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Active Value Investing: The Bull Case for EBAY, Philip Morris and Supervalu

Posted Feb 10, 2009 05:06pm EST by Aaron Task in Investing, Internet

The sayings "it's a stock-picker's market" and "it's a market of stocks, not a stock market" will prove much more than clichés if the stock market is in the middle of a prolonged range-bound period that could last another several years, as Vitaliy Katsenelson, a portfolio manager at Investment Management Associates, contends.

Indeed, the author of Active Value Investing says investors should avoid index funds, which he believes will go sideways at best. But that doesn't mean there aren't opportunities in the stock market.

As detailed in the accompanying video, Katsenelson is long and recommends the following stocks:

  • eBay: Based on a view the company's non-auction business - notably Skype and PayPal - are worth $9 per share and the core auction business is doing as badly as the last quarter indicates.
  • Philip Morris International: Cigarettes are still a growth business overseas and Philip Morris' strong international brand image makes it a good hedge
    against a weak dollar.
  • Supervalu: The company has a lot of debt it needs to refinance, but if Macy's could refi, Supervalu should be able to as well. Plus, groceries are recession resistant and the stock is cheap relative to its main competitors.

33 Comments

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 01:19AM EST

Yeah, really! Since when the HELL was it a SMART move to take investment advice from an import? They have complete immunity from prosecution, just like the Chinese who sell our kids poison toys! Can't SUE them either! Ebay is a DEPRESSION PLAY!

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday February 11, 2009 01:22AM EST

Ya didn't KNOW cigs and ASS were currency in "the joint", huh? So you wanna tell me WHERE to invest, huh????

san
san - Wednesday February 11, 2009 05:09AM EST

ebay need to do something about protecting their traders or they will end up with no revenue! They put too much efffort into giving buyers their money back, for no valid reason, but it's not the buyer paying the fees. Bite the hand that feeds you and it will stop feeding you!

.
. - Wednesday February 11, 2009 06:13AM EST

Buy Phillip Morris, because business is booming in places that don't care about you. (implies neither do you) Invest in the Kepone Factory.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 09:28AM EST

eBay could fix themselves easily. I speak from experience here. I used to be a rather large buyer and seller on eBay. Where they failed was in trying to FORCE the users to use PayPal for all their purcahses. Another big problem was when they turned their backs on the small sellers and focused on the eBay Stores format. eBay is litte more than an online flea market. There are good flea markets and there are bad flea markets. The good ones are where you can go and individual sellers will sell their odds and end and stuff they don't need anymore. That's when you find UNIQUE items that are appealing. The bad flea markets are the ones where the same people show-up, week after week, selling the same old tired Chinese made new products. That stuff gets boring real fast. eBay needs to get back to the business model they were using 10 years ago if they wish to woe customers (BOTH buyers AND sellers) back to their site.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 08:44PM EST

Finally someone noting eBay's non-auction businesses. If I could buy just PayPal for $9 per share, I'd dump everything I have in it. Ebay is a great long-term value especially if you look at PayPal - which will prove to be much, much bigger than eBay. It's just a matter of time.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 08:50PM EST

Real investors should not listen to all the bitter eBay sellers on this thread (and just about all other EBAY-related threads). PayPal is the future and is worth investing. Think globally and long term. In 10 years you'll all say, "Gee, I wish I bought PayPal (EBAY) back when it was just $13 per share."

ElaineS
ElaineS - Thursday February 12, 2009 01:54AM EST

Does this guy have any clue? He really needs to educate himself on ebay's current condition due to Meg Whitman & John Donahoe's "Disruptive Innovation" against ebay and it's users. Ebay Stockholders and Sellers Calling For Immediate Termination of John Donohoe CEO Petition http://www.petitiononline.com/jdonohoe/petition.html ebay’s upper management reviews (horrendous) http://www.glassdoor.com/Reviews/eBay-Reviews-E7853.htm ebay’s CEO, Donahoe’s, DESTRUCTIVE ebay scheme: http://genuineseller.com/ebays-disruptive-innovation-hows-that-workin-for-ya/ Don’t forget to read your ammended Paypal User Agreement. Paypal (owned by ebay, can now withhold any users funds for up to 180 days at Paypal’s “sole discretion”. Want to fight the withholding of your funds?…good luck with that. Paypal is judge, jury and executioner.

ElaineS
ElaineS - Thursday February 12, 2009 02:08AM EST

I used to be a buyer on ebay, but I will NEVER buy on ebay again as long as the current CEO and his policies remain. I do NOT appreciate a CEO FORCING me to pay by way of a money processor which is owned by that venue. I do NOT appreciate the massive number of listings by huge companies selling cheaply made crap to get to the smaller sellers' listings who offer far better products and better customer service. I want to see my competitors so I can adjust my bidding strategies, not a bunch of hidden IDs. I want my years of 100% buying history to mean something. Now, ebay is handing only the possibility of 100% feedback for all buyers..

ElaineS
ElaineS - Thursday February 12, 2009 02:12AM EST

Anyone thinking it is only sellers leaving the site is very misinformed, uneducated about the true facts, in denial or outright lying.

Jeff
Jeff - Thursday February 12, 2009 11:13AM EST

If I give you a dollar every second, how long would it take to reach a 1 trillion dollars? Answer: 43,600 years. So, the 2T -5T bank bailout is astronomical.

thomasromancer
thomasromancer - Saturday February 14, 2009 03:38AM EST

Okay America... I have to admit something. I have a very pervasive fear. I fear that we American's are not up to the challenges that are facing us. Tell me I am wrong. Doesn't really matter I guess, because I am going to do whatever it takes to show America that we are the perfect society to capitalize in time of incredible adversity. We are the only country in the world that truly mirrors all countries and people of the world. We piss away our power and hold on to a vision that is over. We point our fingers at the other political party, races, genders, sexual orientation, etc. We could be the greatest civilization ever if we use out diversity of cultures and natural talents to their purely incredible extent. We are so close to a greatness that even the Roman's would bow too. Yet we fall into old patterns of safety and eventual demise. This I truly fear for the greatest civilization the world may ever see. We are the only power that can implode our greatness and return us to times of unbelievable self subjugation. Adversity is the call to greatness. But only for those people that have the courage and tenacity to carry fourth the torch of the constitution and the will of a people committed to a country that is the light of integrity. We can become that or continue to survive in fear and destruction of our own choosing. I fear we, the American people are not up to achieving our birthright as a real nation. Some people cannot conceive of such power and commitment. It requires a degree of self that goes beyond one's self. A vision and commitment to all American's that we can change and we can decide what we will bring to the table of all the world. Being in debt and pursuing self pleasure without regard for all of mankind is the pinnacle of self destruction. If any country can reengineer themselves in the face of adversity and pay the price for victory... we; American are those who should gladly take up the challenge. We have so much to say and so much to offer. I am so fearful that we will not take up this challenge, by letting ourselves take up the easy way out. Which is truly no way out at all. I'll die in pursuit of a dream that could be before I relent to a nightmare that is easier to realize.

R
R - Sunday February 15, 2009 11:41PM EST

Well, as far as ebay goes, the only value for them is in Paypal. Ebay is well on they way to hard times because sellers are bailing from ebay as fast as they can due to very poor service, EXTREMELY poor policy, and a number of litigation issues that are only expected to grow due to bad business tactics. I would avoid ebay and look at other ecommerce companies that are in the business of building a long term business and not like ebay who is only focused on shoring up a balance sheet quarter by quarter like ebay has been doing for some time. Ebay is going to fail BIG TIME so avoid that horrific stock.

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