• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Michigan's Value 40 Fund: Adamantium Opportunities

University of Michigan's Value 40 list of longs contains some solid stock ideas.
By TIM MELVIN Jul 10, 2015 | 12:00 PM EDT
Stocks quotes in this article: NAUH, CCNE, LNCB, CIVB, ORRF, WAFD, UFCS, EIG, KINS, ENH, PRE, RE, LRN

The big news around Chez Melvin today is that my wife headed out yesterday -- as she and the youngest go to visit her Dad in Rockport, Texas. While I love Rockport, it is virtually impossible for me to get anything done there, with all the nieces, nephews, cousins and other assorted folks hanging around and wanting to go here and there. This year the dog and I stayed home, and it is a great time to be long on takeout joints around my neighborhood. I plan to spend a lot of time watching baseball, reading and running screens and tests to my heart's content. It is going to be wild and crazy bachelor days around here for a week or so!

Today I want to follow up on another set of screens. The screens provided by the University of Michigan Tozzi Electronic Business and Financial Center have been a great source of ideas on both the long and short side of things for years. Even better, they have both performed very well: The shorts underperform the stock market and the longs have beaten it handily in 10 of the last 11 years. When we last visited the Value 40 Fund -- as they call the list of longs -- it was full of community banks and other financial stocks that have done very well over the past eight months. I sat down yesterday afternoon and went through the current list and there are some solid stock ideas on there.

There are still several small banks on the list, as the sector remains undervalued. CNB Financial (CCNE), LNCB (LNCB), Civista Bancshares (CIVB), Orrstown Financial (ORRF) and Washington Federal (WAFD) are community banks that the University's academic-research-based methodology identifies as solid opportunities for the year ahead. The year's Value 40 list also has some small insurance companies: United Fire (UFCS), Employers Holdings (EIG) and Kingstone Companies (KINS) are growing nicely but still cheap enough to consider for a long-term value portfolio. Larger reinsurance companies like Endurance Specialty (ENH), PartnerRe (PRE) and Everest Re Group (RE) also make the list of cheap financial stocks worth investigating.

Two for-profit educational companies make the list. This is a sector where the bad seeds -- running a financing scheme more than an actual school -- are starting to get shaken out. K12 (LRN) provides curriculum, software systems and educational services that allow school systems to offer virtual online learning programs for grades K-12. We have been investigating the virtual learning programs offered here in Florida, and K12 partners with the local school system. While there have been some complaints around the country about K12 programs, the parents I have talked to rave about the program. In fact, I have not talked to a single local parent with a significant complaint.

As the overall quality of the in-school experience continues to decline around the nation, I think virtual education at the K-12 level is going to grow significantly in the years ahead. Although we can expect some bumps as they work up the learning curve of this relatively new educational option, K12 appears to be well positioned to be a market leader in virtual schools.

National American University Holdings (NAUH) is a stock I am starting to see on just about every value screen I run these days. When I reviewed their latest presentations and studied graduation rates, placement rates and ongoing student renewal, it appears that this company is doing something pretty unusual for the online secondary education market: They are running an actual school, graduating students and helping them find jobs. In the last earnings release, CEO Ronald L. Shape said: "We have a strong balance sheet with no long-term debt and have the necessary financial and operational flexibility to carry out our goal of growing without taking unnecessary risk. We believe that this is a critical differentiator from our competitors, as we are continually working to perfect our academic programs and improve the quality of our educational offering to students. We believe that this will ultimately benefit NAU in both the short and long term." I think he is right, and the improved educational experience is going to lead to much-higher earnings and strong growth in the stock price in a few years. I am a big fan of this stock at this level.

It is worth taking the time to print out the Value 40 fund list and find those stocks that you want to add to your portfolio. Traders and investors, alike, should pay attention to both lists as they search for solid ideas with a decent probability of moving higher -- or lower in the case of the earnings torpedoes we talked about yesterday.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Tim Melvin was long NAUH, although positions may change at any time.

TAGS: Investing | U.S. Equity | Stocks

More from Investing

Don't Shout 'V' for Victory, Yet

James "Rev Shark" DePorre
Jun 27, 2022 4:22 PM EDT

Even after last week's move higher and Monday's narrow range of movement, we can say it's going to be difficult to produce a 'V'-shaped setup like we had at the pandemic low in 2020.

Let's See If Vertex Pharmaceuticals Can Push Higher on the Charts

Bruce Kamich
Jun 27, 2022 3:03 PM EDT

Here's what traders should do.

LyondellBasell Could Hold Temporarily Before Renewed Declines

Bruce Kamich
Jun 27, 2022 2:22 PM EDT

Let's take a look.

Kass: Why Markets Could Make a Yankees-Like Comeback

Doug Kass
Jun 27, 2022 2:00 PM EDT

I remain uncharacteristically bullish. Here's why.

Here's How to Treat Bristol-Myers Squibb's Charts

Bruce Kamich
Jun 27, 2022 1:10 PM EDT

BMY is breaking out to a new high.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • 12:10 AM EDT PAUL PRICE

    More Insider Buying in American Woodmark (AMWD)

    American Woodmark , which I've discussed here fr...
  • 08:55 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 10 personality traits of successful traders an...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login