In the Flexible Value Covestor model, manager Walter Lu uses a deep value investing approach that focuses on arbitrage opportunities and special situations. In his latest investment report for the model, Lu says,
In August, I believed that the market was overreacting to the bleak economic outlook at that time. Now, I am concerned that investors are too optimistic. Many sentiment indicators suggest that bullishness is very high right now. Meanwhile, volatility in the market is low relative to recent months, which is often a sign of complacency by investors.
The current top holding in the model is Noble (NYSE: NE) which recently announced that it would be constructing two ultra-deep drillships through one of its subsidiaries. This new rig order has made some believe there may be upside potential in companies that work in offshore drilling, in spite of recent problems in the Gulf. Some however, like Wyatt Investment Research’s Kevin McElroy, have maintained their faith in stocks like NE. In a November 2010 article, McElroy states,
But one of my favorite ways to invest in rising oil prices is still only slightly more expensive than it was four months ago.
I’m talking about Noble Corp. (NYSE: NE).
I first recommended buying shares of Noble back in July.
I then recommended buying shares again in August, and then September.
As I said, this company is only marginally more expensive than it was four months ago.
(“Don’t Buy BP Plc (NYSE: BP),” November 11, 2010, WyattResearch.com)
On January 20th, NE had a closing price of $37.57 which is slightly lower than its November 11th closing price of $37.62.
*Prices courtesy of Yahoo Finance.
