Thursday, January 8, 2015

1/8/15 Comment Cleaner

ENOUGH SAID...

231 comments:

  1. OK, back to energy. I just looked at some random tickers of midsized plays and all are near or below their 5 year levels.

    DVN,APA,CHK,SWN,SU,WLL,XOP,OIH.

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  2. Anyone have any concern over the potential for a sharp pullback here sometime soon? If I look at annualized returns for the past 20, 30, 40 years its a good deal higher than the average over the really long term.

    20 years: 7.8%
    30 years: 8.7%
    40 years: 8.9%

    I'm ignoring dividends and inflation because they tend to mirror one another. The average return is 7.0% over the longer term. If I use those returns from the 1975, 85, 95 starting points I get pretty low levels for the S&P 500...between 1010 and 1775 depending on the starting point (from 1995 its 1775).

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    1. Sorry, I don't get this.

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    2. Well if the average return over the long term is 7.0% and we've been averaged nearly 9% for the past 30 and 40 years, there's a major disconnect.

      Buffett suggested that you take GDP + Dividends + inflation to arrive at a 6 to 7% annual return. If GDP, dividends, and inflation have been going down over time then that suggests that something doesn't jive. Either we get massive growth in GDP and / or inflation or stocks have to go through a fairly long period of consolidation to get back to the averages.

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    3. This doesn't mean it's wise to go out and short stocks. Stocks can always defy gravity for a long time. Instead I think it means its probably prudent to really look at how much risk you want to take on. Wipeouts in stocks are not an uncommon thing at all. Many sectors have been annihilated over the past 2 years after going on big bull runs. What's to say stocks don't do a 30% swan dive here just to put it back into line with historical averages.

      I look at things like this, the 5 year return of stocks, the fact that its getting really hard to find good cheap stocks, and it makes me think I might be better off just waiting for a better entry point to go heavy in stocks again.

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  3. I'm wondering if it makes sense for me to just take the next year off and focus on the side businesses. I've spent a good deal of time looking for attractive longer term positions and am having a difficult time finding much. Might make sense to just keep an eye on things and wait for panic.

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    1. I did that all last year! it sucks.

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    2. The one area that keeps coming up is energy but I have a tough time understanding the direction of crude oil which is the main determinant of the entire energy space.

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    3. This sector or going to make good money going forward, just need the timing right as it could be awhile.

      Its not like the coal or gold sector oil will come back, again the question is timing. In order for oil not to come back you have to believe that there will be substitution for it as it pervades our way of life like nothing else and supports modern society.

      If you think that thinking is wrong, what do you think would replace it in 30 years?

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    4. This sector IS going to make good money going forward, just need the timing right as it could be awhile.

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  4. Walter Schloss from TOF's article.

    Factors needed to make money in the stock market:

    1 - Price is the most important factor to use in relation to value.
    2 - Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
    3 - Use the book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
    4 - Have patience. Stocks don’t go up immediately.
    5 - Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.
    6 - Don’t be afraid to be a loner but be sure you are correct in your judgement. You can’t be 100% certain but try to look for weaknesses in your thinking. Buy on a scale and sell on a scale up.
    7 - Have the courage of your convictions once you have made a decision.
    8 - Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
    9 - Don’t be in too much of a hurry to sell. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock a goes up say 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E ratios high? Is the stock market historically high? Are people very optimistic etc?
    10 - When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. Three years before the stock sold at 20 which shows there is some vulnerability to it.
    11 - Try to buy assets at a discount [rather] than to buy earnings. Earnings can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.
    12 - Listen to suggestions from people you respect. This does not mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money it is hard to make it back.
    13 - Try not to let your emotions affect your judgement. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.
    14 - Remember the work of compounding. For example, if you can make 12% a year and reinvest the money back you will double your money in six years, taxes excluded. Remember the rule of 72. Your rate of return [divided] into 72 will tell you the number of years to double your money.
    15 - Prefer stocks over bonds. Bonds will limit your gains and inflation will limit your purchasing power.
    16 - Be careful of leverage. It can go against you.
    It sounds simple but it is difficult to put in practice due to the difficulty to control emotions.

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  5. Follow-up on BB and TOF's discussion yesterday.

    Here is another article that's relevant to their points of Schloss, and Tweedy Browne material.

    http://www.aaii.com/journal/article/investment-wisdom-from-wall-streets-legends

    Figure ! shows out-performance of greats and their duration of years at it.

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  6. TOF,

    3 issues I would point out with what you are thinking:

    1. Using data like that will not be a good market timing tool and you could miss 4 good years of returns (like the late 1990's) before stats like that matter.
    2. Dividends were a much larger part of total return in the past and corp's paid out a higher percent of earnings into dividends (therefore less retained earnings to push up stock prices), so you can't really ignore them in an analysis like this when comparing old numbers to new.
    3. Not sure where you got your data, but long things like this tend to be subject to a bunch of historical decisions that affect results and can be tweaked how you want to perform (people will find what they want by picking certain timeframes, etc). If you look at this data set (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html), it appears the last 10 years hve been 2% under the long term historical average, so you could say it is a great time to buy.

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    1. BB - Good points. There has been a wide variation in the way that companies have managed excess cash over the years, moving more toward buybacks vs dividends. I guess this would juice returns more. Total returns are key but probably makes sense to take into account the rate of inflation. Lower inflation should, I would think, warrant lower returns over the long run (short run is anyone's guess which is also why I didn't look at the last 10 years b/c anyone can pick any 10 year time frame to make it fit their argument). Interesting stuff.

      I picked up some GOOGL today and am working my way up to a few holdings now.

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  7. 2nd is hitting it out of the park, again. Nice man!

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  8. AREX, stocks are so strange, been following this for years. In the past say four months when oils have a good day, like today, this thing can rip 7-12%. I buy it and it does nothing.

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    Replies
    1. Bailed on AREX, do not like the way it trades here. 5.21

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  9. Graham--Enterprising Investor screen from AAII, current passing companies

    Company name Ticker
    Cash America International Inc CSH
    AGCO Corporation AGCO
    Kimball International Inc KBAL
    CARBO Ceramics Inc. CRR
    Manhattan Bridge Capital Inc. LOAN
    Electro-Sensors, Inc. ELSE

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  10. The 4+10 and 5+9 are all coming up on this round.

    (a) Emerging Markets extending their rally. EEM up another +2%.
    (b) EWZ (Brazil) +2%. PBR (Petrobras) +6.7%. BRF (Brazil Small Caps) +1.7%.
    (c) RSX (Russia) +6.5%.
    (d) VGK (Europe) +1.54%.
    (e) FCG (Natural Gas) +2%. DBC (Commodities) slightly positive.
    (f) XLE (Energy) +2%. OIH (Oil Services) +1.3%.
    (g) The only downers are GREK (Greece) and the $USD (currently +0.43%).

