EBAY

This portfolio focused on buying wide moat companies at discount prices is starting regain some ground during the recent rally.

All told, I must say that I was disappointed with eBay’s capital allocation and stock compensation expense for the quarter. I had hoped that a $10 share would have tempted management to greedily repurchase buckets of shares; however they bought none.

With recent stock market declines, I had hoped to use this opportunity to filter out those management teams who buy high and pause repurchases when prices fall. But few management teams have taken advantage of the recent declines. And perhaps even more interesting, April saw insiders’ stock sales outnumber purchases by more than 8 to 1!

eBay's management looks to be stirring the pot. Skype’s founders want to buy their creation back, though eBay denies that they’re close to a deal. StumbleUpon’s founders disclosed that they had brought their baby back home, which they had sold to eBay for $75 million two years ago. And lastly, eBay appears close to purchasing a 34% stake in Korean online auction operator Gmarket.

More ugly performance numbers for my value portfolio might help you feel better about your own investments.

Today we examine David Einhorn's talk on ROE, which he gave at the Value Investing Congress in 2006. Einhorn argues that ROE is only a meaningful metric for capital-intensive businesses—like traditional manufacturing companies, distribution companies, most financial institutions, and retailers.

Warren Buffett’s annual letter to shareholders arrived this past Saturday morning with the anticipated fanfare and has produced its usual industry of commentary. In his letter, he discusses selling some equities in order to purchase fixed income securities. Should Buffett's moves inspire the investor to look further up the capital structure?

Fellow blogger Eboro asks us some questions about eBay, one of our favored wide moat businesses. Eboro’s observations and questions reflect the current majority view about eBay and highlight important worries.

Though its Windows operating system and its Office suite are cheap to reproduce, easy to transfer and store, and require only a modest sales force, Warren Buffett has acknowledged that a paradigm shift in communications could quickly undermine Microsoft’s position. In light of this concern, we use a NPV analysis of Microsoft's cash flows over the next ten years to value the company.

So far, our analysis of Ebay has highlighted qualitative factors that make auctions particularly profitable. Here, we offer a more quantitative assessment of Ebay’s profitability by looking more closely at its margins.

We use a net present value analysis of Ebay's future cash flows to try to determine its intrinsic value. At these prices, we find that EBay offers a substantial margin of safety.

Recent research suggests that relative value arbitrage does provide market-beating returns. In fact, both Benjamin Graham and Warren Buffett used relative valuation at various points in their investing careers. In this post, we take a look at EBay's relative value compared to Amazon.

Joel Greenblatt's The Little Book that Beats the Market throws out international stocks, but the basic premise of the strategy should be applicable in any stock market. A new such service exists that applies the Magic Formula's screening philosophy to highlight quality, cheap issues on the U.K. and other European markets. A MagicDiligence review of the service.

I short update on the status of the Fat Pitch Financials value portfolio.

GameStop is the largest dedicated retailer of video game software, hardware, and accessories worldwide. This looks like a value stock in a growth industry.