Capt. Spaulding

Long only, value, growth at reasonable price, long-term horizon
Capt. Spaulding
Long only, value, growth at reasonable price, long-term horizon
Contributor since: 2012
The SEC insider buying disclosures for KTOS give an outsider some food for thought....
KTOS recently showed up on my radar, too, as a speculation -- a "businessman's risk" stock, as we used to say in the (fast-receding) old days. It's holding 3 nicely, and could be setting up for a move higher.
Regards to Newman....
Here's another reason, in my mind, for hanging on to O: in my experience, it is usually a good idea to have some low-beta, top quality, dividend paying, "best in breed" stocks to anchor a portfolio; the kind of stocks that you sell because the company's fundamental situation deteriorates, not because of the vagaries of the market. For me, O fits that description.
disclosure: long 37, again at 44
Thank you for the kind words, E-BI.
Thank you for the informative overview.
AWK is one of the stocks that I trot out when people talk about utilities in general, water utilities in particular, or stocks that they think are "boring."
Over the past five years, AWK has outperformed SPY by a wide margin -- +145% vs. +44%.
On the other hand, it has been difficult to make money with the stocks of companies that provide water handling equipment. Some growth and and/or consolidation would be welcome in that sector.
If PG slides toward 70, I'll be buying more. Why? Here are some reasons, in no particular order:
-- outstanding balance sheet
-- attractive dividend that, to some extent, "pays me to wait" for management to make some positive changes that goose growth a bit
-- the arithmetic that says that all the dollar has to do is stabilize a bit, not necessarily reverse course and weaken, for the pain to ease on the foreign-exchange front
-- deep liquidity, which will let me get out if, in a couple of years, my patience wears thin with the pace of fundamental improvement
-- a good harbor in a volatile market (beta well under 1.0: 0.50 according to FinViz, 0.89 according to Yahoo Finance)
-- in a not-so-strong economy, there's a reason that the products PG sells are called "staples": people keep buying them
-- the stock's chart looks pretty good these days
-- and last but not least, sometimes valuation numbers don't the whole story about a stock
My two cents: don't back up the truck, but accumulate on pullbacks and wait and see what happens. Battleships turn slowly, and this one could well move in the right direction. If it doesn't, sell it and put the money somewhere else. But you probably won't be badly hurt while waiting.
A nit to pick, Robyn, from an old editor to a young one (judging by your photo:
The copy says, "Have portfolios of $1,000,000 or more (33%)".
33% is a plurality, not a majority.
Capt. Spaulding
...and another thing:
I think that investors who have recently put new money into PG should be patient: settle in for a longish period of retooling, monitor developments, and look toward the possibility of substantial rewards. While they wait, they can collect a very good dividend. If things don't work out in a reasonable period of time, say two or three years, then move on. But they're not likely to be badly hurt by having waited.
Exactly right! (IMHO)
Capt. Spaulding
I have no quibbles with the author's analysis, but here is an additional consideration: many investors might have appreciated the opportunity that PG gave them to sleep a little more easily than GE shareholders.
Truth be told, AWK, considered "boring" by many investors, has far, far outperformed PG, GE, and SPY during the years in question.
WK Gore (above) put his finger on it:
"....O is "best in class"; my concern is about a revaluation of the entire class at some point."
I'd add another concern: a severe, long-lasting, take-no-prisoners general downturn.
If/when that happens, O would be one of the positions for the true long-term investor to hold and, eventually, add to. Others in that best-of-breed category are MO, LMT, and JNJ, to name a few. Just sayin'......
Raw Energy:
Thank you very much for the reply. Much appreciated.
Capt. Spaulding
Elephant Analytics, commenters:
Is BBEP the well operator for ROYT (Pacific Coast Oil Trust)? If so, how would problems at BBEP influence ROYT?
Thank you for any information on this topic.
My two cents re UVV: nice business, experienced management, attractive/solid dividend, but results are subject to industrywide inventory cycle and currency fluctuations. That makes the stock volatile when earnings miss and/or guidance disappoints (take a look at the chart). Beta: 1.26. vol. more than 2.5% (per FinViz). IMO: not so "stable" in terms of the stock price. Wait for significant pullback to buy.
Tobacco stocks have been among the best in my portfolio, too. Where would individual investors be without the old Philip Morris, he sighed (*smile*).
re today: tempted to nibble at some defense and defense-related stocks. LMT, AVAV, RTN, NOC come to mind.
re VGR: good call.
I established a modest position in VGR several years ago, and have been very pleased to see it grow steadily. That doesn't mean that VGR is a "buy it and forget it" stock; it bears watching, like everything else. But for now, so far, so good.
Very nice article. Thanks for sharing it.
My two cents: wholeheartedly agree re RTN and NOC. I have been nibbling at LMT recently, too. AVAV rounds out my "arming the world" holdings. Human nature never changes, so we might was well buy defense stocks.
re COST: I bought a chunk many years ago (under $50/sh), and have been hesitating about adding to the position all the way up. Talk about woulda, coulda, shoulda...
On the general subject of hanging on to stocks that don't live up to expectations:
Years ago, when I was a beardless youth, I worked on a weekly basis with a gentleman who is a household name in the investment industry (he studied with Graham, and achieved fame and fortune on his own). One of the basics he preached was, "Cut your losses. Despite what you think, the market almost always knows more than you do." His rule of thumb: except in very unusual instances, sell when your position declines by 15% and move on to something else.
Another bit of advice worth remembering: "If at first you don't succeed, try again. Then give up. No use being a damned fool about it." (W.C. Fields)
As for the specific case of LXP...I'm under water, and undecided about selling and moving on. Brad's article will help me make a decision.