    The operative outlook is 'So far, so good.'

    Even the DJIA has spiked another +319 points. My take? The recent plunge sucked in a ton of shorts, who are now driving the global markets back to pain thresholds.

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  11. TOF,

    I think I mentioned this before but this Jessie LIvermore does a great job of explaining why the 10 year CAPE is really just someone picking data to match their thesis and if you pick a 30 year CAPE, you would expect the forwards earnings correlation to be even higher, but in reality it falls from .813 to .222 - http://www.philosophicaleconomics.com/2014/06/critique/

    I think this is the problem with all these longterm backwards looking studies though - if you look long enough, you can pretty much find anything and prove anything you want (just talk to Hussman!)

    I do think you can look at these things and try and gain some ideas and try and match similar periods (everyone does it, including me and Saut and Tepper and I bet even Buffet), but the more important thinking is about where we currently are and how things look going forward. Personally, I think we are midway through a long-term bull and with the economy and jobs starting to improve, many good things are set up to happen over the next few years which will drive higher stock prices.

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    1. One thing I always think about is why would anyone not invest in the US markets? I get the whole sentiment thing and having too many people in one boat makes that boat unstable, but look at the stability in the US markets and the US economy in general and to me it should always have a premium attached to it so long as that stability. Just like investing in real estate...I feel like there's no other real estate market in the world that should compare to the US and there should always be a premium. you don't have to deal with political instability, property law is honored, its safe, etc. probably a naive way of looking at it but if given a choice i would much rather own real estate (and stocks) in a market / economy like the US.

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    2. I see the world as having different tiers of markets. Tier 1 are ones that have good accounting/reporting and government you can trust. I put Canada, the US, UK, Germany, Holland, etc. in that bucket and would buy the best stock in any of these. I guess there are some tax issues, but they are pretty small for Canadians in general.

      Tier 2 are like Italy, France which should be good, but you have a meddling government or ones like Mexico and Korea, which seem good, but don't have the long history.

      Tier 3 are ones you can probably trust like China and Brazil, but risk is higher.

      Tier 4 is high risk ones like Russia, Venezuela and the rest of that gang.

      Realistically I stick to Tier 1 unless there is a compelling market opportunity or cheapness to go down the scale and the further down, the better it has to be.

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    3. I guess I can't say I'm thrilled with the policies of the past half decade myself, it's my observation the upper classes have benefited disproportionately.

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  12. TVIX - Well into the safety zone. I have to think the opportunity to buy/flip during this cycle has passed. Given the desolation that has taken place I consider contents of my portfolio are in firm downtrend until proven otherwise by a series of higher lows.

    "The Hangman"

    Then one cried, "Murderer!" One cried, "Shame!"
    And into our midst the Hangman came
    To that man's place. "Do you hold," said he,
    "With him that was meant for the gallows-tree?"

    And he laid his hand on that one's arm,
    And we shrank back in quick alarm,
    And we gave him way, and no one spoke,
    Out of fear of his hangman's cloak."

    http://en.wikipedia.org/wiki/The_Hangman_%28poem%29

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  13. Found this on GOOGL:
    http://m.barrons.com/articles/buffett-disciple-mohnish-pabrai-on-bank-of-america-citi-google-and-hyundai-1418128642?mobile=y

    This is the guy that has 25% of his assets in FCAU. He's pretty positive on GOOGL but probably figures the upside is limited. The way I see it with GOOGL is they could stop spending on all of these crazy capex projects and it would be trading at 13-14 times trailing FCF. For what I consider probably the most important company of all time (along with the widest moat), not exactly expensive. I think the stock should be trading at a pretty big premium to the market, not a discount of 25 to 30%

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    1. Interesting he has ZINC as one of his largest positions. It's the deep value guys who are usually the first to step into a stock, sometimes very early of course, but interesting for sure.

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  14. FWIW, my top positions going into 2015:

    NWLI
    CKI.TO
    HLC.TO
    ORI
    AGO

    These 5 make up 50% of my portfolio. 3 US based insurers and a Canadian asset manager and Canadian hotel chain.

    The next holdings, which make up the next 35% of my stocks are:

    ING
    GIB
    CAM.TO
    FCAU
    EVT.TO
    AEG
    DB
    GM
    UNP
    MRE.TO
    CNQ

    Then I've got another 17 stocks which make up the rest. I plan to consolidate these this year into fewer larger positions. Particularly, I have 8.7% of my money in energy (keeps going down with the market), but have 9 holdings. That is too many.

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    1. From an industry perspective:

      Financials - 38%
      Consumer - 24%
      Asset Managers - 17%
      Industrial - 13%
      Materials - 9%

      Asset Managers are technically financial companies, but I track them separately as they are more related to the asset they hold than running a financial business (eg. why count a REIT as a financial?)

      But, you can see my preference as we head in to 2015 for financial and consumer stocks.

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    2. How much of FCAU do you have?

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    3. I like the ORI and AGO charts, just I don't know what it takes to make them rally. I like to think things through and I just don't know how they make money.

      I know how oilers make money, and I'm pretty sure I understand now mREIT's make money. Infrastructure contractors and venders make money when bridges, roads, dams, reservoirs, water treatment plants are constructed.

      I dunno, I guess I need some sort of fundamental thesis supporting the position so I can work it out in my head about how these companies might flourish.

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  15. First 3 days of the year down like we had this year generally indicates a weak overall year:

    http://kimblecharting.tumblr.com/post/107328062426/the-last-2-times-stocks-fell-the-1st-3-days-of-the

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    1. I have this in pdf, can send to Mark if you guys interested. I suspect Parts 1 and 2 may be of interest.

      "Money-In-Motion"...C.B. Worth
      This report, the first edition of "Money in Motion" of calendar 2015, is composed of three parts and an Appendix:
      Part 1: An examination of the January Barometer: it's history and efficacy since 1927. Pages 2-3.
      Snippet:There's a very strong correlation between positive January performance and positive full year performance. But what
      really matters, history reveals, is the performance of the first five sessions of January.
      Part 2: An examination of the current Bull market in the context of all 20%+ selloffs going back to 1921. Pages 4-7.
      Snippet: There have been thirty (30) instances since 1921 when the market has experienced a peak-to-trough decline of 20%
      or more without a 20% rally. The most recent occurrence, as all will know, was the May 2 – October 4 decline of 21.59%
      back in 2011.
      Part 3: An examination of performance of the 10 sectors composing the S&P 500 on a calendar-year basis from 2009 to 2014
      followed by our current view of each sector and where we would be Overweight, Underweight or Equal Weight as 2015 gets
      under way. Thereafter, you will find a list of favorite S&P 500 longs and shorts in each sector. Pages 8-17.
      Snippet: There are at present- as is always the case in the market- actionable ideas on the long and short side whose chart
      patterns suggest excellent opportunities abound for generating alpha regardless of what the market does in the year ahead.
      Appendix: Alcoa (AA)… removed from the Dow Jones Industrial Average late in 2013 only to advance 48.5% in 2014. Ironic.
      Wasn’t time to sell then… but it is time to sell now, by our work. Page 18-22.

