On December 19th I sent out an email discussing the unbelievably cheap valuations that we were seeing, which you can see from the forwarded email below. This is just a quick update on how they are faring. The point is not to get overly excited, just as we don’t want to get overly pessimistic when stocks drop. The key is to understand that you are buying businesses, and in our case we are buying businesses on a mass clearance sale!
It is our opinion that many of these stocks will be 2-3 times higher over the next 3-5 years, while others are likely to pay out prodigious dividends, and might have 50-75% upside potential. It is a testament to the quality of the clients of TTCM, that we don’t receive panicked calls reacting to day by day stock fluctuations, as we firmly believe that by staying the course we can reach our financial goals. Last year was one of the most frustrating years ever for hedge funds and money managers, but I honestly don’t recall one client panicking and making rash decisions due to the severe fluctuations that we saw. Avoiding that behavior is like avoiding smoking cigarettes. Over time it is inevitably a bad idea to take a short term trader mentality, just like over time it is inevitable that cigarette smoking will negatively impact your health. I’ll continue to provide updates on this list through good and bad as I think it represents a decent barometer for assessing equities held in many of our separately managed accounts. If you held equal dollar amounts of each stock from December 19th until today you would be up 24.46%. Thank you very much and as always is you have any questions whatsoever please don’t hesitate to contact us!
1) ABT- $54.33 Earnings Yield 10%, Dividend Yield 3.5%, likely to grow earnings by 8-10% a year Stock is at $57.39- up 5.6%
2) AIG- $22.55 Forward P/E 8.7, P/B Ratio .5 Stock is at $29.80- up 32%
3) AGO- $12.99 Forward P/E 4.3, P/B .5 Stock is at $17.33- up 33.4%
4) BAC- $5.02, Forward P/E 5.1, P/B .2 Stock is at $8.13- up 62%
5) C- $24.86, Forward P/E 5.7, P/B .4 Stock is at $34.10- up 37%
6) CSCO- $17.77, Forward P/E 9.2, P/B 2, $6 of net cash on the balance sheet Stock is at $19.76- up 11.2%
7) MSFT- $25.75, Forward P/E 8.4, P/B 3.6, Dividend Yield 3.08% Stock is at $32.07- up 24.5%
8) MS- $14.25, Forward P/E 6.8, P/B .5 Stock is at $18.87- up 32.4%
9) SHLD- $45.61, P/B .6 Stock is at $75.96- up 67%
10) HPQ- $25.36, Forward P/E 5.6, P/B 1.3 Stock is at $25.32- flat
11) TEVA- $41.80, Forward P/E 10, P/B 1.7 Stock is at $45.25- up 8.3%
12) TEF- $16.65, Forward P/E 7.6, Dividend Yield 10.14 Stock is at $17.04- up 4%
13) BP- $40.78, P/E 5.6, Dividend Yield 4.06%, P/B 1.2 Stock is at $47.50- up 16.5%
14) RIG- $39.54, Forward P/E 11.7, P/B .6, Dividend Yield 7.93% Stock is at $54.19- up 37%
15) NVS- $56.35, Forward P/E 10, P/B 2.1, Dividend Yield 3.61%.Stock is at $54.02- down 4%