William Smead
Chief Executive Officer
Chief Investment Officer

Printable Version

Dear Fellow Investors:

moat/mōt/
Noun:   A deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defense against attack.

At Smead Capital Management our investment committee talks and thinks about the moat of a business a great deal. Based on the definition above, we believe that a wide moat is provided by the aspects of the company and their business which prevent competition from damaging highly sustainable profitability. Wide moat is one of our eight proprietary criteria for selecting common stocks. We have seen a number of organizations begin to include logic associated with moats into their equity research formats. Unfortunately, we believe many market participants confuse the by-products of a moat with the actual moat itself. We think this spells opportunity. Looking for stocks with a wide moat that are priced as if they don’t have one adds to the advantage of the long-duration common stock investor.

I read recently that after years of trying and millions of dollars invested, Google (GOOG) is considering folding Google Wallet and Google Checkout together. When it was announced five years ago, Google Checkout was thought by some to be a potential “PayPal killer”. PayPal appears to have successfully defeated one of the largest cash-rich, wide-moat companies in the world from getting into its secure, online payment castle. PayPal’s moat includes over 100 million existing customers, consumer brand recognition and nearly a decade of statistical information on transactions. Google has the same kind of moat in search that PayPal has in payments. The economic need that PayPal meets is identification privacy and ease of transaction facilitation. It’s a huge market and will grow tremendously in the next ten years. We believe as Google admits defeat, it will mean that the moat at PayPal is so strong that it can’t be overcome by massive financial resources and tech savvy. Google had both of those merits.

PayPal is a wholly-owned subsidiary of Ebay (EBAY). Ebay has a wide moat in its core marketplace business. Ebay is one of the most recognized brands in the world and most of its advertising is free thanks to the lock it has on market share for pre-owned items. When an athletic milestone is reached, the ball or puck or jersey is expected to immediately be offered on Ebay. Sportswriter’s frequently mention this fact in their writing. When Michael Jackson dies, his memorabilia becomes an instant hit on Ebay. This moat makes the low-risk, high free-cash flow nature of Ebay’s original business nearly impregnable. After backing out the cash net of long term debt, Ebay trades for 11 to 12 times the 2012 consensus earnings estimate. It is very unusual to see a fast-growing, wide-moat business trade for anything short of a premium to the S&P 500 Index multiple.

The symptoms of a wide moat are things like high, sustainable profit margins, huge market share, pricing flexibility and long histories of these identifying characteristics. However, the symptoms are not the moat. The moat causes the symptoms. Walgreens (WAG) is one of the two largest drugstore companies in America. Their properties dominate the best locations in the US, their brand recognition is the highest in the industry, their real estate ties up very little of the company capital and they have decades of experience in customer needs and satisfaction. Their financial muscle puts them in position to buy Duane Reade and walk away from Express Scripts. A college buddy who did extensive research on the subject told me that one out of every two Americans will never get a prescription filled outside of the walls of a drugstore. Walgreens castle is being attacked by a disagreement over pricing with Express Scripts and their moat is very busy defending the company. We think it will succeed.

HR Block (HRB) has spent the last ten years fighting off the attacks of Jackson Hewitt and Liberty, two tax prep companies started by former HR Block employees. My favorite test for a moat is putting 100 people through a survey. You ask them, “What is the first thing that comes into your mind when the surveyor says tax preparation”? Almost everyone will say, “HR Block”. If the question was online payments, it’s PayPal. If it is, “where do I find pre-owned items, or sporting event tickets?” the answer is Ebay. If the question is, “who do I trust to entertain my children and spouse?” it is Disney/ESPN (DIS). If the topic is coffee the answer is Starbucks (SBUX), burgers it’s McDonalds (MCD), retail service and selection it’s Nordstrom (JWN). The moat in business is about deeply, rooted competitive advantages which business cycles can’t uproot. It is about a love affair between a company and an addicted customer base which grows as population grows.

