Commodity producing companies have been starved for capital for almost a decade leading to an attractive commodity price environment. Economic Moats in mining are derived from access to low-cost supply and wise capital allocation decisions. Sibanye Stillwater is our preferred choice in the mining industry due to their improving cost structure, strong corporate governance, and attractive valuation.

The US stock market looks expensive, but that is mainly driven by Large “Growth” stocks. US “Value”, “Small Cap” and “Foreign” stocks have relatively more attractive valuations. Value is a poor timing tool, but it can be a strong indicator of long-term forward returns.

Aurora Financial Strategies originally purchased shares of Diamond Hill (DHIL) for clients in individual stock strategies on 09/29/2020. We believe DHIL is worth about $404/share compared to a current price of $188.99 as of market close 12/17/2021. The company has an identifiable economic moat, quality balance sheet, and attractive margin of safety.

Last year, many investors raised concerns over the stock market as we approached the election. While it is normal to experience fear over potential changes, we advised clients that history teaches us that markets are much more likely to be driven by the business cycle than a change in political leadership.

My idea generation process is more creative to start which later informs a quantitative analysis. To find unrecognized value, I think it’s helpful to collect a broad set of information and ask a lot of questions.

Defense companies have better prospects than the market implies. Economic Moats are strong in this area driven by niche technology, long-term government contracts, and security clearances. These companies generally have competent management with reasonable incentive schemes. Northrop Grumman is our preferred choice due to its high exposure to prioritized programs including the nuclear triad.

People really do walk in circles without a relatively fixed reference point at least as far away as the intended destination. We believe investors can implement this lesson into their process to improve their chances of success.

Farming underpinned the creation of modern civilization, allowing for specialized labor, modern government and much more. That’s my synopsis on the importance of farming from a fascinating book I’m currently reading by Jared Diamond called Guns, Germs, and Steel: The Fates of Human Societies. I highly recommend this read as it will answer questions you never knew you had about how civilizations have transformed over time and can help form a framework for predicting how the world may evolve in the future.

Have you ever watched stock market investing segments on TV? I used to be impressed that the host would be able to share their recommendation on any stock at any time when asked. I wondered how they could know so much when the world (along with stock prices) is constantly evolving? After joining the industry in 2008, I set out to become an expert and met several very talented investors along the way. What I learned surprised me.

Aurora Financial Strategies recently purchased shares of Diamond Hill (DHIL) for clients in individual stock strategies. We believe DHIL has upside potential of 148% versus downside potential of 37% based on our scenario analysis and price at the time of writing. The company has an identifiable economic moat, quality balance sheet, and attractive margin of safety.

Historically, the stock market has mostly advanced regardless of who is President. Presidents have limited influence on stock market returns. Business cycles and other factors are more important to stock market returns than the President. We seek to invest in companies that can succeed regardless of the political environment.

Economic moats are characteristics that help protect a company’s profitability just as Castle moats help protect people inside. There are 2 stages of economic moats: legacy (existing) and reinvestment (under construction). Companies with reinvestment moats should invest more back in the business than legacy moat businesses. We believe the identification and evaluation of economic moats is an integral part of analyzing a company’s stock.

Economic moats are characteristics that help protect a company’s profitability just as Castle moats help protect people inside. The presence and development of economic moats can help a business have long term success. We believe the identification and evaluation of economic moats is an integral part of analyzing a company’s stock.

Dividends have been a lure for public investors ever since the 1600s when the Dutch East India Company distributed regular profits to shareholders in the form of guilders (Dutch currency). Investors who are looking to maximize returns often shun dividend-paying stocks, mischaracterizing them as low return investments. In fact, those investors are missing out when one takes a historical view of stock market returns. You may be surprised to learn that stocks that pay dividends have outperformed non-dividend-paying stocks over the long run.