Thursday, November 6, 2014

11/6 Comment cleaner

85 comments:

  1. 2nd - did you hold on to GDXJ?

    ReplyDelete
    Replies
    1. No. I opted for a small long-term position in GDX instead. My wife, however, hold several positions in the mining sector The positions were opened within the past 2-3 weeks, so she's in the red on all of them. I know her well enough to tell you she won't sell until the sector is trading well above where it is now.

      Delete
  2. T3d, re GNW,

    It is a sign that an insurance company is being poorly run when they do big reserve increases like GNW did today. Add that to how they did poorly in the mortgage insurance market and it looks like poor management.

    The stock is cheap compared to it's book value, so if you can trust the book value and management does do a good job over the next couple of years, you should see the stock rise. But on the other hand, reserve increases like this often happen more than once, so you can really trust the book value.

    I would personally stay away.

    David Merkel, who is an actuary and insurance investor, has a good post on reserving for P&C companies, but it also applies to other insurers: http://alephblog.com/2014/08/20/ranking-pc-reserving-conservatism/

    ReplyDelete
  3. Replies
    1. Glad you saw it Mark, as it seemed to dis-appeared.

      How is the wife, feeling good I hope.

      Delete
    2. BTW, at this juncture I would say forget the rifle and go with the shotgun approach via GDXJ if you want to swim in these shark infested waters.

      Hey Sharky, wonder what he's up to.

      Delete
  4. Another solid quarter out of NWLI.

    http://seekingalpha.com/pr/11603905-national-western-life-announces-2014-third-quarter-earnings?app=n

    And still trading at 65% of book value and less than 10 times earnings.

    Not exciting, but still beating the market up 24% YTD and show really jump when rates start to rise (even though they are doing a great job of negotiating these lower rates regardless)

    ReplyDelete
  5. I'm starting to get the feeling Obama and the congressional Republican's don't like each other.

    ReplyDelete
  6. Patricia is going great Tele. Kinda starting to have problems with the thyroid replacement dosage but that's a cake walk. How are you bro?

    ReplyDelete
  7. I like both Emerging Markets and Europe going into the close.

    (a) Holding RYWVX (opened at the 1030 window).
    (b) Adding RYEUX (Rydex Europe).

    Bonds look good also, but gun to head- I'm leaning towards a short squeeze Friday morning. Should one unfold, bonds will be a buy

    ReplyDelete
    Replies
    1. Opening a position in DB @ 30.59 as well.

      Delete
    2. I actually think it's dangerous to be long US indexes right now. Which is precisely why they will all spike tomorrow.

      Delete
  8. Standard Charted - the UK banks which operates in the emerging markets - upon further review, it is a lot riskier than I thought.

    It certainly is cheap, but they are in trouble with the government (again), their loss reserves are rising, Muddy Waters also going after them last year saying they have too much debt.

    The low valuation of course offsets a lot of this, but I think I'm going to pass or at least wait until things become more clear.

    I really like the idea of investing in a first world bank with business in Asia, India, Africa, Middle East. Maybe I'll take another look at Citi and HSBC instead.

    ReplyDelete
  9. FU! In at 10.98...oh, FCAU I mean.

    ReplyDelete
  10. Replies
    1. Looks like BE with 300K less in op. expenses. Probably litigation related. So, for the year they spent 25M to make 22M. If it wasn't for Debello I'd say it's a buy.

      Delete
  11. Now we await Mario Braghi at the podium tomorrow morning?

    ReplyDelete
    Replies
    1. Oh, I'm a day behind as usual, I found this note from earlier today:

      "The ECB succeeded in providing dovish lip service sending the euro lower and stocks higher. The DAX is at the highs up +1.2% above 9400. CAC +1.1%."

      Delete
  12. Nuverra Environmental (NYSE:NES): Q3 EPS of -$3.73 may not be comparable to consensus of -$0.26.
    Revenue of $139.6M (+5.9% Y/Y) beats by $1.16M.
    CFO resigns.

    ReplyDelete
  13. Nice writeup on FCAU:

    http://seekingalpha.com/article/2651565-sergio-marchionne-is-the-reason-to-back-fiat-chrysler

    ReplyDelete
  14. Don't know if anyone else is still following AGO, but big beat today. The stock has been consolidating the last year after a strong move off the 2012 lows, so hopefully this is the catalyst for the next leg up.

    Reported another good quarter and it seems like a no-brainer to me. You are getting an annualized 20% return (calculated as increase in book value plus dividends over stock price), stock trading at 64% of book value and business continuing to improve.

