The Ideas Report For Serious Investors

The following is the table of contents of the latest issue of the acclaimed monthly Portfolio Manager's Review, entitled The Superinvestor Report, published on August 27, 2010 and spanning 174 pages. To learn more or subscribe, click here.

EDITOR’S COMMENTARY 5

EXCLUSIVE INTERVIEW WITH KEN SHUBIN STEIN 9

50+ PORTFOLIOS WITH SIGNAL VALUE™ 14
AKRE CAPITAL (CHUCK AKRE) 15
APPALOOSA (DAVID TEPPER) 16
BARES CAPITAL (BRIAN BARES) 17
BAUPOST (SETH KLARMAN) 18
BERKSHIRE HATHAWAY (WARREN BUFFETT) 19
BLUE RIDGE (JOHN GRIFFIN) 20
BP CAPITAL (BOONE PICKENS) 21
BRAVE WARRIOR (GLENN GREENBERG) 22
BREEDEN CAPITAL (RICHARD BREEDEN) 23
CENTAUR CAPITAL (ZEKE ASHTON) 24
CHILDREN’S INVESTMENT (CHRIS HOHN) 25
CHOU ASSOCIATES (FRANCIS CHOU) 26
CLARIUM (PETER THIEL) 27
EAGLE (BOYKIN CURRY) 28
EDINBURGH PARTNERS (SANDY NAIRN) 29
ESL INVESTMENTS (EDDIE LAMPERT) 30
FAIRFAX (PREM WATSA) 31
FAIRHOLME (BRUCE BERKOWITZ) 32
FIRST PACIFIC (BOB RODRIGUEZ AND STEVEN ROMICK) 33
GATES CAPITAL (JEFF GATES) 34
GLENVIEW (LARRY ROBBINS) 35
GREENLIGHT (DAVID EINHORN) 36
GRUSS (HOWARD GUBERMAN) 37
H PARTNERS (REHAN JAFFER) 38
HARBINGER (PHIL FALCONE) 39
HAWKSHAW (KIAN GHAZI) 40
ICAHN CAPITAL (CARL ICAHN) 41
KLEINHEINZ CAPITAL (JOHN KLEINHEINZ) 42
LANE FIVE (LISA RAPUANO) 43
LEUCADIA (IAN CUMMING AND JOE STEINBERG) 44
LONE PINE (STEVE MANDEL) 45
MARKEL GAYNER (TOM GAYNER) 46
MAVERICK (LEE AINSLE) 47
MHR (MARK RACHESKY) 48
MSD CAPITAL (GLENN FUHRMAN AND JOHN PHELAN) 49
PABRAI FUNDS (MOHNISH PABRAI) 50
PAULSON & CO. (JOHN PAULSON) 51
PENNANT (ALAN FOURNIER) 52
PERSHING SQUARE (BILL ACKMAN) 53
SAGEVIEW (ED GILHULY AND SCOTT STUART) 54
SCOUT (JAMES CRICHTON) 55
SECOND CURVE (TOM BROWN) 56
SHUMWAY CAPITAL (CHRIS SHUMWAY) 57
SOUTHEASTERN (MASON HAWKINS) 58
THIRD POINT (DAN LOEB) 59
TIGER GLOBAL (CHASE COLEMAN) 60
VIKING GLOBAL (ANDREAS HALVORSEN) 61
WEITZ FUNDS (WALLY WEITZ) 62
WEST COAST (LANCE HELFERT AND PAUL ORFALEA) 63
WINTERGREEN (DAVID WINTERS) 64
WL ROSS & CO. (WILBUR ROSS) 65

