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Craig Lehman

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  • The Real Reason To Sell Municipal Bonds [View article]
    >If you buy a bond, you must be prepared to hold it to maturity.<

    Point granted, but it does not apply to muni bond FUNDS, which have no maturity date. E.g., VCV has been hammered: http://on.mktw.net/11M...
    Aug 7 12:06 PM | 4 Likes Like |Link to Comment
  • Despite Sequester, Opportunities Exist In Defense Sector [View article]
    I thought I knew the defense contractors, but I had never heard of Huntington Ingalls. Thanks for the well-organized, useful information on both HII and GD. Counterintuitively, the defense stocks have been a great place to be this year; hopefully it continues.
    Jul 31 09:18 PM | Likes Like |Link to Comment
  • If History Means Anything, Aflac Stock Is Quite Cheap [View article]
    As I understand it, beta is the fluctuation of the stock, relative to the fluctuation of the market. If the stock is up or down 1% on days when the market (that is, the US market) is up or down 1%, its beta is one.

    Now, this is only a guess, but my hunch is that AFL tends not to fluctuate so much with the (domestic) market, as with events in the Japanese or European markets (at least lately.) Those events are not necessarily in synch with fluctuations in the US market. So because it shows larger divergences with the US market, its beta is larger.

    JUST a guess.
    Jul 27 05:55 PM | Likes Like |Link to Comment
  • Team Alpha Retirement Portfolio: What To Do When You Don't Know What To Do [View article]
    The original question was about writing a put on KO at a point where it yields 3%. Writing consecutively higher puts at 40, 43 etc would probably not meet the 3% condition, at least until KO increased its dividend a couple times.

    I guess the way I look at it is that 2.75% is a lot better than my broker will pay me to hold cash, and getting KO at 37.5 is a pretty good deal if the stock dips. Not something that I would allocate ALL my cash to, and there may well be better opportunities out there, but it seems like ONE relatively conservative way to earn a little income.
    Jul 26 08:49 PM | Likes Like |Link to Comment
  • Does Microsoft Get The Message Yet? [View article]
    Ashraf,

    I don't always agree with your analyses (disagreements are why we have a market), but you have certainly nailed it from the git-go about RT. Like Mr. Blair, I am waiting with bated breath for a thin, fast, hi-res Haswell convertible that runs uncrippled Windows 8.1.
    Jul 19 02:17 PM | 6 Likes Like |Link to Comment
  • IBM And The Media Attempt To Obscure Its Declining Business Results [View article]
    Not to completely disagree with your thesis, but you ignore the rather massive share buybacks. IBM is an incredibly rich company, and can afford to offset the so-so operating results with a reduction in share count which still leaves stockholders rewarded.
    Jul 18 02:32 PM | 3 Likes Like |Link to Comment
  • Team Alpha Retirement Portfolio: What To Do When You Don't Know What To Do [View article]
    I was going to say, you aren't going to make much money selling puts on KO going to the point of 3% yield (37.33 as I calculate it.) Then I looked, and the January 37.50's are at 1.03. That seems pretty attractive.
    Jul 16 01:43 PM | Likes Like |Link to Comment
  • Retired Investors: Is It Time To Consider A New Investment Strategy? - Part 3 [View article]
    >It seems you are concerned about each position's value as much as its income.<

    Yes, I consider both. Depending on how you measure, studies say that at least half of total return comes from dividends, so of course I pay a lot of attention to dividend income and its growth. But I also draw some income from periodic "shaving" of capital gains, so I pay attention to price as well.

    Thanks for the excellent Wikipedia link, Cake. I am familiar with Rob Arnott and have parked funds in PRF over the years, but the article provides a lot more theoretical background.
    Jul 14 12:39 PM | Likes Like |Link to Comment
  • Retired Investors: Is It Time To Consider A New Investment Strategy? - Part 3 [View article]
    Cake,

    Thanks, that clarifies it somewhat. If I understand you correctly, you start out thinking that each of 50 positions should produce about 2% of income, and then adjust from there on the basis of fundamentals.

    Doesn't seem unreasonable with stocks like NLY; I might be willing to take a flyer and devote <1% of my capital if it earned me > 3% of my income, as it would, at least until the point (if and when) it crashes and burns. But on the other end of the spectrum, an income-weighting formula would force me to put a lot MORE of my capital into the low-yield but high-dividend-growth stocks which I like, say CHD, CVS, UNP, VFC. Offhand I like dividend-weighting more on the high end than the low, and would prefer to spread my bets on the low end.

