In order to bring more frequent postings and another perspective on the market, I’ve added a partner to Big Money, No Whammies. This person has an eye for detail, especially for IPO’s (I can remember him suggesting to me Volcom, Under Armour, and Crocs all at very profitable points).
He is known in the Business College of Central Michigan University for frequently winning Stock-Trak, the financial simulator for students to compete in the stock market (usually 300+ business students). After shorting Natural Gas Futures he is again at the top of the crop this year.
I wouldn’t have asked him to join the blog if he wasn’t smarter than me. I’ll stop now because you get the point, and I don’t want his head to get too big; so without further ado, Sam Scherf’s first posting starts now.
It's been plastered all over the media that the stock market has been reaching record highs. Regardless of if you're a believer in a bull or bear market, you can't deny that the market's getting more positive attention than usual.When people see a boom, they want to jump in on the ride. For this reason, I decided to take a look at which investment advisers are doing well. Diamond Hill Investment Group Inc (DHIL) has caught my eye as a good catch.
Price
This is a company that has a quarterly revenue growth of 285% year over year. Their trailing P/E ratio is 25, making them below the average P/E of 27 for Regional Investment Brokers.
Economies of Scale
The company currently manages over $3.1 billion in assets. Last year at this time, they managed $1.15 billion. Financial service firms don't need to increase their costs by too much more when managing larger sums of money, yet will receive much larger commissions.
Stability
Although the stock has already had a huge (and justified) run up for this year, it's showing stability in its price. The company has shown consistent growth throughout its life, and the present should be no different.
The fundamentals of this company look strong. I would recommend this stock as one to hold on to for the long term. Investment management companies are showing no signs of slowing, and this pick shows promising attributes to take advantage of that trend.
-Sam
2 comments:
Christopher, 23-Oct-06 AMGN will announce earnings. What numbers do you expect to see.
Good Question,
It's always been my opinion that the analysts can’t predict earnings accurately, so it would do no good to throw an amateur’s guess into the mix. Instead, I’ll say that the savvy investors on Wall Street look to competitor earnings for hints.
Genentech (DNA), Amgen’s main competitor, reported decent earnings last week. They were 8 cents above EPS estimates, but had light sales on their cancer drugs. Investors were indifferent and the stock didn’t do much (just two points down since then). If this is any indication, Amgen’s earnings should do fine.
As always, I still caution not to buy before earnings on any stock. This is when the most irrationality occurs.
Thanks for the interest.
-Chris
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