Fox News Channel
show last weekend
asked me if there was any safe place to put your money and I blurted something like, "Have I got a money-market fund for you." (Like you would expect me to say anything else?!)
But some stocks really
safer than others. And in the midst of this whole value vs. growth debate, people forget that a certain group of value stocks have done exceptionally well -- especially stocks that I put in the category of backdoor investments. (Backdoor because they trade at big discounts to their net asset values, including stakes in other highflying stocks.)
Just go back and look at those mentioned
here three months ago by money manager John Woodberry of
Minute Man Capital
in New York.
have all jumped more than 50%.
Wooed by a record like that, readers now want to know what Woodberry, who also
alerted this column to
, is fond of
Interestingly (and ironically, at a time when it appears investing is more like gambling), one of his current faves is
, which is in the process of buying
for $4.4 billion in cash.
The "cash" part of the story is an important one to Woodberry because, he says, MGM's controlling shareholder, Kirk Kerkorian, "is a guy who only uses his own pocketbook when there's a big opportunity." The other times when his cash purchases were "buy" signals, Woodberry says, were a few years ago when he bought back
stock and, earlier, when he bought into
. "Every time he has used his checkbook, if you followed him, you have made money," Woodberry says, "and this is one of the few times
in recent years that I have seen somebody pay cash for a company."
What's more, the gaming industry, as a whole, is in the doldrums and, when the Mirage purchase is complete, MGM will control high-end (and profitable) gaming properties that are adjacent to one another.
There's plenty of speculation that MGM will sell off several of its hotel properties after the deal is complete, and perhaps use the cash to buy something else -- possibly the
in Atlantic City. But one good source (that's about as far as I'll go) says it's not clear that MGM will sell much of anything among its hotels.
Also, I hear that MGM could hold a conference call with analysts as soon as next week to discuss, among other things, the timing of the deal's closing (it'll be sooner than the year-end date many observers currently think) and about deal-related synergies and cost savings that are more than even MGM had expected. MGM officials couldn't be reached.
Meanwhile, back to safe stocks: Another Woodberry fave is
, the cruise-line company. "It has software-like operating margins," Woodberry marvels. "You show me a business that makes 30% before tax -- that's an incredible business. Even if their current estimates
$1.90 per share are wrong, even if oil prices rise and bookings are down, you probably have only 10 cents to 20 cents of earnings-per-share risk. And then you're buying something at 14-times earnings rather than 12-times right now."
Fund manager Julian Robertson is believed to have been a big seller of Carnival recently for reasons more related to his own fund than to the stock. His sales have caused the stock to fall by almost half. But with such fat margins and virtually no debt, Woodberry would rather sail with Carnival than fly with high-tech.
About this column:
The typical reaction to
yesterday's item on
Lernout & Hauspie
-- one of a continuing series -- was like the following email, which said:
It is important for a money manager not to fight the tape. When does a reporter admit he may not be right, but wrong??? The only way you will ever know is "if" Lernout heads south. However, if your readers followed your pontifications ... need I say more regarding the price movement from 11/1/99 - 3/14/00. P.S.: I'm not even an owner, just tired of "holier than thou" reporters.
To which I respond: A stock's price does not make a story correct. Short-sellers have clearly been wrong on Lernout the stock, but they still believe they'll be proved right on Lernout the story. Maybe you've noticed: I don't recommend you buy, sell or short stocks. I just report the market's oddities. Yesterday's column pointed out how Lernout referred to its most recent press release as a "momentum announcement." In other words, its press releases are designed to keep the momentum of interest in its company, and its stock, on a roll. To me, that's newsworthy -- and I'm in the news biz.
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
firstname.lastname@example.org. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.