Weekend Edition
The Best of The S&A Digest
September 26, 2009
 We wrote it, and Buffett agrees...
The last time we saw homebuilders this scared about their business was in late 1990. After that, shares of homebuilders rose fivefold in two and a half years. It turns out, homebuilders have gotten even more scared... and they've stayed scared... for a long time now.
Homebuilder pessimism like what we're seeing now – in both duration and depth – is unprecedented. I still believe, at some point, we'll make many hundreds of percent gains here. – Steve Sjuggerud, True Wealth, August 2009
Despite his reticence toward the overall economy, Buffett, like Sjuggerud, is bullish on residential real estate... "We're through the worst of it in residential real estate in all probability," he told CNBC. "And the reason is we're building a lot fewer houses and we're forming households, so that solves itself over time."
Buffett has positioned his portfolio to gain from the housing rebound by buying shares of Wells Fargo – the nation's largest mortgage lender. He also holds Clayton Homes, a carpet company, and several other businesses that will profit from a rebound in housing.
In his latest issue of True Wealth, Sjuggerud made two recommendations to take advantage of the rebound in real estate. One is the holding company for a billionaire investor with large interests in international real estate. Readers have already made about 40% on that recommendation.
Steve's other recommendation is his favorite way to play the rebound in the U.S. housing market. He expects readers to double or triple their money over the next two years. Readers are already up nearly 8%, but these shares have much higher to soar. To gain access to Steve's recommendations and learn the best way to quickly make two to three times your money, click here...
Mark Johnson, whose USAA Precious Metals and Minerals Fund was the top performer in its class over the past decade, is betting gold mining stocks will rise much faster than bullion as miners' profit margins improve... "For every 1% percent move in gold, the stocks should gain 2% to 3%," Johnson told Bloomberg.
The $1.2 billion fund has around 80% of its assets in mining stocks. Johnson likes to visit the mines of potential investments to discover details you can't find in financial reports, like what the workers are doing. His combination of fundamental and "boots on the ground" research has produced a 51% return this year through September 18 and an average 23% in the 10 years ended August 31 – making it first in its category and second among all U.S. mutual funds, behind ING Russia.
Right now, Johnson likes Agnico-Eagle – the fund's largest holding – which he says will benefit from a "very steep growth profile." He also recently increased his stake in Centerra Gold, a Toronto company with a mining project in Central Asia. And he holds a large position in AngloGold Ashanti.
But we don't think Johnson's picks will come close to rivaling our resource analyst's latest recommendation. S&A Resource Report editor Matt Badiali expects a 70% overnight gain for his readers, and they came much closer to that gain last week...
An independent auditor confirmed the value of Valdecanas, an incredibly rich silver deposit in Mexico.
Back in December 2008, MAG Silver, the tiny company that owns 44% of the project, fought off an insultingly low "stink bid" from its partner. The cheap offer had been keeping shares depressed – allowing Resource Report readers to buy in this summer with virtually no downside.
Now, the auditor claims MAG's share of the silver is worth as much as 68% more than the tiny miner's market cap... and 89% over the lowball offer (and that doesn't give any value to MAG's other projects, including the neighboring and equally rich Juanicipio vein).
MAG shares jumped 5% on the auditor's report, and subscribers are up double digits already... but the real payday will come when a takeover bid for MAG emerges.
MAG shares trade for more than Matt's buy-up-to price now, but he has several other precious-metals picks in his portfolio. His favorites right now are two players in China's gold sector. These two companies are about to merge, combining to make the largest nongovernment gold miner in a country starving for gold and gold investments. To learn more, click here...
Regards,
S&A Research
Stansberry & Associates produces the daily S&A Digest, which comes free with a subscription to one of our premium products. To learn more about a risk-free trial subscription click here. |
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S&P 500 |
|
|
American Intl Group |
AIG |
+14.13% |
MBIA |
MBI |
+12.11% |
Red Hat |
RHT |
+9.78% |
Countries |
|
|
Thailand |
TTF |
+2.59% |
Switzerland |
SWZ |
+2.23% |
Japan |
EWJ |
-0.20% |
Sectors |
|
|
Telecom |
IYZ |
-0.16% |
Software |
IGV |
-0.30% |
Consumer Staples |
IYK |
-0.34% |
Commodities |
|
|
Natural Gas |
|
+9.90% |
Wheat |
|
+2.44% |
Corn |
|
+2.28% |
|
S&P 500 |
|
|
Kimco Realty |
KIM |
-15.14% |
Moody's |
MCO |
-18.72% |
Eastman Kodak |
EK |
-18.89% |
Countries |
|
|
Mexico |
EWW |
-6.69% |
China |
FXI |
-5.42% |
United Kingdom |
EWU |
-3.68% |
Sectors |
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|
Homebuilding |
ITB |
-5.77% |
Nuclear |
NLR |
-4.99% |
Infrastructure |
PKB |
-3.72% |
Commodities |
|
|
Gasoline |
|
-11.00% |
Crude Oil |
|
-9.67% |
Heating Oil |
|
-8.61% |
Source: Bloomberg, Yahoo, StockCharts, XLQ 9/17–9/24.
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