bargain hunting

Getting Back to Basics

The pandemic forced many companies to shake things up. But perhaps because of these challenges, some of the most basic, “boring” companies on our radar have been making some of the most interesting changes!


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The History of the Stock Market: A 5-Word Story

The entire history of the stock market fits into five simple words: it goes up and down. We can’t know the schedule ahead of time, and this can stir up some stress in the short term. But it seems reasonable to guess this whole “up and down” thing may persist.


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Research Team Q&A: Challenges and Opportunities in Rough Markets

Clients, what do we do when things get so churned up in the markets? We go bargain hunting, of course! In this special message, the team talks bargains, the long view, and keeping the faith through a downturn. Reach out with questions, anytime.


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Feel the Churn

Back in the snowbird chapter of my life, we learned that stormy weather—rough seas—washed a wealth of interesting shells up on the beach. Looking for shells was always more fruitful when the weather had been rough.

The world situation and our markets have been nothing if not stormy this year! War has few parallels as a human tragedy; the economic ramifications are widespread.

Some of our holdings have risen in price because of the disruptions: raw materials and miners and energy, for example. Others have gone the other way.

But overall, we’re pleased with how our holdings have behaved.

Just as rough weather washes shells up on the beach, we’ve found new opportunities in the rough markets. The other thing that turmoil brings us is the chance to rebalance—take some money off the top of things that have gone up, add to the bargains that emerge among our holdings.

While some are paralyzed by the commotion, we’re finding that our principles are serving us well:

  • We look for the best bargains
  • We own the orchard for the fruit crop
  • We avoid stampedes in the market

Clients, want to talk more about what this means for you? Reach out, at any time.


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The Price Is Right! Come on Down… or Up!

A bargain is a bargain, right? We seek those opportunities that may be undervalued by others right now. But there are other types of bargains lurking, too: those opportunities that get the label of overvalued right now… but may actually have years of growth ahead of them!


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Growth Expectations and Searching the Bargain Bin

photo shows a pair of binoculars sitting on their case

I’m familiar with someone known to venture out on sunny weekend mornings to wander local garage sales. Their first target, wherever they stop, is usually to the area marked “FREE.” This is the stuff that the sellers don’t want so badly they wouldn’t even bother with a price tag.

My acquaintance is a bargain hunter. They know that there’s a chance they find something that can be repurposed or reused, that could bring them value far beyond the cost of finding it.

We here at 228 Main spend much of our research time searching for bargains, too. Occasionally, this takes us to Mr. Market’s version of the “FREE” table—things that seem so undervalued by most investors, we may get rewarded. These opportunities get to a point where things can’t possibly be as bad as people are saying (no guarantees, mind you).

But as we’ve been growing, our thinking on this has stretched a little. Sure, we still dig for the bargains of old, but we are also looking at things that our fellow bargain hunters might call “overvalued.”

When a stock is labeled as “overvalued” (by us, the financial news outlets, Wall Street…), typically the labeler is leaving out the “right now” part.

Since we’re investors, aimed at the long haul, the “right now” part is less interesting to us. Instead…

  • How long does “right now” last?
  • Is the price fair right now knowing that we’re buying for the next 3–5 years?
  • Are we paying a reasonable price for the next… however many years of future growth?

Again, we can’t promise that future growth pans out, but a good story, an intriguing product mix, and some competent management are all things we’re considering for these growth-y companies. It’s exciting.

Clients, if you would like to talk about this, or anything else, please email us or call.


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Growth Expectations and Searching the Bargain Bin 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.

Reviewing the Essentials: What’s in the Kit?

photo shows a hikers legs and feet moving over rocky mountain terrain

I’m in my line of work to talk all day. I love spending time getting to know you, getting down to the essence of your financial situation. With new clients, it’s a bit like jumping on the train with you and asking, “So where are we headed?”

Clients, you know it takes some trust and some time to get down to the essence of your situation. And the exciting thing is that the essentials can change on us.

