Philippe Brugere - Value Investor

I came across this video from Philippe Brugere this mourning. When I wake up an hour or two earlier than I would like and am unable to sleep, I crawl out of bed into the bath and scour the web for videos and soak. I spotted this one. This is the first time that I had come across Philippe Brugere - and I like his take on things.

Philippe looks for companies that he feels are given a low value for the wrong reasons - obviously a company that has a low value for the right reasons is something to avoid.

Philippe Brugere is looking to Europe as as source of value - European manufacturing and European banks. I am personally suspicious of banks - but make no mistake this does not mean that they are not good and sound investments, Warren Buffett has increased the Berkshire Hathaway stake in Wells Fargo, Philippe Brugere thinks that BNP and UBS are interesting and is particularly interested in Barclays.

His example of manufacturing is Aktiebolaget Skf a ball-bearing manufacture - SKF has a ROE of 28 and a historic ROE of 22 - over the past 5 years.

Dividends

The other thing that I found very interesting is Philippe's take on dividends. My (rough take) has been that dividends should not be paid if the company can put the money to better use (can generate a high return) from them by retaining them. Obviously with a low ROE the company should pay them out. Philippe's take is different - he likes dividends because they are a sign by which the value of a company can be seen by others. If I understand the way that he thinks of things correctly he buys undervalued stock and then waits for them to achieve their intrinsic value and subsequently sells them (when exactly is maybe not so important) the issue is how long does it take a stock to be recognized by the rest of the market as undervalued. What makes the undervaluation disappear. This is where the dividend comes in - it is the red flag to the bull.