Seth Klarman Buys Ocwen, Should you?

Seth Klarman is a well-known billionaire stock investor that runs the Baupost fund.  He has a very great record of amassing big wealth through his value-based purchases.  In the past quarter, he bought Ocwen (OCN) that was over $55 just a couple years ago and then it reached bottom at $6 just this year.  He’s known to make safe investments that will do really well or else will only lose a little money at the end.  I think that is his strategy with this company.  As risky a play that Ocwen looks, it does look like it technically has hit the bottom and its time for it to rise.

Fundamentally, JP Morgan recently bought a bunch of Ocwen’s agency backed loans.  The company has also sold these loans to Nationstar as well.  The company wants to focus on non-agency subprime which they believe would make their customer service better for owners of these loans.

I recommend looking at OCN and putting a small percentage in it for a 20% gain at $12.  Also, a stop at $9 just in case things go sour!

Is Twitter a Value Play?

Warren Buffet calls a value play a business that is being under-valued.  If the stock book price is higher than the stock price, it is called a value stock and it would be a value play.  However, for Twitter, as much value as there is by the monetary definition, I see value in a different sense.

There is value in that Twitter brings a commodity that has true value in this world.  When something dramatic happens, Twitter is always the first one to be reporting it.  This means that a sudden world disaster, a catastrophe in a country, a large news story that breaks out, or even that innocent tweet that becomes something profound and gets popularized widely are all such things that only Twitter can provide to the public.  This is a value that only a product with true benefit to the world will succeed.

Twitter also continues to bring to bring new products online that follow their ‘live feed’ experience.  You can look at their Vine app that does live short videos.  Their latest creation Periscope is live stream that you can publicly view and record to show to the world.  Again, they are bringing value that helps the world spreads cultures, news, and beliefs that we would never hear about.  This is true value.

The stock closed on May 8, 2015 with a price of $37.59.  This is a great price to buy and it even becomes a better business for other companies to acquire.  If Google acquired Twitter, they would have an excellent advertising stream for their Adsense network.  They have already partnered with Twitter through their Doubleclick partnership to bring Twitter advertising to their ad platform.  If they see success, I see no doubt that Google would be interested in getting a bigger stake into Twitter especially at these prices.

I still believe Twitter is a great buy and I don’t see it going down much further.  There should be strong support around $35.

Twitter Drop Gives You Opportunity

Twitter (TWTR) had a significant drop in stock price the past couple of days.  It was at $52 and now it is in the $38s.  It has lost over 25% of its value.

Why did it drop so much?  Their earnings were lower than expected.  Their future guidance is lower than they guided earlier this year.  Their growth rate has gone down.

All those things above sound bad but now you must look at the bright side.  The negatives mentioned above is priced into Twitter’s depressed stock price.  You must also remember that Twitter owns very popular apps like Vine and the newly created Periscope.  Both are very popular.  The Periscope has been very elegantly and beautifully created and it has grown to be one of the top apps in the ITunes store.

In addition, Twitter has a couple deals with Google to integrate their advertising platform with Doubleclick.  This will open a new ad market for promoting Twitter’s Sponsored Tweets into Doubleclick’s network.  With many companies using Doubleclick for advertising, it will make their job that much easier to do ads on Twitter.  Earlier this year, Twitter partnered with Google to integrate the tweets into Google’s search engine.  This will be a major benefactor to Twitter for growing their user base.

As much as Twitter has had issues, it has a huge brand and huge marketing engine that the world freely promotes for them.  They also are continually innovating and working on new products and apps to keep their technology up-to-date and make sure they are in the latest trends.  They do a very good job at growing but their major next step is monetization.  With their stock price so depressed, I see the downside to be very little versus the reward that you can get by owning it.

I recommend you do your due diligence and buy below 41.

Berkshire Hathaway Quietly Moves Up

If you wish to own a stock that you can buy without any issue, I would recommend Berkshire Hathaway (BRK-B and BRK-A).  This is one stock that has continued to outperform its peers year after year.  Even at times where it had its dips, it continued to move up and increase value to its shareholders.  Warren Buffett and his team has continued to add value to the company.  A couple big moves that they had in the recent years were the purchase of Burlington Railroad and Hertz.  During the recession, he partnered with Goldman Sachs (GS) and Bank of America (BAC) to get some nice loan terms and options to purchase their stocks.  Overall, he has done an excellent job and I only see that trend continuing in the future.

