Recently I was interviewed by Geoff Gannon from one of my favorite sites, Gannon on Investing as part of his "20 questions" series. Please visit his site to see other "20 Questions" interviews.
Below is the transcript.
Todd Sullivan is a value investor who writes the ValuePlays blog. ValuePlays is a value investing site focusing on individual stock analysis, investing concepts, and market commentary.
1. Are you a value investor?
2. What is value investing?
Purchasing a piece of a company at a price that is below a reasonable valuation.
3. What is your approach to investing?
Look for the current "red headed step children" and pick out the gems.
4. How do you evaluate a stock?
I look for industry leading companies who:
- Have a valuation that is equal to or at a small premium to other shares with a comparable earnings growth rate.
- Have a total return yield greater than the current corp. bond rates.
- Are buying back shares.
- Are increasing the dividend.
- And are increasing cash flow from operations.
All that takes about 20 minutes, if it passes those tests, I begin to dig deeper into SEC filings, annual reports, etc. Earnings call transcripts on Seeking Alpha recently have been providing me a ton of insight, not necessarily for the details, but the general "tone" of management.
5. Why do you buy a stock?
To own a piece of a company.
6. Why do you sell a stock?
The business deteriorates or its valuation becomes irrationally high.
7. What investment decision are you most proud of?
MO at the height of the litigation woes in 2003 and MCD during the "mad cow" scare of Jan 2003.
8. What investment decision do you most regret?
Selling USG in June of that year.
9. Why do you blog?
I love the market and love to write. It also makes me a better investor by forcing more detailed analysis and making me stick to my guns.
10. What's your best post?
Picked up in the WSJ Online
11. What's your worst post?
SHLD: What Will Eddy Do? Just guess work. Of course if I turn out right, pure genius. :)
12. What financial publications do you read?
13. What investing blogs do you read?
14. What's the best investment book you've read?
"Buffett: The Making Of An American Capitalist"
15. What's the last investment book you've read?
"The Intelligent Investor" – I try to read it at least once a year.
16. When did you start investing?
At 19. I've always loved the idea of being able to buy a piece of a company and "go along for the ride".
17. How have you improved as an investor?
One word: Patience.
18. How do you need to improve as an investor?
Believe in my choices more, my biggest mistakes have not been picking the wrong companies but getting out too soon or not buying at all because I doubted my reasoning.... (see USG, CHD).
19. Where are the bargains in today's market?
I am sky high on Owens Corning (OC)... SHLD: Eddie Lampert + $4 billion in the bank.
20. What's the most interesting company we haven't heard of?
Based on its small float and daily volume, Owens Corning. It is a leader in all its product categories, fresh off asbestos bankruptcy and just posted strong results despite the housing market and a benign hurricane season. When things turn around in those areas, they take off. Trades at about 6 times earnings.