    The only weakness you can point at is ne business is still weak, but it is growing again:

    "In the U.S. public finance market, insurance penetration, based on par sold, was 7.9% in third quarter 2014, compared with 3.7% in third quarter 2013, with Assured Guaranty once again writing the majority of the insured par."

    But they don't need growth really as they've got profits prebuilt for policies previously sold and these come into income over time with a current estimated value of $52.59 or more than double. A lot of assumptions in this number of course.

    And finally, the big risk situations are falling off with Detroit, Stockton, Harrisburg and Alabama all settled and provisions taken for Puerto Rico, so risk is low as municipalities are back in pretty good shape.

    ReplyDelete
    Replies
    1. Any one time items in that beat? That's a big beat.

      I'm still finding plenty of stocks like this that have a ways to go higher until you could classify them as overvalued.

      Delete
    2. "plenty of stocks like this that have a ways to go higher"
      Do mean ones like NHC, or ones like BALT?

      Delete
    3. Cp - lots of blue chips...banks, autos, retailers....

      Delete
    4. AGO's numbers tend to be lumpy. Especially their GAAP EPS as these can go up or down a lot based on the value of their hedges, which even though they will be held to maturity, must be valued each quarter. The beat this quarter I talked about is on Operating Earnings which exclude hedges, but it still moves a lot. But even outside that, their business is typically one with very small claims most quarters, but then can have a good sized one when a municipality goes bankrupt. And they've also had a number of lawsuit wins against the big banks.

      But looking at their current business and going forward, there should be very few municipality finance issues (if they didn't happen in the financial crisis, they should be good now) unless it is say a 1 industry town and the industry closes.

      And the best way I think to value a company like AGO is to look at their return as increase in book value + dividends. Since 2009, this return is 12.6% annualized. Assuming this continues for the next 5 year, and the shares move to trade at book value (they often traded at 110% of book or higher prior to the financial crisis), the annualized return will be 21% or 150% over the 5 years.

      Delete
  15. TAP - Lifted nicely on "Earnings miss" bad news.

    ReplyDelete
  16. NES- What's going to happen tomorrow. I really can't figure it out. Huge charge and a beat?

    ReplyDelete
  17. per Yra harris

    ***The market is expecting 235,000 nonfarm Payrolls for the U.S. this morning. The rate is expected to remain at 5.9 % and average hourly earnings (AHE) suggests a rise of 0.25 after remaining flat last month. Be patient because Chair Yellen is on record as being concerned about Labor Market Conditions Index (LMCI), which is composed of 19 variables. The labor participation rate will be important on Yellen’s dashboard so don’t react to the headline data, but of course wage rates will be important. From watching the stock market rally and the strength of the U.S. dollar I am GUESSING that the NFP will be a print of 300,000+. The market is in the mode of good news is good news and even with the Fed’s QE program ending, global liquidity is flowing and interest rates remain at the zero bound. For the moment he U.S. is paradise found.

    ***The Canadian data is due at the same time as the U.S. and the data is expected to be weak after an extraordinarily strong number last month. The Canadian economy experienced a jobs increase of 74,100 and a rate of 6.8% last month. Consensus is for a zero jobs gain and for the rate to remain at 6.8%. As usual, pay attention to Canadian manufacturing jobs. The Canadian economy is under stress from falling oil prices and thus jobs in the mining sector should be lagging but the recent weakness in the Canadian dollar may be a plus for the exporters of manufactures goods and of advanced technical services. Patience and prudence will be rewarded as the markets have had to digest a great deal of economic and political news over the last several weeks. There are many momentum positions on that could reverse quickly on any type of statistical aberration.

    ReplyDelete
  18. Rosenberg thinking oil done going down, but gold has more downside:

    Crude’s sudden slide into a bear market has been a painful period for most Canadian investors. But David Rosenberg has some comforting thoughts for those licking their wounds: oil is unlikely to fall much further.

    The first leg of oil’s decline of more than 20 per cent from its recent highs - the classical definition of a bear market - got underway with renewed signs of weakening economic growth in the euro zone and China. Then came the most recent down leg, courtesy of Saudi Arabia juicing up production levels and cutting prices in a bid to recapture market share.

    “The good news is that the slide is likely over because south of $75 (U.S.) per barrel, Saudi Arabia slips into fiscal deficit and that is not a social stability line the royal family will likely want to cross.” The December crude oil contract in New York by late afternoon Thursday was down nearly 1 per cent at $77.96 after hitting a three-year low of just below $76 earlier this week.

    “Secondly, we are already seeing talk of production cuts in North America, so yet again, supply will respond to this new price range on crude and in the process establish a new - though lower - floor under the price.”