Warren Buffett was asked by the Financial Crisis Commission what one single characteristic he looks for in a business. He referred to the stickiness of the customer and the company’s ability to raise prices without affecting unit sales. We feel the moat of the business is what protects the ongoing success of a business even when legitimate competition comes along. It is what is behind wonderful long-term profitability and high levels of free cash flow. Moat analysis is not about number crunching, it is about mind-space control and forces which block or kill competition.

Lastly, we at SCM are value investors. Something very difficult has usually had to happen to open the door for us to get a good entry price on common shares of a wide-moat company. Ironically, in many cases, the temporary reason for the disfavor actually increases the size of the wide moat. Big pharmaceutical companies have had the most hostile political, regulatory and legal environment in the industry’s history the last four years. Major drug stocks have seen blockbuster products lose their patent and the combination of the aforementioned forces have brought many drug stocks down to the lowest PE quintile (bottom 20%) in the S&P 500 index. Instead of doing permanent damage to companies like Merck (MRK), Pfizer (PFE) and Bristol Myers (BMY), these circumstances have increased the depth and width of their moat. It is estimated that a new drug costs over one billion dollars to create and bring to market. Nobody besides these large pharma giants can afford to fight the battle. This high original investment threshold has turned the biotech industry into mostly farm teams feeding the major leagues. Smaller drug and biotech firms do research for creating wonderful new health science and are forced to hand it off to someone with deep pockets and an international manufacturing and sales force. Now that companies like Merck and Amgen (AMGN) are having great success with new products, the naysayers can begin to recognize how incredibly well defended these companies are from competition going forward. We believe they have wide moats.

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. Some of the securities identified and described in this missive are a sample of issuers being currently recommended for suitable clients as of the date of this missive and do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.

William Smead
Chief Executive Officer
Chief Investment Officer

Printable Version

Dear Fellow Investors:

Charlie Munger, the Vice Chairman of Berkshire Hathaway, has said many times that psychology is the most under-utilized discipline in business. He compares the business person or investor, who doesn’t have an inter-disciplinary set of “mental models” including psychology, to a one-legged person in a kick-boxing competition. We believe that those using low consumer confidence as a reason to be bearish about US large cap stocks and consumer discretionary stocks are equivalent to one-legged kick boxers.

At the website, The Big Picture, Barry Ritholtz shared his thoughts (Nov. 4, 2011) on the US employment numbers. We have respected the thoughts and research of his firm because they were early in understanding how damaging the housing bubble was going to be on the US economy. However, this time we believe that the trap that the market has laid for investors in the area of unemployment and consumer confidence is well set. We believe that a number of savvy analysts are not “seeing the forest for the trees” when it comes to understanding the history, psychology and the accounting of consumer behavior.

We at Smead Capital Management believe two things about consumer spending and consumer behavior in the US. First, the income statement of US households tells you more about future spending than consumer confidence does. Second, we believe Andy Grove’s professor at the City College of New York was right when he said, “When everyone knows that something is so, nobody knows nothing!” In other words, is there an investor left in the world who has not anticipated that it will be years before the US consumer makes a comeback? Consumer confidence is a neutral indicator most of the time and a valuable contrary indicator at extremes.

Let me unpack these two ideas. The Federal Reserve Board has maintained statistics on US households since 1980 measuring the percentage of gross household income required to service household debt. You can view these stats by going to www.federalreserve.gov/releases/housedebt/. There you will see that the real estate and borrowing bubble of the 2000’s allowed US households to get to ridiculously high ratios of household debt service (around 14% of income at the peak). This was markedly higher than previous peaks of 12.4% in prior cycles. You will also see that US households have made huge strides since late 2007. These statistics are lagged by three months or more, but you can see that by June 30th of 2011 the ratio had fallen to 11.09%. Assuming that this trend of austerity continues through the next 12 months, the US Household Debt Service Ratio could fall to the low levels of the early 1980’s deep recession at 10.6% and in the job-less recovery of the early 1990’s.

