Portfolio Commentary 2-25

The portfolio is up 1.3% since January 13, and 1% in the last week.

This week Pfizer and Collins were the only companies to make reasonable moves. Collins is up 9%, but this doesn't matter, because it is just arbitrage. Pfizer is up 2% on CEO pay and an upgrade by an analyst.

Quote-

"In the real world, though, emotion trumps rationality, resulting in large opportunities for those who can keep a cool head and can properly assess risks and rewards."

-David Dreman

K-Swiss Update

Over the past few weeks K-Swiss (KSWS) has reported:

• A 10K
• A 8K
• and a bunch of SC 13/G

I'll go over the SC 13/G's first.

The SC 13/G's were Steven Nichols - president and chairman of the board for K-Swiss - and his family trust. So the chairman of the board and president of the company filed his statement of beneficial ownership of the company, which just means he owns more than 5% of the company, he's putting his money on the line here; a good sign.

The other was filed by Barclays Global Investors. Barclays owns about 9.23% of the company, according to Yahoo! this number is higher now, because of the recent filing. here is how Barclays invests.

The 8K was just notifying people about the 10K that was filed.

The conference call is here

K-Swiss performed well in the last quarter, but was below last year's earnings because of a tax break they received last year.

K-Swiss remains focused on bringing up domestic growth.

K-Swiss is going to change marketing by showing more of the "K-Swiss brand" in commercials, instead of just one shoe.

K-Swiss did beat its own estimates.

K-Swiss has, again, reported strong international sales, value line said that international sales would be big in deciding who survived in the shoe industry.

Continued cash growth allowed K-Swiss to purchase ~$1,000,000 of shares back.

Royal Elastcis reported a loss of $.03 per shares, when and if, this becomes profitable K-Swiss will report higher earnings.

K-Swiss Valuation

Value Line reports an un-biased $3.30 in cash flow per share in 2008-10 this gives us a 2-4 year target price of about $46 as initially reported in the write-up

In my current DCF, which has been updated - as it should be valuation is an art that should be continually updated - assumes 1-5 year growth of 10%, 6-10 year of 8% and 11-20 of 6%, also terminal growth of 3.5%, apply a discount rate of 11% and you get a value of $36.4 per share, then add $5.77 in cash per share and I put K-Swiss's intrinsic value at $42.2. Which gives a current margin of safety of 32.5%, also keep in mind I have also applied a few layers of safety with very conservative estimates.

I will continue to, indefinitly, hold K-Swiss.

-Mike

Disclosure: At the time of this article the author, Mike Price, owned shares of K-Swiss, but this could change at any time. The author cannot be held responsible for investing losses, do your own reserach before making any investment decision.

Portfolio Commentary Feb. 19

The portfolio is here

I've made some changes to how I follow the portfolio, these changes will be listed under the portfolio.

• The portfolio is now measured against where it stood at the beginning of the year, instead of the starting price. So it is up .3% since the first portfolio post.
• The portfolio is also now measured against the S&P 500; as measured by the Vanguard fund VFINX.
• I've semi-changed the way I manage the portfolio. If I find a company that I believe will give outstanding returns over the next 2-5 years I will invest. I will no longer wait for cash to be available to invest, if I find a company that has a better probability of great returns than Costco, I will sell Costco.

Here are some portfolio updates -

• I still haven't sold my FHR shares, though they will be sold when it hits $45.
• K-Swiss reported earnings which were lower than Wall St. estimates, a K-Swiss update will be posted later today.
• My Collins shares have yet to be converted.
• Paxar reported fourth quarter 05 results, I will also go over those later also.

-Mike

Update

I posted new "currently reading" books on the sidebar.

I finished How to Trade Link Warren Buffett and will write a review soon.

I added new button to the sidebar as well, you can now donate to this blog/rightPrice site through paypal :-). Your donations keep the two sites and the portfolio free.

I've changed the way I follow portfolio, for now one, instead of following from the initial beginning of the portfolio, I will follow the total portfolio amount and compare it to the beginning price from the first post, and compare it with the S&P (using VFINX) starting on the same date.

I will also be comparing the two with a chart based on the percentage returns.

The new quote is:

"The idea is that I'm going to pay this price and great things may happen, but they don't have to happen for me to do okay,"

-Eddie Lampert.

Have a great week!

-Mike

Portfolio Commentary 2-11-2006

Portfolio

The portfolio is up 7.5%

Here are the changes:

• Fairmont accepted a takeover bid from Colony Capital, a real estate investment firm. The price is $45 per share which is about the current price. I have a limit sell order in at $45, if this goes through - the limit order or buy-out - I would have about a 28% return, equal to a $150 gain. I've owned this company since July 7, 2005.
• On even more exciting news I received cash for my holdings in JB Oxford. I received $293.04 on a $190 investment, this is a 54% return in about six months of holding. I had bad timing on this investment, but was able to secure a 70% return in less than three months in my Grandma's account.
• K-Swiss announced a decline in earnings, this was because of a tax benefit received in the prior year, and I still have confidence in K-Swiss and their management, I will continue to hold.
• Discovery was down about 7%, on no real negative news, just short term volatility.

-Mike