On October 15, 2007, I took a look at Nutrisystem (NTRI) about two weeks after a 25% drop. Running a fairly conservative analysis (in my opinion), I pegged the company as a $38 or so company. Add in a little uncertainty and a 50% margin of safety, and I said I'd consider investing under $19.50 a share.

Then, it fell off my radar.

Continue Reading Do As I Say, Not As I Do ››

Thanks all for your kind words. Amazingly, my brother should make a full recovery after three and a half weeks in the hospital (including two weeks in intensive care). Without going to much into detail, he was blindsided by severe pancreatitis which almost ended his life. Thanks again for your patience and understanding. Let's make some money.

On April 17th, I discussed the Art of Selling Your Stocks and briefly mentioned my investment in Graham Corporation. In doing so, I caught some feedback and lashings from a few visitors. David asked if this was a "cigar butt" investment; (MikeR) posted a Charlie Munger quote about assiduity — the art of sitting on your ass and doing nothing because your companies are great or the markets are not offering any wonderful opportunities. Was GHM a cigar butt? Did I forget to practice my assiduity?

Continue Reading Why I Bought (and Sold) Graham Corporation ››

On Wall Street, growth and value are anything but joined at the hip. Stocks are typically split into two groups: growth and value. When a growth stock gets hammered down, it becomes a "real bargain" growth stock; when a value stock drops in price, it is a "better value" at the lower price.

So, is Adobe a real bargain, a better value, or a pass?

Continue Reading Owning a Slice of Adobe's Toll Bridge ››

The retail sector has been getting crushed lately. Though that breeds panic in most, it presents wonderful buying opportunities for long-term investors. Let me preface with this: I have heard it grouped in the same conversation with sub-prime loans. Are we really to believe that people will stop shopping? Can we compare that to banks lending money to people who can't pay?

But I digress. Let's take a look at a business that seems underpriced, but may not be a buy just the same — even if it is down 75% for the year.

Continue Reading When Your Business Competes In Price, Advertising ››

Valuing companies and looking for deep discounts is pretty boring. For the most part, companies are generally priced right around their intrinsic business value which makes finding steals a difficult and often disappointing venture. In fact, it would make for a fairly boring TV show—even if you had bells, whistles, and mooing toys.

Such is the case with Abbott Laboratories.

Continue Reading Abbott Laboratories: Typical ››

In the earlier years of his investing career, Buffett is said to have had more ideas than cash—a situation that has reversed itself as Berkshire's asset base has swelled. In 1999, Buffett reportedly claimed he could earn 50% a year in the stock market if he had just $1,000,000 to invest.

Where would he look to do that? Pabrai claims that early, or low-asset, Buffett would look to buy $0.50 dollars and sell them when they reached 90% to 100% of their true value. He wouldn't be a buy-and-hold investor; rather, he'd look to buy quick-hit (read: 1-3 year) investments.

And with that, let's take an early Buffett look at Sharper Image (SHRP).

Continue Reading A Glance At Sharper Image ››

Is the Nutrisystem drop old news? In the stock market, you'd have to say yes because things happen so quickly. Still, we can learn lessons from virtually every event in the market. Once we get through the noise and look at the business, things begin to make a lot of sense.

Let's look at Nutrisystem from a business perspective:

Continue Reading Is Nutrisystem Healthy? ››

Thanks all for your feedback—both in comments and e-mails. Let's start from the top: Babui asked for more examples on how price follows value and how buying and holding through drops can still allow you to come out ahead.

Today, let's look at another example: Procter & Gamble.

Continue Reading Price Follows Value: Procter And Gamble ››

Washington Mutual has The Power of Yes; we have The Power of No—a much greater power that can be used to avoid major mistakes and horrible businesses. When you invest in mutual funds, you forfeit that power and put it into the hands of the mutual fund managers. And what do they do with that power?

Some of them own Alcatel-Lucent (ALU), and then act surprised and shocked when the company continues to shrink and choke.

Continue Reading From A Mile Away: The Business of Alcatel-Lucent ››

I've been asked a number of times to analyze Wal-Mart. My goal here is not to offer stock tips; rather, I want you to be able to do it yourself. Still, I looked at (and bought) Wal-Mart for myself, so here it is:

Continue Reading Looking At Wal-Mart ››

Throughout 1988 and 1989, Warren Buffett acquired more than $1 billion of Coca-Cola (KO) stock. At the time, Wall Street thought he was downright crazy. After all, Wall Street scrutinized the purchase and deduced that Buffett has paid way too much for earnings and the stock price was high—having run up 18% a year for eight years.

In 1988, Wall Street said Coca-Cola was a bad stock to buy. Warren Buffett thought it was a wonderful business to own. The results speak for themselves; so, let's look at the reasoning behind Warren Buffett's most famous purchase.

Continue Reading Buffett. Coca-Cola. 1988. Now I Get It. ››

You can't argue Warren Buffett's past. The man is an investing genius and has made millions upon millions of dollars for his investors over his 50+ year investing career. As he continues to discuss his retirement, make plans to pass on his fortune, and search for a replacement, one must wonder whether or not Berkshire Hathaway (BRK.A) is a buy today.

Continue Reading Is there value in Berkshire Hathaway? ››

If you bought Coca-Cola (ticker: KO) on January 2, 1996 and held it through December 29, 2006, you would have had a 10% gain, or about 0.92% average annual return for ten years (when factoring in dividends). Sure, you would have had some big ups and downs, but stock prices generally follow value in the long run. Knowing that, investors could have avoided a lackluster return with just a few minutes of work.

Continue Reading Coca-Cola, Ten Years and Still No Growth ››

Tim wanted a little clarification on how I came up with a value for JNJ's future cash of $201.7 billion using Excel^® (See the full valuation here). The following is a semi-intermediate discussion for Excel^® users.

Continue Reading Buying Johnson & Johnson, Part II ››

You can't argue Jim Cramer's past success. The guy is a stock picking/gambling guru and he's hot on Research In Motion (ticker: RIMM). So much so, in fact, that he told his viewing public to buy it after Thursday night's earnings report. Why not? The stock ran up some 20% on Friday following giant earnings.

Let's take a look at RIMM's business to see if it is a wonderful company to own...or just a hot stock for now.

Continue Reading Research In Motion Analysis ››

As of March 31, 2007, Warren Buffett's company, Berkshire Hathaway, reportedly increased its holding in Johnson & Johnson (ticker: JNJ) to 48.7 million shares-an increase of 24 million shares in three months. And it's no surprise. Forget Wall Street's earnings, JNJ knows how to generate cash!

Continue Reading Buying Johnson & Johnson ››