    Mr. Rosenberg believes investors should pay close attention to the OPEC meeting scheduled for Nov. 27. The “logical bet” would be for a move among members to stabilize the oil price rather than deflate it further, he says.

    “Such a move would be good news for Canadian exploration and production companies, which are currently priced for West Texas Intermediate in the low $70s,” as well as the Canadian dollar. His analysis suggests the Canadian dollar is currently trading as if oil prices will dive to $68 a barrel.

    His willingness to call a bottom on a commodity does not extend to the gold market, however. “It too is in a vicious bear phase and the true capitulation may mean even more of a washout in sentiment in the sense with all the net speculative long positions on the COMEX evaporating - that hasn’t happened in 12 years. At that point, gold will likely be $900 per ounce, which would create acute pain in the industry and touch off a wave of failures and consolidation - and represent the final leg down and blaze the trail for the ensuing rally back to and through the old highs.”

    Inflation, of course, is key to gold’s fate, and Mr. Rosenberg still sees little sign of deflation - and lots of potential for upward pressure on prices, eventually, given the loose monetary policies across the world. “There is little chance that this monetary largesse does not end up morphing into an inflationary experience. The lag is long given that money velocity has been so depressed, but that is not a condition anyone should consider as being permanent,” he said.

    ReplyDelete
  19. Try other options, such as: The Chicken! :(
    MEMP - Here's another oiler with a div, beat to hell.

    ReplyDelete
  20. Added FCAU @ 10.84 in 2nd acct.

    ReplyDelete
    Replies
    1. Well there goes my gains lovely. I've already mentally prepared for a move down to close the gap up

      Delete
    2. I don't even remember what gains look like.

      Delete
    3. Yep, no gains for me in a bull market! :(

      Delete
    4. 50% retracement is 10.32, would not surprise me

      Delete
    5. T3 - Yeah I just need to stress test my mental toughness for a drop to the mid $9's. It seems preposterous to me that it would get that low but I've seen crazier things than that.

      Delete
  21. Replies
    1. Yeah it seems so, did Citroen just publish a fraud allegation or something? Those Chinese stocks don't often recover. Trading considerably less than cash?

      Delete
    2. I don't think you can believe any of them.

      Delete
  22. LGCY - F'ers tried to run stops. Hopefully!

    ReplyDelete
  23. Orange Finger serves up burn warning (Don't play with matches/fire).

    ReplyDelete
  24. PGAL - Given it's spring in Portugal, economic activity may be on the upswing?

    ReplyDelete
  25. Here is some holiday cheer:

    Seasonality And Cycles – In Thursday's Comments, we mentioned a variety of historic patterns that favor the
    bulls. Here's more detail from Jeff Hirsch in the invaluable Stock Traders Almanac, whose 2015 edition is just out.
    Historical cycles suggest good things for the stock market in 2015. It's a pre-presidential election year,
    which is by far and away the best year of the 4-year cycle (pages 20, 32, 130). Since the Dow's last
    loss in 1939, the third year of the cycle is up 16.0% on average for the Dow and 16.3% for the S&P
    500. Since 1971, Nasdaq averages a whopping 30.9% in the third year of the 4-year cycle. The fifth year of the decade is also the best of the decennial pattern by a long shot with only one loss in the past
    13 decades (pages 34 & 129). Years ending in 5 average 28.3% for the Dow and its predecessors since
    1885, with S&P averaging 25.3% since 1935 and Nasdaq averaging 25.6% since 1975.

    But of course you all know this.

    This week seems to be a turning point as I'm starting to feel much better from my side effects of too much lovin, may be just in time since my stock selection lately has a nasty habit of immediately dropping upon commencement.

    Hey Joe,what, it beats breaking rock all day, what kind of rocks?

    ReplyDelete
    Replies
    1. I'm really happy to know you're gaining your strength back, T3D! :)

      Delete
  26. ORB - Experiencing continued technical difficulty.

    ReplyDelete
  27. BMY - Wooo-hoo baby, have you guys seen this chart? Is that a bull flag formation or is that a mouse in your pocket?

    ReplyDelete
  28. SHLD - Holy crap man! REIT conversion lease back. Sounds like a trap or something too it? Oh boy, what if JCP does this?

    ReplyDelete
  29. Just saw these links for Ferrari:

    http://stks.co/p10S0
    http://stks.co/s0zxu

    ReplyDelete
    Replies
    1. Back in 2003 I was playing tennis at the Monte Carlo Tennis Club, (my friend, Hugh Stewart, was the last American to win that in 1956). After playing one of the guys said let's go to the bar and have a beer, the next thing I know he says let go up to my ski resort we can drive up in my Ferrari.

