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Playing the Market’s Volatility

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    Delphi Management President Scott Black on how investors can gain despite the market gyrations.

  • Duration 4:47
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-- -- the session will despite today's rally the markets have tumbled more than 15%.

From their highs.

Problems in Europe and on Capitol Hill really showing no signs few signs of a resolution although today you could argue that there was some type of idea that came out of Europe but.

What does a smart investor do when there -- -- market gyrations.

Scott Black one of the smartest guy up there chairman and president of Delphi management is joining us right I don't you do is Scott when Thursday we -- triple digit losses and today we -- triple digit gains.

Well -- -- -- our lives we're really bottom up we tries tape pretty much fully invested just keep buying good -- return on equity companies.

The sustainable earning power low -- and of course hello p.s have been easier to finally asked two or three months.

But certainly as you alluded to before I came on this market's not for the faint of high.

It -- rates every day with the latest piece of news.

And all of this is -- -- some euphoria today it really hasn't changed much from the fundamentals either in the United States to Europe over the last 48 to 72 hours.

You get two steps forward and then exact two steps back how do you make money what is it that you're doing right now when you say bottom up.

That's simply means that you're looking at a company its balance sheet you're tuning out what's going on on the macro economic picture.

Yes might not trading our hands and we have to take a longer time horizon may be a year to and I picked a couple of stocks -- -- -- and one of those General Cable.

It's ridiculous this is a company that's a manufacturer of electrical distribution cable utilities infrastructure Telecom.

The stock -- five point eight times next year's earnings.

It's selling -- 88 cents on the tangible book and 68 cents on the stated book.

Barry -- debt equity ratio of the company continues to do well and only 37% of its businesses in North America.

I mean the market multiples eleven and a half twelve but you buying a very good business at half the market multiple you have the margin of safety of five point eight multiple -- Benjamin Graham -- What Benjamin Graham of course the original look value investor that Warren Buffett follows that the stock down 19% year over year He would say that's a bargain but.

Let me just quickly ask you when you saw what Warren Buffett was doing announcing that He would be buying back both in B shares.

Spending a good chunk of his forty billion dollars that He has in cash on the books.

For your mind there -- what's behind that well.

You probably know we are holders of Berkshire -- -- rightly.

You remember that He gauges the success of -- pumping by the growth in net asset value per share yeah and interestingly enough.

Spot last week touched down below stated book it's about buying -- -- he's actually create increasing his book value per share and that's the entry point.

-- didn't buy it one point 21 point 15 times book that now makes sense because He keeps his racket going because that's how we measure.

We -- asset value per share growth.

Last week it dipped below a 100000 dollars a share for the first time in in quite some time so -- she probably saw that as a screaming buy Super Micro Computer is another name you like right now.

Tell me why and I'm looking at that one it's up 35% year over year but it's down 20% the past three months what's going on.

-- the stocks come back from nineteen to what lab and I just met with the management -- them.

They have a legitimate 15%.

Top line growth but they do is make specialty service but going to data send us a high speed band with.

But low -- they have their own designs but the San Jose and Taiwan the operating margins are gonna grow over the next couple years from about seven point 2% to 9%.

When you put it all economic calendar basis for 2012.

You know about a dollar thirty in earnings may be a dollar 35.

It's a nine point eight multiple the company is debt free and -- 17% return on equity.

I mean gets no respect Iraq so many 15% legitimate top line -- in the tech world -- single digit multiples of this point.

And then in that got well positioned for cloud computing.

But you don't strike is somebody who is wearing a lot about how -- the mission got that's going on in Washington DC -- what's going on in Europe.

Well I -- because we have a bunch of dysfunctional child in mind that -- with the president.

He needs and -- needs a pro growth agenda and what he's had as a failed strategy.

And some of the things that He talked about about a week and a half ago.

Really not going to get the economy moving again we need to have major tax all of -- -- we have to reduce some of the regulations.

There.

Because there is to a trillion -- sitting on corporate balance sheets and they're not willing to invest is not enough demand but that this functionalities terrible.

Scott so nice to see you thank you so much.

Thank you very much -- at any time Scott Black picking General Cable BGC and Super Micro Computer just a wild --

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