Warren Buffett recently purchased more IBM.  He continues to be bullish in this technology stock which is interesting since before IBM he considered technology to be a taboo in his investment portfolio.  It will be interesting to see how it turns out but if you look at IBM’s stock trend it just moves up like Berkshire Hathaway.

Ford is Ready to Rumble

That’s right.  Cheap oil, low valuation, and nice dividend means Ford (F) is a great stock to own.  They have already released their F-150 aluminum and are getting great reviews.  Ford also has a bunch of other models coming out.  The best part is oil is cheap so its a great time for consumers to get new cars especially trucks.  With a 3.70% dividend, even the patient investor has time to just hold out until the stock moves up.

Technically, the stock has already broken resistance and it is in bullish territory.  If you haven’t look at Ford already, I recommend doing some due diligence and adding it to your portfolio.  I see much more growth in it versus its rival General Motors.

Oil Stocks and Plan B

There has been a lot of discussion over the investing of oil stocks.  I, for one, believe there is great potential in oil stocks but there is a ongoing concern that oil prices will be low for a long time and this means that most investors don’t want to touch oil stocks.  Of course, most of these comments are coming from stock traders.  They want to get in and out when the market news comes out.  Personally, I don’t have the time nor the discipline to keep up with all the market hoopla (trends), up and down action of the day, and look at these stocks minute after minute.

As an investor, there is great potential in oil stocks.  First, you get a nice dividend.  BP is giving a dividend at 5.80% and COP is giving a dividend of 4.30%.  This means while you wait for the stock to appreciate you collect a nice premium.  I don’t know about you but oil is necessary and it will be necessary for a long time.  These two companies also follow a strategy called Plan B.  This means that they are strategizing their portfolio in the belief that oil prices will not rise soon.  Of course, this is a more conservative strategy than the other oil companies but its safer, less risky, and you are still collecting a nice dividend.

I recommend taking a look at both BP and COP as I own them and I will hold them for the long term!

Reaping the Benefits of Stock Investing

With the christmas holiday coming and the holiday season, I thought I would write a lighter side from the normal stock investing that we do. I would like to write about the benefits we get as stock investors. We can use the money for experiences that would usually be a premium to that we can enjoy. Today I am enjoying a very nice first class flight form Japan Airlines. I have had an excellent experience so far and I’d like to write about it in more detail.

From the moment I went to check-in the flight, the experience has been impeccable. The check-in had no line at all for any of the classes (first, business, or coach) and they do have a separate line for each. LAX was very light during the weekday and I was able to pass through security quick. I had an okay experience at the oneWorld lounge. The breakfast was missing bacon and another protein but I was able to enjoy some eggs. They also had a nice barista complimentary to the lounge and I was able to enjoy a nice cappucino while waiting for my flight.

At the time of my flight, I was able to breeze through check-in as the Boeing 777-300 only has 8 first class seats. There was no line and there was even a lady waiting at the terminal for first class passengers to make their experience better. Once I got on board, I was treated to the first class experience and I even enjoyed a nice champagne as they waited for the other passengers to board.

The first class suite seats are a first for me. It is great to have your own private suite complete with outlets, bigger TVs for digital entertainment, noise cancelling headphones, and full reclining flat bed seats. The only thing lacking is a separate door to make the experience fully private but I cannot really say a negative as this would be my first ‘first-class’ experience on the plane.

Once the flight was in the air, they started the meal. I got the japanese style meal and it was delicious.It was an eight-course meal where each course was served with a custom and detailed plating and high quality ingredients. I don’t want to go into very detailed meals of each course but I can say that the seafood was delicious. If you want a western style experience, they also have rib eye steak but it is corn-fed so I wouldn’t say you get as much value.

