Thank-you, Baristas, A fool, Citi
– Thank you for the mention.
– This is actually a good idea at Starbucks (SBUX).
– Could he be any more gullible?
– No cut here
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Thank-you, Baristas, A fool, Citi
– Thank you for the mention.
– This is actually a good idea at Starbucks (SBUX).
– Could he be any more gullible?
– No cut here
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Options activity in RadioShack (RSH) says someone might be looking at it. Rumor is it is Micheal Dell (DELL).
Disclosure (“none” means no position):None
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This work is licensed under a Creative Commons Attribution 2.5 License.
Hmmmm. This marks the second auction in a row in which rates have risen.
On April 21, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate: 2.870 percent
Total propositions submitted: $88.288 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.77
Number of bidders: 83
If this is telling us anything, a 50 point cut at the next meeting is out. One could even make the argument a 25 is in doubt….
Right now the dollar should be a prevailing issue..
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Sherwin Williams (SHW) reported Q1 results this morning the big number for investors was a 1.5% increase in sales to a RECORD number. For those consider Sherwin a “housing stock”, the question is: With housing starts and sales plummeting, how is this possible? The short answer is that Sherwin is not a “housing stock” but a “international coatings” company.
— Sales increased 1.5% to a record $1.782 billion
— EPS was $.64 per share, above our current guidance range of $.56 to $.61
— Price increases and cost reductions announced in 1Q08 will continue to be more fully implemented
— EPS range $1.45 to $1.60 for 2Q08. Reaffirming EPS range of $4.70 to $4.85 for the full year (current PE for 2008 of 11.7 times earnings)
How did the international operations do? The Global Group’s net sales in the quarter increased 14.8% to $461.9 million (26% of total sales) when stated in U.S. dollars due primarily to volume gains, selling price increases, currency translation impact and acquisitions. Stated in U.S. dollars, segment profit of the Global Group for the quarter improved $7.7 million, or 21.7%. CEO Christopher Connor said “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”
For Q2 and the remainder of 2008, Connor said, “We expect diluted net income per common share for the second quarter to be in the range of $1.45 to $1.60 per share compared to $1.52 per share last year. For the full year 2008, we now expect a low single digit percentage increase in consolidated net sales over 2007. With annual sales at that level, we are reaffirming our March 24, 2008 guidance that our diluted net income per common share for 2008 will be in the range of $4.70 to $4.85 per share compared to $4.70 per share earned in 2007.”
SHW acquired 4.1 million shares of its common stock through open market purchases during the quarter and had remaining authorization at March 31, 2008 to purchase 22.9 million shares.
Let reverse the argument. Let’s say that Sherwin is a housing stock, plain and simple. Why wouldn’t you buy shares of a housing stock when the industry is in a depression and the company will still manage to break even or have a slight increase in earnings over the previous year. A year, that was a record year by the way. We are not running up against “weak comparisons”. Let’s also not forget the dividend increase…
Wouldn’t this be the poster child for a value stock? Considering it is down 18%, clearly has very strong management, cash position, stable dividend and is a market leader in its industry?
Now, if it isn’t a housing play because of its diversification of businesses then, doesn’t the same argument hold true? Shouldn’t we then say in that scenario that it is being lumped in with stocks it really is not that related to and for that reason (as well as the financial ones) it falls into a the “value” category?
Either way, it is just dirt cheap…
Disclosure (“none” means no position):Long SHW
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Regular readers kow I am a fan of Whitman and hold a position in his Third Avenue Value Fund (TAVFX). Considering the funds 15% annual return since 1990, it just may pay to listen to what he has to say.
In a shareholder letter, Whitman disclosed the five elements he says are the key to his success. They are: buy cheap, buy quality, buy to hold, buy with minimal expenses, and buy without leverage (margin).
*Buy to hold: Stick with the stock and do not sell just because the price drops. Unless, “there has occurred a permanent impairment in underlying value” of a stock.
*Buy with minimal expenses:
Reduce taxes and trading costs by having the patience and confidence to hold. One of the largest drains on investments not considered by investors are commissions and taxes. For example: An investor has a stock that goes from $10 to $20 and sells. His return is $10, correct? No. Assuming he is in the 28% tax bracket his actual return on the sale is $7.20 ($10 – 28%) after taxes and even less when commissions are factored in. If he decides to buy the stock back he must wait for an in excess of $2.80 a share drop in order for the trading to be worth it.
*Buy without leverage:
Means do not use margin. “While leverage can increase your returns in good times,” he says , “it will dramatically increase your losses in bad times.” Much of the recent angst of investors at Bear Sterns (BSC), Merrill Lynch (MER) and other banks has been due to excessive leverage. Too much leads to forced selling into depressed markets and destroys returns.
