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Alexander J. Poulos

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  • Saying Goodbye To Coca-Cola, Time To Move On [View article]

    If you look further into the companies you mentioned you will also notice they reduced their share count in the time frame you referenced. By taking advantage of their lower share price and reducing their float, they set themselves up for a much higher price as the math (net earnings/shares outstanding) became more favorable. That is what makes KO proposal all the more galling, they won't be taking advantage of their lower share price because the money earmarked for repurchases will be used to soak up all the new shares issued to employees for compensation. In my view, absolutely unacceptable. Thanks for reading and commenting.
    Mar 31 05:38 PM | 3 Likes Like |Link to Comment
  • Saying Goodbye To Coca-Cola, Time To Move On [View article]

    KO is currently facing significant challenges in its core market. Their main product, soda is under attack with claims that are partially true that the product is causing obesity. The product does contain calories, predominantly in the form of sugar however its not the single serving size that will cause obesity. What causes obesity is excessive consumption of calories above what you need to function. For example if a person drinks a 2 litter of Coke on a daily basis they will put on weight. This isn't the companies fault but the individuals. With the above backdrop in mind, meaningful volume gains will be hard to come by in the developed world, (North America and Europe) as the governments make a push for healthier lifestyles to combat the rise in health care costs.

    This brings us to what can we reasonably expect to offer going forward. The answer was a dividend hike that well exceeds inflation with a current yield above that of a ten year bond. KO was deemed a shareholder friendly board that used excess cash flow to routinely repurchase shares. The board with their obscene proposal is can no longer be viewed as shareholder friendly, Furthermore, what makes the plan so obscene is the dilution aspect which will curtail any sort of meaningful earnings advance. I am not alone in this view and have decided to exit. In my view KO has become a bond without a foreseeable path for capital gains. Not something I am really interested in as I look for total returns which can be in the form of dividends and share repurchases or above average eps growth with an aggressive share repurchase plan. DG fits the second criteria, hence its inclusion. Thanks for reading and commenting.
    Mar 31 05:33 PM | 3 Likes Like |Link to Comment
  • Saying Goodbye To Coca-Cola, Time To Move On [View article]

    I am very much aware of the meaning, are you familiar with the term shareholder dilution. The purchase of KO was made for dividend growth combined with capital gains as the company dutifully reduces it share count. Revenue growth is very challenging here which would make a share reduction plan even more effective as they remove shares while they are depressed. By missing this opportunity and compounding it by diluting existing shareholders with overgenerous compensation we have the making of another CSCO. I will pass they are other opportunities out there. Thanks for reading and commenting.
    Mar 31 05:04 PM | 3 Likes Like |Link to Comment
  • AT&T: More Positives For The Stock [View article]

    Thank you for the positive mention in your article. Your article makes quite a few compelling points on the bargain that T currently is. I enjoyed the article.
    Mar 14 12:31 PM | 3 Likes Like |Link to Comment
  • AT&T CEO Telegraphs The Bottom In The Shares [View article]

    Your yield on cost is very impressive. That is my goal with this purchase. I have stashed my shares in a Roth IRA to avoid all taxation on the dividend. I highly suggest this move for all who are contemplating purchasing shares in T. Thanks for reading and commenting.
    Mar 12 04:43 PM | 3 Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: What Is BPT's Fair Value? [View article]

    The optimistic comment is based on your assumption the trust will last for far longer than indicated by the trust's management team. It very well may happen, however until proven or disclosed by them it is optimistic.
    Jan 21 01:31 PM | 3 Likes Like |Link to Comment
  • Is BP Prudhoe Bay Fund Really A Good Short? [View article]

    Just to add further to Clayton's excellent comments. As mentioned in the article above it would take roughly 8 years using the last years net dividend payment to recoup your initial investment. At that point the additional dividends received plus the liquidation of the remaining assets in the trust would be distributed to shareholders. I can't really get a feel for what this will be so I will pass. Hope that helps. Thanks for reading and commenting.
    Jan 16 09:37 AM | 3 Likes Like |Link to Comment
  • Is BP Prudhoe Bay Fund Really A Good Short? [View article]

    I am in the camp of we will continue to see higher oil prices well into the future. The problem I have with BPT is the difficulty in modeling it's fair value. I believe Mr. Kaiser is way to pessimistic, however what it's true fair value, and real dividend is beyond me. There are too many unknown variables here, which will cause me to pass. I prefer the oil majors and their far more predictive dividend stream. Thank you for reading and commenting.
    Jan 16 09:28 AM | 3 Likes Like |Link to Comment
  • My Top Dow 30 Pick For 2014 Is IBM [View article]

    I am aware the company has faced a significant challenges in growing their revenue. The 2010 roadmap slide was included to show their plan towards achieving operating eps of $20 in 2015. Notice, not everything went as planned which is fairly typical of all long term plans. What has impressed me about IBM is in spite of the weak revenue growth, they are still on track to deliver their 2015 goal. They have done this while exiting less profitable businesses (hardware) and investing in higher growth (cloud, software) ventures.

