Wednesday, February 08, 2006

Nice Timing

So yesterday I wrote a post about JNJ and that they should be receiving some press since the stock looks like a good value play. Today the stock jumped up over 3% and two more pieces came out on JNJ (besides the one under yesterday's comments- thanks for the link!). S&P upped JNJ to a Strong Buy and set a price target of $67. Then Morningstar came out with an article titled "Five Cheap Companies that Create Value", which can be found here, and I think this was a great article because it also explains the concept of ROIC (return on invested capital). The author also makes a strong case for favoring ROIC over the more traditional ROE (return on equity) and ROA (return on assets) measures.

One last thing on hedge funds (for now) that I didn't include in last weeks posts. I wanted to explain a little on how we pay the traders we use and why we use these particular traders. Some of them are just great to work with and we have a strong relationship with them. Others work with firms that help us out in some way and this is what I want to explain. Let's say a firm has a great sales guy who helps us out a lot. For instance we might be interested in medical companies and he will bring the management of a particular company to our office or set up meetings with the companies. Other sales guys might be in charge of road shows where we'll get to meet more companies. Now in order to pay these guys we can't cut them a check. What we'll do is place trades (use their traders) for some of our orders. So rather than cut a check for $10,000- we'll place enough trades so the commissions total $10,000.

One last note: I'm meeting with a friend tomorrow because he's interested in starting a business or side project. I have the capital and he has the computer expertise, so something may work out...(if something does, details will come in the future).

1 comment:

Anonymous said...

Starting your own business with your friend. Im looking to do that soon, been talking about starting something for years but never have gone ahead with it. Think I may just have to stop procrastinating.