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  • Update For Technology & Industrial Dividend Growth Companies 1-27-15 [View instapost]
    I have an over abundance of data gathering and coding to do -- and I want to produce 'code' that works when the data is displayed in 'articles' (and not so much in 'blogs') that is viewed on 'non-mobile' devices. Seeking Alpha does not pay authors for 'mobile' page views.

    If I were less 'over worked and under paid', I would work on a solution. But currently - that is not the case. Also - I have no idea how to solve the IPAD display problem. Sorry.
    Jan 29, 2015. 11:13 AM | Likes Like |Link to Comment
  • Packaging Sector Update 1-28-15 [View instapost]
    I wish I had started following this sector five years ago - so that I would now have an acceptable amount of "historical EPS projection accuracy" stats. I have some fear that this sector is hyper-cyclical. This sector may have a lack of predictability - and that justifies the current high "yield + CAGR" numbers.
    It is my current perception that PKG is 'a great stock in small doses' - while at the same time having the volatility that would causes large allocations to place your portfolio on a roller coaster.
    My portfolio - that is dominated by midstream MLPs, REITs, consumer stables and health care stocks - is overly defensive. My portfolio can easily handle the addition of potentially volatile PKG.
    Jan 29, 2015. 10:59 AM | Likes Like |Link to Comment
  • Earnings And Valuation Update For Kayne Anderson Energy Development [View article]
    In response to MLP Investor - questions about CEFs are a little outside my area of expertise. So take what follows with a grain of salt.

    KED is still BDC-like in updating its NAV. The last NAV data I find is from 8-31-14. While KYN is CEF-like and the last update on NAV is from 12-31-14. So there could be a problem comparing NAV discounts due to the inequality of freshness in the NAV data.

    But that may not be the issue.

    Both KED and Kayne's CEFs use some debt. The credit covenants are (probably) not going to be the same -- and the duration of the credit facilities are (probably) not going to be equal. This normally trivial information suddenly becomes important in stressful times.

    In summation - be very careful where you get your answers. I know enough to know that I would not be a good source.
    Jan 13, 2015. 08:07 PM | 1 Like Like |Link to Comment
  • My Vision Of What The 'Perfect Retirement Portfolios For Dummies' Might Look Like [View article]
    My projections are for dividend growth - and any update would need to be done 12 months after the original posting of the article. I set conservative dividend CAGR projections. Individual stock performance strongly tends to outperform my expectations.
    Jan 5, 2015. 05:28 PM | Likes Like |Link to Comment
  • Technology & Industrial Dividend Growth Companies 12-26-14 [View instapost]
    DanH111 asked a really good question: "Do you find it odd that stocks with a TR-RRR less than zero had greater mean price gain, higher yield and lower PE than stocks with TR-RRR >0?"

    I am not at all surprised that the better stocks would have higher P/E ratios.

    In sectors where the dividend/earnings ratio is high - I can have a lot of confidence that those companies with lower ratios will have higher dividend growth (and moderate ratios lead to moderate growth -- and high ratios lead to lower growth). In sectors where there are low dividend/earnings ratios - the importance (or predictive-ness) of that ratio is diminished. This is one of those sectors.

    Any grouping that mostly contained AAPL, AMAT, BRCM and INTC would have a big advantage in winning the 'best mean price gain' stat. The 'less than zero' grouping contained three of those four.

    This is a coverage universe where nine components are brand new and five components have been followed less than six months. It takes me some time to fine tune my CAGRs. In sectors where the importance of the dividend/earnings ratio is low, my CAGRs may never become finely tuned.

    This is a group were I should not bifurcate - but tri-furcate. Stocks with TR - RRR where the value is +0.5 to -0.5 should be separated into a fuzzy "roughly fair valued" category.

    CAGR projections are great metrics to use as a tool in explaining valuations when the CAGRs basically come in three or four flavors - low, medium, high and very high. This is not one of those sectors. This is not a coverage universe where I have a high level of confidence in a strong degree of accuracy in my CAGRs due to so many of the components falling into the high and very high 'flavors'. The difference between an 8 CAGR projection and a 10 CAGR projection can be the factor that makes a stock a positive "TR - RRR" or a negative "TR - RRR".

    In summation -- I have a fair amount of concern that the degree of accuracy needed of the CAGR projections to make this system work is higher than the degree of accuracy of the CAGR projections I am able to produce. This has not been the case in sectors where CAGRs come in fewer flavors.

