Author: TenStocks
Covestor model: TenStocks
Disclosures: Long HTCH, BAC, IMOS
We’ve waited a long time, but the market has finally begun to show some weakness. As the market has come down, so has the Tenstocks Covestor portfolio. We added to our Hutchinson Technology (NASDAQ: HTCH) position at prices we consider a bargain.
We have now built full positions in three names: Bank of America (NYSE: BAC), Chipmos Technologies (NASDAQ: IMOS) and Hutchinson. Cash now (as of 6/7/11) stands at 26%.
Bank of America is currently suffering from a world of problems – a public relations fiasco not the least of them. While most investors’ time horizon is the next quarter or two, we look out a little longer. Yes, things are a mess for BAC now and their public image is somewhat tarnished, to put it politely. But looking out over the next two to three years, BAC should be able to make $2 a share in yearly earnings and start paying a decent dividend. We think BAC is worth significantly more than its current market valuation. So when’s the best time to buy it? When nobody wants it.
Chipmos is a lost stock. It appears on nobody’s radar… or almost nobody’s. It was mentioned in a recent edition of Barron’s and tagged with a fair value of $25 a share, versus its current (6/7/11) market price of around $9.
Hutchinson, currently experiencing some price weakness, may need another two quarters before it starts to show operating improvements. Again, the time to buy into these names is when they are the ugly ducklings and priced accordingly.
In all three cases, we are looking out farther than the average investor. We plant now for a harvest two years out.
As we take cash off the table and put it to work in currently unpopular investments, we expect to see an increase in portfolio price volatility.
We also got a bit of press this month in a review of ‘The Warren Buffetts Next Door’, a book by Matthew Schifrin of Forbes in which Chris Rees of TenStocks is profiled. We were not mentioned by name in the review, but I’m the guy who had the eczema as a kid. It’s a good, well written review. Here’s the link: http://bit.ly/kr1pN9
Sources:
“Digging Deep for Value“ Lawrence Strauss, Barron’s 5/21/11 http://online.barrons.com/article/SB50001424052970203869804576327460139580464.html#articleTabs_panel_article%3D1
“Research pays off big for part-time investors” Tarra-Nicholle Nelson, Inman News, 6/7/11 http://bit.ly/kr1pN9
