Was out golfing with 2 ex-RIMM guys and 1 who is barely hanging on and 2 things were clear:
1. Would not even think about touching RIMM stock and could easily make the case it should be shorted. 2. People love the dividend payors. Tried to make the case to these guys they should sell their good dividend stocks as they have moved up so much and many non-paying or low-paying dividend stocks with equivalent businesses are much cheaper, but wouldn't even consider the idea.
When interest rates do rise (whenever that finally is), I see these stocks getting hit hard as well as the bonds which will obviously drop. These big dividend stocks will get hit by both sides as their cost of borrowing rises and demand for their stocks fall as competition for income-seeking funds moves back to bonds.
This means that there is a great opportunity for active investors like us to make gains by buying and selling these un-loved stocks as opposed to sitting in overvalued dividend stocks with little more upside.
These guys would be better off setting stops above their entry and collecting the dividend until rates rise. No one knows when that will happen but we are still seeing signs of easing and exchanging short term for long term debt so rates may be suppressed for an extended period of time and their dividend payers may, in fact, be their best bet. The other side of the logic is some of those div payers, like many co's are not paying divs with borrowed funds as corporations generally have decent balance sheets, and their stock prices may increase in some cases as business improves and rates rise. AAMOF, they may need to raise their divs as rates rise to keep pace and retain capital. Some of the bigger div payers are utilities and higher rates will likely have a negative impact on their earnings and divs as they use a lot of debt, but that isn't true for all co's. I think the break even point could be some way off as investors are still doing WAYYYY better holding div payers than T's and bonds, which is why I would set stops and let the share price take care of itself.
These are different guys than my gold bug golfer buddies.
CC, I guess you are right that this could run a long time - sold all my bonds 2 or 3 years ago now and they would have still been good investments to hold, which I still find hard to believe!
Who would have guessed? It must be a lot worse than anyone knows. Those bonds from 3-4 years ago would still be paying 3-4% and have a decent cap gain to boot. I pissed I sold some too!
People are saying F is one of the cheapest stocks in the S&P. Haven't looked at it, but have good product, know how to run a car business profitably and there is all the chatter about how old cars on the road are - would probably be a good one.
Oil service companies reporting good numbers this morning and yesterday and the stocks have really gotten beaten up on the thought business would be bad. Price of oil is back above $90, so I think these should do well.
If you want some good trending up stocks, take a look at DIS and TJX. Missed both of these, but they are definitely up to the right. Don't know how to play stocks like this personally, but seem like good trends to ride.
Latest from Jeff Saut earlier this week: http://www.raymondjames.com/inv_strat.htm
Clip from the Economist: "America’s economy is once again reinventing itself. The U.S. economy has repaired [itself] quickly in the last three years. Home prices are among the world’s most undervalued (19% below fair value). U.S .banks [are] among the best capitalized in the world. Consumer debt loads are down. Exports are extremely strong. [And] energy, long the U.S.’ “Achilles Heel,” is now turning into an advantage with the shale gas boom."
Alright I picked up a little NSPH at $2.665. The only reason I'm thinking it's time to pick up a little is this move has to do at least in part with the CPHD move. I will keep more in case it gets to $2.5.
the US dollar is likely to strengthen as the eurozone crisis weakens the euro and as global risk aversion returns. The US Federal Reserve will carry out more quantitative easing this year, but it will be ineffective: long-term interest rates are already very low, and lowering them further would not boost spending. Indeed, the credit channel is frozen and velocity has collapsed, with banks hoarding increases in base money in the form of excess reserves. Moreover, the dollar is unlikely to weaken as other countries also carry out quantitative easing.
Similarly, the gravity of weaker growth will most likely overcome the levitational effect on equity prices from more quantitative easing, particularly given that equity valuations today are not as depressed as they were in 2009 or 2010. Indeed, growth in earnings and profits is now running out of steam, as the effect of weak demand on top-line revenues takes a toll on bottom-line margins and profitability.
you gotta wonder how much is priced in right? At a S&P price the same as it was in 1999 while earnings have grown 150%, you would have to think a good deal of this is priced in. As I mentioned before there have been several instances where we had a recession and yet the S&P never dropped much more than 7 to 10%, which it already did in May/June.
TOF, you make a good point. Basically, the world is still in a massive deleaverage stage that is far from finished plus the world is up to their eyeballs in debt and we are not likely to grow our way out of it anytime soon. Does this not take the wind out of the sails?
Still as always there will be trading oppotunities as the world turns.
sorry meant to say "were". to me it's all about EPS man. it continues to grow over time, making the market cheaper and cheaper. i understand the argument about high profit margins but just because they come down over time doesn't mean EPS comes down. i believe this happened in a rising market in the 50's.
Didn't see any news which would push this and no earnings releases.
It is probably back to the "rates are so low, the insurance companies can't make money" theory.
US 10 year yield down, chatter about negative yields in Europe.
But the bigger concern is LQD (investment grade corporate bonds) has been no a tear recently. The current yield on this is 4.13% and I recall NWLI, in their last report, said their yield to maturity was about 4.5%, so margins will take a hit on reinvestment if rates don't rise.
Most insurance companies tend not hold a lot of government debt, but a lot of corporate debt.
MUX: "The most impressive hole returned 1.1 gpt gold over 71.3 m"
These are quite poor results. I remember some mining expert said the following: "A minimum of 2-3 grams per ton is needed to make an open pit mine while 5-6 grams per tons at a minimum are needed for an underground mine."
CP - I know you pay a lot of attention to OBV (and I noticed that Stephen Stewart guy uses it a lot in his work). It sure looks good for NSPH: http://stockcharts.com/h-sc/ui?s=NSPH&p=D&yr=1&mn=0&dy=0&id=p28975746992
Yes, this is likely one of the initial parameters that peaked my interest immediately following the TT secret weapon alert. Basically it seems OBV is back to historical levels ahead of price.
Assuming volume proceeds price, I guess we find out on this one... may as well have a few toes in the water meanwhile.
TOF, your Objective Trader friend calling for a 2 year rally in commodities. If true, implies economy and markets all get better as this is heavily oil-weighted and higerh oil prices need a decent economy.
ME: Hi Bill – I listened to Cepheid's conference call and it sounds like they are seeing some slowing in spending as a result of the economic issues surrounding the health care reform package in the US. I was curious if you're seeing this as well.
Also, I'm curious to hear your take on how you differentiate your product to potential customers from that of Cepheid. What are your key selling points when they counter that the Cepheid machine is approved to do a multitude of tests?"
THEIR RESPONSE: "Cepheid’s primary tests are MRSA screening assay and their c difficile test. They cannot do the broad panel tests because they cannot multiplex in the double digit range.
Their slow down could be due to US health care reform, but we don’t see it. It is also possible their slow down is attributable to the fact that their MRSA test (primary driver) has much competition and ultimately many hospitals are having a difficult time justifying the cost of testing compared to the benefit."
Mark, the measured & indicated resources for AUMN contain 3.4 g/t of gold and 210 g/t of silver, and with a 50:1 gold/silver price ratio, they contain 7.6 g/t of gold equivalent oz.
Nice to see gold and silver positive on the day when $USD made such a huge jump. Even nicer to see AUMN finish positive for the day when GDXJ finished red, which suggests that yesterday's news of production decline in Q2 relative to Q1 did not have much impact, as in fact it was totally unimportant (that's why I added more AUMN calls at EOD yesterday). In order to make sure that other AUMN investors realize this as well, I just wrote another article on SeekingAlpha (currently pending for review), which explains just that.
By the way, writing an article on SeekingAlpha is a great way to influence a stock, since that article immediately pops up on Yahoo finance, Google finance, etc., whenever someone looks at the page for that stock. Let's see if we get some movement in AUMN next week, after my article is published. :)
Oh, then I'll be reading your article, you waited long enough to mention this. ;)
I'm thinking we see a least one more pullback for commodities, WTIC somewhere under $90(mid 80's?) to shake and bake the new longs who took the breakout bait.
Offed the BAC @ 7.165. WTF was I thinking? It's clearly trending down. $200 lesson> I'm ticked off.
ReplyDeleteWas out golfing with 2 ex-RIMM guys and 1 who is barely hanging on and 2 things were clear:
ReplyDelete1. Would not even think about touching RIMM stock and could easily make the case it should be shorted.
2. People love the dividend payors. Tried to make the case to these guys they should sell their good dividend stocks as they have moved up so much and many non-paying or low-paying dividend stocks with equivalent businesses are much cheaper, but wouldn't even consider the idea.
When interest rates do rise (whenever that finally is), I see these stocks getting hit hard as well as the bonds which will obviously drop. These big dividend stocks will get hit by both sides as their cost of borrowing rises and demand for their stocks fall as competition for income-seeking funds moves back to bonds.
This means that there is a great opportunity for active investors like us to make gains by buying and selling these un-loved stocks as opposed to sitting in overvalued dividend stocks with little more upside.
Are these the ones who hedged their div stocks with gold?
