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An "Anti-Katrina" Portfolio

09/16/2005 12:00 am EST


John Buckingham

Editor, The Prudent Speculator

Rather than focus on the sectors that have been gaining investor attention in the wake of Katrina, value investor John Buckingham takes the opposite approach and recommends a portfolio of stocks that have been hurt by the storm. Here’s his "anti-Katrina" portfolio.

"Many of our stock holdings in areas such as oil refining and marketing, manufactured housing, construction and engineering services, and building productsm have performed very well recently and we are happy to have enjoyed our share of the investment windfall as a result of Katrina, even as our hearts go out to all of the victims. However, I urge investors to continue to pay attention to financial fundamentals and avoid being blinded by visions of riches from low-priced, unknown stocks that are being touted as Katrina rebuilding plays.

"From our value perspective, we would avoid chasing hot market trends and sectors. Going against the crowd has usually offered outsized returns and I actually think that long-term oriented investors more likely do well by focusing on our ‘Anti-Katrina’ portfolio. Given our contrarian investment bent, this listing contains insurance companies, retailers, transportation-related concerns, and other consumers of petroleum products. These are precisely the sectors likely to suffer as a result of Katrina. We think that the share prices of these 13 undervalued stocks already discount a good chunk of the bad news and they have definitely been left behind in the post-Katrina market rally.

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