      The club was incredible, they would not let me pay for anything, when my wife showed to to get in they would just say go on up he's up there playing. Usually it's $150 euro's just to get through the door. The was a great trip we had for five weeks travelling through Europe, I was mostly playing tennis tournaments and the wife would check out museums. Of course we were leasing a Puget not a Ferrari. I want a Ferrari hat now, damm you Tof.

      http://www.mccc.mc/

      Delete
    2. http://store.ferrari.com/us_en/accessories/clothing-accessories/caps.html#more2

      Delete
    3. Cool story. Go for this one!
      http://store.ferrari.com/us_en/accessories/clothing-accessories/caps/men-s-ferrari-cap-by-borsalino.html

      Delete
    4. That's a fun looking hat, we will all need Polo ponies to go with it.

      Delete
  30. "Rosenberg thinking oil done going down, but gold has more downside:"

    LOL!

    ReplyDelete
  31. GNW downgraded - bad news for them. Ratings are key for insurance companies:


    No bid for Genworth as S&P cuts to junk
    Genworth (GNW -14.1%) is cut to BB+ with negative outlook from BBB- at S&P. Also cut are the company's U.S. life subsidiaries, along with Genworth's mortgage insurance subsidiaries."The negative outlook reflects the need to rebuild capital strength, the risk of further reserve strengthening, and execution risk in the turnaround of the U.S. life insurance division."The session-plus decline in the stock is nearing 50%.

    ReplyDelete
    Replies
    1. -50% in 2 days, wonder how it feels to be a LT holder in that.

      Delete
    2. You don't want to go too far out the risk curve when buying insurance companies - worse things can happen than you expect. Better to try and get quality at a good price than a so-so company at a great price.

      Delete
  32. Big day for the energy companies. Seems like just a relief rally that energy prices have stopped going down.

    If Rosenberg is right and "Canadian exploration and production companies, which are currently priced for West Texas Intermediate in the low $70s,” as well as the Canadian dollar. His analysis suggests the Canadian dollar is currently trading as if oil prices will dive to $68 a barrel." then there should be room for more of a bounce.

    First green line for BXE on the weekly chart in 10 weeks. And many other similar energy companies look the same. Been a brutal market for small caps especially.

    ReplyDelete
    Replies
    1. AREX exploding on earnings beat today

      Delete
    2. AREX - 114.7 million barrels of oil equivalent in Crockett and Schleicher counties, Texas; and owned and operated 679 producing oil and gas wells in the Permian Basin.

      Delete
    3. AREX - Looks like a screaming buy, in comparison with LGCY?

      Delete
    4. One hell of a short float on AREX

      Delete
  33. Broccoli - Call this vegetable "dinosaur trees" and 4 year old's will eat it.

    ReplyDelete
  34. NES/MITK- NES now solidly in the lead.

    ReplyDelete
  35. Closing RYWVX + RYEUX end of day.

    ReplyDelete
  36. (a) RYEUX (Europe) closed down -0.13% (and taken off end of day). I had 30% of the port on the line.
    (b) RYWVX (2x Emerging Markets) closed up +0.57% (and taken off end of day). I had 42% of the port on the line.
    (c) GDX closed +8%, and I'm taking off my 'long term' position. Based on my experiences trading miners, a +10% gain in 2 days (+13% from Wednesday's close) is 'reasonable,' even in this volatile sector.

    I'm less than pleased with my trades in the mining sector, though. I wrestled with the idea of sizing up in RYPMX at Wednesday's close, but waited a minute too long (the trading window closes @ 1550 est). I was aware that capitulation was nearing an end. However, the gold correction that had been unfolding since August (GDX lost -38% between the end of August and November 5!) accelerated this week, and a string of 5 successive gaps down (in 5 trading days) made it virtually impossible to size up. Thursday (yesterday) I had a second shot at RYPMX, but the window was narrow and the trade apparent only in retrospect: a +6% intraday rally in GDX was cut in half to +3% in the final 15 minutes of the trading session. Opening a position in RYPMX @ 1550 would have entailed too much risk. Only in the last 1-2 minutes of the session would the trade have become 'interesting,' at which point the trading window was closed.

    ReplyDelete
  37. HLF- Think Ackman is ahead now?

    ReplyDelete
  38. Uranium ETF Recharges as Japan Opens Nuclear Plants ETF Trends +12.07%

    ReplyDelete
  39. KWK - Did you guys notice yesterday;s move?

    ReplyDelete