DeleteNorilsk doesn't have a rosy outlook for nickel or palladium:
http://www.reuters.com/article/2012/06/29/norilsk-investment-idUSL6E8HT63220120629?feedType=RSS&feedName=basicMaterialsSector&rpc=43
These guys would be better off setting stops above their entry and collecting the dividend until rates rise. No one knows when that will happen but we are still seeing signs of easing and exchanging short term for long term debt so rates may be suppressed for an extended period of time and their dividend payers may, in fact, be their best bet. The other side of the logic is some of those div payers, like many co's are not paying divs with borrowed funds as corporations generally have decent balance sheets, and their stock prices may increase in some cases as business improves and rates rise. AAMOF, they may need to raise their divs as rates rise to keep pace and retain capital. Some of the bigger div payers are utilities and higher rates will likely have a negative impact on their earnings and divs as they use a lot of debt, but that isn't true for all co's. I think the break even point could be some way off as investors are still doing WAYYYY better holding div payers than T's and bonds, which is why I would set stops and let the share price take care of itself.
DeleteThese are different guys than my gold bug golfer buddies.
DeleteCC, I guess you are right that this could run a long time - sold all my bonds 2 or 3 years ago now and they would have still been good investments to hold, which I still find hard to believe!
Who would have guessed? It must be a lot worse than anyone knows. Those bonds from 3-4 years ago would still be paying 3-4% and have a decent cap gain to boot. I pissed I sold some too!
DeleteItaly and her banks in focus?
ReplyDeleteGE - Back over $20
ReplyDeleteUS car sales supposedly strong (14M units) and F seems headed lower?
ReplyDeleteMust be the remainder of the world, but there's a bottom somewhere that we're not hearing about til the next top is upon us.
I keep looking at F also.
DeletePeople are saying F is one of the cheapest stocks in the S&P. Haven't looked at it, but have good product, know how to run a car business profitably and there is all the chatter about how old cars on the road are - would probably be a good one.
DeleteDavid- Great job on the AUMN article. Congrats you brainiac!!!
ReplyDeleteBHI- Nice.
ReplyDeleteOil service companies reporting good numbers this morning and yesterday and the stocks have really gotten beaten up on the thought business would be bad. Price of oil is back above $90, so I think these should do well.
DeleteBAS/RES are interesting to me in this space.
DeleteNSPH - In @ $2.77 with half size position
ReplyDeleteHow do you get 1/2 a share?
DeleteStill waiting for a rinse. Earnings will be over in a couple of weeks- then what?
ReplyDeleteNot saying I know squat.
DeleteIf you want some good trending up stocks, take a look at DIS and TJX. Missed both of these, but they are definitely up to the right. Don't know how to play stocks like this personally, but seem like good trends to ride.
DeleteNSPH- Come on baby...I'm here.
ReplyDeleteCPHD- Same space as NSPH?? I saw the halt on this one yesterday.
ReplyDeleteSheesh...they're not exactly holding on to their options.
DeleteCNH - Will this thing really fall out of the pennant, really?
ReplyDeleteStill waiting for $2.5 on NSPH.
ReplyDeleteLong 50k shs PEIX at $0.322 avg.
Bro- Did you see CPHD? At first I thought that was Chicken in HD!
DeleteAll we need is some rain in the midwest and PEIX rallies 100%.
Deleteyeah what happened over there at CPHD?
DeleteHD Chicken ain't super so it don't fly!
DeleteMUX- No reaction to drill results?
ReplyDeleteOpened NSPH @ 2.72.
ReplyDeleteGE - No longer $20
ReplyDeleteI bet the bears are busily preparing a fresh new obituary for release this weekend...
NSPH - Well okay then, half way down the opening bar from yesterday is ~$2.60, maybe that's the near term target???
ReplyDeleteI'm picky and would like to buy at yesterday's low.
DeleteYeah, can't blame you for that one bit. I am considering adding another 1/4 here.
DeleteTTM - India auto plant shut down due to fire and worker violence:
ReplyDeletehttp://www.reuters.com/article/2012/07/20/us-maruti-unrest-idUSBRE86J0HP20120720
Haven't read article, I'm guessing it's TTM
Maruti Suzuki Took-la-fruchi
DeleteGotta hop.
ReplyDeleteEWZ & GGB - Hmm, both of these aren't exactly tanking, Brazil tankaroony schedule on hold?
ReplyDeleteEPU - Forming hammer
BAP - Hard to tell, but looks kinda weak
---- it. Out of NSPH @ 2.70...
ReplyDeleteObviously, I'm trading for the sake of trading and don't have a ----ing clue.
Deletethis market takes no prisoner...it's just kills em all. you have a gain one day? you better f*cking take that profit.
DeleteExhibit A, B, C, D, E in no particular order: NSPH, DECK, FSLR, TIF, COH. Today's winners will be tomorrows losers.
