Stocks and Sectors

When we first discussed the stock, it traded at a sizable discount to its net current assets. Today, it trades near its book value, after more than doubling over the last few months. As such, it moves from the Stock Ideas page to the Value In Action page, as Mr. Market once again offers a reasonable price for this once unfavoured stock.

The lessons to be learned from Goodfellow’s rise can be used to find and identify other potential value investments. First, industries with poor short-term outlooks are great places to look for stocks that have been beaten down beyond their intrinsic values. Second, intrinsic value should be calculated as if the purchase were of a private business (e.g. more weight should be placed on the value of assets being purchased over short-term earnings outlooks).

Finally, investors can benefit from studying the investments of other value investors. In the case of Goodfellow, Stephen Jarislowski, a value investor whose book we have summarized here, is a substantial shareholder and the company’s chairman.

Companies trading at significant discounts still exist. Investors who apply these and other value investing principles to their future investments put themselves in a position to purchase the next set of stocks that hit intrinsic value.

Have you heard the old adage: “Have your cake and eating it too”?

I seem to remember this from some time back as the adage relates to getting something special in addition to what you wanted, like having a cherry on top.

As investors, we want to own gold but it is difficult to do. If you take possession of gold, you must pay to store it without getting cash flow throughout the tenure. If you purchase gold mining stocks, you don’t get many dividends to go with the stock market risk.

I have a solution if you want your gold and dividends too. The Gabelli Global Gold, Natural Resources and Income Trust (GGN) gives you precious metal exposure and an annual dividend yield greater than 10% paid monthly.

The Gabelli Global Gold, Natural Resources & Income Trust is a non-diversified, closed-end management investment company that seeks to provide a high level of current income. The Fund’s secondary investment objective is to seek capital appreciation consistent with the Fund’s strategy and its primary objective.

This Fund does not invest directly in precious metals but buys equity in companies involved in the precious metal industry. Under normal market conditions, the Fund will attempt to achieve its objectives by investing at least 80% of its assets in equity securities of companies principally engaged in the gold industry and the natural resources industries. The Fund will invest at least 25% of its assets in the equity securities of companies principally engaged in the exploration, mining, fabrication, processing, distribution or trading of gold or the financing, managing, controlling or operating of companies engaged in “gold-related” activities. In addition, the Fund will invest at least 25% of its assets in the equity securities of companies principally engaged in the exploration, production or distribution of natural resources, such as gas, oil, paper, food and agriculture, forestry products, metals and minerals as well as related transportation companies and equipment manufacturers.

Vodafone Group Plc (VOD), the largest wireless carrier in the world by revenue, is reportedly buying the entire stake in the Turkish fixed-line voice and Internet service provider Borusan Telekom. However, the UK-based telecom titan has not provided financial details of the deal. The acquisition is subject to the approval of the Competition Board and the Capital Markets Board (“SPK”) of Turkey.

The enterprise focused Borusan Telekom is a subsidiary of Borusan Holding, one of the largest industrial conglomerates in Turkey. Borusan Telekom has a leading share in the enterprise fixed-line telecom market and has more than 3,000 corporate customers. The operator had gross assets of $18 million and net revenues of $70 million at the end of 2008.

According to the data released by World Steel Association (Worldsteel), global crude steel production for the 66 countries reporting to Worldsteel improved 24.2% year over year to 107.5 million tons in November 2009. Crude steel production has been showing a positive growth rate since September 2008. Total crude steel production in the 66 reporting countries for the first 11 months of 2009 was 1,090 million tons, a decrease of 10.8% from the same period of 2008.

Steel production had peaked in July this year on the back of a moderate rise in demand and the resumption of idled facilities by producers. Crude steel production in China, the largest producer and consumer of crude steel, was 47.3 million tons in November 2009, up 37.4% from November 2008. Russia’s crude steel production for the month expanded 42.6% to 5.3 million tons. Ukraine produced 2.7 million tons in November 2009, 67.1% higher than in the same month last year. Turkey produced 2.1 million tons of crude steel in November 2009, a 67.1% increase year over year.