Investing Ideas

“Water water everywhere but not a drop to drink”

Seventy Five percent of the world surface is covered in water but 97% is salt or otherwise undrinkable. Another two percent of water is held in Glaciers and Polar ice caps. One, just ONE percent of the water on this Blue planet is usable for drinking, household use, agriculture, construction, manufacturing etc. Shocked? It gets worse. Water consumption is increrasing at 2.5 times the population growth. By 2025 two-thirds of the world population will live in water stressed conditions.

What are people supposed to do? Stop drinking water? Stop bathing? Stop agriculture, construction and industry? NO the answer lies in more efficient use of water, better distribution, purification, filtering and increasing the water supply. The companies that deal with water in any form will show good steady growth over the next few decades.

My Personal opinion is that since this is a very long term bet and there are no stand out companies that i can think of the best way to play this would be to invest in PowerShares Water Resource Portfolio (PHO) . If you prefer to invest in individual companies over Mutual Funds or ETFs my favourites are Aqua America, SUEZ, and Veolia Environnement. I have included a list of companies that form the Palisades Water Index.

• Calgon Carbon Corporation (filtration)
• Consolidated Water (water utility)
• Insituform Technologies (pipeline installation and repair)
• Companhia de Saneamento Basico do Estado de Sao Paulo (water and wastewater utility)
• Pentair, Inc NYSE (pumps, motors, filtration, water tanks)
• Southwest Water
• California Water
• Pall Corporation (filtration)
• Watts Water Technologies (valves)
• Amer States Water
• Aqua America
• Millipore Corporation (filtration)
• United Utilities
• ITT Industries (pumps)
• Franklin Electric (pumps and motors)
• Nalco Holding
• Layne Christensen
• Danaher
• Idexx Laboratories
• Lindsay Manufacturing (center pivot irrigation systems)
• Badger Meter (flowmeters)
• Synagro Tech
• Veolia Environnement
• Tetra Tech
• Urs Corp
• Valmont Industries (center pivot irrigation systems)
• Itron
• Flowserve (pumps)
• SUEZ-ADR
• Ashland, Inc.
• Idex
• Roper Industries (appliances, pumps, industrial controls)
• Emerson Electric (pump motors and flowmeters)
• Siemens-Ads
• General Electric (appliances, motors)
• 3M

Conflicts: I do not own shares in any of the companies or funds listed.

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A great man once said “If you dont know money, know your money manager”.

If you think you, your money manager or your mutual fund can beat the market youre probably wrong. Sixty five percent of mutual funds wont beat the S&P 500 this year. Most of the ones that do beat it will fall short next year. Why invest in a mutual fund that cant beat the market? You can easily invest in an index fund.
So you still want to beat the market? If you cant beat the market find someone who can. The last thing you want is to be invested in a high flying fund just as its about to dive. You need a money manager who can beat it consistently and has proven it over long periods of time. There are other money managers that i consider superinvestors like George Soros and Bruce Sherman but it is not possible for the average investor to invest with them so they have been excluded. I must mention Masters’ Select Value a mutual fund that is a favourite of mine. Three of its Four money managers Bill Miller, Bill Nygren and Mason Hawkins are in my favourites list. Its a great way to get exposure to multiple superinvestors in 1 mutual fund.

Take a look at my favourite money managers. Most of these superinvestors have beaten the S&P over long periods of time (10 years or more).
Individual Stocks
Warren Buffet: Berkshire Hathaway (BRK.A, BRK.B)
Eddie Lampert: Sears Holdings
My personal preference here is Berkshire Hathaway. It is better than Sears holdings in virtually any comparison.

The 3 dollar Bills
Bill Gross: Pimco Bond Funds (Too many funds to name)
Bill Nygren: Oakmark Select
Bill Miller: Legg Mason
I find it hilarious that my 3 favourite mutual fund managers are all named Bill.

Additional US Funds
William Danoff: Fidelity Contrafund
Joel C. Tillinghast: Fidelity Low Priced Stock
Harry R. Hagey: Dodge and Cox
Ken Heebner: CGM Focus/CGM Realty
Mason Hawking: Longleaf Partners

International funds
Charles de Vaulx: First Eagle Global
Riad Younes: Julius Baer International

There are too many great mutual fund managers and i wanted to keep my list small. I feel that some names need to be mentioned even if they are did not make my favourites list. Here are a few more brilliant managers and management teams

Richie Freeman: LeggMason Partners Aggressive Growth
Christopher Davis: Davis New York Venture Fund
John Calamos: Calamos Growth Fund
Wally Wietz: Wietz Partners Value Fund
Jeffrey Bruce: Bruce Fund
Oakmark International
Dodge and Cox International
Matthews Pacific Tiger

Conflicts : I have investments in Berkshire Hathaway, Fidelity Contrafund and Fidelity Low Priced Stock

Confession: I am the great man who said “If you dont know money, know your money manager”.

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