*Buying cheap:
Cheap, or, “issues at prices that reflect substantial discounts from readily ascertainable NAVs (net asset values) … (and whose) NAVs will increase by not less than 10% per year compounded”.
*Buying quality:
Whitman defines it as a strong financial position, competent management, and a business that is “understandable … plus lots of cash and a high level of insider ownership … with some type of competitive advantage”.
A very Buffett like strategy and a very simple one filled with common sense.
For more on Whitman’s thinking, visit the Fund’s site here:
Disclosure (“none” means no position):Long TAVFX
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Regular readers kow I am a fan of Whitman and hold a position in his Third Avenue Value Fund (TAVFX). Considering the funds 15% annual return since 1990, it just may pay to listen to what he has to say.
In a shareholder letter, Whitman disclosed the five elements he says are the key to his success. They are: buy cheap, buy quality, buy to hold, buy with minimal expenses, and buy without leverage (margin).
*Buy to hold: Stick with the stock and do not sell just because the price drops. Unless, “there has occurred a permanent impairment in underlying value” of a stock.
*Buy with minimal expenses:
Reduce taxes and trading costs by having the patience and confidence to hold. One of the largest drains on investments not considered by investors are commissions and taxes. For example: An investor has a stock that goes from $10 to $20 and sells. His return is $10, correct? No. Assuming he is in the 28% tax bracket his actual return on the sale is $7.20 ($10 – 28%) after taxes and even less when commissions are factored in. If he decides to buy the stock back he must wait for an in excess of $2.80 a share drop in order for the trading to be worth it.
*Buy without leverage:
Means do not use margin. “While leverage can increase your returns in good times,” he says , “it will dramatically increase your losses in bad times.” Much of the recent angst of investors at Bear Sterns (BSC), Merrill Lynch (MER) and other banks has been due to excessive leverage. Too much leads to forced selling into depressed markets and destroys returns.
*Buying cheap:
Cheap, or, “issues at prices that reflect substantial discounts from readily ascertainable NAVs (net asset values) … (and whose) NAVs will increase by not less than 10% per year compounded”.
*Buying quality:
Whitman defines it as a strong financial position, competent management, and a business that is “understandable … plus lots of cash and a high level of insider ownership … with some type of competitive advantage”.
A very Buffett like strategy and a very simple one filled with common sense.
For more on Whitman’s thinking, visit the Fund’s site here:
Disclosure (“none” means no position):Long TAVFX
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
On 4/17 Seas Holdings (SHLD) Chairman Eddie Lampert, through his ESL Investments hedge fund purchased an additional 69,679 shares of AutoZone (AZO) and about $119 a share.
This brings his ownership to just over 22.9 million shares or over 36% of the total.
Disclosure (“none” means no position):None
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Upgrades
Rackable Systems (RACK)- Canaccord Adams Hold » Buy
Wilmington Trust (WL)- B. Riley & Co Neutral » Buy
Citrix Systems (CTXS)- Needham Hold » Buy
POZEN (POZN)- Broadpoint Capital Underperform » Neutral
Embarq (EQ)- Wachovia Mkt Perform » Outperform
Pilgrim’s Pride (PPC)- Credit Suisse Neutral » Outperform
Healthcare Services Group (HCSG)- Morgan Keegan Mkt Perform » Outperform
Imperial Tobacco (ITY)- Citigroup Hold » Buy
Comerica (CMA)- Punk, Ziegel & Co Sell » Mkt Perform
Ford Motor (F)- Soleil Sell » Buy
Downgrades
Caterpillar (CAT)- Longbow Buy » Neutral
Popular Inc (BPOP)- B. Riley & Co Buy » Neutral
Landauer, Inc. (LDR)- Hilliard Lyons Long-term Buy » Neutral
MeadWestvaco (MWV)- BMO Capital Markets Outperform » Market Perform
Ensco (ESV)- Stanford Research Buy » Hold
Intevac (IVAC)- Needham Buy » Hold
Caterpillar (CAT)- Wachovia Outperform » Mkt Perform
Caterpillar (CAT)- Credit Suisse Outperform » Neutral
Cirrus Logic (CRUS)- Jefferies & Co Buy » Hold
Wells Fargo (WFC)- Oppenheimer Perform » Underperform
Ryder System (R)- Robert W. Baird Outperform » Neutral
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Upgrades
Rackable Systems (RACK)- Canaccord Adams Hold » Buy
Wilmington Trust (WL)- B. Riley & Co Neutral » Buy
Citrix Systems (CTXS)- Needham Hold » Buy
POZEN (POZN)- Broadpoint Capital Underperform » Neutral
Embarq (EQ)- Wachovia Mkt Perform » Outperform
Pilgrim’s Pride (PPC)- Credit Suisse Neutral » Outperform
Healthcare Services Group (HCSG)- Morgan Keegan Mkt Perform » Outperform
Imperial Tobacco (ITY)- Citigroup Hold » Buy
Comerica (CMA)- Punk, Ziegel & Co Sell » Mkt Perform
Ford Motor (F)- Soleil Sell » Buy
Downgrades
Caterpillar (CAT)- Longbow Buy » Neutral
Popular Inc (BPOP)- B. Riley & Co Buy » Neutral
Landauer, Inc. (LDR)- Hilliard Lyons Long-term Buy » Neutral
MeadWestvaco (MWV)- BMO Capital Markets Outperform » Market Perform
Ensco (ESV)- Stanford Research Buy » Hold
Intevac (IVAC)- Needham Buy » Hold
Caterpillar (CAT)- Wachovia Outperform » Mkt Perform
Caterpillar (CAT)- Credit Suisse Outperform » Neutral
Cirrus Logic (CRUS)- Jefferies & Co Buy » Hold
Wells Fargo (WFC)- Oppenheimer Perform » Underperform
Ryder System (R)- Robert W. Baird Outperform » Neutral
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Tuesday’s Picks
Jeff Macke likes Hasbro (HAS) $34.65
Guy Adami prefers Intel (INTC) $22.46
Pete Najarian thinks Baker Hughes (BHI) $81.82 is a buy.
