Out Fox The $treet

SmartMoney.com has an interesting story about a college dropout in Utah that has a successful fund. Very interesting to see a guy that is successful is this business by picking strong companies for the long term instead of attempting to make a dime every minute on every bit of information. What I really like is how the guy spends most of his time reading and very little creating spreadsheets or detailed plans. To an extent, this reminds me of myself. Constantly read articles on Seeking Alpha or numerous other media outlets where somebody has gone into an incredible effort to forecast the future numbers for XYZ company. While useful, investing still comes down to more of a science than a precise equation. For example, John Paulson & Co. just spent months compiling detailed information in order to persuade Hartford Financial (HIG) management on how to split the company up and provide the necessary liquidity for the 2 separate units. That information was so detailed that it almo...

Interesting article from SmartMoney regarding Epoch Investment Partners and their focus on what companies do with free cash flow as being essential to superior risk adjusted returns. Not exactly familiar with Epoch, but their theory goes right along with our Net Payout Yield Portfolio. Epoch Investment Partners is a specialized money management firm that oversees some $12B in assets (just slightly more then Stone Fox....lol). According to the article they've easily beaten the market because they focus on companies with strong cash flows that distribute the money to shareholders via buybacks, dividends, or paying back debt. They'll also consider companies that make acquisitions or expand internal capital projects as long as the deal exceeds the cost of capital. Our Net Payout Yield Portfolio focuses on companies with strong buybacks and/or dividends. The debt position of a company is a 3rd consideration but not as big of a focus. Though, any company that issues debt to buyback ...