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    3. This comment has been removed by the author.

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    4. Worth use 5 days, which is up .1574% or flat, so limbo.

      Let me know if you want the full doc.

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  16. ZINC - I like nickel, zinc is an important metal too. Shell is exercising option to purchase Monaca Pa. Facility, not sure what that's about but possibly natty related? This was announced before NY banned fracing (is it really a ban or in that shale is it possible just to stick a pipe in the ground?).

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  17. BXE - If you think about it, the unconventional oil producers must have $80 oil to be worthy and since they have replaced half of US imports then price of oil should have dropped accordingly based on the additional supply.

    So it was foolish to think oil would not fall precipitously at the expense of unconventional producers. If you thought otherwise, you just weren't paying attention or were uninformed.

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    1. No-one, and I mean absolutely no-one forecasted this oil price fall coming, even the really smart industry guys. I read a lot of stuff and watch the Canadian business news which has a lot on oil and no-one saw this coming. The talk for the last few years has been "oil will trade in a range from $80 - $120 for the foreseeable future". The price drop was a combo of shale oil, but also Lybia (and some others) coming back on-line far faster than expected, combined with weaker than expected demand and mOPEC not cutting and a number of complex factors.

      Oil is by far the most analyzed commodity in the world, but it is a very complex market and I'd say everyone missed this.

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    2. "no-one forecasted this oil price fall coming"

      That's just not the case unless you chose to ignore the numerous warning signs that I kept pointing out to crickets, see here just one example:

      http://peterlbrandt.com/wp-content/uploads/2014/11/11.13_CL_W.jpg

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  18. CP,

    re ORI and AGO and all insurers, they basically make money 2 ways:

    1. the spread between insurance premiums and claims
    2. investment return on the float, which is the money they receive in premiums and hold until they pay out claims

    I can give you more info if you want, but take a look at their historical track records to see how well they make money. ORI is more complex because of their real estate division, but that is behind them now and they've continued to increase their dividend for 27 years.

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    1. Okay, so I'm still considering these of course (I try to keep an open mind when it comes to managing my capital), perhaps AEG or ING, ORI I like b/c it hasn't taken off quite yet(I have to look at the chart more carefully), but any/most of these are top of my list if the big surprise happens that no one is forecasting (same as oil, those guys knew there was too much oil backing up, if they didn't then they should be ignored b/c they are incompetent or lying.

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  19. CASH - $US has outperformed SPY over the past 12 months, so unless you picked a great stock cash was better.

    Why is gold still $1200? It sure held up well, such a bizarre phenomenon that makes absolutely no sense, gold.

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  20. PLL - This one I think, illustrates a good example of the need for clean drinking water, or perhaps cleanup of industrial waste. Not sure what's driving it but I sure would like to know b/c whatever it is seems like a big deal. Clean water is a big deal, isn't it?

    I dunno why we don't discuss this, but it seems like we don't track current events well instead we just make an opinion based on something nebulous?

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    1. Thanks for pointing out that ticker, checking it out now. Have to take a 100 mile round trip today so can't do it right now but definitely interesting.

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    2. I bought this when issued as a spin off, but sold way, way to early.

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  21. KB - I like this one too, if I thought China's growth isn't falling off to 3~4%, which reallt is just a rotation from living in a shack to moving into the city in apartment. The apartments are built and the roads are paved, the people are coming.

    So the corporate farms are growing, no more hogs in the pen behind the shack that momma butchers to feed her child.

    Clean water treatment plants will be maintained.

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  22. Insurance - In Europe, do banks sell insurance? I don't think so, but you never know. Sorta like it used to be in the US you had to have a license to operate as a taxi but now those licenses are worthless due to laws being changed (or unenforced?) based on political winds. Not much different than other countries that make decisions based on numerous motives, some of which aren't clear.

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  23. ABAC - This chart seems to have held up well and could go much higher, but it's super risky IMO.

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  24. Down 168 points, yee-haa for bulls!

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    1. Obama is talking about education, will FMD rally based on this or crash?

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  25. "No-one, and I mean absolutely no-one forecasted this oil price fall coming, even the really smart industry guys. "

    Yeah I don't know of anyone that was calling for this kind of a fall. I was on the lookout for a major move up in the dollar starting about 10 months ago but I didn't even consider the impact it would have on oil. One thing to keep in mind going forward. Probably won't be able to use it ever again though!

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    1. Yep, a higher dollar didn't help US oil producers, that's for sure! Now the question is if the euro keeps on crashing, one target is 0.95 and it sure looks probable to me.

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    2. Honestly I think the Euro going to $0.90 is a foregone conclusion. Makes the FCAU trade harder in my opinion, but not impossible. Lots of value in that stock.

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  26. Putin is homophobic, LOL! Homosexuals are banned from driving autos? Wonder if auto sales are about to plummet?

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  27. Remember the big $US rally during the financial crisis, and crashing oil? How many experts predicted that (We know some were on the right side).

    If US workers have had no appreciable increase in earnings power then who's going to be buying new homes? Lots of new really nice homes were recently built in West Txas oil patch, what's going to happen to that if oil remains low, were those paid for in cash or financed? I guess they were financed.

    SRS is looking good, despite our low interest rates?

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  28. NLY - The flat yield curve is gonna stifle earnings.

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  29. CP,

    if you going to buy one of these insurers, it really is a different dynamic than energy stocks, so you need to understand what you are getting into. They are a slow and steady type business and a bad year is generally followed by a good year as the rates adjust upwards - it is a self-correcting industry. You generally want to buy weakness, not breakouts and play for the reversion to the mean. They are generally valued on a p/b basis, with higher p/b valuations given for better ROE's, but some are valued on dividend yields. They are not like most stocks which are valued on p/e's or energy on p/cf's.

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  30. Schloss, net working capital stock KBAL and in TOF's line of work.

    Cash 136624
    Inventory 140475
    Receivables 175695

    Total 452794

    Current Liabilities 253600

    Net working capital is $199,194

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    1. Funny KBAL is on my watch list.

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    2. www.stockspinoffs.com/2014/10/14/playing-kbal-kimballs-spinoff-ticker-change-set-end-month/

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    3. The spinoff, KE looks like it could be interesting too.

