As usual, here are the best investing ideas from the past few weeks:

Ben Graham Screens

Old Value School has one of the greatest collections of value-oriented screens on the web. These recent screens are modeled after Benjamin Graham, the father of value investing, and his legendary stock selection approach.

Jae has run numerous backtests on the criteria to come up with the 4-5 metrics that make a difference. These screens are a great source for investment ideas and further due diligence.

BYD Company Limited (BYDDF.PK)

BYD is a well known investment by the most famous investor of them all, none other than Warren Buffet.

While many value investments are easy to spot based on a discount to net asset value or low P/B ratio’s, valuing companies like BYD with significant growth prospects is a much more complicated exercise.

It is a great example of backing out implied estimates for a number of different valuation metrics including DCF, Graham, NPV/EPV, and return on incremental equity.

Wal-Mart Stores (WMT)

Illiquid smallcap and microcap stocks often have the largest discrepancies between current stock price and the underlying intrinsic value of the business. For this reason, I rarely post analysis of well-known companies, as they usually have a depth of depth of coverage that prevents major price imbalances.

However, I came across this solid writeup of Wal-Mart Stores (WMT), a favorite large-cap stock for many value investors. The EV/EBIT chart is especially eye opening – by this metric, the stock hasn’t been this cheap since the 1980s!

Disclosure

No positions.

As usual, here are a few value investing ideas from the past few weeks:

Retail Holdings (RHDGF)

This is an outstanding and well-researched writeup from the SumZero analyst community. RHDGF is an undervalued stock on a sum-of-parts basis, with significant near-term catalysts to unlock shareholder value.

It seems to be a favorite of many prominent value investors and bloggers and was recently featured by Jae Jun of Old School Value.

Aberdeen International (AABFV.PK)

Although technically from a few weeks ago, I just came across this post from Baskerville Capital on Aberdeen International, a Canadian investment company traded at more than a 50% discount to its Net Asset Value.

The company has initiated a stock buyback program, a possible catalyst for increasing the share price.

While the stock has appreciated since the original article, the author’s valuation spreadsheet is included, allowing investors to make their own calculations with new assumptions.

The GSI Group (LASR.PK)

A mainstay on Weekend Values, AAOI has another well researched post on a post-bankruptcy reorganization with The GSI Group.

The market is valuing the business based on historical sales figures, even though recent results show a marked improvement in most operating metrics.

The equity committee has done a tremendous job of increasing its ownership in the company post-reorg, and new management will have an opportunity to right the ship going forward.

Mirant Corp. (MIR)

The Manual of Ideas publishes well-research investor newsletters, and recently posted a potentially undervalued stock in Mirant (MIR).

Using industry metrics such as EV / Generating Capacity, the article argues that both companies are selling for substantially less than similar competitors.

Investing Papers of Benjamin Graham

In addition to their always impressive stock analysis and valuation work, Valuehuntr has put together a very impressive compilation of original Benjamin Graham papers. The father of value investing, Graham’s writings and books have influenced most of the great value investors.

These papers were not published in either of Graham’s well-known books and will make for awesome reading for any serious value student.

Disclosure

No positions.

As usual, here are a few value investing ideas from the past few weeks:

Arbitrage Opportunity – Brookfield Infrastructure Partners (NYSE:BIP) takeover of Prime Infrastructure Group (ASX:PIH)

Similar to other arbitrage opportunities posted here (see UBET/CHDN and FCEC/TOBC), this merger is a combination stock & cash deal expected to close in early December.

The transaction spans both the US and Australian markets so investors must take into account currency fluctuations in addition to the normal merger arbitrage risks.

However, it appears to offer attractive returns for the sophisticated investor who can take advantage of the mispricing.

CTM Media (CTMMB)

“A Low-Risk, High-Return Micro Cap Spin-off with a Turnaround Twist”

A guest post on AAOI, this investment analysis combines several of my favorite traits in value investing: micro-cap underfollowed stock that is a spin-off from a larger company.

Using normalized numbers, the stock trades right at or a little under 1x EBITDA, obviously extremely cheap.

According to the author, a conversation with Howard Jonas, CTMMB’s CEO and largest shareholder, led to the following exchange regarding the author’s ownership in the company: “how did you get so much… I wish I owned more..”

The St. Joe Company (JOE) – Short Thesis

A number of presentations were made at the recent Value Investing Congress, but potentially none were as explosive as David Einhorn of Greenlight Capital on the St. Joe Company (JOE).

Entitled, “Field of Schemes: If You Build It, They Won’t Come,” Einhorn’s presentation is 139 slides packed full of information on his short thesis – it was powerful enough to move the market with JOE’s stock dropping almost 20% in the two days after Einhorn’s presentation.

To make things more interesting, another famous investor, Bruce Berkowitz at Fairholme Capital Management, is on the other side of the trade. It is an interesting case study that will be worth watching as it unfolds.

Owens Illinois (OI)

Another slide presentation from the Value Investing Congress, this time by Alexander Roepers of Atlantic Investment Management.

OI is the world’s largest maker of glass bottles, described as “a fortress with a massive moat.”

The business has high barriers to entry (usually local monopolies, long-term customer relationships, global scope, etc), and Owens Illinois seems well positioned to profit as glass packaging demand continues to grow.

Atlantic provides a price range of $27-$45 per share, substantial upside to OI’s current price.

Voting Power in the Activist’s Hands

Shareholder activists can be an incredible catalyst for unlocking returns in many of these undervalued stocks.

This is a great post describing the power of voting control for activist investors, and how buying and selling choices (whom to sell to, whom not to sell to, etc) can have a major impact on future decision making.

Disclosure

No positions.