Monday, November 25, 2013

Installux Reports Good Q3

Installux SA continues the string of good news from my small caps. I had mentioned that the company had 10% less revenue yoy in Q1 and Q2. However, Q3 revenue was flat compared to a year ago. I hope this is a sign of a turnaround for the company. However to counter this, recent news suggest France is still struggling to get out of recession. I suppose this is why the stock jumped 13% on the revenue numbers and then gave it all back the next day. I think Installux is still a work in progress. That is, the stock is still depressed due to uncertainty, but I am betting when the uncertainty is over the stock will jump, as has happened with my other smallcaps.

In other portfolio news, I sold about 15% of my WLP holding. I had held it since the days when it was still called Anthem. I don't remember ever selling through last 7 years. But I have bought it regularly in that time. Now the stock is at an all time high of $93 and at around 10 times earnings. At this multiple I no longer regard see WLP as seriously undervalued anymore. The Obamacare discount of a year ago — which I mentioned here — is gone. So it is time for me to finally take some off the table. In addition I also sold some Berkshire Hathaway. Berkshire is a fine company run by the best CEO in the world. However, it is a huge holding company. I just don't believe it has much growth opportunity above the market as a whole anymore.

And finally, I recommend this great tutorial on basic valuation metrics. I believe the first thing a beginner value investors should learn is the set of basic valuation metrics. However, although they are mentioned a lot in the media, there are very few knowledgeable people who have explained them well. And not only does this article explain them well, the author also compares the pros and cons of each in a table, which I have never seen before.  

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