Sales Desk – US 877.701.2883
Sales Desk – International +353 1 525 9677
Sales Desk – US 877.701.2883
Sales Desk – International +353 1 525 9677
Storm clouds seem to build by the day. Many investors have an ongoing love affair with a few large-cap and more futuristic companies, yet they have corrected the prices of any stock with disappointing earnings or an attachment to the production of commodities.
Peter Lynch was one of the most successful stock pickers of all time. From 1977-1990, he managed the Fidelity Magellan fund and produced returns of 29.2% per year, besting the S&P 500 Index returns of 15.8%. The Magellan fund grew from $18 million to $19 billion in assets during that time period. What Lynch said about market timing and investor sentiment appears very useful to long-duration common stock owners like us.
We at Smead Capital Management believe in the value of compounded returns. They are the friend of the long-duration common stock investor, especially when considering the intrinsic value of a company. With so much chatter among investors, the media and analysts over when the Federal Reserve will increase interest rates, we would like to share with you how we think about and use prevailing interest rates in security analysis. Together with earnings growth estimates and longevity, the discount interest rate is a cornerstone of calculating the intrinsic value of a company.
The 50th annual meeting of Berkshire Hathaway with Warren Buffet as Chairman was filled with sugar and spice and everything nice. We at Smead Capital Management always look for three key takeaways from the annual meeting of Berkshire Hathaway. This year we think we can sum it up by using the 19th Century nursery rhyme.
When I was ten years old, my Dad asked me if I’d like to make some money. Those of you who know me are aware the answer to that question is almost always yes. Dad offered me the chance to plant two rows of tomatoes in his one-acre garden. I would weed and water the two rows with the hopes of selling the fruit of my labor to the grocery store in my hometown of Washougal, Washington.
Like picking up the Good Book, a read of Berkshire Hathaway’s Annual Shareholder Letter yields
insight, wisdom, and encouragement for the long-duration common stock investor in a world of shortterm
thinking and 30-second sound bites.
“It [investing] is the one sphere of life and activity where victory, security and success is always to the minority and never to the majority.” –John Maynard Keynes Dear Fellow Investors: To get a good feel for where the largest pools of money are
“There are three things that can happen when you pass the football and two of them are bad,” observed The Ohio State University’s legendary coach Woody Hayes. All the Seahawk fans, myself included, know exactly what he is talking about since the Seahawks chose to pass the ball at the one-yard line. You can complete a pass, you can throw it for an incompletion, or you can throw it to the other team (an interception).
As long-duration common stock owners, we are always interested and entertained when the media covers company earnings. To understand why, we think you need to know the facts behind the intrinsic value of a company, what it means to be a business owner and what differentiates a good business from a great one. Our contention is that there is little or no connection between short-term stock price movements at the time of earnings reports and long-term success in common stock investing.
Since this is the beginning of 2015, let me refresh you on today’s esoteric wizardry. Smart Beta, quant strategies, hedge funds, liquid alternatives, leveraged buyouts (LBOs)/private equity and go-anywhere bond strategies are all formulated to confuse Mr. Market in 2015.
Which fund do you want to go to?
Smead Value FundSmead International Value Fund
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