    On the other hand, this is a system that has guided me to invest in APH and TEL in late 2014. In health care, it is a system that is nudging me towards selling BAX, staying patient with NVO, STJ and SYK - and buying CAH. I am more concerned about the 'results' from the system that the neatness of the system. If those seven decisions turn out to be 'mostly right' -- then I will stick with the system and try to refine it. If those decisions turn out to be 'mostly wrong' -- then I will make major alterations.

    FYI - it took me seven years of investing in REITs before I saw that 'cap rates' really, really matter. It could be years before I see that I am missing something major with these numbers. I am still uncomfortable that I am not using operating margins in these valuation calculations. It would be logical that it is the 'change' in operating margins that is the metric that really, really matters here.
    Dec 30, 2014. 08:05 AM | 1 Like Like |Link to Comment
  • Office/Industrial REIT Stats For 12-26-14 [View instapost]
    (1) My FFO projections come from Yahoo Finance. The 'earnings projections' for REITs from Yahoo are almost always FFO projections. Yahoo does not tell you this. You learn this from observation.

    (2) Target prices also come from Yahoo.

    (3) How can one make a recommendation based on this data? It is my perception that one can not. I have found that I need FAD data to do that. (The dividend/FAD ratio is reasonably predictive of dividend growth.) I can get FAD data from the earnings releases for Health Care REITs. That is the only sector where you will find me making projections.

    (4) One also needs cap rate data in order to derive a RRR (Required Rate of Return) assessment - and there is enough trading within the portfolios of Health Care REITs -- and transparency of the cap rates on sales and purchases -- for the retail investor to make a RRR assessment.
    Dec 29, 2014. 08:25 AM | Likes Like |Link to Comment
  • Technology & Industrial Dividend Growth Companies 12-26-14 [View instapost]
    IBM is lacking when it comes to a 'growth story'. UTX recently fired its CEO. Both have great histories - but fuzzy 'presents' in need of improvement. Both have valuations that show them to be unloved. I am three months away from including the 2016 EPS projections - and once they are included, an 'unloved' valuation may become a merited valuation.

    Heck if I know if you did not make some timely decisions in those three purchases. But there is one thing I do know - a valuation assessment can change in a heartbeat.

    IBMs 2014 EPS projection is below the 2013 actual. And the 2015 projection anticipates growth of only 4.34%. If the 2016 EPS projection lacks much of a growth story (and that looks likely today), then my growth assessment for IBM will be downgraded. The Q3-14 ending CAGR from Yahoo was 8.30%. The current projection is 5.93%.

    The good news - IBM has such a low P/E ratio that it is already priced for anemic growth. IBM has so much EPS retention that it can 'financially engineer' some EPS growth via share buy-backs. IBM has so much EPS retention that it can afford to grow the dividend faster than EPS.

    The bad news - IBM appears to be needing to 'buy growth' via acquisitions - and the valuations for growth are already high.
    Dec 27, 2014. 11:33 AM | 2 Likes Like |Link to Comment
  • Health Care / Pharma Stocks 12-26-14 [View instapost]
    Your broker, your family, your friends, co-workers or neighbors are not going to kick you in the ass for failing to bear sector average. You have to do that task yourself. And if you are not beating sector average, you are better off owning the ETF. My health care stocks have a total return since their late January purchase of 17.35% (as of 12-19) compared to the XLV's 21.07%. That is a losing record. Should I fire the coach (and buy the ETF)? Or should the coach shake things up?

    There were two selections I made in this sector for added yield - ABT and BAX. I really do not need much yield from this sector. If I want more total portfolio yield - I could change some sector allocations. I could own some more BDC baby bonds. I could start a grouping of large cap bank preferred stocks.

    BAX had a falling 2014 EPS projection. The 2015 EPS projection is less than the 2014 projection. The 'last five year EPS growth' (which includes 2014 and 2015 projections in that calculation) is only 3.50%. I believe I let 'third party' CAGR projections over influence my own CAGR assessment (and that still may be the case with my current numbers).

    I tell 'you guys' to invest with CAGR projection awareness. Part of awareness is acknowledging your mistakes.

    I tell you guys to invest with RRR awareness -- and to strongly use 'historical EPS projection accuracy' as a tool in making your RRR assessments. The BAX history:

    On 1-28-10 BAX projected 2010 adjusted EPS of $4.20 to $4.28. Actual was $3.98.
    On 1-27-11 BAX projected EPS of $4.15 to $4.25 and cash flows $2.8 billion. Actual was $4.31. Cash flows was $2.81 billion.
    On 1-26-12 BAX projected adjusted 2012 EPS of $4.47 to $4.57. Actual was $4.53. Cash flows were $3.1 billion.
    On 1-24-13 BAX projected adjusted 2013 EPS of $4.60 to $4.70, and cash flows of $3.3 billion. Actual was $4.67.
    In January 2014 Baxter expected sales growth for 2014 of 9% to 10% and EPS of $5.05 to $5.25. The current 2014 projections is $4.88.

