Carnival of Money Stories #1

Carnival of Money Stories #1 has just been posted over at Andy's Money Walks Personal Finance blog. There's quite a wide variety of stories in this edition of the carnival. I would encourage you to head over for a look. I came across a couple of really interesting posts.

The other reason for mentioning the Carnival of Money is that my post on Biotech Capital was included in the carnival. Blog carnivals are a great way for new bloggers to generate interest in their blogs. I would strongly encourage other bloggers out there to contribute to and support blog carnivals in whatever is their area of interest.

Thanks again to Andy for including my post.

Gannon On Investing

Gannon On Investing was one of the first blogs I stared reading. The blog is written by Geoff Gannon - a hard-core value investing aficionado. The blurb from Gannon's site is as follows.

Value investing blog and value investing podcast influenced by Benjamin Graham, Joel Greenblatt, and Warren Buffett's value investing model. Built upon the value investor insights of intrinsic value, margin of safety, competitive advantage, and protection of principal.

I like the straight-forward style of writing which appears on Gannon on Investing. Geoff's no nonsense down to earth approach to investing provides inspiration for other value investors in the making.

However, what first attracted me to Geoff Gannon's blog was the series of podcasts he has recorded and put on his site. There are currently about a dozen podcasts to choose from. The podcasts mainly cover general value investing concepts, but Geoff occasionally discusses specific companies.

My only criticism of the Gannon On Investing Blog would be that he seems to post infrequently (although having said that, a flurry of posts has appeared recently). My guess is that Geoff would argue that quality of material is more important than quantity.

Read about other investment resources.

CDO - Colorado Group

Colorado Group (ASX:CDO) was recently the subject of a partially successful takeover bid by Affinity Equity Partners (one of a long line of Private Equity deals). The takeover was only partially successful because Solomon Lew emerged at the last minute 10% (blocking) stake in the company. While Affinity control the Colorado Board, Lew's stake prevents Affinity from attaining the 90% ownership required to compulsorily acquire the company.

The Australian Financial Review reported today that Affinity would be able to make another bid for Colorado in March 2007.

Affinity, it is thought, can make a new bid for Colorado from March 16 next year. Market observers are already suggesting Affinity will waste little time in bidding around the $5.20 mark in an attempt to get rid of Lew and get 100% of the company's cash flow.

Given that Colorado closed at $4.00 yesterday, this creates an interesting opportunity. At yesterday's closing price there is a 30% gain available assuming that a bid does in fact arise at $5.20 as suggested.

While this all sounds quite reasonable, the current share price would indicate that investors in the Australian stock market think this is certainly not a sure thing. Still, it's worth considering...

Disclosure: The author does not own shares in Colorado Group.

Festival of Stocks #15

The Festival of Stocks #15 post has just gone up over at SINLetter Blog.

My post on Biotech Capital Limited has been included in this carnival - thanks Asif. Make sure you head over and have a look at some of the other posts selected for this edition of the carnival.

You can read my post on Biotech Capital here.

Carnival of Investing #53

The Carnival of Investing #53 has just been published. Head on over and have a look.

My post on Biotech Capital Limited has been included. It's good to see international submissions being chosen in the blog carnival. This was my first submission and I think Blog Carnivals are a great idea.

Warren Buffett - Berkshire Holdings Shareholder Letters

Although Warren Buffett has not written any books (at least not to my knowledge), there is a website which contains an invaluable selection of Buffett's writings. The Berkshire Hathaway Shareholder Letters page of the Berkshire Hathaway website contains Warren Buffett's letters to shareholders for the years 1977 through 2005 (the most recent one available).

I highly recommend reading (or at least browsing) through each of the letters written by Warren Buffett. In addition to discussing the performance of Berkshire Hathaway and its various businesses, Buffett also discusses more general concepts.

For example, in the 1987 letter to shareholders, Buffett discusses how Benjamin Graham's famous Mr Market metaphor is useful in developing a mental attitude suitable for dealing with market fluctuations.

And in 2000, Buffett discusses valuation. Among other things, he debunks the myth that growth and value investing are two contrasting styles. He argues that they are simply part of the same equation.

So if, like me, your are keen to read pearls of wisdom straight from the oracle's mouth, then head over to the Berkshire Hathaway website for some enlightenment.

BTC - BioTech Capital Limited

If you are interested in the biotechnology sector of the Australian stock market then BioTech Capital Limited (ASX:BTC) might be worth a look.

BioTech Capital Limited is an investment fund which invests in both listed and unlisted Australian biotechnology companies. Read more on the company's website. One advantage of investing in a company like Biotech Capital is that you will be exposed to a broader range of biotechnology companies than might otherwise be the case if you were investing in biotech companies directly. You also have a dedicated manager (hopefully knowledgable in the biotechnology industry) picking the investments for you.

Biotech Capital held the following listed investments as of the end of November 2006.

• Alchemia (ASX:ACL)
• Clinical Cell Culture (ASX:CCE)
• Phylogica (ASX:PYC)
• Prima Biomed (ASX:PRR)
• Starpharma (ASX:SPL)
• Stem Cell Sciences (ASX:STEM)

In addition Biotech Capital held the following unlisted securities.

• Biocomm
• Continence Control Systems
• Pacific Knowledge Systems
• XRT

As of the end of November 2006, Biotech Capital's listed securities were valued at 19.05 cents per share. The unlisted securities were valued at 16.99 cents per share and net cash on hand was at 8.46 cents per share. After a small allowance for tax, the net tangible assets per share come to 44.64 cents. This compares with a closing price today of $0.40. This is a discount of almost 10%.

While Biotech Capital is not a screaming bargain as a pure asset play, it does appear to be reasonable priced given the assets it has. Also, the Australian Biotechnology sector has been somewhat overlooked in recent times so asset valuations should not be stretched.

There are a couple of risks to be noted with regard to this company (beyond the normal risks involved in investing in biotechs). Liquidity is quite low so establishing a holding or selling out of a position may require patience. Also the company has a very small capitalization ($36M).

One further point to note - Biotech Capital is registered as a Pooled Development Fund (PDF). As such, investors are generally exempt from tax on capital gains, but equally capital losses are not available to be claimed as tax loses.

However, on balance Biotech Capital Limited looks like quite a reasonable situation for those looking for a broad exposure to the Australian stock market biotechnology sector and who have an appetite for higher risk. As with any investment in Australian shares, do your homework and seek professional advice where necessary.

The author does not own any shares in Biotech Technology Limited.