I recently started reading Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors ($) by Wesley R. Gray and Tobias E. Carlisle.  Both of the authors are fellow value investors who blog. Tobias Carlisle runs Greenbackd and Wesley Gray writes the Turnkey Analyst blog.  I’ve followed both of their blogs for several years. I’m very excited to share this book with you.

I first met Wes Gray when he became one of the early members of Fat Pitch Financials Contributors Corner years ago. While he was a member he caught my attention when he mentioned he was deploying to Iraq. We exchanged emails a few times in the past and I started reading his blog soon after it first started. When I learned of his book, I knew it would definitely be worth reading and I had to get it. Read the rest of this entry »

Sorry I’ve been so quiet here on Fat Pitch Financials. I found 2012 to be an extremely challenging year for me both financially and professionally.  Thankfully, I came through it all pretty well. The Special Situations Real Money Port had another successful year.

The Special Situations Real Money Portfolio started 2012 with a balance of $46,029.93. I deposited another $2,000 at the end of the year and the portfolio closed out the year with an ending balance of $53,497.88.  Adjusting for that deposit, the Special Situations Portfolio returned 11.4% in 2012. That’s a bit better than the Special Situations Real Money Portfolio performance for 2011, but not ideal. I did not find too many great workouts in 2012, so I didn’t end up beating the 16% total return for the S&P 500 in 2012.

While I under performed in 2012, I’ve still been able to achieve a 23.13% annualized rate of return since inception.  The portfolio’s total return from inception back on October 19, 2004 until the end of December 2012 is 234.36%.

My hope for 2013 is that going private transactions and tender offers start happening a bit more often.  If not, I’m going to have to start looking for new types of workout opportunities.

At the end of the day today, Portfolio123 and StockScreen123 will be switching data providers. The company is making the bold move of switch from Thomson Reuters to Compustat for its fundamental data.  This will change the underlying data used to power these stock screening and backtesting tools.

Read the rest of this entry »

In observance of Independence Day here in the United States, the securities exchanges will close early today. The markets will close at 1:00pm ET on Tuesday, July 3rd, 2012. Exchanges will also be closed on Wednesday, July 4th, 2012.

Enjoy your 4th of July!

Here’s a list of the top stories this week at Value Investing News based on the number of times the story was shared on top social media sites:

1. Buy and Hold Has Failed: So What is the Best Investment Strategy?
2. Top Finance People to Follow on Twitter: Market Folly’s Alpha List
3. Should the Price I Paid Affect My Decision to Sell a Stock?
4. Eric Sprott on the Recent Volatility in Gold
5. Is Nokia Becoming Too Cheap
6. Value Investing: Hidden Stock Price = Deliberate Practice
7. Why Lone Pine’s Steve Mandel Likes Kohl’s (KSS)
8. Neev Capital’s Rahul Sharma on H&M, Inditex & Emerging Market Retail
9. Trian Fund’s Presentation on Lazard
10. Julian Robertson on the Hedge Fund Industry Past & Present

Here’s a list of the top stories this week at Value Investing News based on the number of times the story was shared on top social media sites:

1. Aim for the Middle
2. Works if Small, Fails if Large
3. What We’re Reading ~ 5/31/2012
4. Warren Buffett’s Stock Buying Secret Revealed
5. What We’re Reading ~ 6/6/12
6. Presence of Hedge Funds in Chapter 11 Process & Effects on Bankruptcy Outcomes
7. Lone Pine Capital Discloses Kinder Morgan Stake Via El Paso Deal
8. Book Review: The Kelly Capital Growth Investment Criterion
9. Pennies from Hell
10. Sorted Weekly Tweets

I recently reported on the results of my price-to-book ratio backtest. Shortly after running that backtest, I realized that many value investors probably actually prefer using price to tangible book value. The price to tangible book value ratio is simply the current price of the stock divided by the latest quarterly tangible book value per share. Tangible book value  is defined as book value minus goodwill and intangible assets.

Often goodwill and intangible assets end up on a balance sheet as a result of an acquisition, and unfortunately the more a company overpays for an acquisition, the higher those assets (goodwill and intangibles) end up being reported on the balance sheet. The price to tangible book value ratio to some degree overcomes this issue and more closely represents what common shareholders can expect to receive if the firm goes bankrupt and all of its assets are liquidated at their book values. Read the rest of this entry »

Here’s a list of the most shared articles posted on Value Investing News this past week:

1. Great Warren Buffett / Berkshire Hathaway Resources
2. Why George Soros Owns Comverse Technology (CMVT): Stock of the Week
3. Third Point’s 2011 Letter: Rationale for Owning UniCredit, Skyworks, Abercrombie & More
4. Ratios for evaluating turnarounds
5. A Value Investor’s Take on Shorting
6. Join Market Folly’s Third Annual FREE March Madness Bracket Contest
7. 11.0010010000111111011010101000100010000101101000110000100011010011
8. Redacted Version of the March 2012 FOMC Statement
9. What We’re Reading ~ 3/14/2012

Were there any other great value investing articles that were published this past week but are missing from this list? If so, please share them in the comments section below.

Last Friday I asked my Twitter followers, “Which fundamental should I backtest next?” Andrew Martin replied. Here’s a copy of our conversation:

@ACJMARTIN: @FatPitch ROC

@FatPitch: @ACJMARTIN What’s your definition of ROC?

@ACJMARTIN: @FatPitch it’s more like ROIC. Op profit + deprec + goodwill amort – tax – capex divide by total assets – cash.

I used the data and backtesting tool provided by Portfolio123. This backtest uses the same filtered universe of stocks as my recent P/B backtest. I’ve designed the filtering criteria for this backtest specifically for individual investors and with a focus on enhancing data quality. The filters include the following criteria: Read the rest of this entry »

Here’s a list of the most shared articles posted on Value Investing News this past week:

1. Berkshire Hathaway Inc. 2011 Annual Report
2. Top 10 Hedge Funds By Net Gains Since Inception
3. Jeremy Grantham’s 10 Investment Lessons
4. Grantham: 10 Investment Lessons
5. Dan Loeb’s Third Point Starts Apple (AAPL) Stake: Top Positions & Latest Exposures
6. Beta of a Stock is a Meaningless Measure
7. Notes on the 2011 Berkshire Hathaway Annual Report, Part 1
8. Thinking about the Insurance Industry
9. Price-To-Book Ratio (P/B Ratio) Backtest
10. Eric Sprott’s Latest Commentary: 2012 is Year of the Central Bank

Where there any other great value investing articles that were published this past week but are missing from this list? If so, please share them in the comments section below.