This month, as I noted I would do a week ago, I decided to pick my favorite idea from the Value Investing Congress and suggest that as the “Idea of the Month.”
The task, however, was more difficult than I expected — I do have an idea to share with you, but it runs along with half a dozen others that stand out to me as appealing. To give you an idea of the broad list of picks that struck a chord, I can tell you that I came away favorably impressed with The Brick (BRK.TO, BRKQF on the pink sheets), CME Group (CME), Atos (ATO in Paris, AEXAF pinks), Williams Cos (WMB), Sensata Technologies (ST), Sandisk (SNDK), Fortune Brands Home and Security (FBHS) and, of course, stocks I already own and have covered before like Apple (AAPL), Intel (INTC) and Berkshire Hathaway (BRK.B).
I even find some appeal in the distressed debt of DryShips that was pitched at the conference, and in JC Penney (JCP), though I still can’t quite understand why so many value investors are head-over-heels in love with the stock … and every once in a while I flirt with Bill Ackman’s Howard Hughes Corp (HHC), despite the fact that it seems likely to be a long-term no-earnings land development story (it is, at least, one that seems being fairly valued at what must be pretty recently assessed land valuations, and it has no debt).
And the one that probably came closest to making the cut was CME Group (CME), largely because they’re big, stable and predictable and don’t seem to be priced for the growth they should expect as OTC derivatives are slowly forced onto exchanges and the democratization of derivatives trading continues … but I’m not quite comfortable with that yet.
So what flows to the top of the list for this month is … Flowserve (FLS)
You may well have heard of Flowserve before — it’s a mid-sized company, about $4.5 billion in market cap, it serves primarily the oil and gas, chemical, power generation and water industries, broadly conceived, and it makes pumps, valves and seals and has a market leading position in most of its businesses.
And it was a stock market darling for a while, with folks like Louis Navellier picking the shares (near the top) as they made a huge run leading up ...