I have been focusing a bit on Intel, it starts to seem interesting again… I want to be prepared to add more if necessary so my time and thoughts are mostly focused there lately. It’s one of the few companies that I find great, I know and seems reasonably valued. I have been concentrating on Dell too. Trying to understand the private equity deal going on.
Regarding Intel I want to be prepared to add more. I love the company. It does have a lot of competition with ARM based computers. They will most probably keep on taking away customers from Intel. Now customers have ARM based computer options that they simply did not have before, and those alternatives just keep getting better. But then again Intel has an advantage in the fact that it has its own foundries and very advanced knowledge and control in all aspects of processor manufacturing. They will indeed spend a lot to make new 14 nanometer production plants and getting them ready to use 450 mm silicon wafers. Capital spending to build those plants will flow to semiconductor machinery companies such as Applied Materials, which I proudly own. Such plants have a high cost, comparable to nuclear plants. The advantage is that only companies as big as Intel, with its cash flows, capital and knowledge, can spend such amount of money, and enjoy the benefits. Such investment is necessary to keep them on the leading edge. It is important though to realize that others are catching up. It’s not easy to say when Intel will be really cheap but it starts to get quite interesting. The more I focus on Intel the higher the chances are that I value it correctly and that I am prepared to buy it (or let it pass) at the right price.
I let the Berkshire Hathaway strike 62.5 and 65 jan 2013 puts expire worthless. I was short those puts since a bit more than a year I think. I basically made 700 dollars with each. It’s one of the few times that I have let puts expire worthless. I hardly thought of covering them. The reason being that Buffett and his company gives me a lot of confidence.
Besides that I have been reading about some of my companies, specially focusing on the ones whose future I doubt more about. I also read a bit over a couple of others the seemed interesting, but given the market prices I do not find any company, that I do not already have, interesting enough.
In December I added 3 more shares of a Spanish train builder. At around 335 euros/share. The company is called Construcciones y Auxiliar de Ferrocarriles. I think it’s a good and cheap company expanding very successfully all over the world. I like investing in Spain now that everyone is running away from it.
I have been reading some books. One of them is The Buffett Portfolio, it’s mostly a bit basic but with some very interesting specific points about the strategy of focus investing and optimal portfolio weighting. It also added some bits and pieces complementing what I already knew. Overall I recommend it due to that. I also read the Aggressive Conservative Investor. That’s a much more advanced book. There are many things worth learning from it, specially the subject about a company’s capital allocation activities and it’s very important impact on value.
I feel Okay and spend my time mostly as always, adding knowledge to my circle of confidence, observing and studying. Like that I am prepared to detect future opportunities.
I have not spend as many hours on investing activities as I used to do when my kids were on school. Basically because now that they are on vacation I dedicate more time to them. But sometimes I think that that’s one of the best investments possible . Here’s a recent picture of them: