P/E Ratio by Position mid July Update

We try to compile a list of P/E ratios for the whole portfolio every so often - I'd do it more often but it all has to be done by hand; hopefully one day there will be a nice 1 button to press and I can get this sort of data daily. Until then, this is our latest installment.

Earlier we explained the rationale behind the P/E ratio and how I use it in January [Jan 20: P/E Ratio for Portfolio]
Our last update was in May which I updated some top line thoughts which I'll mostly cut and paste below [May 19: P/E Ratio by Position May Update]
Recently we asked does P/E ratio even matter as some of the best performing stocks even in the recent carnage are those with the most astronomical valuations [Jul 2: Does Valuation Matter?] Great arguements can me made on both side but at heart I like growth at relative value in most cases (always make exceptions)

Here are the key points we brought up in May

1. I like earnings; it is very hard for me to value stocks with no earnings i.e. valuing hope or earnings in 2011 is difficult. (we do own some of this nature such as US housing stocks)
   
2. At heart, while not a pure value investor, I am a relative value investor - i.e. all things being equal I prefer growth at a reasonable value. That however, does not always work, certainly solar has been one example of this. I don't list growth rates below but I peg a growth rate I think viable for a 1-3 year period as my countercheck to P/E ratio.
   
3. I look forward, not backward - what I've done here is look at Dec 2008 estimates - or if the stock has a different year end than December, the yearly period closest to ending in December 2008.. If you looked backward you would of missed the entire fertilizer run and the entire coal run, deeming the stocks 'expensive' when in fact they were dirt cheap based on what was coming in the upcoming quarters/years.
   
4. In most cases I try to buy stocks I believe the analysts are missing part of the story and understating earnings potential - so the P/E ratios below are not necessarily what I believe to be true.
   
5. Except for the a few cases (investment banks and US housing) I believe almost every company will beat current analyst estimates for the year, and this is the whole basis for my investing style. So what seems "expensive" might become cheap by the time we get to December 2008 (or December 2009 in some of my themes)
   
6. In some sectors, I believe 2009 growth will be so good, I am looking past somewhat average 2008 estimates and looking out 1 more year (coal being the best case)
7. I am willing to pay up for scarcity value (i.e. hard to replicate business models or hard to enter businesses) I truly have no way to value a Baidu.com for example - so I think P/E ratio is useless for these.
8. I do pullback exposure when valuations seem to get rich (in my opinion) versus growth rates - we can see that now in Apple for example, and a few other names - while I like the companies, I just cannot put a large weighting to stocks that are this rich to growth rates.
9. An 18 P/E ratio in 1 sector might be expensive, whereas it might be cheap in another - hence I only compare P/E ratios among peers
   
10. P/E ratio is but one of many measures one can use; and as with most things its an art not a science. If you approach it as a science of absolutes, you will miss out on many opportunities. It is but one tool in a very large tool kit.

In general you will find most of the stocks I own as relatively cheap on full year 2008 estimates, especially in relation to their (relatively) high growth rates. Even within each sector, certain companies have major advantages which may or may not deem a premium multiple.

Below are all my non ETF holdings, sorted by sector. I've sorted within each sector the stock with the largest weighting at the top, and the farther down the list, the lower the portfolio weighting is.

Energy - Coal (2009 story, not 2008 story)
ANR 43.2
MEE 27.5
WLT 15.4
JRCC N/A

Agriculture - Fertilizer ("these stocks have run up so much - how can you keep holding them - they are SoooooOOoOo expensive". Still more of a 2009 story)
MOS 33.5
POT 19.1
CF 11.6
IPI 25.5

Energy - Natural Gas Focused E&P
EAC 12.7
XTO 14.1
COG 20.1
EOG 12.5

Solar
CSIQ 14.2
YGE 15.7
TSL 8.8 (did I mention buying value has failed me in this group? this is a management discount at its best)
LDK 20.1
ENER N/A (2009 story)

Energy - Oil Service/Drillers
ATW 16.5
PDE 11.7
CLB 22.0
NOV 17.4

Energy - Non Solar Alternatives
APWR 24.8
FSYS 32.7
AMSC N/A (2009 story - maybe)

Energy - Everything
PBR 12.9

Global Infrastructure
FWLT 18.3
MDR 19.9
FLR 26.6
JEC 24.0

Financial (not really comparable to each other)
GS 9.5
MA 29.4
BLK 20.1

Metals/Mining
CLF 16.7
SLT 10.5 (India)
MTL 8.6 (Russia) [note to self - need to add MTL exposure]
RIO 10.1 (Brazil)

Technology - Computer/Communication
CIEN 12.8
RIMM 28.9
AAPL 33.2

Technology - Internet ("crazy valuation" category, but scarcity value; no pure alternatives)
MELI 67.0(South America)
BIDU 73.7 (China)

Home Builders
GFA 9.0 (Brazil)
DHI N/A (US)
LEN N/A (US)
HXM 13.1 (Mexico)

India Banks
HDB 17.9
IBN 12.9

China (Misc)
PWRD 16.1 (gaming)
CTRP 38.7 (travel)
WX 26.2 (healthcare contract research)
SOHU 26.5 (search/gaming)
HOGS 10.0 (hogs)

All Other
DRYS 4.0 (not a typo)
CMI 14.1
ILMN 70.2