Friday, June 29, 2007

Vitamins for your portfolio

Today I decided to buy some stock in Nutraceutical NUTR - a company that sells nutritional supplements and health foods. The market area appears to be quite competitive and it is not clear whether NUTR has significant brand advantage. For me personally, vitamin brands all seem interchangeable, but there may be people who do not feel the same way. The company seems to have done fine so far and I expect that the performance will continue. Consolidation in health foods markets could both help and hurt NUTR, so I won't speculate about it. Another risk is a greater oversight from FDA or other regulatory bodies. Periodically we hear news stories asking for more regulation in the vitamins and supplements market. It is not clear whether much will happen and whether this would have significant influence on NUTR.

The valuation of the company is reasonable. It is not fantastically low, but assuming that they can continue their present course, 13% annual return could be expected, which is fine with me. It seems that right now Chinese herbal medicines and supplements are the rage, but it may be that winds will turn to NUTR's favor in the future.

In other news, I sold my Talbots TLB position. The stock has run up quite a bit with the new CEO announcement. Although it is still somewhat attractive to hold, I hope to reenter it at lower prices if the fundamentals hold together. We will talk about it then. :)

Tuesday, June 26, 2007

Saying hello with Wesco Financial

Although I have been investing for over 10 years now and participating in Silicon Investor site for as long, I finally decided to write my personal investing blog. My goal is as always: discuss possible investments, think aloud and have fun in the meantime. My approach to investing does not require rapid trading or huge number of decisions. However, I do look at quite a few companies when deciding what to buy and what to sell.

I am mostly following the Buffettology and Superstocks investment approach with some personal adjustments towards Value Investing, mostly looking at high ROE stocks selling at a low price with a reasonable moat and somewhat clear future. Some of my choices go into the corners of these criteria: there are stocks that have more moat, but are less cheap; there are ones which are cheap but have very uncertain future. In the end, it's a personal mix, something that every investor have to develop for themselves. Let's explore parts of that mix here.

To finish this introduction, just couple of words about one of my recent buys: WSC - Wesco Financial. The company of Buffett's friend Charles Munger, partially owned by Berkshire. Every year Munger claims that Wesco is worse than Berkshire Hathaway and every year so far Wesco has matched Berkshire's stock movement. Until now. Right now WSC dropped quite a bit diverging from BRK, and I decided to take position in the BRK sister company. As Munger, I am pretty sure that WSC is not as good as BRK, but I still think it may provide outsized investment returns for investors buying it cheap. Is it cheap now? I am betting it is with my money. :)