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Why Cognizant Shines Brighter as a Stock Pick

in Analysis

We’ve been eyeing investment opportunities in business process outsourcing for a while; lately, our interest is on the rise because of the industry’s declining stock prices. Cognizant stands out as a shining star. Its revenue has quadrupled since 2008, and the company is growing at a faster pace than very competent competitors such as India’s Infosys and Wipro. Even as Cognizant’s growth slows from its explosive level of more than 30...

Trump May Equal Volatility, but Volatiliy Doesn’t Equal Risk

Trump May Equal Volatility, but Volatiliy Doesn’t Equal Risk

in Macro

It is a new year, and my crystal ball was supposed to have become magically unfogged by the turn of the calendar. Well, I hate to disappoint you, but it hasn't. Unlike our new president, I lack certitude about the brightness of our future. My thinking is caught between two quotations from Mark Twain. The first is, "Whenever you find yourself on the side of the majority, it is time to...

Discovering Discovery

in Analysis

Discovery is a media company that owns some of the most popular TV channels – Discovery, TLC, Animal Planet, Opera Winfrey Network (OWN), ID (crime channel), Eurosport among others. Discovery stock has been scratching multiyear lows because of millennials.  If you are reading this and you are between 19 and 35 years old – it’s on you!  Millennials are the first purely digital-age (non-analog) generation.  The one that thinks the DVD/CD...

The Persistent Problems of Presidential Elections

in Macro

The election is over. I am left with two very contradictory feelings. First is one of appreciation — every four years we peacefully replace our government. I remember my parents in the late 1970s discussing Soviet politics at our house with their close friend. Their friend said something anti-Soviet. I vividly recall the fear in my mother’s eyes when she realized I had overheard that part of the conversation. Views that were contrary...

The Dangers of Dividend Obsession

in Analysis

By Vitaliy Katsenelson “This is a very bad, incoherent piece.” I received this feedback from a reader concerning my most recent article for Institutional Investor. I don’t expect everyone to agree with me, and I welcome negative feedback because it provides an opportunity to learn. But this stung. If this comment had been about almost any other article I’ve written this year, I’d probably have filed it under “let’s agree to...

Good Companies Don’t Always Make Good Stocks

in Analysis

I was recently going through a new client’s portfolio and found it full of the likes of Coca-Cola, Kimberly-Clark and Campbell Soup — what I call (pseudo) bond substitutes. Each one is a stable and mature company. Your mother-in-law would be proud if you worked for any one of them. They have had a fabulous past; they’ve grown revenues and earnings for decades. They were in their glory days when...

Whatever Happened to the Invisible Hand of Capitalism?

in Macro

When I was growing up in the Soviet Union, our local grocery store had two types of sugar: The cheap one was priced at 96 kopecks (Russian cents) a kilo and the expensive one at 104 kopecks. I vividly remember these prices because they didn’t change for a decade. The prices were not set by sugar supply and demand but were determined by a well-meaning bureaucrat (who may even have...

SoftBank CEO Masayoshi Son Banks on Exponential Growth

in Analysis

I am about to go out on very thin ice. I am a value investor, but I’ll probably get banned from the value community for what I am about to say: Current valuations don’t mean much for companies in industries that are entering an exponential growth phase. As I type this, I catch myself thinking that it sounds so “dot-commish,” but bear with me as I try to bring my...

The Values of Value Investing

in Analysis

This article has been in the works since last November.  It started out as a speech I gave to the Swiss CFA Society.  To me it is an important framework for understanding value investing.  I think the rise of the consulting industry, armed with cheap computing power and an abundance of stock-specific data, has harmed the industry, because according to them, a “value” investor is one who holds statistically cheap stocks and a “growth” investor...

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