    The issue needs more research. Contributor RichJoy has expressed the view that if you want to weight portfolios, it should be done on a basis of a certain percentage of high-yield low-growth, medium-yield medium-growth, and low-yield high-growth (though he hasn't put it quite that way and I may be distorting his view.) This all needs to be worked out in models but I think I intuitively agree more with that view -- without doing the work to verify it. Just a hunch.
    Jul 14 12:30 AM | 1 Like Like |Link to Comment
  • Retired Investors: Is It Time To Consider A New Investment Strategy? - Part 3 [View article]
    No Free Cake,

    Weighting by income is a really interesting idea. E.g., from my perspective, NLY scares me to death, but if I only expected it to produce 2% of the INCOME in my portfolio, then I would have relatively little capital invested in it, and that would make me feel better.

    But I don't understand when you say "I don't equal weight. I simply like some companies better than others and they get a higher weight in my ~50 positions. " Weighting by "what you like" doesn't sound like weighting by income! It would be great if you would comment further or even write an article to explain in a little more detail how this has worked for you.
    Jul 13 04:27 PM | 1 Like Like |Link to Comment
  • Chowder Rule Breakdown - High Growth Vs. High Yield In Your Portfolio [View article]
    Chowder, I never realized that you were treating your number as a threshold, and that you *expected* it to drop due to price appreciation. Or that it was related to protecting an 8% moat. Very helpful clarification.
    Jul 13 04:08 PM | Likes Like |Link to Comment
  • Chowder Rule Breakdown - High Growth Vs. High Yield In Your Portfolio [View article]
    Dr Fred, I agree. Nevertheless, you can gather some evidence from the *consistency* of historical growth rates. For example, APD has grown its dividend at 11-12% for the last ten years, while KO has maintained 7-8%. And there are no great mysteries about what their business models are. Also, growth rates on smaller yields, esp. when FCF payout is low, tend to be more consistent.

    But Pendragon is right. Some people seem to want autopilot, and that is simply too much to expect.
    Jul 13 03:58 PM | 1 Like Like |Link to Comment
  • 3 Good Yielding Stocks That Have Raised Payouts By At Least 8% A Year For The Last 5 Years [View article]
    According to both Yahoo Finance and Dividata.com, STX did not pay a dividend in 2010. Because it paid a very small dividend in 2009, it can be said to have a five-year dividend growth rate (which includes one year of no dividends), but that is a little misleading. The chart you supply does not show a zero-dividend year, so either it or Yahoo and Dividata are wrong.

    (As far as I can see, Seagate's web site does not provide dividend history.)
    Jul 13 02:50 PM | Likes Like |Link to Comment
  • Chowder Rule Breakdown - High Growth Vs. High Yield In Your Portfolio [View article]
    Eric,

    I did much the same kind of analysis at http://bit.ly/1aCr7c8, but using actual examples. However, I disagree with your conclusion after the last table that "the end results generally follow the trend." Your best performer, FDO, outruns UHT by 39%, and tops MO by 288%!

    I think the direction your Scenario Two takes -- assuming LESS than 2x share price appreciation for the lower-yield higher-dividend- growth stocks -- is probably the opposite of the way you ought to be looking. E.g., here is a Yahoo chart comparing price appreciation of FDO vs MO over the last 20 years: http://yhoo.it/13VWDfM;range=19930701,201307... FDO's price appreciation more than SEXTUPLES that of MO.

    Now, that result may be due to the spinoff of PM and KRFT from the old Altria, but try some other comparisons and you will still see the price appreciation in FDO handily doubling that of stocks that yield twice as much. E.g., FDO more than doubles PG or KO. Other low-yielders such as SYK and IBM demonstrate even stronger results. Not to cherry-pick results, but I suspect a more thorough analysis would bear out the claim that the price appreciation of the universe of low-yielders would be more than 2x that of the higher yielders, not less.

    But not to sound too critical. I completely agree with your instinct that the tradeoff between low-yield high-dividend-growth stocks, and vice versa, as reflected in the Chowder number or total return, needs to be more thoroughly investigated. I also agree with RichJoy that a well-balanced portfolio probably needs some stocks from each part of the spectrum.

    [Looking at the way SA translates my link to Yahoo, I'm not sure that my FDO vs. MO comparison will display correctly. But their "interactive chart", with its "Compare" feature, should make it easy to reconstruct any of the examples given above. SA is also mangling parts of my comment where you see ellipses.]
    Jul 13 02:09 PM | 1 Like Like |Link to Comment
  • Intel Could Be Hiding Something Huge [View article]
    If I was just bringing out new chips that are in themselves pretty good, I wouldn't be diluting the message by talking about the next generation just yet. When competitors start fighting back with their responses to the new generation is the time to start bragging that you've got something even better nearly ready to go.
    Jul 8 09:57 AM | Likes Like |Link to Comment
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