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  • McDonald's: Expect A Full Recovery In 2015 [View article]
    I can't like rich's comment enough. Very well said, and exactly what I was thinking as I read the article.
    Dec 17, 2014. 06:11 PM | Likes Like |Link to Comment
  • Valmont Remains Well Positioned For Exceptional Returns [View article]
    I concur that Valmont benefits from long-term secular growth drivers, but the near-term outlook is a little tougher than you hint at in your otherwise excellent article. The Australian economy, which is going through some tough times right now, has an outsize effect on the company's performance, and while the company's irrigation products have held up better than might have been expected this year, practically everybody is expecting a downturn over the next year or so while commodities prices are at a cyclical trough. I think a 30% upside from the current price implies a fair value around $160-170, which is where I had the company pegged until recently. I concur with your multiple, which is about where I had it, but I think I would be a bit more conservative with my EPS outlook.

    None of this changes the fact that the company is now undervalued even relative to my own estimate (I think my last article I said $137), so I think it's looking more attractive now. It's got competitive advantages, working in what essentially amounts to a duopoly with Lindsay, and is well diversified across a number of industries. Held over a long-enough timeframe to let the various aspects of your investment thesis work out (which also happen to be my own), I think an investment in Valmont will succeed, but I would probably scale in my purchases at the moment. Again, very nice article, and best of luck to you in your new enterprise!

    Long: VMI
    Dec 13, 2014. 02:04 AM | 2 Likes Like |Link to Comment
  • Why Stocks Have Bottomed [View article]
    Openly speculating that the market will bottom around Christmas due to terrorism is pretty low, in my opinion.
    Dec 12, 2014. 06:08 AM | 1 Like Like |Link to Comment
  • Why Stocks Have Bottomed [View article]
    Ha, I was trying to edit my comment but it's now gone (Thanks iPad). At any rate, yes, wild geese are probably equivalent :-)
    Dec 12, 2014. 01:17 AM | 1 Like Like |Link to Comment
  • Pfizer's Lyrica fails to outperform placebo in spinal stenosis study [View news story]
    Disappointing, but can't say that it's all that surprising...
    Dec 11, 2014. 07:22 AM | Likes Like |Link to Comment
  • Crucial Facts About Energy Stocks [View article]
    Great article; now following.
    Dec 11, 2014. 06:48 AM | 1 Like Like |Link to Comment
  • McDonald's: I'm Not Buyin' It [View article]

    We'll have to agree to disagree here. MCD may be a quality company, but there are troubles there that I find disquieting. The firm's big appeal has been its dividend growth and steady, reliable cash flow; should earnings deleverage continue and significant investments be required, that cash flow will dry up and the steady growth of the dividend could be at risk. As much as you may believe that any purchase of energy stocks at this stage may be speculative, it's probably even more speculative to bet on a change in MCD management, a move which hasn't even been hinted at so far. Should that change happen, I might be willing to revisit my assumptions, but so far, I haven't heard anything which changes my mind about my initial thesis.

    Like I said before, my timing on the SLB trade was pretty poor, and it may be dead money for a few months' time, even a year or two. But ask me a few years from now how we're doing. Both companies will still be around, but I think their respective places within their industries will be markedly different.

    Anyway, I appreciate the candid discussion-- just think we've got different takes on things at the moment. Right now, the market agrees with you, but you know how these things can go.
    Dec 10, 2014. 09:35 AM | 1 Like Like |Link to Comment
  • McDonald's: I'm Not Buyin' It [View article]

    Ha, I can't argue with you at all. My timing for my Schlumberger purchase couldn't have been worse. That said, I take a very different view than you do on this: I view Schlumberger's price drop as largely due to external factors, which ought to prove cyclical. Furthermore, long-term growth drivers for oil services companies (production decline curves, exhaustion of easy, conventional sources of oil, structural demand) remain intact. Finally, I view Schlumberger's positioning and competitive advantages as largely intact-- in fact, in time, I think these will grow, even after the HAL/BHI merger.

    The same cannot be said for McDonald's, at least not at this point. Even in a friendly environment for quick service restaurants, the company is seeing declines in revenues and comps, which as I alluded to above is starting to have a direct effect on margins due to fixed costs. Its competitive advantages actually seem to be waning, as its brand has become synonymous with poor quality, and as its competitors appear to have caught up. And long-term headwinds (desire for healthy food, quality at a reasonable price as opposed to cheap food for cheap) are in play. Short-term price movements may suggest I timed the purchase poorly, but as of right now, the long-term outlook for Schlumberger is still much, much better-- and Schlumberger's stock trades at a large discount to my fair value estimate. The same can't be said for MCD.
    Dec 10, 2014. 02:15 AM | 2 Likes Like |Link to Comment
  • Why Lower Gas Prices Do Not Necessarily Mean A Higher S&P [View article]
    xpan, though I note that the author suggests the correlation data are derived from a 13-year data set in the conclusion, he says earlier in the article that the data are derived from information dating back to 1991. I think the 13-year thing was a typo, though I could be mistaken.
    Dec 9, 2014. 04:45 PM | Likes Like |Link to Comment
  • Why Lower Gas Prices Do Not Necessarily Mean A Higher S&P [View article]
    Nicely done; applaud the methodology and I'm intrigued by the results. I wonder if there might be some more at play here, though: could diminished energy costs merely be reflective of the diminished demand associated with economic downturns (the latter of which would obviously entail diminished corporate profits)? It seems to me that people need time to accumulate the money they save from the pump and then additional time to actually spend it. Would adjusting the time correlation between gas prices and S&P weekly close make a difference?
    Dec 9, 2014. 03:55 PM | Likes Like |Link to Comment
  • Ellington Financial on sale [View news story]
    I'm adding more. I think the management has proven it can maintain and even grow book value in a multitude of operating environments.
    Dec 5, 2014. 05:19 PM | Likes Like |Link to Comment
  • P-E firms circle around PetSmart [View news story]
    That's a helluva premium there...
    Dec 3, 2014. 10:06 AM | 1 Like Like |Link to Comment
  • Both Extremes In The Oil Debate Are Wrong [View article]
    Couldn't agree more. Concise, easy-to-read article. Long SLB, and have been thinking about SCTY and GE.
    Dec 3, 2014. 09:59 AM | 2 Likes Like |Link to Comment
  • Priceline open to new acquisitions [View news story]
    Avoiding routinely paying about 40 times earnings for non-accretive acquisitions would seem to be a good way to go about it, yes. Long: PCLN
    Dec 2, 2014. 02:47 AM | 1 Like Like |Link to Comment
  • What Do Current Prices Suggest About Investor Sentiment For Individual Sectors? A Look Using Reverse Discounted Cash Flow [View article]

    Super good point, and I concur that I wouldn't put too many eggs in the analyst estimate. Nevertheless, I question the likelihood that the energy sector as a whole will only see a 6-7% earnings CAGR over the next 5 years, which strikes me as unlikely. If true, though, the PEG for the Energy sector comes out to about 2-2.3, not unreasonable. Even if the sector as a whole is not nearly as undervalued as it looks, it may be *reasonably* valued at this point, and further declines would certainly make it even more attractive. A sizable margin of safety would appear to exist.

    Long: SLB, ETP, SEP, NOV
    Dec 2, 2014. 02:44 AM | Likes Like |Link to Comment