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  31. I am estimating that GOOGL could drop capital spending down to $3 Billion right now and FCF would jump to over $20 Billion this year. Not bad for a $330 Billion company with $62 Billion in cash. This is a steal down here around $500. Could be some volatility going forward but this is in my opinion the company with the most sustainable competitive advantage in the world. It has some risks, particularly if Apple drops them from the iPhone (contract expires this year). But I think that would piss off a lot of people.

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  32. US Oil Service & Drilling
    Angie's Oil Service & Drilling Weekly

    I have this on pdf, anyone want?

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  33. Tof,

    I think the key re FCAU is the Euro is just a measuring stick for the value of the company. If Fiat Chrysler the company can prove it is worth half of Ford the company, the market cap of FCAU will be half of F and a double from here. If it can get to 3/4's of the value of Ford (it producers 3/4 the number of vehicles), then it is a triple.

    The holder of FCA.MI will be even happier as they will get a quadruple in their local currency (if the Euro goes down a lot), but in the long run, the value of the stock will approach the value of the company and the company is undervalued in every currency now.

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  34. I have an email/article by GS from MOG. I'll review it and see if it's worth/ok to pass along.

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  35. NGLS went long 46.92

    NKA might be of interest to some here or on watch

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  36. My hero...

    CNNMoney ‏@CNNMoney 11h11 hours ago

    Indian civil servant finally fired after epic 24-year absence. http://cnnmon.ie/1AzFR7Z (By @HarmeetSS)

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  37. It was a wild day on Wall Street, with a 250-point range in the DJIA. Crude opened strong, sold off hard, and has recovered to within -1% of yesterday’s close. This morning’s ‘payrolls report’ was (in my opinion) a positive surprise.

    Closing all positions.

    (a) RYWVX (Rydex 2x Emerging Markets) was closed at the 1030 est window (@ $64.06) for a three-day gain of +7.2%.
    (b) RSX (Russia) +4% over 3 days.
    (c) EWZ (Brazil) +1.3%. BRF (Brazil Small Caps) +1%. PBR (Petrobras) +10.8%.
    (d) FCG (Natural Gas ETF) closed flat.
    (e) XLE and OIH both pulling back today on lower crude prices-> RYEIX (Rydex Energy) and RYVIX (Rydex Oil Services) likely to close end of day with 2-day gains of +2% and 0%, respectively.
    (f) The $USD off -0.5% today. RYWBX (Rydex Weakening Dollar) will probably close with a minor 2-day gain. RYMBX (Rydex Commodities) was up yesterday, and likely to give it all back today.

    I’m guessing the trades will deliver a +1.6% gain for the total portfolio. The market is quite good at shaking out longs just prior to a run higher. That may be the case here, and I’ll be forced to reopen positions at higher prices.

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  38. "if you going to buy one of these insurers, it really is a different dynamic than energy stock"

    Reflecting on the dynamic of energy stocks, I certainly would hope it's not the same or remotely similar. I'm just not interested in anything that has rolled over or is in the process of rolling over. If that makes any sense, the reason is as price goes down it takes your portfolio with it.

    So the dynamic is you sell high and buy low, not the other way around. A comprehensive and objective thesis is mandatory, not a subjective one.

    The concept seems simple enough even a caveman could do it but if you think a 10 ton flywheel spinning at 2000 RPM can store enough energy to power all of NY city for an evening but if you can't show the math supporting that I'd say your thesis isn't comprehensive.

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  39. Not sure what the French gun laws are like but it appears the weapons used were illegal, thus the weapons were available despite gun laws. A dead terrorist is the best kind of terrorist.

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  40. BXE - New low - Subsidized bubble has popped.
    DB - New low - No Subsidies yet or nolo participater?
    FCAU - Jury still out. Worried if the subsidized recovery has popped or about to pop.
    Education - A new bubble about to form, fat lady clearing her throat prior to 1st inning?
    Infrastructure - I think there's no bubble, so it's a candidate?

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  41. JCP - Rhetorical question: Which way from here? Will our government blow a free for all bubble here or leave it to fend for itself, live or die?

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  42. SAN - Raising cash, man.
    BSBR - Are we no longer interested? It's not Europe so maybe it's safer? Or since China is molting, there should be some new opportunities excluding South America (obviously, unless South America molts as well) as the new feathers grow?

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    1. I was circling back to some of these stocks today in my mind...didn't really do any research on them. Was just checking out SAN, DB, BCS, LYG, IRE, NBG. There's a play setting up in these and the catalyst is the ECB.

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    2. Yep, all we have to do is figure out which of these will be the chosen winner.

      Delete
  43. TAX Loss Selling - Still incomplete for BXE/DB

    ReplyDelete
  44. We're still working around the ideas for what to do this year. I probably should have just stayed in cash while deciding because I've lost a decent chunk in the first week. Oh well can't complain after last year.

    We have come up against a bit of a quandary. We would like to buy a home but in order to qualify for a loan we need to show tax returns for the past 2 years and right now we aren't showing any income (the money I make is in my retirement account and withdrawn as an early distribution therefore no income). Our options are:

    (1) Get a job to show steady income...probably would have to be an entry level type thing or get lucky working in a field that is somewhat related to my experience
    (2) Start a business up or piggyback off my furniture business which is marginally profitable and hope it shows some steady income within 2 years
    (3) Pay for a home in cash and get completely bludgeoned to death by taxes (we would pay an additional 18% in taxes if we decided to buy a house with all cash vs just taking out a little extra every year to set aside to buy a house)

    If we go with option 1 or 2, I really need to take a step back from the hands on approach to investing and focus on dividend paying stocks (ideally stocks with 3%+ yields)...both of these (hands off + dividend stocks) is foreign to me. Ideally they would need to be stocks that could withstand a recession and bounce back fairly quickly but offer dividend protection during a recession.

    Anyone have a list of some good stable non cyclical stocks paying that much? A stock like GM is attractive but would take some management on my end and is susceptible to huge swings that are unrecoverable during recessions.

    ReplyDelete
    Replies
    1. Hmm, I agree if you're going to buy a home the deal needs to take advantage of these uber-low rates else it's probably not worth the risk.

      PG is paying nearly 3% now, what are the chances is sells back to mid $70's ? I can think of a lot of ways, such as maybe shorting the bejesus out of bonds in a year or two once they've fully bottomed.

      I don't think there's anyplace you can get a return of 3% without taking on risk, so the positions still have to be managed? How about Russia, nice return there and your time horizon is long enuff to wait it out, right?

      Delete
    2. BX pays 5% and looks ready to break out. If you think the economy has completely healed and there's only upside remaining for the next 20 year bull market this one should kick ass?

