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Zeke Ashton of Centaur Capital Partners -- Exclusive Interview with The Manual of Ideas, May 2009

Zeke Ashton of Centaur Capital Partners -- Exclusive Interview with The Manual of Ideas, May 2009

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Published by The Manual of Ideas
Zeke Ashton of Centaur Capital Partners spoke eloquently on the topic of value
investing and risk management at the Value Investing Congress in Pasadena
earlier this month. We found Zeke’s presentation enlightening and asked him to
elaborate on some of his key points. A week or so ago, we conducted an
exclusive interview with Zeke, and it’s our pleasure to bring it to you here.
Before we proceed to the interview, we should point out that Zeke’s
approach to risk management has worked. In 2008, the Centaur Value Fund was
down 6.9%, trouncing the 37.1% and 40.0% declines of the S&P 500 and
Nasdaq Composite indexes. From inception in August 2002 through the end of
1Q09, the Centaur Value Fund gained 134.6%, net of fees and expenses, versus
returns of 15.1% for the Nasdaq Composite and -0.3% for the S&P 500 Index.
Portfolio Manager's Review sets a new standard in idea generation for serious investors — It is the next best thing to having a direct view into the idea generation work of "super investors" such as Warren Buffett, Seth Klarman or Glenn Greenberg. As Glenn points out, "We do similar work ourselves."

What is the work we do? Each month, the Manual of Ideas research team combs through equity markets utilizing our proprietary idea funnel and brings you a review of 20-25 pre-qualified investment opportunities. In addition, we apply a proprietary, quasi-quantitative scoring methodology to zero in on the 3-5 most compelling investments each month. The resulting Top Ideas are a must-read list of timely, alpha-packed stocks.
Zeke Ashton of Centaur Capital Partners spoke eloquently on the topic of value
investing and risk management at the Value Investing Congress in Pasadena
earlier this month. We found Zeke’s presentation enlightening and asked him to
elaborate on some of his key points. A week or so ago, we conducted an
exclusive interview with Zeke, and it’s our pleasure to bring it to you here.
Before we proceed to the interview, we should point out that Zeke’s
approach to risk management has worked. In 2008, the Centaur Value Fund was
down 6.9%, trouncing the 37.1% and 40.0% declines of the S&P 500 and
Nasdaq Composite indexes. From inception in August 2002 through the end of
1Q09, the Centaur Value Fund gained 134.6%, net of fees and expenses, versus
returns of 15.1% for the Nasdaq Composite and -0.3% for the S&P 500 Index.
Portfolio Manager's Review sets a new standard in idea generation for serious investors — It is the next best thing to having a direct view into the idea generation work of "super investors" such as Warren Buffett, Seth Klarman or Glenn Greenberg. As Glenn points out, "We do similar work ourselves."

What is the work we do? Each month, the Manual of Ideas research team combs through equity markets utilizing our proprietary idea funnel and brings you a review of 20-25 pre-qualified investment opportunities. In addition, we apply a proprietary, quasi-quantitative scoring methodology to zero in on the 3-5 most compelling investments each month. The resulting Top Ideas are a must-read list of timely, alpha-packed stocks.

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Published by: The Manual of Ideas on Jun 03, 2009
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ORTFOLIO 
ANAGER 
’ 
EVIEW 
 
Edited by the Research Team of
Copyright Warning:
It is a violation of federal copyright law to reproduce all or part of this publication for any purpose without the prior written consent of BeyondProxy LLC. The Copyright Act imposes liability of up to $150,000 per issue for such infringement, and violators will be prosecuted to the full extent of thelaw. See inside for subscription information, including having multiple copies sent to you. © 2008 by BeyondProxy LLC. All rights reserved.
A Monthly Publication of BeyondProxy LLC
www.manualofideas.com
May 28, 2009When asked how he became so successful, Buffett answered: “we read hundreds and hundreds of annual reports every year.”
With
John Mihaljevic, CFA
Managing Editor,
The Manual of Ideas 
john@manualofideas.com
 
