Isaac Pino: That leads me to my next question. Who are you looking at for the year ahead? Who do you really like, whether it's a growth company or a value company?
Blake Bos: I am a value-constrained investor, I guess you could say, so I go against the grain most of the time. I think 2013 is an especially good year for stocks. You've seen yields on treasuries, fixed income at historic lows, and you have a lot of cash on the sidelines.
You want to see people trying to get that yield -- I think we'll see a lot of equity flow into the equity market -- but as far as stocks go, I don't really like to pick stocks for one year. It's just one year, and it takes more than one year, when you're a huge company, to do anything.
But companies I've been looking at are LeapFrog (NYSE: LF ) , I like them a lot. I feel like they're a good takeover target. They have a niche industry with those low price point tablets they do for children.
Isaac: LeapFrog is specifically tablets that introduce kids to games, education, very interactive ...
Blake: Yeah. Parents are probably familiar with them more so than investors, so I should highlight. They did the Learning Tablet. It's like $99, then you go and you buy all the software for these tablets that are for children, so they'll stop playing with your iPad.
You buy the software and they can learn from it. It's a great educational tool, and we saw them sell phenomenally well over the holidays. They sold out at some retailers for a period of time, and they were top sellers on Amazon. They had, I want to say 6 of the top 10 selling spots in toys.
They've been around for a little bit, and their valuation is pretty cheap. It's just a great takeover target. Michael Milken likes them. I don't know if you remember him from the '80s.
Isaac: Michael Milken? That guy's still around?
Blake: He's got about a 6% stake, if I remember right, in the company.
Isaac: He's trying to relearn the way to invest through a LeapFrog tablet ...
Blake: He's definitely a talented investor. He had his bad run back in the '80s, but ...
Isaac: Interesting. LeapFrog, that's kind of a play like iPad. It's targeted on a certain demographic that I think there's not as many competitors, at least at this point in the space.
Patience. What is really the difference in the price goes up today, or next week, or 6-12 months. The long term is VERY POSITIVE, so it doesn't matter. You have a company with strong growth, little debt, a lot of cash, and a P/E of 7.
Yes, it's a wonderful article and for retail investors it states a few valid points.
Review the trading volume over the past year on LF and it's apparent that institutions and hedge funds rule the roost. Take a position, follow the company, try to ignore each tic value and enjoy the ride LONG TERM.