Karen Finerman recommends shorting the British pound by shorting the CurrencyShares British Pound Ster. Trst (FXB) $198.62
Monday’s Results
Pete Najarian thinks EMC Corp. (EMC) $15.52 is a buy ahead of earnings.Close $15.89 GAIN
Guy Adami prefers Wachovia (WB) 27.24 as a short term trade. Close $26.43 LOSS
Both Jeff Macke and Karen Finerman recommend Microsoft (MSFT) $30.0 Close $30.42 GAIN
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 1-1
Jon Najarian= 4-3
Jeff Macke= 30-21-1
Tim Seymore= 15-12
Guy Adami= 29-26
Pete Najarian= 32-22
Karen Finerman= 23-24-1
Joe Terrenova= 1-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
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GE, SHW, VOTE, Tilson on Borders,
– Frank Lara says buy GE
– Declares dividend
– Oh, Thank God, after this, I can now rest easy knowing who to vote for…..Are they kidding?
– Whitney Tilson has some thoughts on Borders (BGP)
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GE, SHW, VOTE, Tilson on Borders,
– Frank Lara says buy GE
– Declares dividend
– Oh, Thank God, after this, I can now rest easy knowing who to vote for…..Are they kidding?
– Whitney Tilson has some thoughts on Borders (BGP)
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Oppenheimer’s Meredith Whitney has now taken Wells Fargo (WFC) to task. She downgraded the stock to Underperform from Perform, saying the company is under-reserved by at least $4.5 billion and will need to take a reserve “true-up” in 2008 and potentially more in 2009.
Whitney cut EPS estimate for FY2008 to $1.20 from $2.15 vs. consensus of $2.33. FY2009E goes to $2.00 from $2.15 vs. consensus of $2.65.
Whitney has been the analyst dujor after her being the first to make calls on Citigroup (C) and the rest of the financial sector. By taking on Wells Fargo, Whitney is also running a contrary opinion to Berkshire Hathaway’s (BRK.A) Warren Buffett who has added to his position in the stock recently.
Whitney must be given credit for her calls last fall that came to fruition. One thing does tend to happen when you have a success like that. People tend to then keep going in the same direction for too long.
Wells Fargo is by far one of the most conservative banks out there and when one get’s into the write-down guessing game one get’s into very a very opaque area. We are getting past the large “write-down” area of this situation and now have to begin looking to the other end of it. What will be coming will be “write-ups” on the same securities that have recently decimated bank earnings.
Whitney will most likely be correct that Wells may take additional charges, but the degree to which she has predicted seems a bit excessive for a bank and management with the history of Wells Fargo.
Disclosure (“none” means no position):Long WFC
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“This sport is the sport to see what you are made of, so use those expert’s advice, but be free to be your own champion runner, picking and choosing advice you enjoy and that works best for you.” Bill Rodgers
Since today is “Marathon Monday” here in Massachusetts and also “Patriot’s Day”, I thought I would weave them together with investing. The quote above, taken from Bill Rodgers, a 4-time winner of the Boston Marathon, I think is perfectly suited for investors.
There are a million different books on how to make money and just as many on how to do it in stocks. What do you do? Who do you listen to? What style should you use? You must answer these question before you invest a dime. In this example I will use myself to try to illustrate my point.
