A focus on the principles and practices of value investing from Lampert, Buffett, Graham, Fisher, Klarman, Greenblatt and beyond.

Monthly Archives: October 2011

Sears May License Craftsman, Kenmore, Diehard

A source says Sears Holdings may license its Craftsman, Kenmore, and Diehard brands. Essentially, Sears would charge a fee to outside companies to use the brand names on their products. Sears has not confirmed this licensing model but with the other recent developments involving selling Sears brands at outside retailers, I’m guessing this is in the works.

Buffett Sees No Recession

Railroad shipments are peaking as the holiday season draws near which could be a sign of an expanding economy according to . This is good news for Warren Buffett’s railroad investment in Burlington Northern.

“Our railroad carried 200,000 carloads last week,” Buffett said Oct. 4 at a Fortune magazine conference in Laguna Niguel, California. “That’s the highest total in three years. And that’s stuff moving around the country, supplying merchants and doing all kinds of things.”

Buffett added: “As of today, the recovery is still under way.”

It’s hard to go against Buffett’s optimistic view on the economy but many people are still sitting on the sidelines as far as stocks are concerned. Where there is fear, there is opportunity.

Joel Greenblatt on CNBC: Big Secret for Small Investor

Joel Greenblatt discusses a valuated index that he developed. His concept was to create an index that that is weighted toward the cheapest valued stocks as oppose to being equally or market cap weighted like the S&P 500. His index puts emphasis on finding value as oppose to just blindly buying the market regardless of value. Greenblatt states that the results tested over a 20 year period resulted in 6 – 7% better returns per year with the same beta or risk. The majority of people aren’t going to beat the market actively investing in individual stocks; therefore, Greenblatt’s index seems like a great investment that many people could benefit from in the long term. The only bad part, it’s boring

Lampert on Kmart’s Real Estate Value

There has been a lot of talk about Sears Holdings turning into a REIT lately. Eddie Lampert said in an interview for New York Magazine in 2005 that the real estate was not even factored when coming to a decision on the acquisition of Kmart. It is interesting to see how the company’s objective is beginning to shift from a retail turnaround strategy to an attempt to unlock value with existing brands. The only sure thing with Sears Holdings going forward will likely be the stock repurchase program.

Q; You say Kmart wasn’t a real-estate play.

Lampert: What I focused on when I invested in Kmart was the potential for a revitalized retail operation. We didn’t even do a separate valuation of the real estate.

Mortgage Backed Securities Explained


Here is an illustrated explanation of mortgage backed securities (MBS). This is obviously just a starting point but the video does a great job of easily explaining the concept behind these investments that we hear so much about. The Khan Academy has numerous videos on banking and money for those interested in learning more on various topics. .