Vitaliy Katsenelson Contrarian Edge

The Value Trap of Deeply Cyclical Stocks

Mon, 06 Feb 2012 16:59:23 +0000

Just as it is easier to draw straight lines than to think in nonlinear terms, it is simpler to buy stocks that have gone up a lot over the previous decade than to remain committed to the ones that have done nothing. However, linearity is for suckers. Success in investing comes from being able to [...]

Krugman’s Missed Call; Europe/China/Japan; Sideways Markets; Profit Margins; Microsoft

Tue, 27 Dec 2011 19:57:19 +0000

 I wanted to share with you my interview with my friend Bob Huebscher who runs a terrific website Adviser Perspectives.  I am very excited about this interview because in a very unconstrained format we had a chance to discuss Paul Krugman’s  latest bearish article on China, the linkage between the European crisis and Chinese and [...]

Microsoft Is Not as Boring as it Appears

Thu, 15 Dec 2011 16:17:41 +0000

 I am bored and exhausted. I am on my third cup of coffee, but my lack of excitement has not changed, as I am about to explain why the sleepiest, most boring stock in the universe—Microsoft Corp.—offers a very compelling r eward with very reasonable risk. Microsoft was the bright light in the tech firmament [...]

Why Hewlett-Packard Is Today’s Most Hated Stock

Fri, 11 Nov 2011 21:46:53 +0000

 There is a good reason John Lennon wrote “All you need is love.” We want to be loved and usually gravitate toward people and things that others cherish. But when it comes to investing, love is not cheap. The trick is to identify misplaced (or mispriced) hate that will turn into love. This brings us [...]

A Few Simple Rules For Money Managers

Wed, 26 Oct 2011 19:17:47 +0000

One of the biggest hazards of being a professional money manager is that you are expected to behave in a certain way: You have to come to the office every day, work long hours, slog through countless e-mails, be on top of your portfolio (that is, check performance of your securities minute by minute), watch [...]

For Europe, Breaking Up Is a Hard Thing to Do

Mon, 17 Oct 2011 15:14:17 +0000

Everyone is looking with horror at Europe, waiting for the European Economic and Monetary Union to break up and for the PIIGS to start dropping like flies, taking the rest of the euro zone and the global economy with them. Unlikely! European monetary union was a great experiment that made a lot of sense on [...]

On CNBC: Making Money in Sideways Markets

Sat, 08 Oct 2011 21:18:39 +0000

CNBC interview discussing sideways markets, Xerox, HP, Vivendi

On Yahoo! Breakout

Sat, 08 Oct 2011 21:08:37 +0000

Interview with Matt Nesto, segment 1: HP, Xerox, Vivendi (we own all of them) Segment 2: China

Some Thoughts on Buffett’s BRK Buyback Announcement

Mon, 26 Sep 2011 17:36:19 +0000

Most CEOs are not good capital allocators when it comes to their stock: They are not objective analyzing their company and thus not objective in share buyback. In majority of cases they think their stock is a buy all the time. Why? Because they spend long hours trying to grow the business, they keep telling [...]

You Are Not as Dumb as You Think

Thu, 22 Sep 2011 22:34:51 +0000

I was going to write something smart and pithy about this recent market decline, but then I realized that I’ve written about this in the past (more than once).  So here is an excerpt from the Little Book of Sideways Markets.  In addition, here is a copy of the presentation about sideways markets.  – Enjoy. [...]

Fed is Measuring U.S. Economic Health by the Wrong Number

Mon, 19 Sep 2011 21:57:17 +0000

Mark Twain said, “To a man with a hammer, everything looks like a nail.”  To a Fed – an institution employing an army of economists and academics – everything looks like an economic problem that needs to be quantitatively eased.  But the Fed is killing the economy. Undermines confidence  Sir Alan Greenspan, who, after he [...]

HP: Grow Up, Already

Fri, 19 Aug 2011 21:25:54 +0000

Anger and frustration are the two emotions pulsing through my veins as I write this.  HP, once the symbol of innovation, is being dismantled by its high-pedigreed board and the CEO of the hour (I truly hope his tenure will be measured in hours, not years).  I vividly remember the early 2000s, when Carly Fiorina, [...]

We Are Not AAA

Mon, 08 Aug 2011 00:08:41 +0000

I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper.  I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term impact on the market), and political (will it [...]

Pyrrhic Victory and Q&A with Kirk Report

Fri, 29 Jul 2011 22:18:16 +0000

A Pyrrhic victory is so called after the Greek king Pyrrhus, who, after suffering heavy losses in defeating the Romans in 279 B.C., said to those sent to congratulate him, “Another such victory over the Romans and we are undone.” Dictionary.com A quick thought on the debt-ceiling debacle.  I believe that by August 2nd we’ll see the debt [...]

Thoughts on Brown & Brown: Stay Away!

