This week is going to be dominated by Fed guessing and football discussions. The First Church of the NFL has reopened and there were all sorts of interesting games to verbally replay around the office, and we still have two more to play tonight.
Let's hope football talk can give us at least a short break from all the Fed talk and predictions about what they will do and how the market will react. It is as big a waste of time and brain power as I can imagine. Even if you can call the Fed, it is difficult to predict how the combination of emotions and algorithms that is the modern market will respond.
The Fed will do what it is going to do and the markets will respond. Those of us of with cash will be in a position to respond if an opportunity is created, or more likely to continue not doing much of anything until we get an inventory creation event. Placing a bet on the week's action strikes me as similar to betting the favorite at bad odds. Even if you are right, you probably are not going to make much money and the chance of a big loss is reasonably high.
A more productive use of my time is to run some screens over at Insider Insights and see what the big shareholders of companies are doing with their stock. The market has been a touch crazy the past month, and seeing what large individual and institutional shareholders are doing is instructive. Those who are buying more would seem to be placing a well-informed wager that better times are ahead in spite of market volatility, and it's worth taking note of their actions.
Mohnish Pabrai has been a big fan of Horsehead Holdings (ZINC) for some time. He has purchased shares up in the teens and is still buying as the price has fallen along with the global economy and metals markets. His Dalal Street Capital was a big buyer again in August, spending a little over $3.2 million to buy just over 400,000 new shares of the company. Horsehead Holdings shares are trading below 80% of tangible book value and are close to 52-week lows. The company's zinc products are used in a bunch of different products including rubber tires, alkaline batteries, paint, chemicals and pharmaceuticals, as an alloy in the production of stainless steel and in the galvanizing of sheet and fabricated steel products. You will have to be patient with this stock, but when we do get a decent economic recovery, a return to the old highs is possible and perhaps even probable. The stock is worth considering by long-term patient and aggressive investors.
Towerview LLC has been increasing its stake in Tejon Ranch (TRC). Towerview is managed by Daniel Tisch, brother of James, Andrew and Jonathan Tisch of Loews Corp. (L). Like his brothers, he learned the art of value investing from their father, Laurence, and has put the lesson to good use in building a solid track record in the investment markets.
Tejon Ranch is a diversified real estate development and agribusiness company, whose principal asset is its 270,000-acre holding about 60 miles north of Los Angeles and 30 miles south of Bakersfield. It also has a mineral resources division that consists of oil and gas royalties, rock and aggregate royalties, royalties from a cement operation leased to National Cement, and the management of water assets and water infrastructure. The land and water rights are thought to be worth far more than the current market cap of the company, and apparently Daniel Tisch agrees. His firm already owns more than 2.6 million shares and he has spent about $850,000 this month on additional shares of the company.
This week is going to be one of heavy news and analysis, most of it related to the possibility of a Fed rate hike and the implications of such a move. My time will be better spent reading the filings of Tejon Ranch and Horsehead Holdings to see if I should add these names to my portfolio. Some very smart, very successful investors have been increasing their stakes in the companies and it's worth some investigation.