    One mess up (2010) out of four is not bad. Two out of five (2010 and projected 2014) is a little bit bad. The 23.65% long term debt to market cap is a little bit high. So maybe BAX fails to merit a 9.50 RRR assessment.

    I lost to the sector average while owning AMGN and ABC -- both of which had great years. I take that as evidence that the rest of my portfolio was REALLY bad. NVO and STJ both under performed since my purchase. The numbers still support strong CAGR projections for those two. I can be patient with those two.

    I lack statistical evidence that would justify holding BAX. My only choice is the decision to act - or not to act - on that perception. Will BAX help me beat sector average in 2015? The data does not support that expectation. Does BAX with its 2.79% yield need to be held due to the income it produces? No way.

    I have already made up my mind to sell two of my REITs in early January. BAX would make it three 'sells' (or 5 sells over what would then be the last 12 months out of a portfolio of 66 investments). I can live with that degree of turnover. Put in different words - I probably need to cut close to 10% of the current players from my team each year. If you are not doing that - then you are probably being overly patient.
    Dec 26, 2014. 11:03 PM | 1 Like Like |Link to Comment
  • Top 10 BDC Issues For 2015: Part 1 [View article]
    I have the impression or suspicion that the volunteers for your survey may be insufficiently briefed on potential losses on energy related loans in the portfolios of several BDCs. (But I do give you credit for asking the question.) This topic was not even on the radar in the last series of conference calls. The only ones who know the potential problems are those who actually read the 10-Ks and 10-Qs. I would suspect that companies with balance sheets and credit metrics that result in them being charged 13% on their loans would be the one's most vulnerable in a down turn. And this has the potential to be a deep and lasting downturn.

    I also want to thank you for polling your audience. I want to know "what the rest of us" are thinking. Most of you guys are hesitant to participate because you only have a fuzzy idea of what is going on. Let me share a secret: ALL OF US only have a fuzzy idea of what is going on.
    Dec 17, 2014. 12:22 PM | 8 Likes Like |Link to Comment
  • 8% Yield From MLPJ: A Diversified Small-Cap Energy MLP Fund [View article]
    The author wrote that MLPJ's "diversity is appealing to those such as myself that are not confident in picking individual stocks in these sectors."

    MLPJ owns many of the E&P MLPs - and they are a mine field. MLPJ mainly owns the smaller, non-midstream and newer MLPs. This investor would strongly prefer the smaller discounts that one can get from "bigger, older, diversified, midstream, investment grade" MLPs than the larger discounts one can find by taking on more risk.

    Allow me to copy and paste something I posted on the Investor Village MLP message board that expresses my current thoughts on the sector:

    I would also suggest something that is counter intuitive - buy those MLPs that dipped the least. If your mind is anything like mine, your mind will fight you on that suggestion. Your mind will see a 25% drop for stock A and tell you that it must be a better bargain than stock B that 'only dropped' 15%. In a world where the price of everything is falling, it is hard to remember that RRRs (required rates of return) exist. Don't do that! This pricing event should serve as a strong reminder that you want to have a low RRR portfolio.

    Do not let your search for bargains lessen the quality of your total portfolio. It's hard to find an analogy that works -- but for the purpose of your (all you guys and gals reading this) edification, I will make an effort. So off we go on the best analogy that comes to mind.

    One can find sweaters on sale at 50% off all the dang time. You can find shirts at 25% off all the dang time. But it is hard to find a belt on sale. At the end of a fashion season, one can find sweaters and 75% off, flannel shirts at close to 75% off, woven long sleeves at a discount of maybe 50% off. But belts are still selling at full price. This mid-term pricing stress on oil has the sweaters (which would be like the E&Ps) on sale at huge discounts. It has the long sleeve shirts (which would be like low coverage midstream MLPs and many of the G&Ps) on sale at good discounts. The investment grade MLPs are like the belts. Finding one of those belts at 20% off is a better 'find' and long term purchase than finding a sweater at 75% off.

