Last week, my parents came to visit me in New York. They always take me out to great restaurants when they come down, and we usually make it to a museum or two as well. This time, we went to the Morgan Library & Museum in Manhattan. I’d been to the Morgan before, and have wanted my own private three-story library (complete with secret passages) ever since. Someday.
One thing I forgot was how beautiful the ceilings are—some of the best you can see without going to Europe.
The library (designed by Charles McKim) was built for John Pierpont Morgan in 1906; he used it as a study and to house his collection of rare books, manuscripts and prints. After Morgan’s death in 1913, his son opened the library to the public as a museum.
The Morgan’s collection is truly incredible; you can see Balzac’s writings in his own hand, a letter in which Galileo defends himself against accusations of heresy, scores by Mozart, letters from queens and presidents, illuminated manuscripts from 500 AD and some of the first books ever printed (including a Guttenberg bible).
In the adjoining study, there are paintings and sculptures by Italian Renaissance masters, and the enormous desk where Morgan worked. I thought the study’s red silk wallpaper was particularly interesting; it bears a family crest, but not Morgan’s. The insignia (a bumpy mountain-like shape) is the crest of the Chigi, a Sienese banking family. The family’s 15th century patriarch, Agostini Chigi, amassed his fortune through banking and was appointed treasurer to Pope Julius II after financing the careers of several popes and rulers. He’s also remembered for building the Villa Farnesina in Rome, which is decorated with frescoes by Raphael and other great artists.
The Villa has likewise since been turned into a museum, and is open to the public. I’m sorry to say I can’t remember if I’ve been, although I suspect I did on a class trip to Rome in college.
According to scholars, both Morgan and Chigi used their art collections to impress friends and acquaintances—Chigi is said to have had his guests throw their gold and silver plates into the Tiber River after each course (after he’d placed hidden nets to catch them).
But regardless of the reasons they amassed them, their collections have preserved a wonderful cultural history for the public. Through his library, J.P. Morgan turned a personal fortune into a public treasure, enriching the city and the world he lived in.
His other major legacy, of course, is JP Morgan & Co. And while the bank is still creating plenty of billionaires, I can’t help but wonder whether any of them will leave a public legacy like Morgan’s. An interesting tidbit, Morgan was worth about $68.3 million when he died—that’s $1.39 billion in today’s dollars based on CPI, or $25.2 billion based on relative share of GDP. Based on the latter figure, he would be the ninth-richest person in the world today, between Brazilian Eike Batistsa (who prefers collecting speedboats and fast cars to rare books) and the secretive self-made Spaniard Amancio Ortega. Based on the simple CPI conversion alone though, he would be somewhere between 700th and 800th.
As for the market, I’ve noticed an interesting change in tone lately.
Everyone is still waiting for the “inevitable” correction, but rather than waiting on the sidelines, they’re making hay while the sun shines. Advisors who missed out on—or haven’t taken full advantage of—the new year’s advance are increasing exposure to stocks and doing new buying.
Of course, they’re still being cautious—no one wants to get caught with their boat stranded once the tide does go out. That means not buying really high flyers, not buying the same stocks everyone has been recommending for months, and not buying popular, well-known companies. It’s forcing stock pickers to be a little more creative, which really gets me excited. They’re looking for investment candidates where they might not have before. Some of the most popular set-ups are sectors that have been unfairly lumped in with lower-quality industry peers (there were two great sectors in the underperforming for-profit education stocks in the last Dick Davis Investment Digest) and new leaders in industries that are staging comebacks (solar is popular again).
These are my favorite kind of stocks—I love reading about a great company, seeing it also has a great chart, and saying, “Why haven’t I read about this stock before?” Between the two Digests (Investment and Dividend), we recommend over 700 stocks every year. Obviously, we have to work hard to keep the recommendations fresh, but also good. I can’t recommend ConocoPhillips (NYSE: COP) for three months in a row, but I can’t include mediocre picks just because they’re new. So when our contributing newsletter editors are working hard to find fresh, quality names, it makes my job a lot easier! And my subscribers benefit by getting a bevy of good, fresh ideas.
Obviously, if you want all 700+ ideas Digest readers get, you’re going to have to subscribe. But I can share one great idea with you today. The company is AMN Healthcare Services (NYSE: AHS), which places temporary healthcare workers. The stock was originally recommended in Sound Advice on February 11. Editor Gray Cardiff wrote:
“AMN Healthcare Services is a small-cap ($240.9 million) provider of temporary medical professionals for hospitals, doctors’ offices and other medical facilities. We think demand is about to experience a sharp rise. … In a tight economy and job market, not only have many postponed elective or non-urgent medical care, which diminishes demand, but also many nurses, doctors and other skilled professionals who in better times might retire, take leaves or move on to new positions hold on to their current jobs. And when medical facilities have to reduce staff, the first to go usually are the temporary workers.
“We want to own AMN before investors not only get excited by how well healthcare shares will do but also before they are convinced that the economy has righted itself. If we’re right about demand for healthcare and the direction of the economy, AMN should move into a very profitable phase. [AMN’s] Medfinders acquisition caused consternation on Wall Street because of its price ($193 million), which was paid with debt and new shares, and because adding depth at a depressed period in the industry’s business cycle worried investors. The shares lost more than 40% in the four weeks after the deal was announced (July 28) until they bottomed at $4.34. Since we are coming in after a vicious sell-off, we can pick up AMN at a fat discount not only to where we see the company today, but even more from where we think it can go. ... We recommend buying AHS up to $8.”
AHS is a perfect example of an overlooked stock in an underperforming industry. The healthcare sector lagged the S&P 500 by about 8% in 2010, but the fundamental reasons for growth in the sector are obvious (our aging population being the most important factor) and as true today as they were two years ago. The sector is just a little behind the general recovery, partly because of overblown fears about health care reform.
AHS’s chart isn’t ideal, but the stock has shown clear strength over the last month, moving upward on heavier-than-usual volume. Earnings won’t be announced until March 8, so you could try and buy on a pullback before then. However, in the last two quarters, AHS has traded down after earnings despite reporting results that met or exceeded expectations, so you could also wait for a post-earnings buying opportunity.
As the saying goes, make hay while the sun shines.
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Investment of the Week
