After reading Benjamin Graham’s The Intelligent Investor, Daniel Radakovich changed his career ambitions to the field of finance and now attends the annual shareholders’ meetings of Warren Buffett’s Berkshire Hathaway Inc.
Daniel Radakovich
Occupation
Independent investment analyst
Portfolio
Long-term holdings include Berkshire Hathaway Inc., Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co. and Suncor Energy Inc.
The investor
When Daniel Radakovich read Benjamin Graham's The Intelligent Investor, it was transformative. He changed his career ambitions to the field of finance, and now attends the annual shareholders' meetings of Warren Buffett's Berkshire Hathaway Inc.
How he invests
As a value investor, Mr. Radakovich first reads a company's annual report. He wants to see if it's easy to understand. If it is, he'll dig deeper to "determine how sustainable the business model is, and how honest and able management is."
Depending on what's found, he'll then do valuations for the company based on Warren Buffett's "owner's earnings" (reported earnings plus depreciation, amortization and other non-cash charges less expenditures on maintaining capital). If the shares are selling 25 per cent or so below the range of valuations, Mr. Radakovich will likely invest.
In an article for seekingalpha.com, Mr. Radakovich outlines a bullish view on oil sands company Suncor Energy. The positives include: i) the company is not overly reliant on the price of oil due to an integrated business model; ii) in situ operations have the potential to greatly reduce costs with new technologies; and iii) large scale operations spread fixed costs over high production volumes, reducing costs per barrel to less than $33 (U.S.).
Best move
He invested in major U.S. financial institutions in the years following the financial crisis of 2008 and 2009. "Market sentiment, litigation, regulatory actions and contingency fears were way overblown, providing an ample margin of safety to invest in well-run institutions."
Worst move
"Buying Peabody Energy at the top of the coal market for $60 a share back in 2012. … Luckily, I sold at $35." Today, it's trading just above $1.70.
Advice
"Opportunities to buy at good prices tend to arise mostly in times of turbulence. When the market is calm, build up cash and a 'watch-list' of stocks to purchase when the turbulence hits."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.