Chicago, IL – May 6, 2022 – Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/1917181/this-book-changed-warren-buffetts-life
This Book Changed Warren Buffett's Life
Welcome to Episode #280 of the Value Investor Podcast.
(1:00) - Breaking Down The 2022 Berkshire Hathaway Shareholder Meeting
(12:15) - The Book That Changed Warren Buffets Life: Buying Below Fair Value
(22:35) - Creating A Margin of Safety In Your Portfolio
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
On Apr 30, 2022, Berkshire Hathaway held its annual meeting in Omaha. It was the first "live" meeting in three years. It was attended by both Warren Buffett, age 91 and Charlie Munger, age 98.
Buffett disclosed that Berkshire had bought over $20 billion worth of oil giant Chevron (CVX) in the first quarter.
Berkshire had already owned some shares, but this was a big buy in Chevron. Chevron is now the fourth largest holding in the portfolio after Apple, Bank of America and American Express.
Chevron is cheap, with a forward P/E of just 9.6.
The Book that Changed Buffett's Life
During the 5-hour question and answer period with shareholders, Buffett shared the background about how he became a value investor.
He started buying stocks at 11 and as a teenager was mostly a trader, not an investor. He played the chart.
But in 1950, at age 19, he read Benjamin Graham's 1949 book "The Intelligent Investor" and said it changed his life. He realized he had been doing it all wrong. He specifically cited Chapters 8 and 20 as having the most influence on him.
Chapter 8: The Investor and Market Fluctuations
Ben Graham talks about the difference between "timing" the stock market and "pricing." In "timing" you are anticipating a certain action in the stock market, like a rally or a sell-off.
In "pricing" you buy stocks when they are quoted below fair value and sell them when above fair value. You aren't trying to "time" it.
1. The Andersons (ANDE)
The Andersons is a current example of buying through "pricing." The Andersons recently missed on earnings in Q1 due to a loss in its commodities trading group. Shares plunged over 30%.
But The Andersons is now trading at 1x book value when competitors trade for 2x.
Is The Andersons a mispriced stock?
2. KB Home (KBH)
KB Home, one of the large home builders, has seen its shares fall over 25% year-to-date on fears about rising mortgage rates slowing the housing market.
KB Home is so cheap it's now trading under book value.
Is Wall Street mispricing KB Home too?
3. Shopify (SHOP)
Shopify was a big pandemic winner but shares have plunged in 2022 and are down 67%.
Yet shares are still expensive on a P/E basis with a forward P/E of 152. It also has a high price-to-book ratio of 5.
Is Shopify a "timing" trade or a "pricing" one?
Chapter 20: Margin of Safety as the Central Concept of Investment
Ben Graham describes the margin of safety concept in Chapter 20 as lying in the expected earnings power being considerably above the going rate for bonds.
Bond yields were rising in the 1970s. In a 1972 speech, Graham discussed the possibility of a negative margin of safety as bond yields rose. No stocks may have a margin of safety under those conditions.
Are we going to enter into a period similar to the 1970s?
4. Invitae (NVTA)
Invitae shares have had a devastating 1-year drop falling 82% over that time period. Shares went from nearly $60 in 2021 to under $6 in 2022.
But Invitae has negative earnings. It's expected to lose $2.98 in 2022.
Has the risk been taken out of Invitae after such a large stock sell-off or does it still have a negative margin of safety?
What Else Do You Need to Know About the Intelligent Investor and Value Investing?
Tune into this week's podcast to find out.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com/performance
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
