“Silver’s Doubling Effect,” Inflation-protected savings, and some Updates

The latest musings for our favorite Irregulars in this week's Friday File

By Travis Johnson, Stock Gumshoe, November 22, 2013

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It’s been an interesting week here in the Land of Gumshoe — Just this morning I’ve been patting myself on the back for suggesting that Africa Oil was a good deal again in the $7s a couple months ago (they just announced yet another oil find today, putting the shares up over $10 for the first time this year) and for buying a bit more Xerox when it dipped below $10 after a weak earnings report last month, and, of course, conveniently ignoring my less useful recent ideas (selling CVV before earnings, and buying a bit more RST). It’s also been a nice week for the share prices of most of the insurers and reinsurers I follow, but there hasn’t been much “real” news on those stocks (TPRE, GLRE, MKL, etc) and we talked about them just recently, so let’s see what else is going on.

Brazil Fast Food (BOBS), surprisingly enough, is not going to be taken private. They realized that they weren’t going to get a majority of non-involved shareholders to accept the $15.50 share price, so they canceled the “going private” offer that had been made by the CEO and a group of other large shareholders. I continue to think that Brazil Fast Foods is reasonably priced here, given the potential for substantial revenue increases with the World Cup and Olympics coming to town in the next three years … but results were also fairly weak in the last quarter on some fronts and the Brazilian currency and inflation might be a drag, so it’s no guarantee that we won’t look back on this and wish we’d sold in this neighborhood. BOBS is a small position for me so I’ll continue to let it ride, and the initial response from shareholders is positive (it’s up to $17 again now), but if I owned a large chunk I’d consider a stop loss around $14-15 — it’s an illiquid stock and a small company that can certainly have missteps, and Brazil is a wild card when it comes to inflation and currency, so I wouldn’t want to be overly confident even with the World Cup and the Olympics coming to town.

I have lots of folks asking me “what are the hot teasers this week”, and it’s always hard to know for sure — but the ones we’ve seen forwarded most to us in the last week ...

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