Trinity Industries: "Prime Time" Value
11/18/2016 10:00 am EST
With the election over, we ask, "What should we do with our Prime Time Portfolio?" The short answer is "Not a darn thing", asserts value investing expert Charles Mizrahi, editor of Hidden Values Alert.
As long-term value investors, the reason we selected companies for our Prime Time Portfolio was based on their financial strength and that they were trading at a bargain price when we bought them.
The companies we hold have continued to increase their revenue and earnings in spite of a housing bubble, financial recession, and now, a tumultuous election cycle.
The key has always been is to focus on the company and not the noise. One of our latest additions, Trinity Industries (TRN), a diversified industrial company is a good example.
TRN owns a range of business — railcars, aggregates, wind towers, and distribution containers, just to name a few. The company was founded in the depths of the Great Depression in 1933 and has survived and thrived over the past 83 years.
In the past five years, while pundits were talking about a slow economy, low interest rates, deflation, etc., TRN more than tripled their sales from $1.9 billion to $6.4 billion. They also paid a dividend since 1964 — more than 52 years in a row, without skipping a beat.
When we added the shares to the Prime Time Portfolio in August, we weren’t the only ones who though the company was financially sound and trading at a bargain price.
ValueAct Capital, a $16 billion activist manager, which already had a 6.8% stake in the company, filed on November 1 that they increased their holdings to 9.8%.
The reason behind this was because they believed the company is “undervalued” and "represented an attractive investment opportunity. And so do we.
Instead of trying to predict where the economy will be four years from now under the Trump administration, we continue to focus on the company — and so should you.
By Charles Mizrahi, Editor of Hidden Values Alert