Delete"Today's winners will be tomorrows losers."
DeleteA summer of bear flags, just like PM's have been doing for a year and base metals have done for a year and a half.
Sold the POS PEIX at a $0.307
ReplyDeleteThe crop is dust bowl.
DeleteLatest from Jeff Saut earlier this week:
ReplyDeletehttp://www.raymondjames.com/inv_strat.htm
Clip from the Economist:
"America’s economy is once again reinventing itself. The U.S. economy has repaired [itself] quickly in the last three years. Home prices are among the world’s most undervalued (19% below fair value). U.S .banks [are] among the best capitalized in the world. Consumer debt loads are down. Exports are extremely strong. [And] energy, long the U.S.’ “Achilles Heel,” is now turning into an advantage with the shale gas boom."
The very day I buy a home builder or REIT is the day the advance reverses.
DeleteClarification: The reversal occurs at the following day's open.
DeleteAlright I picked up a little NSPH at $2.665. The only reason I'm thinking it's time to pick up a little is this move has to do at least in part with the CPHD move. I will keep more in case it gets to $2.5.
ReplyDeleteCounterpoint:
ReplyDeletethe US dollar is likely to strengthen as the eurozone crisis weakens the euro and as global risk aversion returns. The US Federal Reserve will carry out more quantitative easing this year, but it will be ineffective: long-term interest rates are already very low, and lowering them further would not boost spending. Indeed, the credit channel is frozen and velocity has collapsed, with banks hoarding increases in base money in the form of excess reserves. Moreover, the dollar is unlikely to weaken as other countries also carry out quantitative easing.
For full article:
http://www.project-syndicate.org/commentary/american-pie-in-the-sky
and
Similarly, the gravity of weaker growth will most likely overcome the levitational effect on equity prices from more quantitative easing, particularly given that equity valuations today are not as depressed as they were in 2009 or 2010. Indeed, growth in earnings and profits is now running out of steam, as the effect of weak demand on top-line revenues takes a toll on bottom-line margins and profitability.
you gotta wonder how much is priced in right? At a S&P price the same as it was in 1999 while earnings have grown 150%, you would have to think a good deal of this is priced in. As I mentioned before there have been several instances where we had a recession and yet the S&P never dropped much more than 7 to 10%, which it already did in May/June.
DeleteTOF, you make a good point. Basically, the world is still in a massive deleaverage stage that is far from finished plus the world is up to their eyeballs in debt and we are not likely to grow our way out of it anytime soon. Does this not take the wind out of the sails?
DeleteStill as always there will be trading oppotunities as the world turns.
where the debt levels relative to income etc quite high in the 30's? stocks did well after they bottomed.
Deletesorry meant to say "were". to me it's all about EPS man. it continues to grow over time, making the market cheaper and cheaper. i understand the argument about high profit margins but just because they come down over time doesn't mean EPS comes down. i believe this happened in a rising market in the 50's.
DeleteAh there it is, the weekend obituaries should start arriving in the mailbox right about now. No rest for the weary...
DeleteAMNF up to $0.88. Only 700 shares, so not a convincing breakout, but he best bid is now $0.85, so above that $0.84 ceiling that has held for the year.
ReplyDeleteAn argument can be made for a price of $2.50.
DeleteYou will drive the price up getting in and will drive the price getting out.
Deleteyeah that's the prob you have to buy over days. the vol is actually decent for an OTC stock.
DeleteHey BB, why are they dissing insures today?
ReplyDeleteNWLI -2.94 141.31 + 144.09 -2.03%
MET -1.08 29.70 + 29.70 -3.51%
PRU -1.56 46.99 - 47.00 -3.21%
HIG -0.57 16.28 - 16.29 -3.38%
LNC -0.80 20.09 - 20.10 -3.83%
ORI -0.13 8.10 - 8.11 -1.58%
AIZ -0.51 33.91 - 33.93 -1.49%
OZM -0.19 7.03 - 7.04 -2.63%
Didn't see any news which would push this and no earnings releases.
DeleteIt is probably back to the "rates are so low, the insurance companies can't make money" theory.
US 10 year yield down, chatter about negative yields in Europe.
But the bigger concern is LQD (investment grade corporate bonds) has been no a tear recently. The current yield on this is 4.13% and I recall NWLI, in their last report, said their yield to maturity was about 4.5%, so margins will take a hit on reinvestment if rates don't rise.
Most insurance companies tend not hold a lot of government debt, but a lot of corporate debt.
BB, thanks for your insights.
DeleteNSPH- S2 is 2.38 FWIW, which for this type of play is not much.
