In Search of Perfection
As long I was in the process of searching for perfect stocks, I thought I would spend a little time searching for perfect stocks that were cheap on an asset basis in the current stock market. I set my trusty stock screener to look for companies that were priced below tangible book value, profitable and paid a dividend. I always want to avoid over-leveraged companies outside my longshot portfolio, so I further screened for companies with manageable debt loads. I always want management to be on the same side of the table with me as an investor, so I added criteria for decent levels of insider ownership. I want the people running the companies I invest in to care about the stock price as much as I do.
I did not expect to find many socks and I was not disappointed. A mere handful of companies that passed through my screen could be considered candidates for perfect-stock status. I remain cautious in general on insurance stocks but some old favorites make the candidates list. White Mountain Insurance Group (WTM) still makes the cut even after its 40% price increase over the past year. The company currently trades at 90% of tangible book value and insider's own 21% of the company. The company has been buying back stock as well, and recently bought back the almost 90,000 share stake of Berkshire Hathaway (BRK.A). They also conducted a tender offer and repurchased more than 800,000 shares under the terms of the offer. Over the course of 2011, the company bought back 647,000 shares as part of its ongoing buyback program. Management sold several non-core operations last year and ended the year with more than $2 billion of what they called undeployed capital. As long as the stock remains below tangible book value, the company will continue with its buyback operation....421 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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