Think of it like this. Who is likely to spend money and do it more consistently, someone who’s in very good shape on their income statement that lacks confidence or someone who is up to their eye-balls in payments but brims with confidence? The unconfident households with room in their income statement will ultimately be part of what we call “pent up demand” for goods and services. The car wears out or the fridge needs replacing or the kids are going to get too old to want to go to Disneyland, so you breakdown and do it. You don’t have much confidence, but you can afford the expense.

These facts have been baffling to most stock market participants for nearly three years. In the world of the supposed “new normal”, why is everything happening pretty normally among US consumers who are providing great business to McDonald’s (MCD), Starbucks (SBUX) and Nordstrom (JWN)? We believe the record-setting low consumer confidence numbers of 2009-2011 and the continuing high levels of unemployment that The Big Picture speaks of have been the reason that the money management community has avoided the consumer discretionary category.

We looked at the correlations between consumer confidence and the stock market between 1977 and 1996. What we found was that there was almost zero correlation and it was a neutral. If you look at the period since 1996, consumer confidence was a valuable contrary signal at extremes and the correlation is significant. Stocks were to be avoided on high consumer confidence and the stock market lows have coincided with low consumer confidence.

Going back to Andy Grove’s professor, the logical thing that everyone knows is that US households have a great deal of debt to work off over the next ten years and the US government has a very large amount to deal with itself. Everyone has assumed that the consumer wouldn’t be able to lead a meaningful economic recovery until those debt levels come back in line from a historical standpoint. This has resulted in significant under-ownership by professional money managers and asset allocators in the consumer discretionary category. We believe that until the money management community capitulates and buys into the consumer sector that it will out-perform the S&P 500 Index. And we believe that the capitulation will come at dramatically higher consumer confidence levels and we are about as far away from those statistics in early November of 2011 as you can be!

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. Some of the securities identified and described in this missive are a sample of issuers being currently recommended for suitable clients as of the date of this missive and do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.

William Smead
Chief Executive Officer
Chief Investment Officer

Printable Version

Dear Fellow Investors:

We have now seen the S&P 500 Index drop below 1150 five times since the first of August. The overriding reasons, listed in no particular order, are fears of another contraction in the US economy, European sovereign debt and bank problems, a lack of political leadership in Washington D.C. and persistent unemployment data. These problems have caused an 18% decline in the index from peak to trough and have given those of us who stay fully invested in high quality stocks another opportunity to examine our thesis.

Our thesis is that by owning the companies which fit our proprietary eight criteria and making changes very sparingly, we can garner the historically superior returns which come from equity ownership and exceed the return of the index over long-term time periods. This comes from a combination of dividends, dividend increases and capital appreciation.

Even though we are not traders or short-term oriented, we at Smead Capital Management would like to throw out a few opinions which cause us to be very positive about the stock market over the next one to two years.

1) While market participants look to the US government and the Federal Reserve Board for answers, US Households are doing remarkable and historical work of getting their finances in order. The Household Debt Service Ratio dropped to 11.09% at the end of June after being as high as 14% in late 2007. This is the ratio of how much of the average family’s gross income is dedicated to debt service. The statistics are reported on a 90-day lag, which means that the ratio is probably below 11% by now. At the pace that households are improving their income statements, we could see a ratio of 10.6% in the next year. Numbers below 11% existed in 1982 and 1992 at the beginning of extended periods of prosperity. What this means is that households could take on monthly payments comfortably and that bodes well for the employment rich automobile and housing industries.

2) Usually bearish firm, Grantham, Mayo, Van Otterloo (GMO), recently put out an extensive research piece indicating that US housing participants are making the “Error of Pessimism”. They are arguing that US housing is in position to become a bright spot in the US economy.

3) Commodity prices are plunging. In the same piece, GMO argued that China is making the “Error of Optimism” in residential real estate. If real estate activity falls off in China, commodities will continue to decline. No politician could duplicate the incredibly simulative effect of lower gasoline prices, not to mention the enormous psychological benefits in a mobile society like ours.