ReplyDeleteEOD rally into the weekend? I kind of feel like that is gonna happen...
Deletei mean selloff! hehe what good is trying to time a 1.5 hr move exactly?
DeleteMUX: "The most impressive hole returned 1.1 gpt gold over 71.3 m"
ReplyDeleteThese are quite poor results. I remember some mining expert said the following: "A minimum of 2-3 grams per ton is needed to make an open pit mine while 5-6 grams per tons at a minimum are needed for an underground mine."
NSPH - Oh jeeze, why don't they just gap it up Monday morning so as to get everyone hoping to reload will sell the pop?
ReplyDeleteCP - I know you pay a lot of attention to OBV (and I noticed that Stephen Stewart guy uses it a lot in his work). It sure looks good for NSPH:
Deletehttp://stockcharts.com/h-sc/ui?s=NSPH&p=D&yr=1&mn=0&dy=0&id=p28975746992
Yes, this is likely one of the initial parameters that peaked my interest immediately following the TT secret weapon alert. Basically it seems OBV is back to historical levels ahead of price.
DeleteAssuming volume proceeds price, I guess we find out on this one... may as well have a few toes in the water meanwhile.
TOF, your Objective Trader friend calling for a 2 year rally in commodities. If true, implies economy and markets all get better as this is heavily oil-weighted and higerh oil prices need a decent economy.
ReplyDeleteinteresting. he's actually mark's boyfriend.
DeleteA welcome-back Cotter boyfriend, categorically speaking: "Thank you for being a friend!"
DeleteNow hopefully the tune sticks in someone's conscience and drives them nuts all weekend....
Not to be confused with TOF's boyfriend, Stuat.
Deleteits saut bro...get it right.
DeleteMy Q&A with NSPH regarding CPHD:
ReplyDeleteME:
Hi Bill – I listened to Cepheid's conference call and it sounds like they are seeing some slowing in spending as a result of the economic issues surrounding the health care reform package in the US. I was curious if you're seeing this as well.
Also, I'm curious to hear your take on how you differentiate your product to potential customers from that of Cepheid. What are your key selling points when they counter that the Cepheid machine is approved to do a multitude of tests?"
THEIR RESPONSE:
"Cepheid’s primary tests are MRSA screening assay and their c difficile test. They cannot do the broad panel tests because they cannot multiplex in the double digit range.
Their slow down could be due to US health care reform, but we don’t see it. It is also possible their slow down is attributable to the fact that their MRSA test (primary driver) has much competition and ultimately many hospitals are having a difficult time justifying the cost of testing compared to the benefit."
You get some pretty frank responses from them.
DeleteDavid- Thanks for the info on drill results. Do you guys are with that take on GPT?
ReplyDeleteWell, you know what I mean...
DeleteNext Friday, please refrain until lunch before cracking open the ripple, mmmmkkk? ;)
DeleteMark, the measured & indicated resources for AUMN contain 3.4 g/t of gold and 210 g/t of silver, and with a 50:1 gold/silver price ratio, they contain 7.6 g/t of gold equivalent oz.
ReplyDeleteAnd that's the AVERAGE of their M&I resources, with some samples having a 10X grade of the average...
DeleteDoesn't it seems wired then that MUX would phrase the results the way they did?
DeleteNSPH- I'm really tempted here.
ReplyDeletetwo block trades today at 2.76 and 2.64
ReplyDeleteNice to see gold and silver positive on the day when $USD made such a huge jump. Even nicer to see AUMN finish positive for the day when GDXJ finished red, which suggests that yesterday's news of production decline in Q2 relative to Q1 did not have much impact, as in fact it was totally unimportant (that's why I added more AUMN calls at EOD yesterday). In order to make sure that other AUMN investors realize this as well, I just wrote another article on SeekingAlpha (currently pending for review), which explains just that.
ReplyDeleteBy the way, writing an article on SeekingAlpha is a great way to influence a stock, since that article immediately pops up on Yahoo finance, Google finance, etc., whenever someone looks at the page for that stock. Let's see if we get some movement in AUMN next week, after my article is published. :)
By the way, the article on an impending rally in gold and silver that I wrote yesterday already got 3600 page views...
DeleteOh, then I'll be reading your article, you waited long enough to mention this. ;)
DeleteI'm thinking we see a least one more pullback for commodities, WTIC somewhere under $90(mid 80's?) to shake and bake the new longs who took the breakout bait.
Good article. Short and to the point. Drops a couple of recent comments from names to be taken seriously and whom I respect (Dalio/Soros).
DeleteCongrats on your first article. SA is something I use a lot. I signed on as a follower although don't know exactly what that entails.