Canadian Value Investing

Looking back, the games performed by the government over your debt ceiling seemed to put the fear back into the markets. Increase that the debt problems in Greece and the marketplaces just unraveled until early October. Since that time they have recovered somewhat with the S&P 500 ending flat and the Dow Jones up just over 5% for the year.

Here in Canada the TSX Composite index was down 11% for the year. These results don’t amaze me as large caps were definitely cheaper than small caps entering the year. Year Looking back the suggestions from last, they are apparently a mixed handbag. Compared to the broader market indexes this is a good result. The financial companies have been hit hard due to the issues in Europe despite the fact that US finance institutions are well capitalized and have little contact with the European sovereign debt problems.

Hardwoods Inc. is back again on the right track and has started to pay a dividend again. Citizens Republic was priced for disaster but the economy in Michigan has bottomed and loan losses have stabilized. Fairfax, a keeping company, this year by purchasing a number of other companies mainly owns insurance businesses however they started to diversify.

  • Foreign Exchange Market
  • 31-Dec-02 -11.41% 32.27% -13.97%
  • Income taxes
  • Marketable securities
  • Raising capital by buying securities or issuing new shares during an IPO
  • Don’t make presumptions

They include William Ashley (fine china), Sporting Life (sporting goods), & Prime Restaurants (Eastside Mario’s, Casey’s, & Prime Pubs). Fairfax made billions owning CDS swaps a couple of years back and today are actually putting that capital to work. I have a sizable part of my net worth in Fairfax. In fact if I wasn’t interested in actively managing my investments, I’d put 100% in Fairfax and sleep soundly at night.

The company is worth considerably more than its current quotation. I’ve written many times about BAC before and regardless of the 58% drop in 2011, it is my top pick out. The facts haven’t changed only the emotions with this stock. In comparison to a year ago, the company is much more capitalized. Tier 1 common equity should be over 9.5% in Q4, if you include the recent asset sales (Basil 1). Despite what the assets are said by the pundits are not proclaimed to fantasy. Level 3 assets, the ones with assumptions made by management are 2.9% of total possessions.

The company still has a lot of litigation headwinds but the company has recently set aside a lot of funds to cover the majority of these expenditures already. It may need years prior to the results of the numerous lawsuits are known. Management has a lot of credibility issues because of many promises not kept in the past couple years. Despite this they are well on the way shrinking the balance sheet and reducing risky assets.

BAC sells for around 25% of reserve value and 40% of tangible publication value. The lower the stocks go the better the bargain. BAC could increase or triple from but still be undervalued here. I’m going to keep that one short. Despite all the hatred, Goldman Sachs is still a leading global investment bank or investment company. As emerging markets develop and require access to capital, Goldman’s business opportunities will likewise grow.

To be clear, financial uncertainty is the biggest problem hurting the ongoing company. The success of both the ongoing company and the financial marketplaces hinge on investor self-confidence. When it returns Goldman will return solid results. Goldman is capitalized soundly. GS sells for over net working capital just, 68% of book value, and 75% of tangible book value.

I can’t seem to help myself as there are so many cheap financial companies to choose from. If you can’t see that you must be blind. Like the CRBC select from last yr, FNFG is an inexpensive bank, or investment company but unlike CRBC they don’t have problems with problem loans and home loan issues.