“If our efforts can further thegoals of our members by givingthem a discernible edge over other market participants, wehave succeeded.”
Top 5 Ideas In This Report
EchoStar Corporation
(Nasdaq: SATS) ……………… p. 57
EMC Corporation
(NYSE: EMC) …………………. p. 59
Republic Airways
(Nasdaq: RJET) ………………. p. 62
Ticketmaster Entertainment
(Nasdaq: TKTM) ……………… p. 64
WellCare Health Plans
(NYSE: WCG) ………………… p. 68
Also Inside
Editor’s Commentary
…………….. p. 4
 Portfolios with “Signal Value”
…. p. 5
 Exclusive Interview: Zeke Ashton
p. 27
 Exclusive Interview: Igor Lotsvin
p. 35
 100 Superinvestor Stocks
……… p. 38
 Value Investing Congress Notes
p. 139
 Essay: Want to Be Next Buffett?
p. 153
 
About Portfolio Manager’s Review
Our goal is to bring you compellinginvestment ideas on the basis of intrinsic value versus market price.John Mihaljevic, editor, is a fundmanager, former banker and analyst.He is a member of Value InvestorsClub, an exclusive community of topmoney managers, and has won theClub’s prize for best investment idea.John is a trained capital allocator,having studied under Yale chief investment officer David Swensenand served as research assistant toNobel laureate James Tobin. Johnholds a BA in Economics,
summa cum laude,
from Yale and is a CFAcharterholder. He resides in NewYork City with his wife and two kids.
 
T
HE
S
UPERINVESTOR
I
SSUE
 
 
Snapshot of 100 companies owned by superinvestors
 
30 companies profiled and analyzed
 
Proprietary selection of Top 5 candidates for investment
 
Plus: Latest holdings of top investors
 
Plus: Exclusive Interviews with Zeke Ashton, Igor Lotsvin
 
Plus: Notes from Value Investing Congress
Superinvestor companies mentioned in this issue include Alexander's,American Express, American Railcar, AmeriCredit, AmerisourceBergen,
 
Amylin Pharma, Apartment Investment, Ark Restaurants, Borders, Bristol Myers Squibb, Burlington Northern, Canadian Natural, Capital Southwest,
 
CarMax, Cemex, Chesapeake Energy, Coca-Cola, ConocoPhillips,Consolidated-Tomoka Land, Costco Wholesale, Coventry Health Care, Cresud,CSX, Ctrip.com International, Deckers Outdoor, Dell, Dillard's, DISH Network,Dr Pepper Snapple, Eaton, eBay, EchoStar, Einstein Noah Restaurant, EMC,
 
Facet Biotech, Fair Isaac, Fairfax Financial, Fidelity National Financial, General Dynamics, Goldman Sachs, Greenlight Capital Re, Harman International,Harvest Natural, Health Net, Helix Energy Solutions, Hertz Global Holdings,Hess, Horsehead, Ingersoll-Rand, Intel, International Assets Holding, Iteris,Jefferies, Johnson & Johnson, Jones Apparel, Lab Corp. of America, Lear,Leucadia National, M&T Bank, MasterCard, MEMC Electronic Materials,Moody's, Mosaic, PDL BioPharma, Pfizer, Potlatch, Precision Castparts,Premier Exhibitions, Procter & Gamble, Republic Airways, RHI Entertainment,
 
Rockwell Collins, Ryanair Holdings, Schlumberger, Sears Holdings, Spirit 
 
AeroSystems, St. Joe, Strayer Education, Syneron Medical, SYSCO,
 
TAL International, Target, Telemig Celular Participacoes, Ticketmaster, Trident Microsystems, tw telecom, U.S. Bancorp, United Parcel Service, UnitedHealth,URS, USG, Visa, Waters, WellCare Health Plans, WellPoint, Wells Fargo,Wendy's Arby's, Winthrop Realty Trust, Yahoo!, Yum! Brands, and more.(profiled companies are underlined) 
 
