By Kapitall:

Do you consider yourself a value investor, always looking for potentially undervalued names? For ideas on how to start your own value search, we ran a screen.

We began by screening the financial sector for stocks outperforming the market, with quarterly performance above 20%.

We then screened for those that also appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the “godfather of value investing” Benjamin Graham.

It is based off of a stock’s EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for six of the stocks

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By Phil Timyan:

Surveying the current community bank stock landscape, I have to ask, what are some of these bank officers and directors thinking?

When you’ve proven unable, for whatever reason, to deliver on your promise to produce a decent return for your shareholders, don’t you have an obligation to sell for real money now, or better yet, for stock in a company whose management is producing acceptable returns? In what world does it make fiscal or ethical sense to dilute shareholders by raising additional equity well below book value or the price for which they could reasonably expect to sell their companies?

True, if you stick around chasing your fantasy figure of what you think the bank under your leadership is worth, you can keep your job with its prestige and fancy salary. Grant yourself some options at the new cheaper, diluted price, maybe even get yourself a pay raise. But don’t

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The St. Joe Company (JOE)

Annual Shareholder Meeting

May 17, 2012 11:00 a.m. ET

Executives

Bruce Berkowitz – Chairman

Ken Borick – SVP, Counsel and Corporate Secretary

Park Brady – CEO

Governor Charles Crist – Director

Howard Frank – Director

Jeff Keil – Director

Stan Martin – Director

Thomas Murphy – Director

Patrick Bienvenue – EVP

Tom Hoyer – CFO

Steve Hilliard – SVP, Operations

Rhea Goff – VP, Human Resources

Dave Harrelson – SVP, Timberland

Jorge Gonzalez – VP, Entitlements

Cliff Cohen – VP, Residential & Rural Land Sales

Analysts

Bob Horn – Raymond James

Steve Springer – Target Capital

Presentation

Bruce Berkowitz

Good morning ladies and gentlemen. I am Bruce Berkowitz, Chairman of the Board of The St. Joe Company. It’s my pleasure to welcome all of you

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By Drew Mason:

Dear Warren,

While your investment record is spectacular, last week Charlie Munger made some inflammatory comments about gold and your recent comments completely misclassified the metal. Your sound bites confuse many investors about what may prove this generation’s most critical financial topic as your perspective compares vastly different asset classes through the same lens. Your words and Charlie’s words left thousands of your followers believing gold is a poor use of capital.

Investors believe you endorse the most widely held asset in America, dollar cash, and they hear you denounce its antidote, gold. You do this despite your own admission that dollar cash has been a disaster. If you are wrong on this singular point, as history suggests you will be, your spectacular investment legacy will be tarnished as millions of affluent investors holding concentrated positions in “safe” dollars could be pushed towards poverty.

In a recent letter you appropriately

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By Jason Merriam:

The JPMorgan (JPM) incident comes at a bad time. Global economic expansion faces “liberalist” headwinds, risk-arbitrage gets a black eye and the race for the White House hits the final furlong.

Economic headwinds: Eurozone efforts to stabilize member nation fiscal issues got hung out to dry last week following recent French and Greek elections. Voters in each country veered sharply to the left. Post-election rhetoric hints at major disagreements to proposed austerity measures.

Francois Hollande’s victory in France raises the possibility that Franco relations with Germany could require re-negotiating previous alliances established between former French President Nicolas and German Chancellor Angela Merkel.

In Germany, Chancellor Angela Merkel’s Christian Democrats are also threatened as her CDU party took a beating from the left-wing Social Democrats in state elections (North Rhine-Westphalia is Germany’s most populous state).

As for last week’s Greek elections, they point to the obvious. Greek voters defiantly reject austerity,

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By Sol Palha:

Selling naked puts is a great way to purchase shares in companies you like at a predetermined price.

Benefits associated with selling naked puts

1. In essence, you get paid for entering a “limit order” for a stock or stocks you would not mind owning.
2. It allows one to generate income in a neutral or rising market.
3. When you sell a naked put you are in a way acting like an insurance agent. The seller of the option agrees to buy the stock in the future if it drops to a certain level before the option expires. For this, you (the seller) are paid a premium upfront. If this strategy is repeated over and over again these premiums can really help boost you returns over time.
4. Acquiring stocks via short puts is a widely used strategy by many retail traders and is considered to be one of the most conservative option

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By Vatalyst:

Mortgage REIT Two Harbors Investment Corp. (TWO) has an interesting new business plan designed to take advantage of America’s new economic reality. It has entered the housing business by buying single family residential properties – in other words, houses.

In its May 2 earnings release, the Two Rivers management team admitted that they had bought up $6.1 million worth of houses in various American cities. The release included a piece of doublespeak, called a “New Frontier” statement, which included this little gem:

As of March 31, 2012, the company had purchased $6.1 million in properties which are classified as investment in real estate on the consolidated balance sheet. The company intends to hold these properties for investment and rent them for income.

Yes, you read it correctly. Two Rivers intends to become a landlord as well as a buyer of mortgage derivatives. The problem here is that this investment could

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- By Pat Stout:

Goldman Sachs: Common vs. Preferred Stock

If you like Goldman Sachs (GS) but find the common stock too volatile, then consider its preferred stocks. They have four different issues that trade on the New York Stock Exchange. Depending on the platform used the symbol for the Series A might be GS/PRA, GS+A, GSpA or some other variation. They are all thinly traded, so limit orders would be recommended.

The preferred issues trade at yields above the 30-year treasury yield. Could it be that preferred and fixed income holders decided they needed increased yields to compensate for the increased risks?

Here are the four preferred issues:

GS Series A: Currently pays a $0.9375 annual dividend for a current yield of 4.98%. The stock is at $18.84 and is callable at $25.00.

Dividend rate calculation: 3 month LIBOR + 0.75% with a 3.75% floor. Earliest redemption date is April 25, 2010. Redemption

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By Insider Monkey:

By Jake Mann

A value trap is kind of like the low-priced food that a supermarket sets near its entrance – it looks attractive at first, until one considers the reasons as to why the food may be so cheap. In the investing world, some of the most successful money managers have made their livings plucking undervalued stocks out of the bargain bin, but it can be dangerous to buy only based on the metrics. In some cases, a stock’s earnings or cash flow multiple may be low because there are fundamental changes affecting that particular company, or uncertainties about what the future macroeconomic environment may hold. In the financial sector, most of the biggest banking stocks are trading at prices significantly below their pre-recession highs, but a sluggish American recovery, Eurozone worries, and the unfolding JP Morgan Chase (JPM) crisis may form an impenetrable investment ceiling, so to speak.

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By Doug Carey:

When investing in Real Estate Investment Trusts (REITs) investors are sometimes surprised by the hefty tax bill. REITs are taxed at ordinary income tax rates if they are in taxable accounts, which takes a big bite out of the total return for many. But there is a way to get around this tax bill if an investor has capital losses he can use. I call this strategy dividends to capital gains conversion.

The idea is this: By taking dividends in the form of capital gains, and then offsetting those gains with capital losses you may have, you can pay an effective tax rate of 0%. Compare this to paying either the 15% rate for qualified dividends (for most people) or your top marginal income tax rate on REIT investments.

So how does one go about converting dividends to capital gains? It takes some monitoring, but it could very well be

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