      Delete
  45. CBI is mentioned in this article"
    http://oilandgas.einnews.com/pr_news/243128680/pennsylvania-sets-brisk-pace-of-development-for-natural-gas-power-plants-an-industrial-info-news-alert

    ReplyDelete
  46. VLCCF - Preparing to rock and roll? Go all in, buy a house?

    ReplyDelete
  47. TOF,

    Not sure about down there, but in Canada, I can issue a mortgage out of my retirement account to myself as long as it is done at market rates and the value of the mortgage is less than 75% of the house.

    ReplyDelete
  48. If we go with option 1 or 2, I really need to take a step back from the hands on approach to investing and focus on dividend paying stocks (ideally stocks with 3%+ yields)...both of these (hands off + dividend stocks) is foreign to me. Ideally they would need to be stocks that could withstand a recession and bounce back fairly quickly but offer dividend protection during a recession.

    > The hard part now is so many people have been chasing yield for the last few years that the prices of the good dividend stocks is high. The traditional consumer products stocks like JNJ and PG are sub-3% yields. UL has a 3.6% yield, but probably taxed at higher rates as a UK company. WMT is 2.2%

    GM and the auto industry is quite cyclical, so you have to be willing to sell at some point.

    The only good yielders I have are:

    ORI, which is a 5% yielder and a dividend aristocrat. I think there is good capital appreciation as well as their home mortgage business gets run off. I think this can be held very long term, but my plan is to look to sell when it gets back to fair value (around $22).

    FLY, which is a 7.5% yielder and in the airplane leasing business. There is a long term tailwind (haha) to this industry with increased world travel, but I wouldn't want to hold through a recession.

    CKI.TO yields 4.25%, but is Canadian, but the dividend is safe and their is probably 30% or 40% upside this year if we have a decent market as they are undervalued on an asset basis.

    I haven;t looked in detail, but I agree with CP that BX is probably good.

    I'd stay away from the MLP's and most utilities as these have been bid up to around twice their traditional valuation based on people hunting for yield and I think they get hit hard when rates to rise.

    ReplyDelete
  49. An approach you might want to consider is buying a set of say 30 stocks, focusing more on value than yield. Set target prices for each of the stocks, and when your targets get hit, start selling the stock to fund your income. This is what I do and the good thing is it is not so restrictive. You still need to keep fairly active in the market as you will need new stocks to replace the ones you sell, but I can't imagine you are going to be completely hands off. You also need to keep a cash cushion of a year or more, depending on where the economic cycle is, so you can ride out any downturns without being forced to sell.

    ReplyDelete
  50. TOF,

    just googling around a bit on US tax laws and they are tough. If I lived in the US, doubt I could have quit work a few years ago. I pull money out of my retirement account each year and pay income tax on it, but it is still not a bad rate as there is no other deductions like Unemployment Insurance or Canada Pension (same as Social Security).

    The one thing I saw is that you can avoid the extra penalty if you pull money out of an IRA and buy an annuity. Perhaps you could pull the money out and buy an annuity which pays your mortgage? I don't know if it has to be a life annuity or if it could just be for a fixed term, and not sure if it would save money, but worth a look. Do you know any hotshot financial planner/lawyer types down there? I'm sure many others have had the same situation.

    ReplyDelete
    Replies
    1. BB - Thanks for the comments...the yield chasing issue is a major concern of mine. I'm beginning to circle back to the idea of just loading the boat on FCAU again but keeping like 18 months of expenses in cash. The more I look at that one the more confident I am that $11 will be defended and you have a near term catalyst that will undoubtedly help the shares. Just based on revenues and recent growth trends it should trend up to $20+ eventually. Seems like a very good risk-reward and I can't find much else that has the same upside with limited downside risk. Plus, it's a big cap that shouldn't get hurt too bad and I have a large enough balance that taking a decent hit really won't kill me.

      Regarding the annuity, there's a rule called a 72t distribution that allows you to take equal distributions every year tax free based on your life expectancy. But let's say mine is calculated to be 45 years from now. I would take my balance and essentially divide by 45 which leaves me with not enough to cover costs annually and it also doesn't allow me to have extra $$ to put down for a house. And if you don't do equal distributions they penalize you heavily. So that doesn't work.

      I've read about borrowing from your IRA to borrow to buy a business or something along those lines. That intrigues me but I read conflicting info on that.

      Delete
    2. Looks like a self directed IRA might be the answer...I believe you can buy a business with this $$ which would give me access to getting a mortgage. you can't use it for personal residences.

      Delete
  51. For SAN, DB, BCS, LYG, IRE, NBG etc I think we need to pay close attention to the chart patterns of the US banks prior to QE. I wouldn't be surprised to see an almost identical setup in these.

    ReplyDelete
  52. CP brought up several interesting points.

    (a) Rates. I don't believe we will see mortgage rates this low again in our lifetimes.
    (b) Housing prices. They have recovered in the Bay Area, but elsewhere? I don't see it. It's still a good time to buy along the Central Coast.
    (c) RSX currently yielding 4.4% (based on the $0.66 dividend issued last December).

    ReplyDelete
    Replies
    1. If I could go back to early Nineties, I would have bought a duplex as a starter home. Nothing beats renting out the other unit to pay the bills. When you're ready to move up, keep the duplex for rental income.

      Delete
  53. Reading the latest from Steven Kaplan (http://truecontrarian-sjk.blogspot.com/) led me to this post about the late Irwin Yamamoto:

    http://www.kirkreport.com/2011/07/15/lessons-from-irwin-t-yamamoto/#sthash.Az9zf5Kg.dpbs

    My kind of guy.

    ReplyDelete
  54. Good article on how people think the oil price knock down was so obvious, but how few people predicted it:
    http://www.fool.com/investing/general/2015/01/06/i-knew-it-all-along.aspx

    I started reading the book he mentions, Thinking fast and slow, and it iss amazing the tricks your brain plays on you if you are not looking for them.

    ReplyDelete
    Replies
    1. The point is you must always respect price action and take losses quickly, else you get handed your butt. If the trade wasn't working then at lest the timing was wrong and that makes the trade wrong, despite if the thesis is eventually proven correct.

      I recall asking these questions (If a doubling of production wouldn't result in huge price declines) so the question was presented. China isn't growing at a rate of 8% or even 7%, more like 3~4%, based on the old metrics, there are probably sectors in China growing at much higher rates though, not sure how that translates or impacts energy consumption but steel production chews up energy, so too do other mechanisms. I was thinking the end of the farmhouse wood burning stove meant electricity demand would increase, and auto sales the rivaled US sales would translate to increased demand as well.

      These dynamics are probably still in play but every trade is timing dependent, not just thesis dependent.