“Never let any guru spoil your fun!” Bill Rodgers
The is no “one way” to success in investing. Warren Buffet did it with value investing, Boone Pickens did it in oil, Bill Gates in tech, Eddie Lampert, retail. The point here is that there are many ways to skin this cat and do not let any “guru” tell you there is only one way to do it and that your way is wrong. There probably is only one way for “you” to do it and that my be very different from me or the person living next door to you. The style you choose must fit your personality, otherwise you spend your whole investing life fighting yourself. What do I mean? If you are a big risk taker who needs constant action, being a value investor and rarely making a trade will probably lead to you jumping out of your skin as you see the day to day market action happening and you are not participating. You will be constantly itching to trade and fighting back the urge. Then, when you cannot contain it anymore, you will leap at a trade and probably end up making a mistake because you will be trading just to trade to satisfy the urge, not necessarily because it is a good trade.
I am two thing (among others). Stubborn and patient. Fortunately those traits are perfectly suited for my investing style of value investing. I need to be patient as it may take months or years for the full value of a pick of mine to be realized. I need to remain stubborn and have the courage of my convictions while those without patience bail from the stock as the talking heads on TV trash it day after day. If I am right, I will be richly rewarded for both traits. Remember, you are never “right or “wrong” on a pick because someone says you are. You are right or wrong because in the end, you are.
“My whole feeling in terms of racing is that you have to be very bold. You sometimes have to be aggressive and gamble.” Bill Rodgers
While I am patient, I do require a little excitement in my portfolio. Now, my definition of this is probably much different that yours and that is ok because the key here is to find your level and stay within it. In order to get my “excitement fix”, I engage in the selling of puts in my portfolio. This gives me a short term trade (usually less than a month) and a little “action”. Many people are laughing at this saying to themselves “that is what he calls action?” For me, yes it is. Because I do this and do not extend myself into day trading which I just am not genetically wired to do with any consistent profit, I am very successful in this area. I usually end up netting $200-$600 a month selling these puts. Now, for me to be successful at this, I do it a certain way. Read about it here
The key here again is to find what works for you and do it, not to try to do what someone else does especially if what they do just goes against your very nature.
“One key to success is not to make your diet too complicated”. Bill Rodgers
One mistake too many investors make (myself included in the past) is to try and be a little bit of everything. There a millions of ways to invest and many people are good at them and make tons of money with them. Very few are good at many of them. There is nothing wrong with finding a single style and sticking with it so that you become very proficient at it. The is more money to be made at excelling at a single style than being ok at a few of them. The more you complicate your strategy with different styles, the easier it then becomes to blend them together and water them down. For instance, value investing and growth investing do not really mesh. In many ways, they are polar opposites. If you were to try and do both, what would most likely end up happening is you would end up with a portfolio that is a little of both (not really true value or a growth stocks) and in the end, realize the return of neither strategy. I am a value investor, everything I do stems from that. I do not understand tech (can’t analyze it with accuracy) so I avoid investing in it. That is not to say tech is bad, or that you cannot make money there, it is just not for me and to be honest, I do just fine without it. If I am really successful without names like Apple (AAPL), Google (GOOG) or Microsoft (MSFT) in my portfolio, why should I add them just because someone says “you have to have tech in your portfolio”. That is nonsense. One thing to keep in mind is there are about 15,000 stocks, bonds and funds you can buy, there is money to be made everywhere. If you do not get it, avoid it, you can make money somewhere else. Never buy a stock because someone says “you must diversify in tech” (or whatever investment they say you “need”).
“Always take the long term view and train and race smart, with a bit of caution.” Bill Rodgers
Long Term
I have said it before but I think it cannot be emphasized enough, the shorter your time frame, the more risk you assume. Taking a long term view towards your investments will enable you to avoid angst from the short term ups and downs that the market will inevitably throw at you. The longer your view, the less important weekly or quarterly results become to you. You will instead be focused on the big picture and the business fundamentals, which is what is the most important thing.
Train Smart
Charlie Munger, Warren Buffet’s partner, has always said that those who are the most successful investors are always reading. He says people should read whatever they can get their hands on and read in a wide variety of subjects. The wider the field of knowledge you have, the wider you then cast your investment competency net.
Caution
As you become successful as an investor and accumulate more assets, there will be a urge to become enthralled with your success and assume it will be the “way it is”. You then will be inclined to make larger bets on new positions assuming your success will naturally continue. Be careful about this as nobody is right all the time. Exercise the caution Rodgers calls for above and remember how you got to where you are and watch the urge to “over reach”. This way, if you are wrong (everybody is eventually), the pain will not be so bad. You want to avoid the sickening feeling of wiping out years of profits in one bad investment.
If you take the advice Mr. Rodgers gives above, you are at least heading it the right direction. I wonder if he knew he was an investing adviser…..
Disclosure (“none” means no position):None
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