    One needs to find and keep that kind of shopping perspective. That is a tough assignment. Your mind is conditioned to 'buy the 75% offs and ignore the tiny discounts'. Your mind has been conditioned incorrectly.
    Dec 17, 2014. 05:58 AM | 9 Likes Like |Link to Comment
  • Retirement Portfolio For Dummies - The Health Care REIT Components [View article]
    The stats that I used in the above article used Q4-14 dividends. At the time this article was submitted (the wee hours of Monday morning), VTR had not announced its Q4-14 dividend. I noted in the header of the first spreadsheet that "I am temporarily using an 'expected' Q4-14 dividend of $0.78 for VTR."

    After the market's close on 12-10-14 (Wednesday), VTR announced "that its Board of Directors increased the Company’s fourth quarter 2014 dividend by nine percent to $0.79 per share. The dividend is payable in cash on December 31, 2014 to stockholders of record on December 22, 2014."

    The penny difference is not big enough to change (or augment) all the good things already written about VTR in this article.
    Dec 11, 2014. 12:04 AM | 1 Like Like |Link to Comment
  • Retirement Portfolio For Dummies - The Health Care REIT Components [View article]
    Birch222 wanted to nudge me towards a simplified star rating system to bridge the gap between my complex system and the over simplified system.

    My "yield + CAGR - RRR" stat could be used as such a rating.

    Birch222 asked "at what point do you think holding a basket of these REITs might give way to greater concentration of one or two holdings"?

    This "portfolio for dummies" series started with a portfolio of 10 or 20 stocks. For a portfolio of 20 stocks (with no or low mutual fund holdings), a 5% weighting (thus one stock) from this sector is enough.

    I personally have a portfolio of 60 stocks - with many having 1% weightings. I still have a 39% allocation to mutual funds. I think owning a 'basket' is better than owning just one. But I do not mind the complexity of following 37 Pharma stocks to own 7 - and following 14 Health Care REITs to own 3 -- and so on for several more sectors.

    I believe I have gone over the edge to what Peter Lynch would call deworsification. I do not want to own a larger number of stocks. I want to own less stocks (like 50) with a higher allocation (2%) to each.

    At the same time, there is a HUGE emotional component to investing. One has to do what makes them comfortable . . . even when the 'comfortable' is lightly 'sub-optimal'.

    Today, I would tell you if your basket is larger than three for this sub-sector, then you are probably doing the deworsification thing. And at the same time, if one found the above analysis daunting, then one's ability to narrow the size of their existing basket could be overly challenged by that task.

    It is my goal " to liberate investors from the chains of borrowed opinions by teaching metric awareness that leads to the formation of your own opinions." I do not want to be the 'talking head' that tells you to sell all other Health Care REITs but VTR. I want to increase your ability to listen to the numbers -- and let the numbers lead you in a direction with which you will also be comfortable.
    Dec 10, 2014. 04:19 PM | 1 Like Like |Link to Comment
  • Retirement Portfolio For Dummies - The Health Care REIT Components [View article]
    The penetration of REIT ownership of Health Care properties is still pretty low. Dang! I forgot where I could find that stat. Thus I am using a faulty memory to make that statement. The penetration of REIT ownership of top quality regional shopping centers is huge (based on my memory of the last time I saw those stats). There has always been some competition for assets.

    It has been since the Q2 releases that I made an effort to listen to multiple conference calls in the sector. There was no weeping or moaning about the cost of assets - or the competition for assets - in the several calls that I heard. Still, that is not an objective measurement.

    I would really like to see some stats to support your argument. You could be right -- I just want some evidence before I accept what you say.
    Dec 10, 2014. 02:21 PM | Likes Like |Link to Comment
  • Retirement Portfolio For Dummies - The Health Care REIT Components [View article]
    This article had the appearance of being 'long enough' without the inclusion of the Q3-14 earnings release summaries that I do. I have put that information into a Seeking Alpha InstaBlog message that I posted this morning. One can click on my icon to find a link to my InstaBlog.
    Dec 10, 2014. 09:10 AM | 7 Likes Like |Link to Comment
  • Retirement Portfolio For Dummies - The Health Care REIT Components [View article]
    nottheboss1 wrote - "You are asking readers to admit to ignorance."

    On the other hand, readers who are not using dividend CAGR projections are not that aware of their relative ignorance. I am asking them to admit to being in what is likely the vast majority.

    It is my observation that every investor begins this experience lacking CAGR projection awareness. The situation is like that of a half mast zipper. Some folks have been tapped on the shoulder and told of their condition. Some folks have not. I am only asking if they have ever been 'tapped'.

    Thanks for expressing that the idea is a good one. I hope your comment gets a lot of 'likes'.
    Dec 10, 2014. 08:12 AM | 2 Likes Like |Link to Comment