Top 5 ideas of the week:
The Nash-Finch Company (NAFC) is the second largest publicly traded wholesale distributor in the United States. Although Nash-Finch also operates 74 company-owned retail grocery stores, it derives nearly 85% of its revenues from its wholesale distribution businesses. Our interest in Nash-Finch was piqued because of its strong presence serving military installations.
We have been following Xerox Corporation (XRX) since the middle of January largely because David Einhorn (Greenlight Capital) had purchased 17M shares of the company in Q4 2011. We have stepped up our coverage of Xerox in October as the company’s shares were trading at a 30% discount to book value. However, we are most certainly aware that just because a company’s shares are trading at a low price to book value does not automatically make it a great value.
Although we have been disappointed in Supervalu’s (SVU) performance since we re-entered it in Q2 2012, we can see that we are not the only firm that has taken a position in the company during the 2012 calendar year. We believe that although SVU is facing a challenging set of circumstances, investors in SVU’s bonds or shares will find it to be a “super value.” We were particularly pleased to see that two Tiger Cubs have staked out a significant position in SVU.
We are impressed that Berkshire Hathaway’s (BRK.B) Book Value Growth has exceeded the S&P 500 and the broad bond market since 1999 despite the challenging environment for stocks, Berkshire’s gargantuan size and the easy money policies of the Federal Reserve pushing up bond prices. We believe that Berkshire’s recent $1.2B share buyback as well as the increased price offered for future buybacks (from 110% of book value to 120% of book value) will bode well for investors.
We published two articles on AIG this week. First article discusses AIG’s deal to sell its ILFC aircraft leasing subsidiary and the second evaluates AIG’s prospects now that the US government has sold its shares in AIG.
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