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Alexander J. Poulos

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  • Update: IBM Q3 Earnings - I Was Wrong About Earnings Quality [View article]

    Fair enough. however let me elaborate on my point of view. I have held the share for three years now with a net loss with dividends included to show for my efforts. It has easily been one of my worst holdings yet I was willing to be patient and allow the story to evolve. I wasn't worried about the decline in revenues as the company continued to shed assets and refocus on higher margin offerings. The increase in debt taken on wasn't an impediment as the bulk of IBM revenue is stable and predictable. The interest rate IBM could raise debt at remains quite attractive.

    The abandonment of the roadmap and the failure to issue new guidance is particularly troubling. I can't help but shake the feeling that they don't have a good feel for exactly what is going on. Furthermore, if they knew they were going to fail to meet expectations they should have pre-announced instead of blindsiding investors during the earnings announcement. It feeds into the narrative that the ship is adrift here. I have vacated the shares and have reinvested the proceeds into Total with their 7% dividend. Perhaps the timing will prove to be fortuitous as the shares of the energy giant are down sharply as crude pulls back significantly. Paying 1.3 times book value I suspect will be proven to be an excellent entry especially if held for 3 years.
    Oct 22 08:31 AM | Likes Like |Link to Comment
  • Update: IBM Q3 Earnings - I Was Wrong About Earnings Quality [View article]
    rockjcp and momintn,

    Jstratt is correct, Rommety needs to go. For the shares to drop over 11% in 2 days in inexcusable. Very poorly managed here. IBM was given the benefit of the doubt due to the WB halo and the 2015 roadmap. Now that the roadmap has been pulled, where do we go from here? I have exited and will reinvest elsewhere. Too much time wasted on a company that is simply failing to execute.
    Oct 21 07:28 PM | 1 Like Like |Link to Comment
  • Updating My Price Target On Gilead Sciences [View article]

    The shares closed higher today than at any point on the 13th. Hopefully you held your position as the dip seems to be of a temporary nature.
    Oct 21 06:52 PM | Likes Like |Link to Comment
  • IBM Transformation Continues, Expect The Shares To Trade To $250 By Year-End [View article]
    Thank you gentlemen, I appreciate it.
    Oct 20 07:00 PM | Likes Like |Link to Comment
  • IBM Transformation Continues, Expect The Shares To Trade To $250 By Year-End [View article]
    To all,

    IBM has now officially lost all credibility. I have sold out of my position and will look to deploy funds elsewhere. Very disappointing day.
    Oct 20 03:09 PM | Likes Like |Link to Comment
  • Is Barron's Right On Target With Schlumberger? [View article]
    Good news today.

    •Schlumberger (NYSE:SLB) finished with a solid 3.7% gain today after a strong Q3 earnings report, but investors were particularly reassured by CEO Paal Kibsgaard's declarations that oil prices will recover and stabilize.
    •"The key to the overall oil market is still that the global oil demand is currently set to increase by 1.1M bbl/day in 2015, which will require growth in exploration and production investments," the CEO said in today's earnings call.
    •SLB shares had slumped 20%-plus in the three months before today due to the sharp slide in crude prices, and analysts say the stock still looks cheap.
    •While WTI crude prices in the low-$80s have highlighted some concerns over the willingness of upstream customers to spend through the pricing weakness, "we believe prices are still more than sufficiently high to induce customers to keep existing plans,” writes S&P Capital's Stewart Glickman, who maintains a Buy rating and $128 price target on SLB.
    Oct 17 06:04 PM | Likes Like |Link to Comment
  • Using European Uncertainty To Initiate A Position In Coca-Cola Enterprises [View article]

    CCE as of its latest 10-Q is showing 249k shares outstanding with a fully diluted number of 254k. From what i can tell, compensation seems reasonable. The share reduction plan has removed a meaningful portion of all the shares outstanding. a well run company that generates a large amount of free cash flow that is highly predictive. Not a bad combination, thanks for reading and commenting.
    Oct 16 08:58 PM | Likes Like |Link to Comment
  • Updating My Price Target On Gilead Sciences [View article]

    Not until one lies in a hospital bed dying to they truly see that life is precious and money in the long run is meaningless. As for Sovaldi/Harvoni if you are covered under an employer plan the company will subsidize a portion of the out of pocket costs similar to what goes on with most high priced pharmaceuticals currently.

    As for the ACHN's nuc we have to see how it responds to testing. If it does show significant promise don't be surprised if GILD acquires them. Thanks for reading and sharing.
    Oct 15 06:29 PM | 2 Likes Like |Link to Comment
  • Additional Bullish Portents For Treasuries [View article]

    Well you are certainly a bear. We shall see over the course of the next say 6-12 months who's scenario plays out.
    Oct 15 03:15 PM | Likes Like |Link to Comment
  • Gilead's Harvoni Will Dominate J&J's Olysio In HCV: Is Olysio Even Relevant Anymore? [View article]
    Pharma Doc,

    Thank you for the excellent analysis on GILD. Fear has set into the market, which has naturally led to selling. Combined with margin calls for those who are levered leads to what we have seen over the past ten trading days. Any sort of early strength is met with late day selling. the tide will turn when we see a big gap down, usually on the opening of trading followed with strength and a positive close for the day. For those with a longer time frame, the simple holding of positions and riding out the storm may prove to be very profitable. Time will tell.
    Oct 15 11:01 AM | 1 Like Like |Link to Comment
  • Additional Bullish Portents For Treasuries [View article]

    Quite a negative forecast. Lets see, "equity market has already begun a bear market", the S&P is up slightly for the year and would have to decline an additional 20% to enter bear market territory. Quite a steep slide.