4) Pretty much all stock market participants are bearish. Mutual funds specializing in US Large-Cap equities have suffered huge net liquidations for months. Sentiment polls look similar to the spring of 2009, right before a huge gain in the following two years. Stock correlations are running at highs only seen in the 1987 crash period. This means that the professional traders are selling baskets of stocks simultaneously without regard to their quality. When low correlations come back in the future there is a lot of wheat to separate from the chaff.

5) We believe our companies have performed well in a less than stellar environment. The dividend growth the next five to ten years could set records as these lean powerhouses gush free cash flow. Howard Schultz pointed out, as an example, that Starbucks has $2 billion in cash on their balance sheet and might be interested in strategic acquisitions.

6) Insiders (officers and directors of public companies) have been as aggressive in their purchases of their own company’s stock as they were in early in 2009.

We believe many of our stocks have held up quite well in this environment, but some of them look especially attractive at this point. Financial stocks seem to be in a capitulation phase and Wells Fargo (WFC) and Aflac (AFL) look particularly attractive. The household debt ratio inspires us about Disney (DIS), Cabela’s (CAB) and H&R Block (HRB) in what we call our “staple” consumer discretionary category. In healthcare, Mylan Labs (MYL) is retesting its August low and saw significant insider buying at these price levels last month. We would be remiss to not mention that PayPal/ Ebay (EBAY) is preparing to become a major payment force in stores for the first time. It is nice to start a business with 100 million existing customers.

In conclusion, we have reasons for being the optimistic contrarians, even over the next one to two years.

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. Some of the securities identified and described in this missive are a sample of issuers being currently recommended for suitable clients as of the date of this missive and do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.

William Smead
Chief Executive Officer
Chief Investment Officer

Printable Version

Dear Fellow Investors:

They say that to make significant improvements or permanently change behavior you have to hit bottom. Once you hit bottom, you have to want to change. There is a special blessing in hitting bottom in the business world earlier than your competitors. This is true for companies and it is also true for national economies.

Home Depot was created by Arthur Blank, Bernie Marcus, Ron Brill and Pat Farrah. The leader of the company for years was Bernie Marcus. He had a passion for the business and for employees which was infectious. When he stepped back from the company in the year 2000, a former GE executive named Robert Nardelli became the CEO and attempted to improve the company through financial engineering. The attention to merchandising detail and customer service suffered once Bernie’s enthusiasm was removed from operational management of the company. Frank Blake was hired in 2007 with the morale and the performance of the company in a deep struggle. Home Depot’s number one competitor, Lowe’s, was running rings around them.

Frank Blake went to work on a company which in many ways hit bottom in 2007. By the time the “Great Recession” was in full force in 2008, Home Depot was already working on improvements which other businesses would make at the depth of the recession. In the most recent quarter of 2011, Lowe’s and Home Depot reported results which effectively were the reverse of 2007. Lowe’s earnings stagnated and Home Depot is growing again and appears to be gaining market share. Hitting bottom early was a competitive blessing for Home Depot.

Another example of this occurred in 2007 when it became obvious to Howard Schultz that he needed to retake the reins as CEO of Starbucks. The company had over-expanded and lost the attention to detail and efficiency, which was one of its hallmarks. Soon after taking over in mid-2008, Schultz announced that 600 stores would be closed and that earnings would be damaged by charges and lower sales. Starbucks corporate performance hit bottom in late 2007 and early 2008.

By 2008, Starbucks was well on its way to improving almost every aspect of their business. Then the “Great Recession” hit with full force. This caused all the businesses around Starbucks to deal with some of the same forces that their own stumble had forced them to address. In the fiscal year 2011 ended September 30th; Starbucks will have nearly doubled its peak fiscal earnings record prior to the great “reset”. Hitting bottom before most all the other businesses was a blessing.

This is not only true for companies, but it is also true for countries. It was obvious to our firm in late 2005 that residential real estate prices were nuts. We wrote endlessly about this topic during that time. The residential real estate market started to crash in the hottest markets in the US in late 2005 and in the rest of the country in 2006 and 2007. In turn, the market for mortgage loans blew up in 2007 and 2008 leading to the financial crisis of 2008 and early-2009. The US hit bottom in the economy in the first quarter of 2009 and the stock market bottomed on March 9th of 2009.

