Van Den Berg: Large Cap Stocks "At Historic Lows"

In this GuruFocus interview, Arnold Van Den Berg of Century Management named the investors he admires most:

- Benjamin Graham
- Warren Buffett
- Walter Schloss
- Prem Watsa
- T. Rowe Price (the person)
- John Templeton
- Philip Fisher
- Peter Lynch
- John Neff
- Seth Klarman

He also made the point that they are all investors whose writings are worth checking out.

Van Den Berg also says that large cap tech stocks (and large caps in general) are inexpensive. The top 5 five holdings and additions revealed in Van Den Berg's just released second quarter portfolio certainly supports that view. In addition to buying or adding to positions in large cap stocks like Berkshire (BRK.B), Target (TGT), Cisco (CSCO), and Wells Fargo (WFC) there were quite a few other changes.

This GuruFocus article summarizes the portfolio and the key changes in more detail. 

Top 5 Holdings

1) Microsoft (MSFT)

2) Walmart (WMT)

3) Coca-Cola (KO)

4) Colgate-Palmolive (CL)

5) Dell (DELL)

The top five holdings make up more than 23% of the portfolio.

In last month's interview, he also made the following comments:

"At today's prices, a significant number of the large cap stocks we own are priced as though they will experience negative sales & earnings growth. We feel these assumptions are too onerous as the companies benefit from emerging market demand growth..."

Later in the interview he added...

Related post: Tech Stocks are Cheap, the Market Yawns

"I believe large cap tech stocks are one of the cheapest areas of the market. Stocks like Microsoft, Dell, Cisco, and Applied Materials (AMAT) are names that come to mind. In the non-tech environment, Walmart and Wells Fargo represent good values today..."

For those with some patience, market prices of some of the better business franchises still provide more than a decent margin of safety in my view (even if not a true fat pitch).

Certainly, the discounts to value of some quality large cap business franchises recently became wider than I ever thought I'd see. Some remain fairly cheap, if not as much so, even if the market as a whole is not.

Now, why have these businesses become so cheap? It wouldn't be tough to come up with a few logical reasons why. Each business, of course, has a unique set of challenges.

I'm guessing that efficient market true believers and even half-believers won't like the following explanation: The reason some perfectly good businesses sell at a discount to value these days is no more logical than the reason some of these same businesses were extremely expensive a decade ago.

Check out the full interview with Van Den Berg.

Adam

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Van Den Berg: Large Cap Stocks "At Historic Lows"

Reviewed by jembe
Published : 2011-07-07T12:48:00-07:00
Rating : 4.5