CM Article - Companies We Own

Investment Counselors
Managing Portfolios $2 Million and Above © 2006
Century
Management

COMPANIES WE OWN
(April, 1999)

"Currently their industries are very unpopular
and that is why you can buy them at discounts
of up to 50%"

In this section, we are going to discuss in summary form three companies: CPI Corporation (CPY), Schlumberger (SLB), and Toys R US (TOY), as it would be beyond the scope of this article to cover every stock in our portfolio.

Summary of Three Companies We Own
Stock Symbol	Century PMV	Century Average Buy	Discount to PMV	Price to Earnings	Price to Cashflow
SLB	$92	$45.0	49%	22.0	12.00
TOY	$35	$17.5	50%	12.5	7.00
CPY	$50	$20.0	40%	14.5	4.90
3 Stock Avg.	-	-	-	16.3	7.97
S&P	-	-	-	30.6	15.80
Source: Century Management database

These three companies have similar characteristics that we think are very important and are quite valuable. First of all, they are leaders in their fields and dominate their industries. Currently their industries are very unpopular and that is why you can buy them at discounts of up to 50% of their private market value (PMV).

Second, these companies are extremely well financed and have invested enormous capital to prepare them for the future. Third, these companies also continuously repurchase shares to further create their shareholder value.

When the fundamentals of these industries get better, and there are signs in all three industries that they are, these stocks will move closer to their private market value. We believe that in the next two to three years, these stocks will be selling in the market at 80% of their private market value. However, if this process takes up to 5 years, instead of 3, for these stocks to double, it would suggest a 15% return. If you compare this to the S&P numbers below, which would average only a 2% to 5% return depending on which evaluation you want to use, you can see our stocks compare very favorably. While it may take some time and patience for these unpopular stocks to reflect their true value, the risk is low and the upside is high.

PLEASE READ:
Rule 206(4)-1 of the Investment Adviser’s Act of 1940 prohibits advertisements that refer directly or indirectly to the Adviser’s past specific profitable recommendations unless the advertisement sets out a list of all recommendations made by the Adviser within at least the prior one-year period.

Please click on this link to view a list of past specific recommendations.
It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.

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