A week ago I wrote our 2014 Review, along with the opportunities I see for 2015. Less than a week later we’ve purchased two of the securities from our watch list. This week we purchased 200 shares of DBA (an agricultural commodities ETF) at $24.12. As I mentioned last week, I have had satisfactory results with this same trade each of the last few three years. The difference currently is that the US dollar is rapidly appreciating against most other global currencies….which will prove a headwind. Our portfolio focuses on undervalued companies with fantastic brands, and this is the only “hedge” type investment I make. The investment community is not anticipating any trouble (if price is any indication) with cash crops and livestock in 2015, but farming is a fickle business. A little too much rain here……not enough there…..some sort of transportation troubles…..and the price of the commodities climbs rapidly. Besides, it’s not like the global population is declining or remaining static. With so little concern priced in, I think it’s a reasonable bet for us to make.
Now for the investment I’m REALLY excited about. This week we purchased 20 shares of National Western Life Insurance (NWLI) at $237 per share. You may be wondering why I’m so excited about our recent purchase?! There simply aren’t many companies that meet ALL of the criteria to be a long term holding. The facts that excite me most, include:
The company has zero debt, plenty of cash, and trades at less than 60% of book value, but…..
this isn’t a shrinking business who is just gasping for life. Book value has grown 9 of the last 10 years.
Insiders own over 34% of the outstanding shares
The price to earnings multiple is between 7.6 and 8 (depending on the source)
Double digit profit margins appear steady, as does the high single digit ROE metrics
This investment won’t be a home run tomorrow, but it looks a great company we can use to compound our capital for years to come. I added a few graphs below to illustrate the company’s track record. We are hoping to ultimately invest three or four times as much money in this company, but time will tell if Mr. Market gives us a good chance!
The graphics above are from the 2013 annual report featured on https://www.nationalwesternlife.com.
Disclosure: We own shares of DBA and NWLI. Please do your own research before investing, because this post is for entertainment purposes only…..and not a recommendation to buy, sell or hold any investment. I am not a licensed financial professional, please seek the advice of one before investing.
Which investments have excited you recently?