Winn Dixie (WINN) has cash, assets and a decent business. They are not the market leader in the grocery business, but they are holding their own. Hilltop Holdings (HTH) not only trades for less than cash, but it's uniquely positioned to benefit from the current mess in the banking business. Gerald J. Ford controls the company and has made billions buying distressed banks.
Despite the withdrawals and ongoing death watches for activists and private equity investors, there are a few still standing and we will start seeing 13HF filings soon. Watching their purchases can help you find asset-rich stocks worth some attention.
Many of them are also focused on assets and will be a source of ideas. It was buying by Bruce Berkowitz that tipped me off to how cheap the eclectic portfolio of assets held by Leucadia (LUK) had become. Keep in mind that 13F filings are a source of ideas only -- do your own homework on these stocks.
I do not think we are out of the woods yet. There are still more problems to come in the real estate market, while foreclosures continue to be a problem. Earnings will not improve in the second quarter. I am not suggesting that you pile into the stock market, but that it will get better someday. As assets come on sale, it makes sense to slowly and carefully build a portfolio of these companies.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Hilltop Holdings to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices. This was originally published on RealMoney on Feb. 18, 2009. For more information about subscribing to RealMoney, please click here.
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