My Portfolio

[KatonahMike]

I still think the market may fall some more, but there look to be some great bargains out there. I'm mostly in cash right now, except for a decent amount of AAPL that I bought at 187 (doh!). Here's the way I'd like to allocate the remainder in the near future:

- NVDA 12% (Looks like a good Rule #1 buy)
- MIDD 12% (Another Rule #1)
- USB 12% (Good dividend and seemingly safe financial)
- PCU 12% (Good dividend in a different sector)
- AAPL 40% (Already have this and refuse to panic and sell... at least not before July 11)
- cash 12%

Any thoughts on the above choices?

Mike

[Stockowner]

Very interesting.

I have much of my money in Southern Copper Corporation (PCU). I've also looked at Nvidia and Apple for some time now.

The business of Nvidia is being attacked by competitors, like Intel, which are much larger companies with greater resources. Even though the company looks very strong in many ways, I don't know what Nvidia will look in even 5 years, so I haven't done anything yet. I want to be on the safe side if I am going to put my money to work...

Apple is apparently on the offense, and IIRC is taking the market from stalwarts such as Nokia.

[KatonahMike]

Originally Posted by Stockowner

I have much of my money in Southern Copper Corporation (PCU). I've also looked at Nvidia and Apple for some time now.

Does $110 look like a reasonable entry point for PCU?

The business of Nvidia is being attacked by competitors, like Intel, which are much larger companies with greater resources.

Interesting. I do want a long-term play at these prices. Maybe I'll hold off. Intel is at low prices these days, but nothing resembling a MOS by my calculations.

Apple is apparently on the offense, and IIRC is taking the market from stalwarts such as Nokia.

And RIM I think, although not as much. I wish my entry for Apple was more well-timed, but I think their long-term prospects are good.

[Stockowner]

Does $110 look like a reasonable entry point for PCU?

Perhaps. I don't want to be responsible for your gains or misfortunes. All I can tell you is that I've bought at 115. So yes, I personally think it is reasonable.

It is by no means dirt cheap, but chances are copper prices will remain high in the next years to come. And the growth of PCU has been almost spectacular for the past ten years. I haven't come up with a good estimate of intrinsic value, because things could happen.

Prices of copper, zinc, molybdenum have a direct impact on this business (even though the company has hedged itself to some extent), and workers strikes can have a negative impact on the business.

All I know is that the company;

* Will probably grow a lot in the future
* Isn't too badly priced
* It currently has a nice dividend (which could be reduced if the profitability of the company is reduced)
* Has 1.4 billion in cash.
* Has adequate size
* Large reserves and big production
* Is planning on expanding and diversifying into other materials

I personally think the company, at the current price, has a lot of uncertainty (many things could happen, good and bad), quite good upside, but not much risk, if you have a long term outlook.

[rwdaigle]

How are you determining ROIC on banks (like USB)? They all show up as N/A for me on moneycentral.msn.com..

[KatonahMike]

Originally Posted by Stockowner

Perhaps. I don't want to be responsible for your gains or misfortunes.

No worries there. I think we come here looking for feedback, but with a full understanding that all factors must be considered before making a trade.

All I know is that the company;

* Will probably grow a lot in the future
* Isn't too badly priced
* It currently has a nice dividend (which could be reduced if the profitability of the company is reduced)
* Has 1.4 billion in cash.
* Has adequate size
* Large reserves and big production
* Is planning on expanding and diversifying into other materials

Thanks for the insight.

[KatonahMike]

Originally Posted by rwdaigle

How are you determining ROIC on banks (like USB)? They all show up as N/A for me on moneycentral.msn.com..

Good question. I confess, I did't pick this one based on Rule #1. Most banks are hurting right now, but the reading I've done suggests that USB is in better shape than most, yet the price is near a 52 week low.

[rwdaigle]

I feel the same way about Goldman Sachs (GS), though without a concrete valuation method on the banks and brokerages I am hesitant to get in. If anybody has any pointers they would be greatly appreciated!

[adampepp]

Just to add my 2 cents on financials.. disclaimer - I bought AXP ~40.50 and USB at ~30.00.

I think the way to approach financials right now is to pick out the strong among the weak. All financials right now are undervalued, and they will PROBABLY continue to go down more. I bought now and may continue to add to my positions because who knows where the bottom is. But the one thing I do know is that AXP and USB will still be strong companies with great management and will likely gain market share as other credit issuers/banks get squeezed out.

Right now, I'm taking advantage of the slowdown to pick up long term picks that I have high confidence in (just to share a few ideas):

AXP (already in) - just settled 1.8 billion from mastercard - this alone protects their loan default reserves and then some. This couldnt be a safer investment for the long term and its a Buffett stock that is on a RARE sale for a 50-60% MOS (probably worth $65-80)
USB (already in)
MMM (building position) - classic strong bellweather that is going on sale right now due to general consumer weakness (about 30% MOS).
MHK and USG - housing market/building materials long term plays that will probably stay depressed until late 2009, so theres no need to rush into these right now. Both produce large revenues from the renovations business.
WLP - industry leader healthcare play, depressed sector and election year
AEO - this stock is just TOO CHEAP to ignore at $13-14. The store is ALWAYS packed when you go to the mall.. just check it out.
CTAS - slow n steady value play.. huge moat, obsoletion is a non-factor, management consistently grows, 50% MOS right now.
FAST - great company, definitely a buy at a lower P/E.. currently overvalued, but may get dragged down with the rest here soon.

As a side note, right now is also a good time to pick up some mutual funds cheap.. FAIRX and LLPFX, both value style funds that consistently beat the market using Buffett fundamentals. These guys invest in some sectors or companies that I just dont understand, so it rounds out things a bit.

Adam

[KatonahMike]

Wow- thanks for all the great ideas, Adam. I'll be doing some research for sure over the next couple of days.

Mike