The US economy has been attempting to cleanse itself of these over-priced properties and bad loans for five years. We’ve had to recapitalize our banks through the TARP program. Businesses had to right-size their employment levels and get their balance sheets in order. Households had to aggressively attack their over-spending ways, turning Dave Ramsey into the high priest of debt reduction and have made massive improvement in their household debt service ratio.

While the US economy has hit bottom and has been cleansing itself for five years, Europe and Japan have been slow to get their act together. Japan never has cleaned their system of the loan problems of their late 1980’s bubble. Europe has a common currency and uncommon problems which they have been hesitant and reluctant to address.

Brazil, Russia, India and China have boomed and caused Australia and Canada to boom with them. The economies of Brazil and India are already showing severe cracks. Australia’s housing market is crashing. Lower oil prices could lead to major problems for Canada and its hot residential real estate markets. Bank loans that are going bad are haunting the economies of the BRIC nations. Here is how Bloomberg Business Week’s Michael Patterson explained what is going on in the emerging market world in their August 15th-28th issue:

“Loans to Brazilian shoppers, Chinese infrastructure projects, and Indian property developers have fueled the global economic recovery and turned emerging-market banks into some of the world’s biggest firms by market value. The party may be ending. Worrisome inflation rates in Brazil, Russia, India, and China have local monetary authorities raising interest rates and tightening credit conditions. That, plus evidence nonperforming loans are on the rise, has investors rethinking their enthusiasm for BRIC bank stocks.”

China has an even nuttier residential real estate bubble than we had in the US, in our opinion. China has more bad real estate and infrastructure development loans in their banking system today than the US did back in the late 1980’s, when we had the Savings & Loan debacle. The US banking crisis in the late 1980’s ended in the Resolution Trust Corporation handling bad development loans at taxpayer expense. It looks to us like a $1.5 trillion black hole waiting to be filled by the Chinese government. In other words, these other countries like China are at the beginning of their skid and nowhere near the bottom as yet.

Fraser Howie, the co-author of “Red Capitalism”, expounds on China specifically in a piece in Barron’s August 29th. He sees, “more problem loans ahead for China’s big banks, with negative consequences for global economic growth.” Here is how he details the problem loans:

“China’s banks issued a record $2.8 trillion in new loans, of which $1.7 trillion went to local governments. While the big four banks— Industrial & Commercial Bank of China (ticker: 1398.Hong Kong), Agricultural Bank of China (1288.Hong Kong), China Construction Bank (939.Hong Kong) and Bank of China (3988.Hong Kong)—reported nice first-half earnings gains last week, as well as limited impact from local-government lending, fresh problem loans are likely to surface in the future, says Howie, a Singapore-based executive at the investment bank CLSA Asia Pacific Markets.

Worse, the banks are ill-equipped to handle them, he said in an interview last week.”

Summing up the investment landscape from the angle of banking weakness in the BRIC countries Howie said:

“But weakness in China and the knock-on effects will surely hit a raft of investments premised on breakneck growth, among them mining stocks, commodities, construction plays and retailers. China ultimately has an unsustainable banking system.”

We believe that the first country to hit bottom, the first to confess its mistakes the way Frank Blake and Howard Schultz did for their companies, and the first to cleanse the banks, corporations and households will lead to lasting prosperity long before any other country in the world does. We also believe that the investment rewards of US non-cyclical large cap common stock investing has rarely looked more attractive because of the willingness of investors to underestimate the benefit of hitting the skids before everyone else does.

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. Some of the securities identified and described in this missive are a sample of issuers being currently recommended for suitable clients as of the date of this missive and do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.

William Smead
Chief Executive Officer
Chief Investment Officer

Printable Version

Dear Fellow Investors:

In an article in Saturday’s Wall Street Journal, Jason Zweig asked the question, “What will it take for companies to unlock their cash hoards”? At Smead Capital Management, we’d like to expound on his thoughts and examine our own portfolio under the magnifying glass presented.