“Wait, wait, wait,” you might be wondering, “Aren’t the essentials essential for a reason?” Yes. The fundamentals are always in style… but the circumstances can (and do!) change. And so we revisit our systems, our assumptions, and our resources.

Any seasoned traveler will recognize the ways “the essentials” can shift over time. Taking inventory of first-aid kit, for instance, you notice that some supplies can expire, wear out, or become obsolete as your life and your activities change.

So it goes with the companies we screen, too. As we search for potential investment opportunities, some of our favorite qualities help us identify what resonates with us. But a bargain doesn’t keep its bargain status forever: that label is useful to us, but we actively monitor our holdings as things change.

It’s a dynamic line of work we’re in. There is no “set it and forget it,” really. We’re all about the fundamentals, those values that guide us, but keeping our practice geared on the essentials—and only the essentials—is quite an active process.

And a lot of fun for us, to boot.

Clients, what are we missing? Is it time to take a closer look at something together? Write or call, anytime.


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Play the audio version of this post below:

Reviewing the Essentials: What’s in the Kit? 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.

Can One Redeem All?

photo shows coupons

As value investors, we have always treasured the opportunity to buy shares at favorable prices for companies we deem to be durable. For many companies, 10 times the annual earnings per share looks like a bargain to us!  

In the recent market turmoil, these kinds of opportunities appeared again. The arithmetic of these situations is interesting: an investment might compound to three times its beginning value over 10 years or so if the company is making annual profits of one-tenth the share price and earnings keep up. 

No guarantees, of course. We could be wrong in our judgment, or some problem could befall the company and upset the theory.  

But suppose shares are purchased in three such companies. If only one pans out as hoped over the 10 years or so, it may be worth triple the beginning value. If the other two are worth nothing, then the combined value of the three may still hover around the original value, as it was 10 years before.  

One could redeem all. 

Better yet, a company that delivers steady earnings over 10 years might be valued at 15 or 20 times earnings in the future instead of just 10 times, based on the steady earnings record. That valuation change might produce profits in addition to return of the original investment. 

Well-known grocery chains, health companies, and food processors may be a fit for this strategy. We cannot know the future, but we believe all these companies will survive—not just one out of three—with the possibility of real gains.  

But even if only one proves durable, that one may redeem all. 

If you are ready to talk strategy as it relates to your goals, please email us or call.


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Portfolio Themes: December 2020

photo shows airplane at an airport at sunset

Our investment research process is bottom-up: we look first at individual companies, screening for bargains and dividends, checking out ideas, reading SEC filings and news reports.

But certain themes do tend to emerge, as favorable opportunities often cluster in one industry or sector.

Thinking about the big picture, it seems to us that inflation may surprise on the upside in the months and years ahead. The COVID-19 pandemic—suppressing activity on a global basis—may give way to a synchronized global recovery. With not enough production capacity attempting to supply material and goods through a transportation network constrained by the crisis, shortages may lead to higher prices.

Record tides of debt and monetary stimulus may create more purchasing power than there are goods and services to purchase. Therefore, we are striving to avoid low-interest bonds and other investments that expose us to the risk of loss from inflation.

Our most recent additions to the “buy list” reflect favorable valuations in companies we believe to be durable—and fundamental to our lives. We will still require food and shelter and medicine in the future; finding bargain prices in profitable, dividend-paying providers is a joy.

We have revised an older theme—airlines and related companies—to focus on those with the most durable balance sheets. The airline industry has faced new challenges in the pandemic, and an industry under stress presents an opportunity… but we need the companies to survive in order to live through the current difficulties. (Hence the focus on only the strongest.)

Certain natural resource holdings have become market darlings. We began investing in them years ago, sometimes adding at lower prices as we waited for the turn to come. Our patience is being rewarded, and we believe this theme has years to run.

This is not a comprehensive list, of course, but covers some of the dominant themes we are seeing today.

Clients, if you would like to discuss these or offer additional ideas, please email us or call.


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