More Old Masters See a Buying Opportunity

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More Old Masters See a Buying Opportunity
By Tim Melvin, RealMoney.com Contributor
Friday November 14, 2008, 11:25 am EST

We are now deep into one of my favorite seasons of the year. The deadline is fast approaching for filing 13HFR reports that show investment managers' holdings, and the reports are coming in fast and furious.

For investors who are looking for ideas, seeing what some of the very best investors have been doing with their money is like having Christmas every quarter. These are indeed difficult times, and the outlook is bleak. In my opinion, it is worth knowing what investors who have been around a long time with a record of success are doing with their money right now.

One of the reports I look forward to the most every three months is the one from Kahn Brothers. This is a firm whose principals have truly been there and done that. Irving Kahn still goes to work every day at the young age of 102. He got his start in 1930 while serving as Ben Graham's teaching assistant. His son Thomas is a relative newcomer with a mere 40 years of experience in the business.

In a recent interview with the Financial Times, Irving said that he has indeed seen this before. He described the current market as the same old play with different characters. The Kahns describe themselves as classic Graham-and-Dodd investors who eat their own cooking.

What are the youngsters doing with their money and client accounts these days? Not much, according to their latest filing. Consistent with Thomas' remark that investors should avoid panic by turning off their television and taking a drive up the Hudson to enjoy the fall colors, the Kahns are sitting pat for the most part.

They added to a few positions such as Schering Plough and New York Times Co.. They bought more Flushing Financial and First Niagara. The Kahns added a little to two of my favorite insurance stocks, New York Magic and American National Insurance.

For the most part, their positions are pretty much the same as they were the end of the previous quarter. There were no new positions or eliminations. They are taking the long-term view and holding stocks they consider to be tremendous values and not panicking in the current markets.

Another seasoned market pro with a long track record reported on Wednesday. Leon Cooperman filed the 13HFR for his hedge fund, Omega Advisors. Cooperman has said publicly that he believes we are closer to a market bottom and that it is a good time to buy. He was with Goldman Sachs for years before opening his current investment firm.

What is Mr. Cooperman up to in this market? First let's answer the question that is the source of much of my reader mail this month. Yes, he was adding to both Atlas Pipeline Partners and Atlas Pipeline Holdings. In addition, there are no amended 13D filings of Form 4s filed to indicate that he has sold into the steep selloff in the shares.

He added to one of my favorite stocks, Hilltop Holdings, as well the master limited partnership Linn Energy. Omega Advisors exited positions in JPMorgan Chase, Wells Fargo and Citigroup.

It also trimmed its tech-stock exposure somewhat in the quarter, especially telecommunications. Cooperman eliminated holdings in both Sprint Nextel and Nokia. New positions include Barr Pharmaceuticals, the troubled Los Angeles REIT Maguire Properties, Potash and UnitedHealth Group.

I was chastised by a fellow commentator for presenting the views of those who are not totally bearish and who believe that perhaps the selloff is overdone. It was pointed out that people are scared, and they should be. I do not disagree, and I have made it plain that market conditions worry me as well. I have also said that I am finding some very cheap stocks that I believe are worth owning for the long-run, patient investor. This makes it difficult to pull the trigger at times, and that is why I have been buying the stocks and hedging the market risk.

But I do myself and readers a severe disservice if I present only those views that agree with my own. Howard Marks, Irving Kahn and Leon Cooperman have been in the investment business for far longer than I. Mr. Kahn, for one, has been at this longer than anyone. The only person with anywhere near Mr. Kahn's seniority is Seth Glickenhaus, who recently told reporters that even though he was uncomfortable with the volatility, he thought there was great money to be made in the long term at these levels. Above all, he said, it never pays to panic.

Each generation thinks it invented music, sex and the stock market. None of us did, and at times like this, it pays to check in and see what the graybeards are doing. It appears they are very patiently and carefully buying stocks.