Great value investor goes bargain hunting

Heard of John Neff? Big name value investor - interviewed by FORTUNE magazine recently money.cnn.com/2009/01/02/magazines/fortu...venson_neff.fortune/ But he has been hunting for other bargains through the final, grim months of 2008, even tapping his bond portfolio in December for extra cash. On the eve of the New Year he shared four stock picks - and his optimism about the market. \"I think it\'s time to go in, and I have,\" he says. \"And I think retail investors should be availing themselves of the bargains out there.\" For one, Neff believes that both stock and housing prices were scraping the bottom late last year. He also thinks that the economy will start to recover in 2009, helped by the Fed\'s drastic interest rate cuts, low gas prices, and massive discounts by retailers and Detroit. In the meantime he expects his down-and-out stocks to benefit from the rebound. First on his list is Seagate Technology (STX), a top hard-disk-drive manufacturer that supplies Dell, Hewlett-Packard and others. It\'s been a rough ride: Neff thought the stock was cheap at around $20 last January, then watched the shares slide nearly 80% through 2008. He added to his position at $4 in the fall, when the yield had crept up to 12%. In early December the company lowered its earnings estimates for the current quarter. But Neff thinks revenues will recover in the next fiscal year, which for Seagate begins in June. \"It\'s going to have a pretty testy quarter, but I don\'t think the dividend is in question, and that provides some support,\" he says. \"It\'s not going to be a normal year, but I still think next year\'s EPS could be a buck or better.\" He\'s also bullish on another technology stalwart, Hewlett-Packard (HPQ, Fortune 500). \"I wouldn\'t usually own two technology stocks, but at the right price even I can be convinced,\" he says. And he couldn\'t pass up HP, a blue chip that now trades in the mid-30s. \"I think for this challenging year, HP will earn $4 a share,\" he says. \"They\'re leading the pack on PCs, and I think they\'ll get some economies from the EDS acquisition. If I\'m right on $4 for 2009, next year it will be $4.60. That\'s friendly growth.\" He\'s also looking for growth in energy stocks, since he expects oil prices to rebound from late-2008 lows. \"Obviously the price of oil came down sharply, but even at this level refiners and producers are making pretty good money,\" he says. \"If I\'m right and oil\'s coming back up a bit, they\'ll continue to have good bottom lines.\" Neff did get pummeled on one of his energy picks last year: He started buying ConocoPhillips (COP, Fortune 500) when the stock first dipped last January. \"I thought I was getting quite a bargain at $70 a share,\" he says. But after climbing to $96 in July, the stock started sliding. It ended the year in the low 50s - a steal, in Neff\'s opinion. \"They have great cash flow, and they\'ll raise the dividend in a couple of months,\" says Neff. \"I think they\'ll have $12 in earnings per share for 2008, maybe $11.50. So at a little over $50 a share, I think that\'s a very low multiple.\"

Improving Economy May Keep Stock Rally Alive, Say Biggs, Doll By Matt Miller and Jeff Kearns Jan. 9 (Bloomberg) -- U.S. investors are looking ahead, and they like what they see, say Barton Biggs and Robert Doll. The 21 percent rally in the Standard & Poor’s 500 Index since Nov. 20 reflects speculation the worst of the recession is over, according to Biggs, managing partner at hedge fund Traxis Partners LLC, and Doll, chief investment officer for BlackRock Inc. Equities will probably keep rising, they said yesterday on Bloomberg Television. Airline shares may gain after crude oil fell 71 percent from its July record, said the New York-based Biggs. Stocks with the biggest price swings will climb as the recession ends, according to Doll. BlackRock is based in Plainsboro, New Jersey. “Sometime around the middle of the year there’s going to be pretty conclusive evidence that the economy has stabilized,” Biggs said. “That’s what the stock market is now looking forward and seeing, and that’s why I think that this rally carries further.” The Standard & Poor’s 500 Index rallied after dropping to an 11-year low on Nov. 20. The benchmark plunged 38 percent in 2008, its worst yearly loss since 1937. Biggs was wrong in February 2008 he said the U.S. stock market is “at or very close to an important bottom.” Biggs said airlines “make some sense” because they are cutting costs and getting a boost from lower fuel costs. The S&P 500 Airlines Index tumbled 29 percent in 2008, its fifth straight annual decline. He also favors companies in less-developed countries. “The growth opportunities will be in emerging markets,” he said. “They are considerably cheaper then developed markets.” Recession Nadir Doll said the worst of the recession is probably over after more than $1 trillion of bank losses froze credit markets in 2008. U.S. gross domestic product may have contracted 4.35 percent in the last three months of 2008, according to the average estimate of economists surveyed by Bloomberg. “The fourth quarter that just ended is likely to be the worst of the recession,” said Doll. He said Nov. 20 probably was the bottom for the stock market. Companies reliant on consumer spending to increase earnings led the advance in the S&P 500 since Nov. 20, rising 36 percent. Banks and commodity producers rallied 29 percent. “Risky assets will outperform safe assets this year,” he said. “There are going to be horrible earnings but markets have a way of discounting that.”

Another value investor went in with their eyes closed last year. Now blue black and licking their wounds... I think that investor is called TEMASEK !!!

Who has not lost money?? Even the oracle WB is licking his wounds..but then again it is nothing new to the big guys as they invest with 20 years outlook...I should still be around but maybe with a walking stick and my grandchildren should be able to count the number of hairs left on my head!!!

Holy cow! Mark Mobius is a bull now!!! March 23 (Bloomberg) -- The next “bull-market” rally has begun and there are bargains in every emerging market following a record slump in stocks, Templeton Asset Management Ltd.’s Mark Mobius said. www.bloomberg.com/apps/news?pid=20601087...CuuTjJaUk&refer=home