      Delete
  55. WSJ - "$US gets boost from easing of global fears"

    I have to say I don't comprehend this logic.

    ReplyDelete
  56. Hawaii seems very popular lately:
    "Maui Land & Pineapple Co. rose 18.1 percent to $7.49"

    ReplyDelete
    Replies
    1. http://investorplace.com/2014/01/trade-of-the-day-maui-land-and-pineapple-mlp-stock-prices-activity/#.VLLfOyvF9fY

      Be something if Larry Ellison bought this.

      Delete
    2. Yep, he sounds familiar with it and based on those stats probably a good short.

      Delete
  57. MLM - Hmm, wonder if a few infrastructure projects are announced the market might anticipate a need for some aggregate and rip-rap?

    ReplyDelete
  58. EBIX - Were we looking at this one recently or a few months ago? Seems familiar.

    ReplyDelete
  59. CVEO - Blood in the streets, running down storm drains into the river?

    ReplyDelete
  60. "The only way to cause prices to rise is to increase demand relative to supply. Where low household income is the main constraint on consumer demand, the only substantial way in which to spur CPI inflation is to increase the household income share of GDP."

    ReplyDelete
  61. CP, I think it depends on your timeframe and thesis. I've had a number of trades go from say $2.00 to $0.50 to $8.00. Because of my approach of buying stocks I believe in, I am willing to do this and if I had cut my losses, I would likely never got back in and missed the gain. Or worse, the stock would go from $2.00 to $1.60 and I'd dump it at $1.60 only to immediately see it turn around and go to $8.00 without me.

    Of course I've had other ones where they go from $2.00 to $4.00 and down to $0.10 and didn't sell and took the big loss, but fortunately, these are far fewer than the ones that come back and if you average it out, I've come out ahead for sure.

    I certainly understand that other types of traders would rather take the quick loss and try and reload at a lower price or with a different stock. But from my perspective, good stock ideas are generally hard to come by, so if I think I have a good one, I'd rather take my chances and hold on.

    Often the biggest difference in how people perceive stocks isn't the business, but the timeframe they are using to evaluate the stock performance.

    ReplyDelete
    Replies
    1. Yes, that's why you have to take losses quickly, sit on the sidelines and wait for a better entry. So you can jump back in AFTER the selling spree has run it's course. Otherwise it's impossible to add at the (much) lower prices b/c your allocated capital is already tied up.

      Delete
  62. Europe is happy about something, maybe a horse won or QE was promised. Could be QE was selivered, will find out what happened in the next couple days as the news finally reaches me.

    ReplyDelete
  63. Paulson continuing to make big losses:

    http://www.bloomberg.com/news/2015-01-11/paulson-event-driven-fund-said-to-end-last-year-down-36-.html

    I guess he won't get any of the 20% upside (assume 2& 20 fee structure), but the 2% management fee is still worth $390 million - I guess he'll be OK.

    ReplyDelete
  64. BXE - Another bad day, they just keep coming.......

    ReplyDelete
  65. Still think BXE's balance sheet looks okay?
    http://www.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

    ReplyDelete
  66. Natty - Be prepared for the great natty rally if shale producers have no future then natty prices are gonna hit the roof (unless Saudi Arabia can ship natty too).

    ReplyDelete
  67. Oh wait, everything's crashing.......

    ReplyDelete
  68. DB - At some point this one will stop falling but not sure if that happens AFTER a huge dilution?

    C - I recall this one received a huge dilution a few years back that placed share count at a figure greater than human headcount on the planet. Do you guys know if shareholders have broken after the dilution, I don't recall the original price.

    ReplyDelete
  69. TKMR - I suspected that was coming.

    ReplyDelete
  70. Raising gasoline taxes soon, or just more BS?

    ReplyDelete
  71. BMY - Not going to $120 eh? Where's that guy who shat all over this idea last year while trying to get me signed up for some kind of dumb-ass stock service?

    ReplyDelete
  72. BXE - Does this look right and what does it mean?
    EBITDA: CAD$ 161
    Enterprise Value: 5X EBITDA: CAD$ 805
    - Debt: CAD$ 620
    = Market cap: CAD$ 185
    % Shares outstanding: 192
    = Share price: CAD$ 0.97

    ReplyDelete
  73. I ended up bailing on my GOOGL position right at the open thankfully and picked up TWTR at $40.1. I'm going on a hunch that the addition of their search bar is a long term winner for them, allowing them to monetize their large user base. I also think they will start monetizing the embedded twitter streams you see on so many sites just like GOOGL did with Adwords. After all, it's their content and they could go after any site poaching their content from them which is part of the internet copyright laws.

    ReplyDelete
    Replies
    1. These two factors are tough to quantify so I'm going on a feeling more than anything that this will be a long term winner. It's a very unique internet property that can not be replicated and is quickly becoming a mainstream way for companies, celebrities, news agencies, protestors etc to get their voices heard and promote their products / services. Revenues are growing rapidly but it's not even close to hitting its stride in my opinion. The valuation at current levels makes little sense.

      Delete
  74. Paris - Why didn't Marco Rubio go to Paris for the ceremony? He missed the opportunity for showing his sincere concern.

    ReplyDelete
  75. We're putting two politicians in jail this month, for committing crimes.

    ReplyDelete
  76. TWTR - DOD twitter account was hacked, LOL Why does DOD have a twtr account, anyway?

    ReplyDelete
  77. Kinda surprising energy is selling off considering how robust growth has been. And that 10yr rate, keeps moving lower, surely that's telling us growth is booming, no?

    ReplyDelete
  78. Replies
    1. This was a Stanford endowment pick a few months back, right? So, I guess Stanford must be selling.
      http://www.bloomberg.com/news/2014-11-14/stanford-endowment-adds-fracking-investments-in-third-quarter.html?cmpid=yhoo

      Delete
  79. SRS - If you owned this one, you wouldn't have experienced a 10% draw down today.

    ReplyDelete
  80. Took another hit on TWTR heading into the close. Really just not willing to take any more risk this year. I have made about 10 trades and all but 1 has lost money. I moved almost all into cash into the close. I don't know what will happen with the market but I need to put the brakes on for the time being so as to not be down like 10 or 15% right off the bat to start the year. With the lack of success I've had either I'm in a rut or the market is heading for a rough patch for the next few weeks. I think it's some of both and my suspicion is we have a tough stretch here soon.

    ReplyDelete
    Replies
    1. I finally got my spreadsheets updated for 2015 and I am down 3.1% already - not fun.

      My only good ones are GM, FCAU and FLY (airplane leasing). Amazingly, 20% of my stocks, all energy ones, are down almost 10% or more already.

      Energy stocks and the price of oil in general are still the big question for 2015.

