Arohan’s investing life

A quick note regarding several investments that were recommended (and the author took a personal stake at the time of recommendation).

WSCI: WSI Industries was recommended as a growing metal working company with excellent prospects. I took a position in the company in the $4-$5 range several months ago. In the last one month, I have liquidated my entire position in the company in the $9-$10 range for close to a double. Very satisfying return for a few months work. The stock today is trading close to $14. If I had held for another month, I could be looking at a triple instead of a double. But I have no regrets. The company is approaching 40 PE and is getting quite frothy at these levels even if you take into account their projected growth for the next few years.

CFC:I am still holding Countrywide. If you recall, the play here was to buy Countrywide as a cheaper way of getting into Bank of America. The risk is that the Bank of America acquisition of Countrywide may not close. I am still comfortable in my position and will continue to hold

WM: I am still holding Washington Mutual and am currently underwater. However I am willing to wait out the current crisis of confidence as I think the company is taking the right steps to ensure that it survives
C: I have since my last writing on Citigroup increased my position in the company. The company is very quiet on what they are doing to improve their capital structure. However, they recently entered in an agreement to liquidate a part of their debt portfolio (to private equity) for about 10% discount. I think the company will correct course and come out stronger than many expect and in 3-5 years time should reward a patient investor handsomely

Additional notes: I have also increased my stake in BAM (Brookfield Asset Management), MKL (Markel), ACAS (American Capital Strategies), LUK (Leucadia), SLT (Sterlite Industries) and added positions in BRKB (Berkshire Hathaway B shares) and EPI (Wisdomtree India ETF)

Please note that if you choose to act on any of the recommendations/ideas outlined above, make sure that you conduct your own due diligence and understand the risks you are taking. I am not a financial advisor

Appears that Google is now a more valuable company than stalwarts of American industry such as Procter and Gamble, Bank of America, Cisco, Berkshire-Hathaway and Chevron. I can not yet comment on the value appeal of Google stock (on the first blush seems pricey, but of course I will have to delve into it much deeper), but I will add this: each of the companies with such large market capitalization took multiple generations to reach it.

Except of course, Berkshire Hathaway

But WB took much longer time to reach to this level than Google did

Which brings us to an interesting question: Are the Google guys much better value compounders than Warren Buffet?

The question is not as silly as it sounds. Every for profit enterprise is basically a capital allocation machinery. Some companies do it better than others. While most companies tend to stick close to their ‘area of competency’, there are countless examples of companies who have completely reinvented themselves with new opportunities for profit. Nokia is one example, Corning is another

And Google itself is trying to morph itself into a multi-line of business behemoth

So I pose the question again: Is Google a better value-compounder than the Buffet-Munger duo?