Reporte cripto para o Fisco é obrigatório para transações já deste ano. Coimas chegam aos 22 mil euros

[Keyser Soze]

Portfolio Virtual (preço de aquisição = fecho 18 Agosto 2006)

[Keyser Soze]

[Keyser Soze]

Portfolio Virtual (preço de aquisição = fecho 18 Agosto 2006)

[Keyser Soze]

John Dorfman , president of Thunderstorm Capital in Boston, is a Bloomberg News columnist. The opinions expressed are his own. His firm or its clients may own or trade investments discussed in this column.


Benjamin Graham Might Like USEC, Avnet, Insurers: John Dorfman

Aug. 15 (Bloomberg) -- Ben Graham, the father of value investing, has been dead for 30 years. Hundreds of disciples, however, keep alive his bargain-hunting style.

Most of us are less strict in our criteria than Graham was. His definition of ``cheap'' was stringent, and his balance-sheet criteria were exacting.

Each year at this time, I try to channel Graham's ghost and ferret out a few stocks that I believe he might like if he were alive. This year I believe that Avnet Inc. and USEC Inc. fit the bill.

I also think Graham would consider buying Furniture Brands International Inc., LandAmerica Financial Group Inc. and National Western Life Insurance Co.

In my five previous tries, my ``Graham'' picks have shown an average 12-month total return of 28 percent, compared to 5.2 percent for the Standard & Poor's 500 Index. They have beaten the index in all five outings, and made money in four out of five.

Last year's batch returned 14 percent (including dividends) from Aug. 11, 2005, through Aug. 11, 2006. The S&P 500 was up 4.3 percent.

Arch Capital Group Ltd. (ACGL), a Bermuda-based reinsurer, paced the advance with a 30 percent gain. The other four stocks, all insurers of one type or another, had smaller gains.

Because value selections often need time to pan out, I also calculated the three-year returns of my ``Graham'' picks from 2001, 2002 and 2003. They averaged just below 100 percent, compared to 25 percent for the S&P 500.

Influential Teacher

Graham was a hedge fund manager, author and professor at Columbia University, where he influenced many students including Warren Buffett, widely considered the greatest living investor.

In making my selections on Graham's behalf, I rely on a simplified set of criteria. I look for stocks selling for less than 12 times earnings and less than one times book value (assets minus liabilities per share). Also, the company must have debt less than 50 percent of stockholders' equity. If more than five stocks pass these tests, I use judgment to select five.

This year I'm bringing back two insurance stocks from last year's list - LandAmerica Financial (LFG) and National Western Life (NWLIA). I've added three companies outside the insurance realm.

Avnet (AVT), based in Phoenix, is the world's largest distributor of electronic components. It meets my criteria with room to spare, selling at nine times earnings and 0.88 times book value. Debt is 44 percent of equity.

Investors generally find distributors about as exciting as changing the paper in the office copier. In a few cases, however, they may be yawning prematurely.

Steady Growth

Avnet increased its sales to $14 billion in fiscal 2006 (ended June 30) from $5 billion a decade earlier. It has posted a profit in 18 of the past 20 years.

It has shown rising earnings in each of the past four years, and analysts expect a 17 percent earnings gain for the fiscal year in progress.

USEC (USU), out of Bethesda, Maryland, produces enriched uranium used as fuel in nuclear power plants. Originally called the United States Enrichment Corp., USEC was spun off from the U.S. Atomic Energy Commission in 1992 and completely privatized in 1998.

USEC has thin profit margins and many problems. It depends on a long-term contract with Russia for much of its uranium. The uranium delivered under this 20-year contract comes from decommissioned atomic warheads. There is a risk that Russia will renege on the contract or choose not to renew it when it runs out in 2013.

According to a 2004 report by RWE Solutions of Germany, four companies supply about 98 percent of the world's enriched uranium. They are France's Areva, Europe's Urenco Ltd., USEC and Russia's Tenex.

I believe that the European competitors have lower production costs and more modern equipment than USEC does. To modernize, USEC will probably have to issue more stock or more debt.

Two Advantages

What's more, in the past five years, USEC's revenue has grown at only a 1 percent annual clip.

Against these disadvantages, I would set two advantages. USEC stock is cheap at eight times earnings and 0.84 times book value. And I believe the U.S. will need to turn increasingly to nuclear power as fossil fuels become more expensive.

Furniture Brands International (FBN), with headquarters in St. Louis, is the biggest U.S. maker of residential furniture. Out of nine analysts who cover it, only two rate it a ``buy.''

I think it may be a buy, nevertheless. The stock has descended from more than $40 a share in 2002 to less than $19. Today's price is only 11 times earnings and one times book.

Now, back to the two insurers. LandAmerica Financial, a title insurer based in Richmond, Virginia, has been on each of my Ben Graham lists beginning in August 2001. It has almost precisely doubled in the past five years, without ever being a popular stock. I think the same thing could happen in the next five years.

National Western Life, from Austin, Texas, has returned 47 percent since I put it on the Graham list in August 2004. It still sells for only 12 times earnings and 0.93 times book value. To the best of my knowledge, no Wall Street analyst covers it.

Disclosure notes: I own LandAmerica Financial for many clients; Arch Capital and USEC for a few. I don't currently own the other stocks discussed in this column.