A Master Investor's Best Ideas Now

One of our primary investment advantages at The Motley Fool is our ability to learn about and to learn directly from the most brilliant investors in the world. It's a leading reason why David and I are thrashing the market in our Stock Advisor service. There simply is no community in the world where more investors are helping each other beat the market.

Each month, more than 4 million investors travel to our sites, sharing their greatest ideas and insights with each other. And in our CAPS service, more than 70,000 investors are making stockpicks in direct competition with each other. One of our finest investors in CAPS is Brent Mayne, known by the screen name Brent2223, who is in the top 3% of all members.

Here's my interview with Brent to hear his best ideas now.

Tom Gardner: Because you are one of the greatest investors in our Motley Fool community, I'd like to know what are your favorite two stock investments today, and briefly, why?

Brent Mayne: Today my two favorite picks are Sirius XM Radio (NYSE: SIRI  ) and General Electric (NYSE: GE  ) . Sirius is a growth stock that I got into with last year's bankruptcy fears, and I think it's one of the few technology stocks that has a high barrier to entry and exclusive content. It's had a nice run, but I think still has some legs to become one of the major players in the new media landscape.

General Electric is beaten up and hasn't seen the recovery that the market has seen recently. From a historical perspective, it's a great price to get in at, and with a 10 to 15 year investment horizon, I think this stock will outperform. Even with the lowered dividend (close to 3%), and even with what has been said for years that this company would probably be worth more split up, I think the stigma of the financial services unit is still holding the price down.

Gardner: Are there any stocks that you are inclined to avoid today?

Mayne: I don't get priceline.com (Nasdaq: PCLN  ) . Unlike Sirius, Priceline doesn't seem to have a high barrier to entry and is just a content accumulator. How this company commands a $20 billion market cap is a mystery to me. Sure, it's the flavor of the week right now, but what's stopping another start-up from mimicking the model? Isn't this just servers and algorithms? Once it's no longer flavor of the week, where is the value in this company?

Gardner: Are there any trends that you find particularly compelling or concerning today?

Mayne: I think health care and demographics are important trends to watch. It's a perfect storm: Health care needs fixing today, but add on top of that the demographic trends, and it makes health care an even more pressing issue. I think seeing how this is handled will determine if the U.S. is going to continue to be a capitalist powerhouse going forward. If the U.S. can't get this sorted out, it'll be the final nail in the coffin of the American middle class and probably the current incarnation of capitalism as well. While I'm not fleeing North America just yet, I don't think it's a given anymore that it will continue to lead the world economy.

Gardner: What has been your worst investment decision and why?

Mayne: A little Canadian company called Coventree. It was at the heart of the asset-backed commercial paper freeze in 2007. I figured the company would be smart enough to make sure it wouldn't go down with the ship, as it had to know the ship was going down. But the stock tanked, the company declared it would wind down, I sold, and then the stock shot back up and is still sitting out there with value for some reason. This one reinforced the importance of understanding what you are buying, because I have no idea what happened! I just lost my shirt, that's what happened!

Gardner: When investing, do you worry about macroeconomic issues or not?

Mayne: Of course. Macroeconomic issues will push stock prices around independent of the underlying fundamentals of any company. I feel that monitoring macroeconomic issues is necessary to evaluate the diversification of your portfolio between stocks, bonds, and cash. At the very least, I think you at least need to understand how interest rates affect the value of each product and the cycles interest rates go through. While sometimes you can't see the trees for the forest, the flip side is also true: If you don't know what a forest is, how can you take care of your trees?

Gardner: What one bit of parting advice would you give to stock investors worldwide?

Mayne: Don't follow the herd. If you depend on someone else to give you your investment advice, you have to understand that you're probably the last to know and, therefore, there probably isn't much wind left in the sail. The concept of hot stock tips is dead, since information is disseminated so quickly that it's usually already factored into the stock price by the time you hear of it. Have a small group of companies that you follow, and if they starting moving opposite to what you expect, take a closer look to find a buying opportunity. If you want to outperform, you need to make your own decisions.

You can see all of Brent Mayne's investment ideas by following this link to his CAPS page. And you can see how David and I are using information like this to beat the market by following this link to learn more about Stock Advisor.

Fool co-founder and CEO Tom Gardner does not own shares of any companies mentioned. priceline.com is a Motley Fool Stock Advisor choice. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2010, at 1:02 PM, penchy1 wrote:

    Full disclosure? What does Brent personally own?

  • Report this Comment On November 17, 2010, at 11:47 AM, dag154 wrote:

    Re: Priceline.

    I disagree with your view on PCLN.

    I own a travel agency and I am very familiar with their on-line system.

    First I learned about it because they (through www.booking.com) were eating up a very significant part of our business. Then I learned even more because I added their system on my company's website. If you can't beat them, join them ...

    Their Booking.com system is nothing short of revolutionary: they do not operate as a travel agency, but rather an electronic booking platform. Why is this important? Because the hotels actually sell direct to the customers, through the platform. In other words, the value chain has been re-defined. With this system, all the transaction risks and costs (and trust me there are many) are passed on to the hotel. PCLN simply sits back and earns a fat commission.

    The problem for competitors is that, beyond the few million dollars required in developing a similar booking platform (which is probably the best in the world), they also need to sign direct contracts with the hotels. Over 100,000 of them in 92 different countries. And this number is rising fast.

    Today Booking makes about 50,000 reservations per day, so every hotel wants to hop on-board. They also have offices in 32 countries, a website in 38 languages and over 6,2 million customer reviews. Plus, they are growing fast.

    This is a BIG moat with the added bonuses of first-mover advantage and brand recognition.

    I very much expect that they will become more powerful over time.

    My only problem is that their share price is quite expensive.

  • Report this Comment On November 17, 2010, at 3:29 PM, TMFOpie wrote:

    Great comments, dag. Very valuable to help folks understand the true value of Priceline's network. David G has recommended this stock a few times in Stock Advisor with absolute monstrous results. An investor can't just look at Priceline's P/E ratio and call it over-valued. That misses the point. As you point to they have been able to build a very valuable platform by offering a better way to a market ripe for innovation. And it's been a big win for shareholders (including William Shatner).

  • Report this Comment On November 22, 2010, at 3:36 PM, Brent2223 wrote:

    Dag, thanks for the insights. I understand that PCLN has a very sophisticated portal connecting customers and vendors, and that is where the value of the company rests today. But most of this value is intangible (ie relationships, brand recognition, etc.) and this is what scares me. Just as PCLN disrupted the traditional travel delivery service, what's stopping another startup trumping them? Or what if eBay, Amazon, Google, one of the big boys wants to get into this market? That's who I feel PCLN is competing with - online marketplaces. Is brand recognition worth anything here (I'm not being sarcastic)? Travel is being commoditized and I think most people will go wherever they need to get the cheapest price? At the end, I think we're basically agreeing with each other, it's a pretty cool company but is looking a little expensive at the moment.

    PS for disclosure I do own SIRI and GE.

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