Tue, 19 Jul 2011 18:28:42 +0000

I looked at Brown & Brown about a year ago (May 2010), here are my thoughts which are still relevant today: Risk of growth by acquisition Very significant portion of Brown & Brown’s (BRO) growth in the past came from acquiring brokers.  I am naturally skeptical of sustainability of this type of growth as it [...]

The Chinese Black Swan

Tue, 05 Jul 2011 16:53:23 +0000

Party rulers in China are trapped in a position that chess players deeply fear — zugzwang — where any move made puts you at disadvantage. In China, the potential cost of both action and inaction is economic collapse. China is slowly starting to face the consequences of its actions — loans grew over 30% a [...]

Finding Investment Treasures in International Markets

Tue, 28 Jun 2011 18:43:06 +0000

This is the letter we wrote to our clients in the first quarter of 2011.  It discusses the importance of international investing and our purchase of a UK retailer, Halfords PLC.  If you want to read a shorter version, I’ve turned it into an article that was published in the June issue of Institutional Investor, [...]

VALUEx Vail 2011 – Thoughts from the conference

Thu, 23 Jun 2011 18:29:32 +0000

VALUEx Vail 2011 is over.  I already miss these three days.  I got the idea to put together VALUEx Vail after I attended VALUEx in Klosters (a little ski resort town in Switzerland, located on the other – the “value” – side of the mountain from Davos) in February this year.  Since I live only [...]

Creighton Value Investing Panel

Thu, 09 Jun 2011 16:03:32 +0000

While in Omaha attending the Berkshire Hathaway annual meeting I had the pleasure of participating on a Value Investing Panel at Creighton University.  Ben Claremon from Inoculated Investor blog took very good notes from the event, you can find them in the PDF below. Creighton Value Investing Panel(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "http://www.scribd.com/javascripts/embed_code/inject"; var [...]

Jeff Saut: Efficient Markets?!

Tue, 07 Jun 2011 17:19:21 +0000

Jeff Saut, Chief Market Strategist at Raymond James kindly mentioned my Cisco article in his weekly letter: Efficient Markets?! May 31, 2011 “Markets are efficient, or so we’ve been told. I am not here to put a rebuttal to this academic nonsense, but let me give you one of the core reasons why markets are [...]

On BNN: Sideways Markets

Tue, 07 Jun 2011 17:08:35 +0000

I was on BNN (Canadian CNBC) with Jeff Saut (Chief Market Strategist with Raymond James) and Jeff Hirsch (editor of Stock Trader’s Almanac) discussing sideways markets.  We did three segments, here are links to the segments one, two and three.  

The Boulevard of Broken Charts

Thu, 26 May 2011 22:40:18 +0000

Markets are efficient, or so we’ve been told. I am not here to put a rebuttal to this academic nonsense, but let me give you one of the core reasons why markets are and will remain inefficient: because human beings are efficient. To function in everyday life, our brains are used to simplifying complex problems, [...]

VALUEx Vail 2011

Tue, 17 May 2011 03:00:06 +0000

I’d like to invite you to the first annual VALUEx Vail being held in Vail, Colorado, June 15th through 17th.  VALUEx Vail is designed for serious PROFESSIONAL investors to share ideas, learn from one another experiences, all while enjoying each others company and fun activities in the beautiful Colorado mountains.     We are only sending out this [...]

I am back!

Mon, 16 May 2011 19:21:52 +0000

I am back!  It was an amazing trip.  It started with Warren Buffett’s Omaha.  I flew into Omaha on Thursday morning, and a few hours later received a call from the CFA Society of Nebraska, asking me to give a talk to their members.  Whitney Tilson and his partner Glen were supposed to do a [...]

Microsoft Just Pulled Another “Microsoft” with its Purchase of Skype

Tue, 10 May 2011 22:33:33 +0000

When I wake up in the morning and check news for the companies I own, I worry.  I don’t worry that my companies missed their quarterly guidance by a few pennies – running a business is an art, and things don’t usually work out in a precise, linear fashion.  The companies that have a “deliver [...]

Quarterly Letter – Q1 2011 – Part 1

Sat, 23 Apr 2011 18:54:23 +0000

I’d like to share excerpts from our quarterly letter we send to our clients (this is Part 1; I’ll send out Part 2 in a few weeks).  I’m not sharing the full letter for a simple reason: we are still accumulating shares in some stocks mentioned in the letter. Purchase of Big Lots Big Lots [...]

See You in Omaha 2011

Sat, 23 Apr 2011 18:49:05 +0000

It is time again for the annual trip to Warren Buffett’s Omaha to Berkshire Hathaway annual meeting.  Warren Buffett over the years was turned into god. He is an incredible investor, brilliantly smart, full of worldly wisdom; but, like everyone else, he gets up in the morning and puts his pants on one leg at [...]

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