The next person to ask me what the Fed is going to do will regret it. The only more offensive and repetitive question I am hearing these days is, "How are your Orioles doing?"
The only people in a position to know what the Fed is going to do are the members of the Fed -- and I am not so sure they know what they will announce, later this week. The worst job in the world, right now, is Janet Yellen's job as Chair of the Fed. She makes just over $200k a year and is trying to find a way to justify a politically needed rate hike with little or no justification from economic reports. Maybe they will raise rates this time and maybe they won't. I have no clue, and neither does anyone else. It's a waste of breath to venture guesses and speculation.
Looking at the buying activities of large shareholders of certain corporations has proven to be a very useful endeavor, and is potentially far more profitable than Fed watching. When you already have a large stake in a company and are buying more, in spite of volatile market conditions, that represents a huge vote of confidence, in my opinion. I am actually making a lot of work for myself, as some very smart people are buying some very interesting companies that are clearly worth further investigation.
Mark Cohen of Stone House Capital Management came into the spotlight at the Harbor Investment Conference in 2013 when Pershing Square's Bill Ackman introduced him to the crowd -- and mentioned that he invested with Cohen. He has recently been adding to his stake in A.M. Castle (CAS). This company is a global distributor of specialty metal and plastic products and provides supply-chain services. It serves a number of different industries -- including the oil and gas, commercial aircraft, heavy equipment, industrial goods, construction equipment, retail, marine and automotive sectors. In August the fund increased its stake from 2.7 million shares to 4 million shares of the company. Cohen's fund now owns 16.8% of the company, so he clearly believes it can achieve a strong turn around and be in a position to soar when the economy recovers a bit more. The stock is trading around its 52-week low, and would appear to have significant recovery potential.
Stadium Capital describes itself as having well-defined investment principles with roots in the philosophies of Benjamin Graham and Warren Buffett. The value-oriented firm has been increasing its stake in Big 5 Sporting Goods (BGFV). The fund has purchased about 310,000 shares since the first of August, bringing its holding in the retailer to 2.5 million shares -- or about 18% of the company. Stadium founder Alexander Seaver clearly feels strongly about the future of the company and the stock price. This is an activist position, and Stadium Capital has seats on the board. Big 5 has 437 stores in the Western United States selling sporting goods and apparel. Its results have been a little disappointing, as consumers continue to be selective about where and how they spend their money, this year.
Pleasant Lake Partners has made one of the more interesting buys in the past month. It purchased an additional 200,000 share of Hemisphere Media Group (HMTV) ¿ bringing its total stake to 1.9 million shares, or about 12% of the company. Hemisphere owns and operates five leading U.S. Hispanic cable networks, two Latin American cable networks, and the leading broadcast television network in Puerto Rico. They describe themselves as the only pure-play publicly traded media company devoted to the Hispanic markets. This is a very fast-growing market in its own right, and the US networks should see heavy ad spending this election cycle, which could drive earnings growth over the next year. Pleasant Lake is an activist-oriented fund.
Remarks by Hemisphere CEO Alan Sokol during a recent conference call give you an idea of just how big the opportunity is for Hemisphere Media. He told investors, "The Hispanic program packages on which our networks are carried reach only about a third of Hispanic TV households, providing us with a long runway for continued growth. Additionally the US Hispanic population is growing at five times the rate of non-Hispanics, which will continue to fuel growth in the Hispanic pay-TV universe."
I will leave the Fed guessing and wishing to others. I find it far more beneficial to track what some of the more successful investors are buying and selling in today's volatile markets. If I find the right ideas, and buy them at the right price, the Fed's actions will have very little impact on my long-term results.