Dell a Value Play

In May 2006, I recommended buying Dell as it is such an attractive company. Since recommending Dell at $25.20, Dell's share price has skidded lower to $22.12. As I have been expecting, superinvestors started investing more in Dell.

Wallace Weitz, a superinvestor, from Omaha started buying Dell too! This is what Weitz said about Dell......

"Dell is a new position for us (and one likely to raise eyebrows among our investors). We generally avoid technology stocks because of their very short product cycles and unpredictable future free cash flows, but we do not think Dell is a typical tech stock. Dell markets directly to consumers and assembles computers, monitors, printers and other hardware to order. As a result, it takes very little inventory risk and can change its product offerings on short notice."

"In recent quarters, Dell has faced improved competition from Hewlett Packard and others and has created problems for itself by skimping on telephone tech support for its customers. As a result, sales have slowed, margins have slipped and the company’s cost advantage over its competitors has narrowed. We believe Dell has addressed these problems and that its cost structure, balance sheet, returns on investment and strong management provide the company with significant and sustainable competitive advantages. The company generates prodigious amounts of cash and is currently deploying it in a massive stock buyback program. We believe the company is worth considerably more than the current price of $24."

To read the complete article.

If Dell is a great buy for Weitz and Hawkins and Nygren and Tilson, I have great confidence that it is a great buy for us too.

Disclaimer: My Family Fund does not have a position in Dell.

Happy investing,

Dah Hui Lau (David)

Online Internet Gambling Discussions

A few weeks ago, I posted my analysis on PartyGaming. I like this company a lot, but my main worry is the legislation. Now, as the CEO of BetonSports been detained in USA with regards to illegal online sports gambling, all the online gambling companies including PartyGaming have taken great beatings. All their shares plunged over 20% in 2 days "slaughter".

As valueinvestor, we should take this opportunity to re-investigate the attractiveness of online gambling more closely. This may present a great buying opportunity.

There is interesting discussion on online gambling at MSN BRK board.

My conclusion is that PartyGaming is an exciting company that generates huge amount of free cash flow, and is a great leader in online gambling world. However, I'm not smart enough to understand how the legislation going to play out in the next few years.

Disclaimer: My Family Fund has investment in PartyGaming.

Happy investing,
Dah Hui Lau (David)

Ajit Jain, Potential Buffett Successor

Jain, who was born in India and holds a master's in business administration from Harvard University in Cambridge, Massachusetts, has been on investors' lists of potential successors the longest, says Tom Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania.

Jain specializes in so-called mega-catastrophe coverage, taking on risks rivals shun. He insured Chicago's Sears Tower, North America's tallest building; the 2002 Winter Olympics in Salt Lake City after the terrorist attacks on Sept. 11, 2001; slugger Alex Rodriguez's health after he signed the biggest contract in Major League Baseball history in 2000 at $252 million over 10 years; and a sweepstakes by Purchase, New York-based PepsiCo Inc. in which a contestant had a chance to win $1 billion.

To read the complete article.

Would you like that $11 billion in twenties, Mr. Buffett?

Buffett poses with the certificate for 121,737 shares of Berkshire A before sending it by courier to Minneapolis.

To read the complete article.

Happy giving,

Dah Hui Lau (David)

Charlie Rose Talk show on Warren Buffett PBS 11PM

A SPECIAL THREE-PART SERIES BEGINS MONDAY NIGHT

http://www.charlierose.com

Warren Buffett stunned the world when he announced he was giving hisfortune to the Bill and Melinda Gates Foundation. Charlie Rose is theonly broadcast journalist with access to Buffett and Gates on theirfriendship which resulted in this historic announcement.

We begin a three part series about Warren Buffett on Monday night witha look at the man. Tuesday night, we look at the business and thephilosophy that created his wealth. We conclude on Wednesday with alook at his friendship with Bill Gates, which led to the combining oftheir vast fortunes.

July 10, Monday - Warren Buffett: The Man

July 11, Tuesday - Warren Buffett: The Business

July 12, Wednesday - Warren Buffett: The Gift

Joe Tahoe pens open letter to Warren Buffett

In trying to fully grasp the magnitude of your generous gift I have come to partially understand something rather profound. The money we earn to pay our housing and daily needs is currency, currency that can be counted. The money we make beyond our expenses is energy, energy that can be used to improve health conditions, energy that can be used to conduct medical research, energy that can be used to educate the people who need education the most, like politicians.

Choosing the Gates Foundation as a means to best distribute that energy makes me suppose you put just as much thought into how best to spend it as you did into how to make it. Effectively, you have turned the popular bumper sticker, "He who dies with the most toys wins," on its head.

You have given America a moment of pride, Mr. Buffett, a moment of faith. Heck, in the shadow of your generosity I have decided to ignore the hot dog eating contest televised on the 4th of July as the sign of a declining society. Not only have you literally saved the day for many people world-wide, but you have brightened a day for America.

To read the complete article.

Thank you,

Dah Hui Lau (David)

Sticking to his guns; "fallen angels."

Nygren dubs these stocks "fallen angels." He named ten that fit the profile: Citigroup (C), Dell (DELL), Harley-Davidson (HDI), Hewlett-Packard (HPQ), Home Depot (HD), Kohl's (KSS), Texas Instruments (TXN), Time Warner (TWX), Tyco (TYC) and Wal-Mart (WMT). Nygren thinks these companies will achieve long-term earnings growth that will significantly exceed the earnings growth of companies in Standard & Poor's 500-stock index and that the market will recognize that growth in the form of high stock prices in the future.

To read complete article.

Thank for GuruFocus for this link.

Happy learning,
Dah Hui Lau (David)

Legg Mason's Miller Favors Biggest U.S. Stocks, Buys AIG, GE

Bill Miller, whose $19 billion Legg Mason Value Trust has beaten the Standard & Poor's 500 index for 15 straight years, said the biggest U.S. companies are ripe for investment because they have slumped over five years. Miller, 56, said he recently bought shares of American International Group Inc., the world's biggest insurer, and General Electric Co., the world's No. 2 company by market value. He's also bought shares in Citigroup Inc., the largest U.S. bank, and Home Depot Inc., the world's largest home improvement retailer.

``You look and see what has done worst over the past five years, and the worst has been megacaps,'' Miller said yesterday in an interview at the Fund Forum conference in Monaco. ``We know it's mathematically impossible for them not to outperform at some stage.''

Shares in General Electric, AIG and Home Depot have all fallen at least 20 percent in the past five years while Citigroup's stock gained 4.3 percent. Over the same period, the S&P 500 Index rose 7 percent and the Russell 2000 Index of smaller U.S. companies surged 49 percent.

Those companies have an average market value of $204 billion while the average for the S&P 500 Index is $23.5 billion. Miller didn't give exact dates when he bought the shares.

To read complete article.

Thank you GuruFocus for this link.

Happy investing,

Dah Hui Lau (David)

The Evolution Of Marty Whitman

This is a great article by Forbes regarding Mary Whitman.

To read the complete article.

Happy learning,
Dah Hui Lau (David)

Martin J. Whitman Profile

Who is this famous 81 years old investment manager?

I'm sure most of you know him... if not,

please visit: Wikipedia.

Happy investing,
Dah Hui Lau (David)
dahhuilaudavid@gmail.com