ArcelorMittal (MT): A Stainless Company

ArcelorMittal (MT) is a company involved in the mining and steel industry. As we know, the steel industry is coming out of the recent recession. It’s a cyclical business, and the market community knows that the best time to buy steel companies is on the rise, that is: when interest rates are up, banks are eager to make loans, investments from companies and governments are up, etc.

Okay, but we’re value investors, right? We want to buy at a deep discount what is worth two, three, five times our investment. Is this the case?

Continue reading

Dell is going cloud

While most of the analysts are trying to understand if the PC business is dead or simply (temporarily) out of favour, one of the most profitable companies in the tech sector, Dell Inc. (DELL) is not just sitting and waiting for the things to evolve (either in a favourable or adverse way).

In my opinion, the PC business is not just fading away, but only…

Continue reading

Dan Loeb’s Dreams about Yahoo!

Recently Daniel Loeb (and his Third Point) has been aggressively accumulating Yahoo! (YHOO) shares, up to the point that they currently represent more than one-third of his holdings.

In his Fourth Quarter 2011 Investor Letter, Loeb explained why he thinks Yahoo! is a great opportunity for Third Point and what he’s trying to do in order to unlock its value…

Continue reading

Career Education: a troubled company with downside protection

Since August 2010, the companies belonging to the For-Profit Education sector have been under pressure after the U.S. GAO (Government Accountability Office) launched an investigation designed to uncover potential frauds based on trying to enrol more students even when they didn’t have the right profile to be admitted to the school and/or to repay a federal loan provided by the Department of Education.

Let’s give a look at GAO original documentation:

“To conduct this investigation, GAO investigators posing as prospective students applied for admissions at 15 for-profit colleges in 6 states and Washington, D.C.. The colleges were selected based on several factors, including those that the Department of Education reported received 89 percent or more of their revenue from federal student aid”

Here are the results…

Continue reading

Has Diamond Foods lost its sparkle?

One of my best friends has been asking me this question for around 15 days. I tried to give a quick (and elusive) response, but it didn’t work.. so I decided to give him a more reasoned answer, trying to justify why I think what I think of Diamond Foods (DMND).

Diamond Foods business refers to snack products and culinary. It has three product lines: Snack, Culinary and Retail In-shell and Non-Retail. The company has a wide range of distribution channels and product facilities in the US, Canada and England.

But let’s have a look at the series of recent events that led the investing community to flee away from DMND…

Continue reading

ITT Corporation (ITT): the Post-Spinoff Era

ITT Corporation has been around for almost one century. In fact, it was founded in 1920 with the name of International Telephone & Telegraph. During the 1960s and 1970s, the company derived its growth from a long series of acquisitions, turning itself into an enormous conglomerate. In 1986 it sold the telecom assets (therefore separating its activities from its name) and in 1995 it split up into 3 separated publicly held companies (at the time of split the divisions were: insurance, industrial, and hotel/entertainment).

After the split (in the form of a double spinoff of the insurance and entertainment businesses), the company took the name of ITT Industries, Inc., which was once again changed to ITT Corporation in 2006 (actually, this was the post-spinoff name of its hotel/entertainment business, subsequently acquired by another company and delisted).

At the beginning of last year, the company announced its plans to separate into…

Continue reading

Greenblatt’s Book Spin-off

I think Joel Greenblatt is one of the best investors of all times. I’m not alone.

He impressed the investment community with his outstanding returns, based on his magic formula, which has proved to be a valid tool to use in order to design a successful investment program.

You can check his results in his The Little Book That Still Beats the Market, along with the rationale of this (apparently) simple strategy.

Anyway, I don’t want to delve into Greenblatt’s most famous book, also if I urge you to read it.

Why?…

Continue reading

Xerox Corporation: An Interesting Misunderstanding

What is the first image that comes to your mind when I say “Xerox?” I tried to do this exercise with my friends and colleagues. The answers were different, but all boiled down to photocopiers and printers.

I think that’s an instinctive connection.

The Xerox brand has been linked to printing technology since 1906, the year it was founded. In 1938 the company invented a process today known as “xerography”, a kind of dry writing. Using this process, in 1959 they introduced the first plain paper photocopier (the famous Xerox 914), and some years later the first laser printer, invented in their laboratories in 1969.

I won’t go through the complete version of Xerox history, but one thing is clear: Xerox is the protagonist of (modern) printing technology history.

That’s why associating its brand to printing machines seems quite natural. After all, the company has been doing it for almost 106 years.

But, if we dig deeper into this affair…

Continue reading

Seagate Technology: Flooding Profits

Seagate Technology (STX) is a company involved in the design, manufacture, marketing and selling of Hard Disk Drives (HDD).

They produce HDDs for enterprise applications (e.g. enterprise servers), client compute applications (mainly for notebooks), and non-compute applications (e.g. portable devices).

Seagate reported latest quarterly results (second-quarter fiscal year 2012) on Jan. 31, 2012, posting an impressive (diluted) EPS of $1.28, compared to an EPS of just $0.31 (around one-fourth) for the second-quarter of last fiscal year.

What is the reason behind such an incredible jump? …

Continue reading