    I agree with your comment that IBM is late to the cloud computing trend, however they are rapidly rounding out their lineup via acquisitions. The shift in technology won't leave them behind. I believe as they continue to switch the revenue mix in the business more towards software and services and away from hardware two things will happen. The first will be margins will accelerate higher. The second which is key from my prospective will be the business will become more predictable which is exactly what I look for. While executing this change, revenue may slip as the hardware sector generates a large amount in gross sales. I am more concerning about margin expansion which is exactly what we are seeing.

    Thank you for reading and commenting. Perhaps, my further elaboration will help you.
    Dec 24 09:48 AM | 3 Likes Like |Link to Comment
  • My Top Dow 30 Pick For 2014 Is IBM [View article]

    Can you please add further color to your claim it can be selling at $120? At that level you are at a single digit multiple.
    Dec 24 08:21 AM | 3 Likes Like |Link to Comment
  • Avoid Cisco Shares As Buyback Pledge Fails To Offset Share Dilution [View article]

    The shares created to reward senior management is one of the components for the share dilution. CSCO has managed to repurchase 4 billion dollars worth of shares in the last year yet the share count went up. Part of this was indeed the option grant and the rest comes from the aquisitions made. It is extremely difficult to analyze each aquisition because some are private companies where the payout wasn't disclosed. My intended point was to illustarte that the byback program from CSCO hasn't done much at all. It has failed to even cover dilution.

    Going forward, can an investor trust the current management team to not continue to engage in such behavior. I personally don't have much faith and will invest in other opportunities. A change in leadership along with the ending of existing option awards will go a long way to restoring imvestor confidence in CSCO. Thanks for reading and commenting.
    Nov 17 12:13 PM | 3 Likes Like |Link to Comment
  • Avoid Cisco Shares As Buyback Pledge Fails To Offset Share Dilution [View article]

    I wasn't surprised when CSCO reported lousy earnings as all of the IT sector is struggling. I was actually interested in opening a position until I uncovered the option dilution. To me the buyback announcement is a non event. What we have left is a mature IT company with limited growth and a 3% dividend rate. What is missing is a management team that has shareholders best interests in mind. That is clearly lacking with the current team at CSCO.

    I prefer IBM which is very similar except with two key differences. The first being management is compensated with restricted shares with a long vesting period. CSCO adopted this practice last year however the option overhand won't dissipate until 2016. The second being IBM's buyback significantly reduces shares outstanding where CSCO for the next few years won't. Thank you for reading and commenting.
    Nov 17 09:57 AM | 3 Likes Like |Link to Comment
  • GlaxoSmithKline: Collecting A Bond-Like Yield While Waiting For Significant Share Appreciation [View article]

    The research drug companies are very unique entities. Where else can you create a product that is recession proof, exhibits monopolistic pricing powers and if a big enough hit billions in revenue overnight. The perils come from when the products lose patent protection and the steep sharp decline. The trick is to get them after the decline while their R&D team develops the new remedies.

    TEVA has a large generic drug division that is absent patent protection. Therefore its the lowest price wins which is never good for margins. The have a proprietary drug Copaxone which has driven a large part of their top end sales. Copaxone seems to have fallen out of favor as a MS treatment and is slated to go off patent in 2014/2015 time frame. When that happens it will be a steep decline in sales. I personally wouldn't invest in them, instead I recommend looking at companies without a steep patent cliff that has new products that will enter the market.
    Nov 1 08:42 AM | 3 Likes Like |Link to Comment
  • Taking Advantage Of What The Market Is Giving You [View article]

    XOM underperformance has to do with the XTO acquisition. It will pay of handsomely over the next 5 years as the use for industrial gas expands. There is a link in this article detailing all the new chemical plants coming online in 2015-2017 in Louisiana.

    When these plants come online, I expect the price of gas to rise combined with the sheer volume demand to shower shareholders of XOM with profits. This is the primary reason why I expect XOM to outperform CVX going forward.
    Aug 22 09:04 PM | 3 Likes Like |Link to Comment
  • Coca-Cola Should Buy Chobani [View article]

    Let me clarify the statement a bit further. Chobani is directly delivered to distribution centers. KO greatest strength is its delivery network that constantly keeps the shelves stocked with their products. Their team is out 7 days a week whereas a grocery store for example may restock twice a week. The delivery network isn't refrigerated requiring either a new trucks or retrofitting the current ones. From what I have seen, I don't see this happening.
    Aug 15 01:32 PM | 3 Likes Like |Link to Comment