What the World's Most Experienced Investor Has Been Buying and Selling

See what the venerable Kahn Brothers Group has been buying.

Feb 5, 2014 at 4:45PM

Every quarter, many money managers have to disclose what they've bought and sold via 13F filings. Their latest moves can shine a bright light on smart stock picks.

Today let's look at Kahn Brothers, chaired by 108-year-old Irving Kahn. The firm was founded in 1978, but Kahn's investing experience goes back long before that: He was a teaching assistant for Benjamin Graham, the key mentor of none other than Warren Buffett. The Kahn Brothers invest "primarily in undervalued and often unpopular securities that present both a margin of safety and attractive prospects for capital appreciation." The company adds, "In the tradition of Graham and Dodd, our investing discipline continues to stress three key words: margin of safety." The firm also says it puts clients first: "We align our interest with our clients' interest, purchasing the same securities for them that we do for ourselves. 'We eat our own cooking.'"

The company's reportable stock portfolio totaled $581 million in value as of Dec. 31, 2013.

Interesting developments
So what does Kahn Brothers' latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are SLM Corporation and Sterling Bancorp. Other new holdings of interest include AT&T (NYSE:T) and Monsanto Company (NYSE:MON). Telecom giant AT&T has been underperforming the market in recent years, though some see it getting its act together lately, with customer churn rates dropping and cash flow growing. Still, it faces strong competition, with Verizon recently spending $130 billion to buy from Vodafone the chunk of Verizon Wireless it didn't already own. One promising market for AT&T is the Industrial Internet, involving Big Data, cloud computing, and more. AT&T's stock yields a handsome 5.5%.

Agriculture and seed giant Monsanto is often in the midst of controversy over herbicides, genetically modified organisms, and more. There's more to the company than that, though, as it's continually innovating and has a rich pipeline. Bulls also like its growing soybean business, though corn is still a much bigger revenue-generator. Monsanto stock yields 1.6%.

Among holdings in which Kahn Brothers increased its stake was BP plc (NYSE:BP). The beleaguered oil giant yields 4.9%, but it's a complicated portfolio candidate. BP just reported its fourth-quarter and full-year results, with fourth-quarter net income down 30% over year-ago levels, due in part to weak refining margins, its divestment program, and Deepwater spill-related costs. BP has sold many assets to generate needed funds, but it's also retained a promising project portfolio, and it boasts strong reserve replacement ratios. On the other hand, drilling costs have been rising, and the company's hydrocarbon production has slipped.

Kahn Brothers reduced its stake in lots of companies, including BlackBerry Ltd. (NASDAQ:BBRY) and New York Community Bancorp (NYSE:NYCB). Smartphone specialist BlackBerry is struggling, but some find that it has fallen so far that it's now attractive. Its price-to-earnings ratio is...well, the answer is "not applicable," as its bottom line is in the red. Its U.S. market share among smartphones these days is close to zero. New CEO John Chen has his work cut out for him. BlackBerry does have value in its patents, but it's a rather speculative investment at this point.

New York Community Bancorp yields about 6.2% and is known for having savvy management. It has grown by more than 20% annually since its IPO in 1993, far outpacing rivals as it has acquired other banks and grown its commercial and industrial lending business. The bank's fourth quarter featured earnings down a bit from year-ago levels, in part because of a fall in mortgage volume. Analyst Collyn Gilbert of KBW recently downgraded the stock to "market perform," citing valuation concerns and slightly lower earnings expectations.

Finally, Kahn Brothers' biggest closed positions included Provident New York Bancorp and First Place Financial Corp.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.

The No. 1 Way to Lose Your Wealth Without Even Knowing It
You’ve fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.

Can you answer YES to all five of these eye-opening questions?
Click here to find out -- before it’s too late!

Selena Maranjianwhom you can follow on Twitter, owns  shares of Verizon Communications. The Motley Fool recommends Vodafone. Try any of our Foolish newsletter services free for 30 days. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers