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David Trainer  

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  • Danger Zone 4/23/2013: Sears Holdings [View article]
    How is your valuation of the real estate different from what the company discloses under the $7.9 billion?

    As for the brands, if they were so valuable, don't you think they'd generate more revenue?

    How does issuing bonds affect the value of the debt in this situation?
    True, someone with a beter balance sheet could refi -but who would want to do that and why - esp considering my analysis?
    Apr 23, 2013. 05:07 PM | 2 Likes Like |Link to Comment
  • Danger Zone 4/23/2013: Sears Holdings [View article]
    I appreciate your sense of humor. But the math here is no joke, from I can tell. Pls tell me what is wrong with the following math for the value of SHLD:
    + $71/share for value of $7.6bn in inventory
    + $74/share for value of $7.9bn in real estate
    + $5.7/share for cash on balance sheet
    - $63/share for $6.7bn in hidden liabilities (detailed in article-note I reduced the tax liability to $1.1bn)
    - $30/share for $3.2bn in reported debt
    - $55/share for $5.8bn in current liabilities (net of deferred rev and s-t debt)
    $3/share is total of above

    a. analysis above excludes impact of negative cash flows, which were equal to -$265 million in 2012. A couple years of that and you knock off another $5/share

    b. also excludes the impact of $2.1bn in long-term liabilities of which $569mn (or $5/share) is not defined

    --- if we include those two liabilities, we are looking at -$7/share
    Apr 23, 2013. 03:26 PM | 1 Like Like |Link to Comment
  • Danger Zone 4/23/2013: Sears Holdings [View article]
    Thank you for your comment.

    1. I prefer to do my own diligence and not assume someone else can do it for me.

    2. I'm not sure I understand your math (above). When I run the numbers, I found $10.1 in tax, pension and debt liabilities. That is almost $95 per share.
    Apr 23, 2013. 09:57 AM | 1 Like Like |Link to Comment
  • Danger Zone 4/17/2013: Stanley Black & Decker [View article]

    It's true, there are always going to be new homeowners and people looking to upgrade their tools. However, my focus in this article is on SWK selling their tools to companies that build homes. These companies are likely to still have the tools they bought during the housing boom in the mid-2000's, and they won't want to take on the extra expense of upgrading their tools.

    SWK will have the opportunity to grow their sales to individual consumers, especially if their newer products are as good as you say. However, to achieve the lofty growth that the market is anticipating, they will need to also significantly grow profits from selling to construction companies, and I don't think that is going to happen to the extent that many other analysts do.

    Thanks for commenting,
    David Trainer
    Apr 17, 2013. 07:49 PM | Likes Like |Link to Comment
  • How To Avoid The Worst Sector ETFs [View article]
    Mr. McMurtrie:
    Thank you for your comment.

    I try to note when "index" funds have widely varying holdings and when specific providers provide a a great deal of funds that have exceptionally good or bad costs or holdings.

    What kind of information are you interested in? Do you want to hear about the providers, or the actual individual managers of different funds?
    Apr 9, 2013. 11:49 PM | Likes Like |Link to Comment
  • Danger Zone April 8, 2013: Williams Companies [View article]
    Thank you for your comment.
    You can see my rating on all the stocks I cover here:

    We do not cover many MLPs, but the free (for a limited time) screener will show you all the stocks I like (and dislike).
    Apr 8, 2013. 04:02 PM | Likes Like |Link to Comment
  • Danger Zone April 8, 2013: Williams Companies [View article]
    Thank you for your comment.

    The question of timing is a good one.
    I get this question often and my answer is:
    1. Timing the market is hard, if not impossible, to predict.
    2. Investors should focus on the level of risk not its timing.
    3. Any number of things can keep a stock overvalued.
    4. I don't try to predict exactly when the bubble will break. Instead, I focus on avoiding bubbles.
    5. In an inherently unpredictable world, maximizing reward/risk is the best strategy.
    Apr 8, 2013. 03:33 PM | Likes Like |Link to Comment
  • Express Scripts: Strong EPS And Cash Flow, But Some Questions Too [View article]
    Thanks for the link to my article.

    I agree with your comment on ROE and ROA. They are low b/c of a bloated balance sheet owing to acquisition-driven growth strategies. The issue there is more about the denominator than the numerator.
    Apr 5, 2013. 10:45 AM | 2 Likes Like |Link to Comment
  • Danger Zone 4/2/13: Express Scripts, Inc. [View article]
    Mr. Merola:
    Thank you for your comment.
    Good points. Proof will be in the pudding soon.
    The main risk here is that expectations for the quality of the pudding are already quite high.
    Any stock valuation that implies 12% growth in NOPAT for 10 years would give me pause.
    No matter the consensus forecast for EPS (or anything else), when the market's forecast (as manifest in the stock price) is that high, I prefer to pick lower handing fruit - or lower market expectations.
    Apr 2, 2013. 03:20 PM | Likes Like |Link to Comment
  • Danger Zone 4/2/13: Express Scripts, Inc. [View article]

    I tend to be somewhat skeptical of earnings forecasts, especially when they're dealing with synergies coming out of acquisitions. The large number of Medco employees that ESRX has already laid off suggests that there might not be as much synergy between the two companies as initially planned.

    My bigger issue, though, is that the market seems to be exclusively paying attention to the positives that you mention without factoring in the negatives on the balance sheet. There is upside and downside to this company, but all the upside is already reflected in the market price, leaving only the downside for investors.
    Apr 2, 2013. 03:14 PM | 2 Likes Like |Link to Comment
  • Best And Worst ETFs And Mutual Funds: Financials Sector [View article]
    User 427801,
    Thank you for your comment.
    I think you misunderstand my research.
    We espouse a buy-and-hold approach. We are "investors" not "speculators".

    When I recommend buying a basket, I mean buying as many of the attractive-or-better rated stocks in the sector. If there are none, then I recommend avoiding the sector. And I recommend holding them for the long-term or until my rating changes.

    For details on how to fund the best etfs:

    This article explains why understanding the holdings in an ETF is so important.

    The bottom line is that only good stocks can drive performance. No matter how one might arrange bad stocks, they are still bad stocks. There is no secret synergy derived from mixing bad stocks into any kind of fund.

    One must start with good stocks, then, look for low fees.
    Mar 26, 2013. 10:06 AM | Likes Like |Link to Comment
  • Best And Worst ETFs And Mutual Funds: Utilities Sector [View article]

    My stock ratings are primarily derived from the line-by-line parsing that my company, New Constructs, does of nearly 3,000 Form 10-Ks. They take into account distortions and expenses that companies bury in the Financial Footnotes. So while there may not be a great deal of data presented in this article, I can guarantee you there is a mountain of data going into every one of my ratings.

    The 25% is the weight of bad holdings, I suppose I should take better care to specify that in the article. An ETF's performance is driven by the performance of its holdings. If the holdings of an ETF perform poorly (which I expect the 25% of Dangerous-or-worse stocks to do) the ETF will perform poorly.

    I don't like many stocks in the Utilities sector, which is why I rank it ninth out of ten sectors. I have even downgraded PEG to a Neutral rating based on its recently filed Form 10-K. The only Utility to currently get my Attractive rating is Consolidated Edison (ED).
    Mar 21, 2013. 10:06 AM | Likes Like |Link to Comment
  • How To Find The Best Style ETFs [View article]

    I rate each ETF based upon my ratings of its holdings. My company, New Constructs, goes line by line through the Form 10-Ks of almost 3,000 companies every year, allowing us to find hidden expenses and distortions that other analysts miss. I don't know of anyone else who does that level of research for as many companies. Here's more detail on how I rate stocks:

    My ratings for ETFs are based on my stock ratings of their holdings as well as my rating of their total annual costs. I believe the holdings of an ETF, rather than backward looking NAV trends, are the best predictor for future performance. Here's more detail on my fund rating methodology:

    You reference Morningstar's rating in your comment. I have issues with Morningstar's ratings, specifically the fact that they give a massive number of 4 and 5 star ratings compared to very few poor ratings. This is because a significant amount of their revenue comes from funds paying license fees for the right to display those Morningstar ratings. Funds are unlikely to pay fees for 1 and 2 star ratings. Here's more detail about how my research differs from Morningstar's:

    Marco Polo XTF doesn't have the same issues with deriving revenue from the funds it rates, but its methodology is still based on backward looking trends without a true analysis of the holdings of the ETFs it covers.

    You can disagree with my methodology and ratings, but I can assure you I have done more research than either Morningstar or XTF.
    Mar 21, 2013. 09:46 AM | Likes Like |Link to Comment
  • How To Avoid The Worst Sector ETFs [View article]
    Nice to hear from you again.

    I am out of town thru this week.
    I will get back to you on the holdings for UGE, which I do not have at my fingertips right now.

    Details on my ETF and mutual fund rating methodology are here:

    One very important point in your comment that I want to highlight is that labels on ETFs are not reliable indicators of much of anything.
    Mar 20, 2013. 06:53 PM | Likes Like |Link to Comment
  • How To Avoid The Worst Sector ETFs [View article]
    User 6707651,
    Thank you for your comment.
    We only cover equity ETFs.
    Mar 20, 2013. 06:50 PM | Likes Like |Link to Comment