 Inside:
 Exclusive Interview with Zeke Ashton, founder and  managing partner of Centaur Capital Partners
With compliments of The Manual of Ideas 
 
 
Table of Contents
EDITOR’S COMMENTARY ............................................................................ 4
 
PORTFOLIOS WITH “SIGNAL VALUE” ....................................................... 5
 
B
ILL
A
CKMAN
,
 
P
ERSHING
S
QUARE
............................................................................................... 6
 
Z
EKE
A
SHTON
,
 
C
ENTAUR
............................................................................................................ 7
 
B
RUCE
B
ERKOWITZ
,
 
F
AIRHOLME
.................................................................................................. 8
 
W
ARREN
B
UFFETT
,
 
B
ERKSHIRE
H
ATHAWAY
................................................................................. 9
 
I
AN
C
UMMING
&
 
J
OE
S
TEINBERG
,
 
L
EUCADIA
.............................................................................. 10
 
D
AVID
E
INHORN
,
 
G
REENLIGHT
................................................................................................... 11
 
B
RIAN
G
AINES
,
 
S
PRINGHOUSE
................................................................................................... 12
 
T
OM
G
AYNER
,
 
M
ARKEL
G
AYNER
................................................................................................ 13
 
G
LENN
G
REENBERG
,
 
C
HIEFTAIN
................................................................................................ 14
 
M
ASON
H
AWKINS
,
 
S
OUTHEASTERN
............................................................................................ 15
 
C
HRIS
H
OHN
,
 
C
HILDREN
S
I
NVESTMENT
F
UND
........................................................................... 16
 
C
ARL
I
CAHN
,
 
I
CAHN
P
ARTNERS
 .................................................................................................. 17
 
S
ETH
K
LARMAN
,
 
B
AUPOST
........................................................................................................ 18
 
E
DDIE
L
AMPERT
,
 
RBS
 
P
ARTNERS
............................................................................................. 19
 
D
AN
L
OEB
,
 
T
HIRD
P
OINT
........................................................................................................... 20
 
S
TEVE
M
ANDEL
,
 
L
ONE
P
INE
...................................................................................................... 21
 
M
OHNISH
P
ABRAI
,
 
P
ABRAI
F
UNDS
.............................................................................................. 22
 
R
ICH
P
ZENA
,
 
P
ZENA
I
NVESTMENT
M
ANAGEMENT
....................................................................... 23
 
K
EN
S
HUBIN
S
TEIN
,
 
S
PENCER
C
APITAL
...................................................................................... 24
 
P
REM
W
ATSA
,
 
F
AIRFAX
............................................................................................................. 25
 
M
ARTY
W
HITMAN
,
 
T
HIRD
A
VENUE
.............................................................................................. 26
 
EXCLUSIVE INTERVIEW WITH ZEKE ASHTON ....................................... 27
 
EXCLUSIVE INTERVIEW WITH IGOR LOTSVIN ....................................... 35
 
SNAPSHOT OF 100 SUPERINVESTOR-OWNED COMPANIES ............... 38
 
I
N
A
LPHABETICAL
O
RDER
.......................................................................................................... 38
 
B
Y
M
ARKET
V
ALUE
................................................................................................................... 40
 
N
ET
C
ASH AND
O
THER
M
ETRICS
............................................................................................... 42
 
S
TOCK
P
RICE
P
ERFORMANCE
................................................................................................... 44
 
F
REE
C
ASH
F
LOW
..................................................................................................................... 46
 
P/E
 
M
ULTIPLES
......................................................................................................................... 47
 
H
ISTORICAL AND
P
ROSPECTIVE
EPS ......................................................................................... 48
 
L
ATEST
Q
UARTERLY
EPS
 
S
URPRISE
......................................................................................... 50
 
R
EVENUE AND
EPS
 
G
ROWTH
.................................................................................................... 52
 
P
ERCENTILE
R
ANK WITHIN
I
NDUSTRY
......................................................................................... 54
 
