Some interesting reading material for the holidays:
Rough Rider / This New Yorker article is a month old, but if you haven’t read it yet I strongly recommend it. Connie Bruck profiles Sam Zell and his history of contrarianism and buying assets on the cheap. Zell has quite a personality, and I think that any investor, businessman or entrepreneur can learn a lot from him.
Be Prepared for A Lot of Bumps / An interview in Fortune with John Bogle. Bogle talks about current market conditions, his favorite CEOs, “Nobody knows nuthin’,” and his biggest mistake.
Valuing Western Sizzlin / George of Fat Pitch Financials goes over a detailed valuation of Western Sizzlin (WSZL). He concludes that buyers of WSZL are getting the investing skills of Sardar Biglari (a great value-oriented fund manager) for a very cheap price. I would also add to George’s analysis that WSZL also has a new fund management business, that although hard to quantify now, should be very lucrative in the future.
There’s No Money In The Long Tail of the Blogosphere / An interesting article on The Long Tail of blogs – why individual sites have trouble making money – and why companies like Google (GOOG) are reaping all the gains. Especially interesting for other blog owners.
Why Penney Will Perk Up (requires Barron’s subscription) / Retail in general looks very cheap at the moment, and JCPenney (JCP) is one of my favorites. This Barron’s article argues that JCP could be trading at $60-70 a year from now, and currently trades at a 15-year low multiple. Penney’s has great management that knows retail very well and has gone through a successful turnaround over the past 7 years.
Gannon to Barron’s: Berkshire Fairly Valued…As a Buffettless Empire! / A response to Barron’s article “Sorry Warren, Your Stock’s Too Pricey“. Geoff hits the nail on the head, as I had those exact thoughts after reading the Barron’s piece. Basically, based on the value of the operating business and investments, Berkshire Hathaway (BRK-A) is about fairly valued. But that doesn’t take into account Buffett’s capital allocation skills and his ability (and his future successor’s ability) to compound equity at above average rates. I would also add that it was unfair for Barron’s to compare Berkshire’s multiples to that of AIG, Allstate, and Travelers.
Disclosure: I may be long one or more stocks mentioned in this post. This is not a recommendation to buy or sell any securities.