    "Housing prices and activity are going down. We are nearing a global bust that is likely to take prices below the 2008/9 lows." Lets examine this proclamation for a moment. Consumers were highly leveraged in 2008 with credit quality deteriorating quite rapidly. In addition we had rampant housing speculating with liar loans (undocumented loans) being offered like candy. Housing prices ascended similar to a hot biotech startup with the aftermath being a hue credit pop and massive pain inflicted upon the global economy. These conditions are largely absent currently. The banks are requiring significant documentation and are very stringent in their lending practices. As to credit quality I will defer to whom I consider an expert in the field the CEO of WFC.

    My takeaway, low rates are here to stay with the Fed refraining from raising interest rates until the very end of 2015 at the earliest. The recent market reaction to the end of QE will stay the Fed's hand. Under the backdrop of low rates, strong well established companies with easily predictable revenue streams will do very well. Hence, the basis for my continued bullishness. The move will not continue in a straight line and there will be corrections along the way. For those with a long term perspective who are willing to ride out the volatility, the buy, hold, reinvest option remains an excellent choice.

    A selection from above to illustrate the point, I will use HSY. The current dividend is $0.535 per quarter. The company has a long history of raising the dividend annually sans for 2008. The rate has increased at a 7% compounded rate over the past 5 years and 9.5% over the past ten years. Using the lower end of the range, say 7% your dividend will grow to $0.81 per share in 6 years. Lets estimate a static share price of $92 per share, just the dividend collected and being reinvested will out perform the 10 year treasury. Best of luck on your trade, I will stick with time and compounding.
    Oct 15 10:46 AM | 2 Likes Like |Link to Comment
  • Additional Bullish Portents For Treasuries [View article]

    Yes, they are still in their growth ascendancy. I suspect once their growth slows, they will act in a similar manner to established tech such as ORCL etc.
    Oct 15 10:29 AM | Likes Like |Link to Comment
  • Updating My Price Target On Gilead Sciences [View article]

    The answer to the healthcare issue is rather simplistic yet politically unfeasible. What you will see is the shifting of a greater burden of costs onto the patient. The process is done through the co-payments, out of pocket maximums and deductibles. I suspect the high deductible plans with a HSA (heath savings account) will be the best option going forward. Peoples perception of the value of services changes dramatically once they have to pay the full cost. We have a similar plan at my employer and I am amazed how frugal people become once they see the money leave their account. In my opinion there will never be the "perfect" solution.
    As for Congress ever fixing healthcare, I think we have seen with the passing of Obamacare that Congress is truly clueless. The proof will be seen once renewal letters go out informing the populace of the increase in their health care costs. For this year, my costs went up 10% with a higher out of pocket max. Can't wait to see what choices are before me for next year.
    As for ESRX and other insurance companies, they will slow down the use of the drug which will play very well into GILD hands. By slowing down the uptake of the treatment, Sovaldi will follow a more traditional drug ramp with peak sales coming a few years down the road without the steep drop many predicted earlier this year. A triage system will be employed with the more critically ill being treated first. The companies will figure in the new therapies costs when setting prices for the upcoming year. They will hike prices on all to cover the cost of the treatment, similar to what they would if a revolutionary oncology product was introduced.
    Oct 15 08:27 AM | 2 Likes Like |Link to Comment
  • Additional Bullish Portents For Treasuries [View article]

    The economy has improved dramatically which is fueling my bullish bias. Take a look at the VL selections and opinions in the weekly survey. They have economic figures there that show considerable improvement. We have the U-6 and U-12 unemployment rate down sharply as well.

    There was an interesting tidbit from WFC CEO today,

    •Credit quality is the best he's seen in his more than 32 years at the bank, says Wells Fargo (WFC -1.7%) chief John Stumpf, leading off the earnings call.
    •Webcast and presentation slides
    •The housing market, he says, has not fully recovered as tight inventory, slower household formation, high student loan debt, and tough lending standards hold things back.

    The balance sheet for consumers is certainly a big positive, then question is when do we see a return to historical patterns regarding household formation and the purchasing of new homes. Perhaps the key will be a bit of regulatory reform which we very well may see after the election. The general consensus is the banks are being a bit tight with credit. this along with tax reform would certainly lift the economic growth rate.

    As for balance sheets as a whole, the leverage we are seeing is an attempt to generate higher returns on equity once nominal growth has slowed. It is perfectly acceptable as long as the business is inherently stable and predictable. It is folly if the business is commodity based. For a clean balance sheet, look at CTSH I suspect you will be quite pleased.
    Oct 14 07:40 PM | Likes Like |Link to Comment
  • Additional Bullish Portents For Treasuries [View article]

    A fascinating discussion, thanks for sharing your thoughts. I have a slightly different take that builds on Brendan's point. With rates extremely subdued, this is a perfect environment for strong stable companies with pricing power. Let me elaborate a bit.

    Take HSY for instance, they are in the food processing field yet are able to effectively pass costs on to consumers via the power of their brand. The demand for their end product has proven to relatively inelastic over many different market conditions. For a dominant company such as this, low rates plays right into their hands. They can purchase smaller players to perhaps diversify overseas or expand their presence in certain niche. They could borrow at extremely low rates and repurchase shares which immediately accreting to earnings. With a stable industry such as this, this is one of the techniques private equity will use.

    Using a separate example a company that is certainly near and dear to both of us, GILD. GILD based of the tremendous demand for their infectious disease franchise could acquire small or midsize biotech companies with promising new therapies. Assuming the new therapies are commercially viable, it will greatly add to their future revenue stream.

    I am fully aware these examples are apply to strong stable companies only. Commodity producers or those with highly leveraged balance sheets will be under severe distress. I would very much appreciate your thoughts as we certainly live in interesting times.
    Oct 14 04:43 PM | Likes Like |Link to Comment