I
NSIDER
B
UYING AND
O
WNERSHIP
............................................................................................. 55
 
TOP 5 SUPERINVESTOR SELECTIONS .................................................... 56
 
E
CHO
S
TAR
(SATS)
 
 –
 
O
WNED
B
Y
E
INHORN
,
 
J
OHN
G
RIFFIN
........................................................ 57
 
EMC
 
C
ORPORATION
(EMC)
 
 –
 
O
WNED
B
Y
A
CKMAN
,
 
E
INHORN
.................................................... 59
 
R
EPUBLIC
A
IRWAYS
(RJET)
 
 –
 
O
WNED
B
Y
E
INHORN
................................................................... 62
 
T
ICKETMASTER
E
NTERTAINMENT
(TKTM)
 
 –
 
O
WNED
B
Y
E
INHORN
,
 
W
EITZ
................................... 64
 
W
ELL
C
ARE
H
EALTH
P
LANS
(WCG)
 
 –
 
O
WNED
B
Y
B
ERKOWITZ
.................................................... 68
 
NEW OR INCREASED SUPERINVESTOR HOLDINGS ............................. 70
 
A
MERICAN
E
XPRESS
(AXP)
 
 –
 
O
WNED
B
Y
B
UFFETT
,
 
B
ERKOWITZ
................................................ 71
 
B
URLINGTON
N
ORTHERN
S
ANTA
F
E
(BNI)
 
 –
 
O
WNED
B
Y
B
UFFETT
,
 
W
ATSA
.................................. 74
 
E
B
AY
(EBAY)
 
 –
 
O
WNED
B
Y
H
AWKINS
,
 
M
ILLER
........................................................................... 77
 
F
ACET
B
IOTECH
(FACT)
 
 –
 
O
WNED
B
Y
K
LARMAN
....................................................................... 80
 
PDL
 
B
IO
P
HARMA
(PDLI)
 
 –
 
O
WNED
B
Y
K
LARMAN
....................................................................... 83
 
H
ARMAN
I
NTERNATIONAL
(HAR)
 
 –
 
O
WNED
B
Y
E
INHORN
 ............................................................. 86
 
P
REMIER
E
XHIBITIONS
(PRXI)
 
 –
 
O
WNED
B
Y
S
ELLERS
................................................................ 89
 
S
EARS
H
OLDINGS
(SHLD)
 
 –
 
O
WNED
B
Y
L
AMPERT
,
 
B
ERKOWITZ
,
 
M
ILLER
.................................... 91
 
S
T
.
 
J
OE
(JOE)
 
 –
 
O
WNED
B
Y
B
ERKOWITZ
,
 
W
HITMAN
.................................................................. 93
 
W
ATERS
C
ORPORATION
(WAT)
 
 –
 
O
WNED
B
Y
G
REENBERG
........................................................ 96
 
 
 
© 2009 by BeyondProxy LLC. All rights reserved.
www.manualofideas.com
May 28, 2009 – Page 3 of 156
UNCHANGED SUPERINVESTOR HOLDINGS ........................................... 99
 
A
MERI
C
REDIT
(ACF)
 
 –
 
O
WNED
B
Y
C
UMMING
/S
TEINBERG
,
 
B
ERKOWITZ
..................................... 100
 
C
ONSOLIDATED
-T
OMOKA
L
AND
(CTO)
 
 –
 
O
WNED
B
Y
W
INTERS
,
 
W
HITMAN
................................. 103
 
H
ARVEST
N
ATURAL
R
ESOURCES
(HNR)
 
 –
 
O
WNED
B
Y
P
ABRAI
.................................................. 105
 
J
EFFERIES
G
ROUP
(JEF)
 
 –
 
O
WNED
B
Y
C
UMMING
&
 
S
TEINBERG
............................................... 108
 
L
EUCADIA
N
ATIONAL
(LUK)
 
