With the 13F-HR filing deadline just a few days behind us, we are pleased to present a new Superinvestor Issue of The Manual of Ideas. We have screened hundreds of superinvestor stocks, analyzed twenty of them, and found three compelling ideas:

EXCO Resources (NYSE: XCO, $12 per share; MV $2.6 billion)

Exco owns conventional and shale assets in onshore natural gas plays in the U.S., including the Haynesville/Bossier shales and the Marcellus shale. The company has ample room to grow production, as proved reserves amount to roughly 10x annual production and the total resource base amounts to nearly 10x proved reserves. Exco’s low stock price is easily explained by continuing low natural gas prices. Investors seem to be ignoring the quality of the company’s asset base, the large interest of management in maximizing equity value, the manageability of financial leverage, and the upside from a rise in natural gas prices or M&A. In 2010, chairman and CEO Douglas Miller indicated an interest in acquiring Exco for $20.50 per share, nearly double the recent market quotation. WL Ross boosted its holdings to ~13% of Exco in Q3, while Harbinger established a new position. Howard Marks’ Oaktree Capital continues to own 16% of the company’s common stock... more

Lincare Holdings (Nasdaq: LNCR, $23 per share; MV $2.0 billion)

Lincare has gained significant market share in the home respiratory niche of the healthcare industry over the past decade. The company has executed well, leveraging acquisition-driven growth to boost the number of operating centers from 642 in 2002 to 1,108 recently. In late 2007, Lincare took on debt to boost an already large share repurchase program. Management has consistently reduced the share count, spending $200 million YTD to bring shares outstanding to 89 million, down from 150 million in 2004... more

Marvell (Nasdaq: MRVL, $14 per share; MV $8.5 billion)

Marvell shares have underperformed due to concerns over exposure to the slumping Research in Motion and, to a lesser degree, Western Digital. Investors may be ignoring Marvell’s strong position in niche segments of the semiconductor industry and the company’s cash-rich balance sheet. Management has been buying back stock aggressively. David Einhorn initiated a position in the company in Q3, arguing that the recent market price amounted to 6x Greenlight’s 2012 EPS estimate net of cash... more

 

Table of contents:

The Manual of Ideas, December 2011
— The Superinvestor Issue (169 pages)

Editorial Commentary — John Mihaljevic highlights three investment ideas
50+ Portfolios with Signal Value — Surveying the top ideas of top investors
Exclusive Interview with Simon Denison-Smith — Focus on UK value ideas
Profiling 20 Superinvestor Holdings — Analyzing superinvestor favorites
Screening ~900 Holdings of 50+ Superinvestors — Hunting for bargains
Favorite Value-oriented Screens — Ideas for bargain-hunting investors
This Month's Top 10 Web Links — A selection of third-party resources
Extra: Selected Valuation Scenarios — Test sensitivity to key assumptions

 

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