short WAMU and have no position in their stock.

Re: McGraw-Hill

George — Sun, 25 Nov 2007 10:17:40 -0500

McGraw-Hill owns Standard & Poors. A large part of the Standard & Poors business involves debt rating. It's the same business as Moody's. Both companies face potential litigation as a result of generous ratings to blended debt securities (CDOs, etc.). The market for debt rating services has also slowed down.

On another note, there is ever increasing competition in indexes. It seems like someone is coming up with a new index every day.

Regardless of these factors, I still believe McGraw-Hill has a wide economic moat and will be producing excess profits for years to come. The real question is whether the stock now trades low enough to provide a significant margin of safety.

The thing that concerns me

Ryan McParlan — Sat, 24 Nov 2007 22:42:30 -0500

The thing that concerns me is why is Mcgraw-hill so sold off. Am i missing something? Are students not going to class any more?

Re: WAMU

George — Sat, 24 Nov 2007 18:31:32 -0500

I'm very sceptical that Washington Mutual has really changed the way banks do business. How have they made banking fun? The only fun aspect of their banking I've experienced is their expensive advertising campaigns. Good marketing does not constitute a change in the way banking works.

WAMU

Teenvestor — Sat, 24 Nov 2007 12:51:49 -0500

Washington Mutual is a great bank one that has changed the way banks do business by making banking fun.

It's a good comapny, management has been there for a while and it has fallen off a cliff recently, the other banks you mentioned may be great companies but I don't know how undervalued they are, banks usually have low PEs.

This is a contrarian play, buying at the height of fear in the company, Morningstar says its value is $51 and it's trading for $18.

Added ticker and category

admin — Wed, 17 Oct 2007 20:58:23 -0400

Added ticker and category for this entry.

I've been using

Jason — Mon, 04 Jun 2007 00:24:27 -0400

I've been using Morningstar's "Fair Value" estimates to help in analysis the last year or so, and so far, I don't know how impressed I am. Sometimes, I just get the feeling like, "where did they come up with these numbers?" I know they use a "proprietary" DCF valuation, but as a subscriber, I feel obligated to see numbers...

Regardless, good story.

Market reacted positively to

Nick — Thu, 01 Feb 2007 18:11:59 -0500

Market reacted positively to the news. WU up 5% today!

Tilson and His Funds

wax — Sun, 21 Jan 2007 09:06:30 -0500

I have to say, if it sounds to good to be true...it probably is, and returns such as Mr. Tilson states for his funds, well, sorry, but I personally don't believe the results.

First of all, I found it curious that stated returns were unaudited. I mean if the returns are all that spectacular, why not hire an independent auditing firm to determine exactly what they were?

The other thing I found curious was that the 2% redemption fees charged when the fund(s) is held less than one year, was not included in performance returns.

Mr. Tilson even tells folks that "the performance quoted above does not reflect the deduction of the redemption fee and if reflected, the redemption fee would reduce the performance quoted."

Yet having slipped that in on page 3, Mr. Tilson continues to market his funds returns as 29.84% and 22.19% for fiscal 2006.

Why not just stop with the games and state performance based on audited results including all fees, expenses, etc.?

I mean no disrespect here, but I have to wonder if Mr. Tilson is really a used car salesman that behind closed doors wears a polyester leisure suit and white patten leather shoes.

Would you buy a car from this person?

Wax

Value Investor Insight

George — Fri, 19 Jan 2007 20:30:44 -0500

Hi Jason,

I do not subscribe to Value Investor Insight, but that has no bearing on its quality. I am super cheap when it comes to spending money on investment research. I should probably at least try it out in the near future.

I've been considering buying some research products this coming year (I didn't spend any money on research products in '06). Do you or anyone else have any recommendations? I'm especially interested in foreign stock information (especially for ADRs), since that is often the hardest to research.

George,

Jason — Fri, 19 Jan 2007 17:23:16 -0500

George,

Do you subscribe to Value Investor Insight?

//Jason
zirotti.com
zirotti@gmail.com

WU: Maybe not

George — Fri, 05 Jan 2007 16:25:21 -0500

The stock closed today at $22.33. If the market corrects, you might get an opportunity to get in on this excellent opportunity.

WU: too late, now?

Leadsteer — Fri, 05 Jan 2007 11:19:50 -0500

Wow, in predicting a $23 stock, this article (from October) turned out to be prescience. I guess it is too late to buy, now (January '07). It doesn’t appear to be a traditional value stock with a PE of 19x.

Thanks

Geoff — Mon, 13 Nov 2006 19:05:53 -0500

I'm really happy with this week's festival. It's a good group. I think you'll enjoy it.