      Delete
    2. Yeah its been a nasty start to the year. I regret selling any of my FCAU. Oh well. AA had solid earnings after hours today. Looks cheap to me.

      Delete
    3. I think this year could be a good one for companies like AA as they will benefit from lower energy costs and an improving economy. I don't know for sure, but I wouldn't think a lot of aluminum is used in the energy industry, so no real hit there.

      I think I could get back into AA for about what I sold it, but I own a commercial steel joist and deck company (CAM.TO) and I think a lot of the same factors help them as well as they don't make the actual steel, just make things with it. Fwd p/e of 9.5 on CAM.TO versus 15.5 on AA, so cheaper and more downside protection hopefully.

      Delete
  81. Wonder if the healthcare act has caused life insurance policy price pressure? Don't see why it shouldn't.

    ReplyDelete
  82. FMC - Alert, this one is moving up.

    ReplyDelete
  83. IBM - This one pays nearly 3%, not quite there.

    ReplyDelete
  84. ENSV - This one lifted today, considerably, with low volume (Up on low volume has been really bullish for SPX, right?) Is this a little company that can get big jobs done at super low prices or what is it?

    ReplyDelete
  85. KRE - Seems to be at an inflection point.

    ReplyDelete
    Replies
    1. The Contra the Heard guys, who i've mentioned before and have a great long term record, like regional banks. Think they are in a consolidation phase after the initial rebounds before the final rampup.

      http://www.theglobeandmail.com/globe-investor/inside-the-market/phase-two-of-contrarian-investing-requires-patience/article21058582/

      I personally like the insurance companies because I understand them better, but I think if you pick good regional banks, you will do well too.

      Delete
  86. SUSQ - Doesn't pay quite 3% but might offer some good upside potential? We might find out soon.

    ReplyDelete
  87. WAL - This one looks pretty healthy in terms of balance sheet, no?

    ReplyDelete
  88. I'm starting to think the time to buy energy may not be too far away (meaning in a few months, not years). I'm reading of big cuts from the large guys, plus the shale guys seem to be cutting very quickly and they need to keep drilling due to the fast well decline rates.

    http://www.grandforksherald.com/news/business/3653603-north-dakota-rig-count-lowest-level-november-2010

    Wouldn't be surprised if this was the make or break decision for market outperformance this year.

    ReplyDelete
    Replies
    1. Are you still holding RES? I didn't see it listed so must be a small position?

      Delete
    2. My thinking is that the key is to find a company with a strong balance sheet (preferably low debt, high cash, low deb to equity, trades well below book value) and particularly one that doesn't have a lot of goodwill.

      Delete
    3. The Contra the Heard guy picked PGH about a month ago:
      http://www.theglobeandmail.com/globe-investor/investment-ideas/three-top-stock-picks-from-contra-the-heards-benj-gallander/article22196968/

      He's targeting $15 Canadian Dollars (vs $3.3 right now) as a target price. That would be a huge home run. They pay $0.04 in monthly dividends (yield of 17.3% but most likely will be cut). 50% of their oil is hedged at 85 or so for a couple of years and 50% of their gas is hedged at like $4, both comments on hedging per this video. I haven't researched it but I do know about this company from prior screens. Could be worth a stab if you believe in what he's saying.

      Delete
    4. Cp, must be someone else - I've never owned RES.

      Delete
  89. I picked up some UWTI and UCO pre market at $2.75 and $7.19.

    ReplyDelete
    Replies
    1. Took these off for $2.83 and $7.33. Not passing up on a gain anymore.

      Delete
  90. Euro QE is supposed to be "shock and awe"

    ReplyDelete
  91. C/WFC - Supposedly, not sure but heard C and WFC have oil exposure.

    ReplyDelete
  92. Would US rates lift if capital began rushing into Europe?

    ReplyDelete
  93. Replies
    1. We are getting into earnings season - earnings have done a pretty good job of getting the market to bounce the last 3 years. Maybe this is the start of the next leg up.

      Delete
  94. FRO - OMG, down 11%, rats deserting ahead of the dilution?

    ReplyDelete
  95. Bought a small position in NM today at $4.2. I'm thinking the impact of lower oil will more than offset a decline in coal usage.

    ReplyDelete
  96. ING - Is ING lifting out of the funk? Verifiable euronews might confirm it and it's important to get in early for gains.

    ReplyDelete
    Replies
    1. Look across the board at the European banks. The QE rally has begun.

      Delete
  97. Long AA between $15.84 and $15.99

    ReplyDelete
    Replies
    1. I think those earnings were phenomenal and this selloff will reverse itself within a week or two.

      Delete
  98. I started buying some TA this morning. My avg is $13.54. I think this could be a $50 stock if oil stays down. They should be able to at least double earnings with low oil based on a rough calculation I did of their margins. I think this could be a momo favorite soon.

    ReplyDelete
    Replies
    1. Interesting idea. Improving economy and lower gas prices should put more trucks on the read. Price seems reasonable But why do you think their margins double from lower gas?

      Delete
    2. It's not a perfect estimate but I used the input costs (oil) and compared to the national average of gas prices then applied this to the total revenues (about 80% comes from gas) and assumed a roughly 5% increase in oil consumption due to growth + higher demand from lower prices to arrive at what I think is about double the current EPS run rate. Gas prices to consumers are stickier than oil prices. For example, oil has dropped 59% from the peak while gas prices have dropped about 44%.

      http://www.gasbuddy.com/gb_retail_price_chart.aspx

      For a low margin, high volume business (about 6%) this is a HUGE deal. I need to double check my input figures to make sure they're accurate though.

      Delete
    3. It looks to me like they could add about $60 to $80 Million run rate in pre-tax EPS from the higher margins (again, tough to calculate exactly given how volatile oil is) which would yield a pre tax earnings of close to $100 Million (vs $520 Million market cap). I would think at a peak momentum run up after people realize oil isn't coming back up this could be worth $1.5 Billion or so...or about $40 per share.

      There was a competitor in their space (PTRY) that got bought out recently at a deal that would essentially value TA at around $20 to $23. And from reading about that buyout it appears there may still be another offer out there. I wouldn't doubt it given oil prices seem comfortable down here.

      Either way, I think TA has the potential to double to triple from here, assuming oil stays down. I was stupid for not buying it earlier when I mentioned it in the $9-10 area but it still looks really cheap.

      Delete
  99. REXX - What's so horrible about this one? Any guesses?

    ReplyDelete
  100. ALDW - There she goes, was anticipating that. Can she make new lows in the next few weeks and when the bottom comes will I be able to spot it? Or, bottomless pit?
    REXX dropped 20% yesterday still dropping today, as if cold fusion hydrocarbon replacement is around the corner or someone found a gargantuan stash of hydrocarbons.
    GUKYF down 8%, Iraq isn't immune to this precipitous slide, I havn't identified any oilers that have held their ground and wouldn't expect too even if they were the hydrocarbon messiah.