Zweig dealt with the key facts. First, companies with large cash balances are adding to them. Second, payouts are historically low as he showed through this research:

“Meanwhile, the payout ratio—the proportion of earnings paid out as dividend income to shareholders—fell to 28.9% for the past four quarters. That, says S&P senior index analyst Howard Silverblatt, is the lowest level since 1936.”

Third, the point has probably come where the best interests of corporate management and the shareholders are at odds. Zweig zeroed in on Ben Graham’s thoughts in regards to why big companies that generate high levels of free-cash flow are hesitant to return cash to shareholders. He intimates that larger business managers seem to think that their slowing growth can be dealt with by acquisitions. With depressed stock prices, the cheap currency is cash. Just look at the money market fund interest rates at major investment firms and banks. The rate is almost zero. Why would you want to make an acquisition with stock at a 6-10% earnings yield when you can give up .01% return on cash?

Graham provided three solutions to this problem. He said that shareholders must pressure management to return the cash to shareholders. He urged companies to set up a formal dividend policy. This would be a certain percentage of profits to be paid out in the form of dividends. Lastly, Graham urged companies to pay out 67% of earnings in dividends. Here is how Zweig explained it:

“Finally, Graham advocated that leading companies should pay out two-thirds of their earnings as dividends. That rate isn’t as radical as it might sound, even though it would amount to more than a doubling from today’s levels. The dividend payout, as a percentage of total profits, has averaged 52.3% since 1936 and 46% over the past two decades, according to Standard & Poor’s.”

Silverblatt estimated for Zweig that a 50% payout ratio would put an additional $207 billion into investor’s pockets and raise taxable income for the US Treasury. It would be a stimulus package without government intervention and it would happen every year going forward.

How would Zweig’s thesis affect our portfolios and some of our individual companies? At the end of the first quarter of 2011, we concluded that 23% of our company’s after-tax income was being paid out in dividends. We have three criteria among our eight proprietary criteria which speak directly to this issue. Our companies must generate high levels of free-cash flow, be protected by wide moats for long duration business consistency and have strong balance sheets. Therefore, we believe our companies are in a much better position to raise dividends than the average company. On a portfolio basis, a growth in dividend pay-out ratios to 46% would mean an immediate doubling of our dividends. If our earnings grew by 7% per year for 10 years and our pay-out ratio was 46% at the end of the 10 years, our dividends would quadruple. This is only something to think about in a relatively low turnover portfolio where an investor could be likely to own many of the current holdings for a decade.

We are involved in a number of companies which should be pestered by shareholders. Some have shown improvement by starting a dividend for the first time like Amgen or by raising their dividend significantly like Microsoft or Franklin Resources. One of our portfolio companies, Ebay, was kind enough to take 30% of the $8.5 billion paid to buy Skype that came from Microsoft’s balance sheet. In our opinion Ebay could easily pay a dividend with their massive free-cash flow, but so far has chosen to not pay a dividend. Microsoft has been much more interested in pouring our dividends out through losses they manufacture in their online division. They lost more money last quarter in that division ($726 million) than they had in revenue ($648 million). Microsoft tells us dividend hungry investors that they will make those losses up on volume.

We have been impressed by how Starbucks has handled the subject of dividends. When the company’s restructuring and slower store growth exposed their massive free-cash flow in 2009-10, Howard Schultz set a substantial initial dividend. He also announced an ongoing dividend policy of a 35-40% payout ratio going forward. Ben Graham would love that kind of attitude toward shareholders.

We believe that our eight proprietary criteria finds companies with the kind of cash hoards that Jason Zweig described. They are in a position to follow Ben Graham’s advice. We also believe that income hungry investors have been too scared to trust the attractive income possibilities created by rising pay-out ratios. As this phenomena plays out and pressure to disgorge these cash hoards occurs, we’d like to think that our portfolios will get an above average share of these rising income streams.

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. Some of the securities identified and described in this missive are a sample of issuers being currently recommended for suitable clients as of the date of this missive and do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.