NEW OR INCREASED SUPERINVESTOR HOLDINGS 66
AFRICAN BARRICK GOLD (UK: ABG) – GREENLIGHT 66
AON CORP. (AON) – BREEDEN, FPA, SOUTHEASTERN, WEITZ 70
BALLY TECHNOLOGIES (BYI) – BREEDEN 74
CHESAPEAKE ENERGY (CHK) – BP CAPITAL, ICAHN, SOUTHEASTERN 78
ENSCO (ESV) – BLUE RIDGE, EAGLE, GREENLIGHT, ICAHN 82
ESTEE LAUDER (EL) – LONE PINE, VIKING 86
GAMESTOP (GME) – CENTAUR 90
MBIA (MBI) – FAIRFAX, FAIRHOLME 94
NALCO HOLDING (NLC) – BERKSHIRE, MSD 98
NCR CORP. (NCR) – GREENLIGHT 102
SERVICE CORP. INTERNATIONAL (SCI) – SOUTHEASTERN 106
TEVA PHARMA (TEVA) – BLUE RIDGE, EAGLE, MARKEL, MAVERICK 110
TREE.COM (TREE) – SECOND CURVE, WEITZ 114
VODAFONE (VOD) – CENTAUR, EAGLE, FPA, KLEINHEINZ, SOUTHEASTERN 118
XERIUM TECHNOLOGIES (XRM) – THIRD POINT 122

UNCHANGED OR OFFSETTING SUPERINVESTOR HOLDINGS 126
AAPLE (AAPL) – BLUE RIDGE, GREENLIGHT, KLEINHEINZ, LONE PINE 126
GOOGLE (GOOG) – BRAVE WARRIOR, GLENVIEW, MAVERICK, VIKING 130
LIBERTY INTERACTIVE (LINTA) – EAGLE, SOUTHEASTERN, THIRD POINT, WEITZ 134
SUPERMEDIA (SPMD) – APPALOOSA, FAIRFAX, PAULSON 138
TRAVELCENTERS OF AMERICA (TA) – BARES, LEUCADIA 142

SNAPSHOT OF 100 SUPERINVESTOR HOLDINGS 146
IN ALPHABETICAL ORDER 146
BY MARKET VALUE 148
BY SECTOR 150
STOCK PRICE PERFORMANCE 152
FREE CASH FLOW 154
P/E MULTIPLES 156
PERCENTILE RANK WITHIN INDUSTRY 158
LATEST EARNINGS SURPRISES 160

FAVORITE STOCK SCREENS FOR VALUE INVESTORS 162
“MAGIC FORMULA,” BASED ON TRAILING OPERATING INCOME 163
“MAGIC FORMULA,” BASED ON THIS YEAR’S EPS ESTIMATES 164
“MAGIC FORMULA,” BASED ON NEXT YEAR’S EPS ESTIMATES 165
CONTRARIAN: BIGGEST YTD LOSERS (DELEVERAGED & PROFITABLE) 166
VALUE WITH CATALYST: CHEAP REPURCHASERS OF STOCK 167
PROFITABLE DIVIDEND PAYORS WITH DECENT BALANCE SHEETS 168
DEEP VALUE: LOTS OF REVENUE, LOW ENTERPRISE VALUE 169
DEEP VALUE: NEGLECTED GROSS PROFITEERS 170
ACTIVIST TARGETS: POTENTIAL SALES, LIQUIDATIONS OR RECAPS 171

THIS MONTH’S TOP 10 WEB LINKS 172

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With the nearly unlimited supply of books on business and finance, it seems impossible to keep up with the list of important titles that appear on a regular basis.  This is particularly true for books covering the financial crisis.  While we have covered many of these titles in the book review series, it is sometimes beneficial to pick up a title on topics completely unrelated to business and investing.

The following list of ten suggested titles span topics ranging from history and politics to fiction and many are suitable for beach reading.  If reading about the financial crisis or Bernie Madoff’s scam seems unappealing for your summer vacation, consider one of these titles for a change of pace.  Enjoy!

History and Politics

Many of these titles are not exactly “light reading” but represent interesting diversions for those who prefer more substantial titles but are looking for something other than business and finance topics.

Stephen W. Sears presents the definitive account of the largest and most costly battle of the Civil War in Gettysburg.  The battle marks the furthest point of northern advance for the Confederate army and the turning point of the war.  Mr. Sears provides a detailed account of the preparations for battle as well as the aftermath.  Much of the battlefield remains intact today and the book is best read after visiting the park to obtain a feel for the terrain.  Weighing in at over 500 pages, this is hardly light reading but it is worthwhile for those interested in Civil War history.