    ReplyDelete
  101. QE ended in July 2014, the exact month that oil prices started falling. A coincidence?

    ReplyDelete
    Replies
    1. I thought it ended in October.

      Delete
    2. Yeah, I think you might be correct about that.

      Delete
    3. They announced the Oct end, in July:
      July 9 news:
      "Assuming the economy continues to heal at its current pace, the central bank expects to officially end its bond-buying program, known as QE3, come October, according to the newly released minutes from its June policy meeting."
      http://www.slate.com/blogs/moneybox/2014/07/09/federal_reserve_ending_qe3_the_program_will_cease_in_october.html

      Delete
    4. BWA - Sadly, it seems BWA isn't going to participate in the new tightened CAFE standards, or the standards are about to be relaxed?
      SPY looks like a 10% correction off this H&S that's formed inside a rising wedge? Just something I see in this chart.

      Delete
  102. PCRX - Okay so why did this get clobbered to $82 just a few days ago if it's not simply someone trying to create fear?

    ReplyDelete
  103. FCAU - Looks like a setup for a nice smackdown ala ALDW/PCRX/(Insert ticker here).........

    ReplyDelete
  104. Doncha just love this market?

    ReplyDelete
    Replies
    1. I guess just have to be patient for now.

      Delete
    2. My account is down yet again, so no I don't! :( Fortunately I didn't fall for the same old tricks else the damage would be greater.
      SCO still looks good to go.

      Delete
    3. I mean more be patient about buying things in this market.

      Jeff Saut looking for a rough few months at least:

      Granted yesterday’s rally was impressive, but I am going to stick with my indicators that still suggest a rough patch for the first few months of the New Year. If those indicators are wrong, I will adjust my views. But until then, I am dancing with the “date that brought me here.” And, I will leave you with this from one of the BEST strategists on Wall Street who wrote, “[The] weight of the evidence suggests the bull market has embarked on a broad topping process that could take its time.” While I continue to think the secular bull market is alive and well, the near-term directionality is questionable.

      Delete
  105. Re TA, I want to like this stock, but either I'm missing something or it's just not working for me (which is fine, but I want to make sure).

    When I look at the Q3, YTD results, they had fuel margin of $0.189 per gallon. In Q3 specifically, it was $0.191 per gallon. In their concall, they say the following and kind of imply Q4 will be similar:

    "I’ve got to think about that in terms of the couple of things. One, the third quarter we’ve seen third quarter this year generally declining the commodity prices and that’s in contrast with third quarter last year where they were generally speaking increasing. And so that may explain the impact when we see $0.191 a gallon for this third quarter and $0.176 a gallon last year third quarter. And that’s the commodity piece of the underlying cost structure piece of it."

    Assume they sell about 2 billions gallons of gas (simple 4/3 prorate on 9 month numbers), they need to bump margins by another $0.03 per gallon, which seems like a lot given they were quite pleased to get the $0.015 per gallon. Also, I think this would be transitory as fuel stabilized at lower prices and low gas prices move closer to lower oil prices - especially in a competitive market like gasoline? I suspect the reason gas hasn't dropped as much as oil is because of things like excise taxes which probably stay flat.

    Also, I didn't get what you meant by:

    It looks to me like they could add about $60 to $80 Million run rate in pre-tax EPS from the higher margins (again, tough to calculate exactly given how volatile oil is) which would yield a pre tax earnings of close to $100 Million (vs $520 Million market cap)

    If they generate $60 - $80 million in pretax, wouldn't the earnings be $40 or $50 million after tax?

    You know I am looking at this from a much longer perspective, so may be missing something and I see how a really strong Q4, if they can get high margins, could drive the stock price higher if people think these can hold, but let me know what you think about the above.

    ReplyDelete
    Replies
    1. shit I just wrote a long reply but it got deleted. The key to looking at the margins is look closely at the price ranges of oil in Q3 2013 vs Q3 2014 then look at where it was when they did their conf call in Nov. No way in hell they made comments pertaining to margins with an assumption that oil would be sub-$50.

      Delete
  106. sold FCAU, AZN, NGLS

    probably a sucker move, but something just does not seem right.

    ReplyDelete
    Replies
    1. CNBC blaming it on Germany still not wanting QE - http://seekingalpha.com/news/2220156-stocks-stage-retreat-in-sharp-midday-reversal

      Looking more and more like the QE decision will be a big, binary event, with the market reacting strongly one way or another depending. Personally, I'm not sure it really matters given how low rates are across most of Europe, but traders always look for something to trade against.

      Delete
    2. For the time being it seems best to sell the open! Reload on weakness rinse and repeat as mindless as it seems.

      Delete
    3. Well, honestly I'd be amazed if CW fell out of it's channel. But I wouldn't mind if it did. I guess we find out what happens, push comes to shove when Germany refuses QE, I fully expect they will b/c that's how Germany is towards Southern Europe. This is why Southern Europeans mutter to themselves when Germans enter the room, "go back to Germany" are the words I heard spoken under their breath.

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  107. Buffet's guy likes CBI - but they both underperformed last year. Amazing how few people you hear beating the market in 2014 - was a tough year for sure!

    http://www.marketwatch.com/story/warren-buffetts-star-pupils-failed-to-beat-sp-500-in-2014-2015-01-13

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    1. I believe Tepper also owns it. I like the stock at these levels. Some risk but I'm not putting a ton in it.

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    2. I'm liking that one too, not sure why it's down this low. I guess it gets whacked as Germany refuses QE so if that happens then I'm probably gonna jump on it. Not sure if FMC is a similar case but my borker keeps harping it (no, I don't trust my broker but have to give them some respect b/c looking over last year's USA1 list there were a good many winners.

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    3. wow -53%, does not take many of these to gut your performance.

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  108. Replies
    1. not only that but huge vol on WTI, light sweet and Brent. This might be the day, but I've been burned on my last 10 oil trades fighting the trend and am gun shy surely that is a sign.

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  109. HP - Helmerich & Payne Inc. is the largest US land driller and provides onshore and offshore drilling services globally with a fleet of about 350 rigs, including about 300 land rigs in the US.

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  110. Ever feel like the market is like a mining operation where where the extraction taking place is what's in your pocket.

    What's in your wallet?

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  111. Looks like Calpers made 18.4% on their money last year, so they were one of the winners.

    But it does make me wonder when guys like Tepper and Buffet have a rough year and Calpers has a very good year.

    If I was going to bet, I'd be pretty confident this gets reversed in 2015

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