 –
 
O
WNED
B
Y
B
ERKOWITZ
,
 
P
ABRAI
................................................. 111
 
MEMC
 
E
LECTRONIC
M
ATERIALS
(WFR)
 
 –
 
O
WNED
B
Y
E
INHORN
.............................................. 114
 
P
FIZER
(PFE)
 
 –
 
O
WNED
B
Y
B
ERKOWITZ
.................................................................................. 116
 
S
YNERON
M
EDICAL
(ELOS)
 
 –
 
O
WNED
B
Y
K
LARMAN
................................................................ 120
 
TAL
 
I
NTERNATIONAL
(TAL)
 
 –
 
O
WNED
B
Y
B
ERKOWITZ
.............................................................. 122
 
USG
 
C
ORPORATION
(USG)
 
 –
 
O
WNED
B
Y
B
UFFETT
,
 
W
ATSA
,
 
W
EITZ
......................................... 125
 
Y
AHOO
!
 
(YHOO)
 
 –
 
O
WNED
B
Y
I
CAHN
,
 
A
SHTON
,
 
M
ILLER
.......................................................... 128
 
REDUCED OR ELIMINATED SUPERINVESTOR HOLDINGS ................. 130
 
A
MERISOURCE
B
ERGEN
(ABC)
 
 –
 
O
WNED
B
Y
P
ZENA
,
 
R
OBBINS
.................................................. 131
 
A
RK
R
ESTAURANTS
(ARKR)
 
 –
 
O
WNED
B
Y
R
ICHARDSON
,
 
G
REENBLATT
.................................... 133
 
D
ELL
(DELL)
 
 –
 
O
WNED
B
Y
H
AWKINS
,
 
G
REENBERG
,
 
W
ATSA
..................................................... 135
 
URS
 
C
ORPORATION
(URS)
 
 –
 
O
WNED
B
Y
E
INHORN
................................................................. 137
 
NOTES FROM VALUE INVESTING CONGRESS, MAY 5-6 .................... 139
 
Z
EKE
A
SHTON
,
 
C
ENTAUR
C
APITAL
........................................................................................... 139
 
J
OHN
B
URBANK
III,
 
P
ASSPORT
C
APITAL
................................................................................... 141
 
J.
 
C
ARLO
C
ANNELL
,
 
C
ANNELL
C
APITAL
.................................................................................... 142
 
D
AVID
C
HU AND
I
GOR
L
OTSVIN
,
 
S
OMA
A
SSET
M
ANAGEMENT
.................................................... 143
 
C
HARLES DE
V
AULX
,
 
I
NTERNATIONAL
V
ALUE
A
DVISERS
............................................................ 144
 
B
RIAN
G
AINES
,
 
S
PRINGHOUSE
C
APITAL
................................................................................... 145
 
S
COTT
K
LEIN
,
 
B
EACH
P
OINT
C
APITAL
M
ANAGEMENT
................................................................ 146
 
D
AVID
N
IERENBERG
,
 
D3
 
F
AMILY OF
F
UNDS
.............................................................................. 147
 
J
ED
N
USSDORF
,
 
S
OAPSTONE
C
APITAL
..................................................................................... 148
 
D
AVID
R
ABINOWITZ
,
 
K
IRKWOOD
C
APITAL
................................................................................. 149
 
G
UY
S
PIER
,
 
A
QUAMARINE
C
APITAL
.......................................................................................... 150
 
W
HITNEY
T
ILSON AND
G
LENN
T
ONGUE
,
 
T2
 
P
ARTNERS
............................................................. 151
 
W
ILLIAM
W
ALLER AND
J
ASON
S
TOCK
,
 
M3
 
F
UNDS
..................................................................... 152
 
ESSAY: WANT TO BE THE NEXT WARREN BUFFETT? ....................... 153
 
This report is printed on recycled paper that is FSCcertified and endorsed by the Rainforest Alliance.

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