April “Idea of the Month” from the VIC

A Two-fer of ideas from the Congress, one for growth and one for income

By Travis Johnson, Stock Gumshoe, April 18, 2014

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Whenever I attend the Value Investing Congress, which I try to do twice a year, I tell folks to expect me to pick my favorite idea from that conference to share as the “Idea of the Month” not long after — and that’s what we’re doing again today.

There were a passel of interesting ideas at the Congress, and a refreshing lack of media coverage meant that we didn’t see half the stocks get driven up in price while the conference presentations were underway (partly because this one was in Las Vegas, not NY, and partly because they didn’t allow the media in — folks who wanted to write about the ideas, like me, had to buy a ticket). So I had a lot to choose from.

And these do not tend to be urgent ideas that are driven by a near-term catalyst, so there’s usually plenty of time to stop and consider. In fact, one of the ideas that I shared from the Congress a year ago, Rosetta Stone (RST), has been down for a while as the revamping of its business takes time to cycle through… and it got recommended by a completely different money manager this time around. I still own that one, I have gotten more comfortable with it despite the decline in price, but haven’t done anything to grow or shrink my holdings recently… I’m just watching patiently for now.

So what do we have to share with you today? Well, I know readers are looking for a variety of different kinds of investing ideas, from wild speculation to income to growth, so while I do actually have a favorite I’m going to suggest that you look at two different stocks.

The income idea is Cherry Hill Mortgage (CHMI), the first mortgage REIT I’ve had any interest in in many years — but if a 10% yield and very little potential for big growth beyond that anytime soon don’t thrill you, it’s not so enticing. Presented by Chris Mayer at the Congress, the original notes I shared are here.

The growth idea is SodaStream (SODA), largely because it’s not priced for any growth and doesn’t get any credit for the stable, cash-gushing nature of its valuable core businesses. This one was presented by Whitney Tilson (my notes here), who has also generated a fair amount of press for the idea (the other two have ...

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