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written by reader Making Sense of This Market

By anton669, February 16, 2016

Few weeks ago i`ve been told by a friend to buy 3 stocks:
FFH (Fairfax Financial) 2016 Performance: +16.8%
MKL (Markel) 2016 Performance: -4,77%
CLX (Clorox) 2016 Performance: +0,56%
With S&P 500 dow 8,46% it has been a wonderful deal.
Tonight, i saw Prem Watsa Portfolio: 85% of it is in 4 stocks, let´s see the performance so far in 2016:
BBRY: – 28,02%
RFP: – 44,52%
KW: -33,31%
IBM: -12,05%
I think a bit mysterious with such performance FFH stock outperform (big) the market.
Now Markel:
Thomas Gayner big position is KMX (CarMax): down 32% last year.
Markel 2016 P/E = 30,7 Markel 2017 P/E = 31,7 P/B: 1,40
Let´s compare that numbers with BRK.B (W Buffett stock):
BRK.B 2016 P/E = 16,3 BRK.B 2017 P/E = 15,3 P/B: 1,15
Let´s see Clorox Numbers:
CLX 2016 P/E = 26,1 CLX 2017 P/E = 24,5 P/B: 153
Let´s compare with KHC (Kraft Heinz) numbers:
KHC 2016 P/E = 25 CLX 2017 P/E = 20,2 P/B: 1,71
Lastly, let´s see the performance and current valuention about one stock Travis mentioneted last year: TGI (Triumph Group)
Performance 2016: -40,68%
TGI 2016 P/E = 7,73 2017 P/E = 4,26 P/B: 0,49
It´s in a sector (aerospace&defense) i like, with lot inside buying lately, and a new management. It´s hard to understand the current valuention. Like TGI i can speak here about many stocks trading below tangible book value like BAC, and LUK.
My point it´s that one day this inefficiencies will vanish. Jim Rogers told in a recent interview that some stocks never go down and he become to short this kind of stocks (AMZN, NFLX). I agree with him. FFH, MKL and CLX are good stocks with exceptional performance, but i cant buy it at current valuentions when Mr Market is giving me other stocks below tangible B/V that have reasonable future expectations.
Just making sense of this market :)))))))))))

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.



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Travis Johnson, Stock Gumshoe

Fairfax has been going up lately because Prem Watsa has very aggressively hedged their portfolio against the deflationary weakness he has seen coming for a few years — that didn’t work out for them in 2014 or 2015, but it’s been working lately. That portfolio is just the stocks they are long, which isn’t much of Fairfax’s portfolio now — shorts and derivatives aren’t in the 13F portfolio report.

Markel I’ve owned for a decade or so and consider pretty richly valued, not selling but I wouldn’t buy more at the current valuation.

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