The stewardesses were very generous and allowed me to sample many different red wines, white wines, green tea, and coffee. I particularly enjoyed their premium sake that the stewardess said I would enjoy and she was correct! It had a nice subtle dryness and a nice light sweetness that made it very delicious and enjoyable with the meal.

Their lobster course was excellent. They made it really easy to take the lobster off the shell and surprisngly really delicious and still fresh while being served on the plane.


They also had a very delicious “Sashimi” style shrimp and flounder plate that was the best part of the course. Very fresh still and very delicious.

I wasn’t too fond of the rice with crabmeat but most people would enjoy it still.

The miso soup was different than the normal powder miso you get at the restaurant. It had a radish and tofu and it tasted really homemade. It wasn’t too salty either.

If you enjoy tea, you will particularly like Japan Airlines for their green tea and black tea. Both are very high quality and you can still see the powder from the teas as you drink. I had a couple of each and they even gave me more when I finished the tea. Their coffee was a bit bitter and they probably could use a higher quality blend with a better creamer.

The coffee was better used with their delicious ice cream. The ice cream was very cold and still frozen so it made perfect sense to make it a abogada by smothering the ice cream in warm coffee.

Once the meal is completed, they get everyone ready to sleep even though it is considered 3PM in Pacific time. It is late in the evening in Japan and it is a good start to getting rid of Jet Lag. They have a nice bedding setup for you. They will put on a nice mattress padding with either soft or hard depending on your preference. They also provide you a comforter and a sleeping pillow to sleep. This is a different pillow than the back pillow that you get when you board.

You are also given comfy pajamas to enjoy your flight. They will take your clothes and store it in a locker (I presume). Their bathroom is complete with toothbrushes, mouthwash, and some lotions for you to use. They also give you a nice travel bag complete with sleepy goods, dental goods, and lotion.

For those that don’t want to sleep, you can enjoy the in-flight entertainment with the latest movies. They also have music and games. All entertainment is scripted in japanese and I needed the help of the flight attendant to choose my movies but they do have some recent english movies that make it easy to watch.

Overall, you will have a great time boarding with Japan Airlines. I would like to continue venturing other first class services but I’ll have to do well with investments before venturing in too many. In the meantime, you must continue to invest for the long-term in strong companies. As for the companies that I mentioned before, you will continue to do well with holding AIG for long-term. I recommend it and I believe it will be a nice winner for many years. For a more riskier play, I suggest Ford (F) as the stock is still low and there is a lot of potential for it to move bullishly for 2015 and 2016. They have a great line-up of new cars and a new Ford F-150 that is all aluminum that should do well going forward.

Invest in Strong Companies and Do Will

As investors, we always want to find something that is under the radar.  We want something that hasn’t been priced high yet.  We want to be able to get the stock before it takes off.  Remember when you are doing this you are competing with investment firms and professional stock traders that have a limitless amount of tools at their exposure and they do this full time.  If you wish to make consistent returns, it is best to stick with strong names that will do well for the long-term.

One high-flyer that has continued to go up is Micron (MU).  This stock has continued to run up well and even with the past dip it has already started moving up again.  It is worth taking a look at.  I couple other good names to look at include IBM and Home Depot (HD).

AIG is a Great Long-Term Investment

As you noticed in my blog, I often do buy and sell out of the same stock within the same year.  I often try to sell a year ahead to reduce the tax capital gains.  If you are looking at a great stock to do play long-term and that means you wish to invest, I recommend looking at AIG.  It did do poorly in the recession and they went to the brink of bankruptcy before being rescued by the US Government.

However, they are now poised in a path to grow and profit.  The stock chart shows this growth and it will continue to do great in many years to come.  Another great way to play is to use the AIG Warrants.  It’s a leveraged bet that will also do well.

I own both AIG Warrants and AIG.

Sprint Update

It has been a while since I posted in my blog.  FYI, I sold Sprint in June while it was in the mid-9s.  I don’t want anyone to take an investment and continue to hold thinking that I still own it.  I still think it is a great stock but there is a lot of competition.  The Softbank Mr. Son will do everything in his power to make Sprint a strong player in the US Market.  I think he will succeed but it will take too much time and there are so many great investments out there.