"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 1 hour The Calm Before The Storm In Tech Stocks
  • 3 hours Japan Scrambles To Dodge Trump’s Trade War
  • 18 hours Big Banks Double Down On Crypto Ambitions
  • 19 hours Investor Debt Outpaces S&P 500 Growth
  • 20 hours Will Bitcoin Ever Dethrone Gold?
  • 21 hours China's Orwellian Social Media Machine
  • 22 hours What Sparked Russia’s Gold Buying Spree?
  • 1 day The War For "White Petroleum"
  • 1 day Stock Market Bulls Are Running Out Of Steam
  • 1 day Crypto Stocks Poised To Bounce Back
  • 2 days The Five Biggest Bubbles In Stock Market History
  • 2 days Was Finland’s Universal Basic Income Program A Failure?
  • 2 days China Goes Long On Gold
  • 2 days Is It Wise To Trade The Trump Effect?
  • 2 days The Tech That Telecom Giants Fear Most
  • 2 days China’s EV Industry Is Booming
  • 2 days How Will Gold React As North Korean Tensions Cool?
  • 2 days Is This The Biggest Mining Opportunity Of 2018?
  • 3 days China’s $33 Trillion Finance Industry Opens To Foreign Investment
  • 3 days Is Bitcoin Cash Overbought?
Financial Sector Reports Record Profits

Financial Sector Reports Record Profits

The financial sector had a…

The FANG Stock Investors Should Avoid

The FANG Stock Investors Should Avoid

Thanks to a private data…

Greatly Depressed U.S Assets?

On August 14, 2008 Warren Buffett disclosed a position in NRG Inc. In reaction to this news the regular Buffett followers rejoiced, bid up shares of NRG, and awaited their fat returns. Shares have fallen 55% since August 27.

While Buffett's stake in NRG is so small compared to Berkshire's assets that it doesn't merit significant attention, it nonetheless serves as an excellent example of a U.S. company with tangible assets seeing its stock price collapse as economic uncertainty and investor fear unite. Another example of this is readily seen in Smithfield Foods Inc., which despite recent assurances on its liquidity situation has recently seen its share price plunge below its tangible book value.

Yet another example of the carnage striking down tangible America can be seen in Natural Resource Partners LP. With the recent addition of shares NRP insiders seem to be confident that coal royalties will continue to generate attractive payouts, but investors have voted with their feet and fled what is now one of the highest yielding MLP's in America.

The cyclicality of the wholesale power, poultry, and coal industries notwithstanding, the above companies seem to be pricing in a worst case scenario. This suggests that if the U.S. economy and financial markets can skirt complete disaster and/or investors refrain from catapulting precious metals higher and every other asset class severely lower, that some American assets are trading at depressed prices that are not reflective of their longer-term returns potential.

Greatly depressed or not, it goes without saying that in order to take advantage of attractive longer-term returns, investor's are required to select the companies that will withstand today's crunch.

Disclosure: No one at FallStreet.com has any financial position in any of the above companies.

 

Back to homepage

Leave a comment

Leave a comment