Joseph J. Ellis presents a lively account of the interrelated lives of John Adams, Aaron Burr, Benjamin Franklin, Alexander Hamilton, Thomas Jefferson, James Madison, and George Washington in Founding Brothers. Rather than presenting a dry history of facts and figures, Mr. Ellis focuses on six key incidents in U.S. history starting with the famous duel between Burr and Hamilton and concluding with Adams and Jefferson’s friendship late in their lives.  An interesting 4th of July fact:  Both John Adams and Thomas Jefferson died exactly 184 years ago on July 4, 1826.

One effective antidote for those who consider history to be boring is to read Stephen E. Ambrose’s riveting account of the epic journey of Meriwether Lewis and William Clark in Undaunted Courage. Over two hundred years ago, at a time when nothing moved much faster than a man on horseback and no facilities for long distance communication existed, Lewis and Clark set out to explore the West and eventually reached the Pacific.  Thomas Jefferson’s decision to sponsor this expedition changed the course of American history.  This book is classified as history but it reads like an epic novel.

Interest in Thomas Jefferson usually peaks around Independence Day and with good reason.  As the principal author of the Declaration of Independence, Jefferson is not only revered in the United States but around the world as well for the democratic ideals his masterpiece expresses.  Jefferson The Virginian is the first of Dumas Malone’s six volume biography of Thomas Jefferson and remains a very readable book more than sixty years after publication.  This volume covers Jefferson’s early life as well as the Revolutionary War period.

George Orwell’s 1984 is a fictional account of political repression in a totalitarian society.  One interesting aspect of the book in light of today’s information age is how much easier it might be for “big brother” to be watching the actions of citizens compared to Orwell’s relatively low tech world of hidden microphones and radios.  Only the most paranoid believe that the United States is at imminent risk of an Orwellian future, but the book is a good reminder that vigilance is always required to safeguard the freedom and privacy of citizens.

Fiction and Travel

For some lighter fare, the following titles are worthy of consideration.

Road trips today are characterized by traffic congestion, eternal connectedness with smart phones and DVD players, and the endless repetitions of the same fast food chains and retail outlets no matter where you are in the United States.  Transport yourself back to 1960 when John Steinbeck took a road trip with his dog and wrote about it in Travels with Charley. At a time when the interstates were not yet complete, the early 1960s actually offered an opportunity to see America.  The same opportunity exists today for those who shun the interstate, but it is a path rarely taken.

Admirers of the late William F. Buckley, Jr. usually focus their attention on his political philosophy.  However, Mr. Buckley was also a prolific author of fiction and wrote a series of spy novels featuring Blackford Oakes, a James Bond-like character.  Stained Glass is set in Germany during the Cold War where Blackford Oakes goes undercover to monitor the activities of a Count seeking to unify Germany.  The entire Blackford Oakes series is an interesting window into the creative mind of a man who helped define the American conservative movement in the post-war period.

Michael Connelly’s Concrete Blonde is a riveting tale of a serial killer terrorizing Los Angeles and leaving grizzly calling cards with his victims.  Police Detective Harry Bosch has the task of hunting down the serial killer and a copycat who emerges years later using the same modus operandi. The book is part of a series featuring Bosch, a flawed but well intentioned detective, and Connelly makes efforts to realistically portray police investigations and forensic details.  This is a great book to read on the beach or during a plane ride, much like other books in Connelly’s series.

Stuart Woods spins a compelling tale set in the Caribbean in Shoot Him If He Runs with the protagonists, Stone Barrington and Holly Barker, hunting a shadowy rogue CIA agent known as Teddy Fay.  Dispatched the President himself, Barrington gets embroiled in a web of intrigue on an island run by a corrupt local government.  The storyline and characters have a “Bond-like” feel, although Barrington prefers Knob Creek on the rocks to shaken vodka martinis.  Another light selection for the beach or plane ride with a compelling, yet sometimes far-fetched storyline.

Alaska is the last frontier and it seems fitting to experience the journey by road.  The downside is that a round trip from nearly anywhere in the continental United States would take well over a month.  Ron Dalby provides a great travel guide in The Alaska Highway: An Insider’s Guide. It provides practical tips but is also great for those who have no immediate plans to make a trip, but might someday.  While I have yet to make the journey, the book provided many hours of entertainment putting together plans for an eventual trip.

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