Old School Value Nugget Fest (June 13th Edition)

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On the Blog

Buying Companies With Great Products – Cummins (Part II)

In Part I, we screened out FOXF and GTX and did a deeper analysis of SNA. In Part II below, we’ll analyze Cummins, Inc (CMI).

Cummins Inc. primarily designs, manufactures, distributes, and services diesel and natural gas engines, as well as components like turbochargers. Although it’s a different kind of industrial from Snap-On, CMI’s fortunes will mostly rise and fall with the worldwide sale of trucks, which is probably peaking for this cycle.

Let’s get into it.

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What We’re Reading in the Media

Gurus

• Seth Klarman: “Value Investing Is At Its Core The Marriage Of A Contrarian Streak And A Calculator.” (The Acquirer’s Multiple)
  “When most people come to believe the same thing, large gaps open up between price and value.”

Company & Strategy Analysis

• Tesla’s Travails: Curfew for a Corporate Teenager? (Aswath Damodaran)
  He updates his valuation with the latest data and finds a similar value but with a much better price.
  
  
• Tech and Antitrust (Stratechery)
  “Ultimately, when it comes to antitrust actions against tech companies in the U.S., there really isn’t nearly as much there as all of the attendant fervor would suggest. Google is absolutely vulnerable, Apple somewhat less so, and it is very hard to see any sort of case against Facebook or Amazon.”
  
  
• Warren Buffett Likes ‘Wide Moat’ Stocks. Should You? (WSJ)
  “The bottom line is that investors may be influenced not only by price and risk, but also by certain behaviors that guide their stock picks. These behaviors, such as gravitating toward popular stocks, can get in the way of performance.”
  
  
• Overstock | Retail Value and Risk Factors (Fundamental Finance Playbook)

Podcast of the Week

Animal Spirits: Talk Your Book: The Net Lease REIT
Even if you don’t want to invest in their ETF, it’s a great companion piece for our REIT article a little while back to learn more about this market.