I'd like to add my two cents praising Brad. I wrote and edited securities research and economics material for 35 years, and -- taking education and retirement into account -- have been reading and thinking about such things for more than 40 years. Based on that experience, I'd put his work in the top decile (for you quants out there). Nobody's perfect (even Koufax lost some games), but he's very good, and his opinions are well worth considering.
The comments by Ted Waller, ConArtist, and jzwmnb01 -- taken together -- suggest that the opinion presented in this piece had little thought, effort, or judgment behind it. An analyst or an investor simply does not look at one label on a pie chart and reach a conclusion. It's one thing to make a questionable judgment, but it's quite another to be a lazy thinker.
I have watched GLW for a long time, and have always been struck by the company's not-unusual combination of very good R&D and innovation on the one hand and management's inability to translate those advances into returns for shareholders. Perhaps the reason has to do with something in the upstate NY air (think Eastman Kodak and Xerox).
I'll continue watching. And if I take a position, it will be in the hope that an activist will shake things up.
Excellent article. Always happy to see an analyst/commentator who follows-up honestly on his/her calls.
My two cents: I bought CORR as a speculation when the adjusted stock price was above 25. I collected some fat dividends. I sold when the shares got so low that it would take years of dividend payments and modest price appreciation to get back to even on the original position. So it goes. Not every speculation works out. Time to move on to something else.
Looking forward to more articles from Brad.
re CORR: investors who want to explore this stock further would do well to carefully read the material about CORR here on SA, as well as company documents and filings. Ditto for EXXI.
disclosure: long CORR (but it's not for the faint of heart)
If that's the case, someone should remind those investors that it takes time to make enough babies to nudge the sales needle. A few more diapers in China, even over the long term, aren't likely to translate into significant growth in revenues of an increase in PG's multiple.
In my view, investors interested in PG should be patient and settle in for a longish period of retooling that could result in substantial rewards. While they wait, they can collect a very good dividend. If things don't work out in a reasonable period of time, say two or three years, then move on. But they're not likely to be badly hurt by having waited.
Excellent analysis, very well-presented. Thank you.
Even if a reader reins-in your assumptions a bit to make them even more conservative (which isn't a bad thing in exercises such as this), it is clear that AA presents unusually attractive upside possibilities for the intermediate term (about a year) and longer. For "speculative investors," as they say.
My 2 cents: I started establishing a position under $8/sh, will add to it opportunistically, and see what develops in the coming quarters.
Thank you for the balanced, thoughtful overview of CORR. I happen to agree with your overall conclusion: CORR is what used to be called a "businessman's risk" stock.
IMO, CORR deserves (a) a small but not insignificant place in the speculative section of an individual investor's portfolio, (b) a chance to demonstrate that management's business model can succeed over time, and (c) close monitoring. I'm agnostic on the reverse split; fundamental trends matter much more, I think.
disclosure: long CORR
Thanks for a well-balanced overview of this very interesting asset category. I have held PCY for quite a few years, and have been pleased/surprised at the fund's recent performance -- the current price of $28.07 is well-above the August low and close to the 52-week high of $29.09, and the yield is 5.6% based on an annualized payout of $1.56 ($0.13 monthly). I don't plan to add to the position, and probably will put in a stop not far below recent levels. Just my (dollar-denominated) two cents.
Excellent article, full of good sense. Thank you.
re the vaporous nature of corporate "earnings" and the shell-game of lowering the bar: During the years I spent on the sell side, I participated in far too many research department and investment committee meetings. Occasionally, the "adjusted for this-and-that" nonsense that an analyst or economist was spouting would cross the line into complete irrationality. When that happened, I would say out loud, but to no one in particular, "Yeah, and adjust for darkness, it's light 24 hours a day." That earned me many dirty looks, but I'm sure it helped to keep some pretty bad ideas from being published.
Can't disagree with a word you say. In particular, your thought -- 'I believe that time in the market is more important than timing the market to try to catch the lowest price "ever" ' -- is one of the most important phrases that investors ought to live by.
BTW, I added some T this morning, before I read your article (*smile*).
Capt. Spaulding
P.S.: I vote for making this a weekly feature.
If you don't mind my butting-in, you're taking exactly the right approach to this stock, and the long-term rewards are likely to be sizable. Buy the dips, DRIP the dividends, and stick to your multi-year plan. Just the ticket.
Capt. Spaulding
Hi, Dividends#1. Thank you for the kind words.
IMO, the key takeaways from your comment are "I can tolerate the risk" and "Until I find a better investment than MO, I will HOLD!"
Having read those sentences, I've upgraded my hunch that you'll do fine to "I'm now fairly sure that you'll do fine."
I hope you enjoyed your workout.
Capt. Spaulding
A very intriguing article and series of comments, especially for those of us who like to speculate about things that are none of our business (*smile*).
My suspicions: the writer knows enough about investing and risk-taking not to have all his eggs in three baskets, so to speak. This portfolio -- which is "scaled down" from one that exceeds $1m -- probably does not represent his entire net worth, or (perhaps) even a majority of it.
My conclusions: I wish him good luck. He clearly follows his holdings closely. nimble, ans is not wedded to any one position, except (possibly) MO.
And therein lies the rub. MO has been one of the best investments of recent decades. I own a sizable (for me) amount of stock, consider it the foundation of my portfolio, and expect it to continue doing well for the foreseeable future. But I wonder/worry about a black swan event sailing in from seven standard deviations out. If that were to happen, I hope that I would have the mental discipline to look at the situation clearly and take appropriate steps. (An important thing to remember: many of us may "love" a certain stock, but fewer of us realize that the stock doesn't love us back.)
So good luck to Dividends#1. I have a hunch that he'll do just fine. As for my little portfolio, MO is the jewel in the crown, but it's surrounded by a few other stones that I hope will continue to glitter.