A Value Investor's Recent Buys

I've described my approach to value investing before. One thing I like about it is the relative lack of time it takes. I don't trade every day; on average, I probably trade one day a week.

I don't read much sell-side research and usually don't talk to managements. I do spend a decent amount of time thinking about sectors in the economy and how they are doing. Sectors where things are going badly can be excellent hunting grounds for well-run, well-capitalized companies.

Finally, it really helps to buy them cheap. Value investors aren't brighter than everyone else; they just happen to benefit from the anomaly that performance of companies and sectors has a tendency to revert to the mean over a two-to-five-year period. By buying what's out of favor (and cheap) and holding for a few years, you can get good returns.

So for my broad market portfolio, I bought Repsol (REP - commentary - Cramer's Take), Premium Standard Farms (PORK - commentary - Cramer's Take), Anglo American (AAUK - commentary - Cramer's Take) and ABN Amro (ABN - commentary - Cramer's Take).

At the same time, I sold Canadian Natural Resources (CNQ - commentary - Cramer's Take), Oneok (OKE - commentary - Cramer's Take), Electrolux AB (ELUXY - commentary - Cramer's Take) and Australia and New Zealand Banking Group (ANZ - commentary - Cramer's Take). All of the trades were made on Tuesday, except for the trade in Premium Standard Farms, which had to be delayed until Wednesday, so that client accounts could trade in front of me. I trade last.

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At time of publication, Merkel and/or his fund was long Repsol, Premium Standard Farms, Anglo American and ABN Amro, though positions may change at any time.

David J. Merkel, CFA, FSA, is a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. Previously, he managed corporate bonds for Dwight Asset Management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Merkel cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

Analyst Certification: All of the views expressed in the report accurately reflect the personal views of the research analyst about any and all of the subject securities or issuers. No part of the compensation of the research analyst named herein was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this report.

Merkel is employed by Hovde Capital Advisors LLC (the "firm"), a registered investment advisor with its principal office located in Washington, D.C. The Firm and/or its affiliates have or may have a long or short position or holding in the securities, options on securities, or other related investments of the issuers mentioned herein.