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Jake Huneycutt  

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  • Five Major Underreported Economic Threats [View article]
    Milkweed,

    I agree 100%. Excellent comment.
    Jan 16, 2014. 12:08 PM | 1 Like Like |Link to Comment
  • Five Major Underreported Economic Threats [View article]
    CJ,

    Japan has issues, but I wouldn't say they are as "under-reported" as Italy or Puerto Rico. Though, I did recently see an article showing that Japan has been a huge net buyer of Italian debt since 2011.
    Jan 16, 2014. 11:39 AM | Likes Like |Link to Comment
  • J.C. Penney: 'Desperation' Is A Stinky Cologne [View article]
    This truly is a desperation move.

    There's a reason most successful large retailers don't do commission sales any more. People don't like having salespeople hovering over them. It's not the 1970's. In 2014, people want to shop in peace, and if they can't, they'll go to Wal-Mart, Target, or order online at Amazon.
    Jan 16, 2014. 05:59 AM | Likes Like |Link to Comment
  • Five Major Underreported Economic Threats [View article]
    Flash,

    Great point.

    But I haven't predicted any banking collapses in the US. In fact, I think the US banks will continue to perform reasonably well, but mortgage lenders may see weaker loan growth. The more interesting question to me, moving forward, is how a commercial-heavy bank like PNC performs versus a residential mortgage-heavy bank like WFC.
    Jan 16, 2014. 04:09 AM | 1 Like Like |Link to Comment
  • Five Major Underreported Economic Threats [View article]
    Rock_nj,

    Thanks for a well thought out comment. You ask what is "unreasonable" about those requirements, but I'd turn that question on its head, "why are these requirements magically going to prevent asset bubbles?"

    When you get down to it, what causes banking crises? The common (but incomplete) answer is "bad loans." But what makes them "bad"? Certainly, a borrower being unable to afford paying a loan off is one factor, but there's a much bigger factor being ignored here: PRICES.

    When the value of an asset plummets, there's an economic incentive for a borrower to default. This phenomenon explains why many people who defaulted on their home loans, continued to pay off their credit cards. The incentive is to keep their line of credit open, but to divest a bad investment.

    The biggest problem isn't "lending standards"; it's lending with inflated asset values. If I give you a loan for a $200,000 house and the house appreciates to $300,000 over the next 5 years before you default, then I'm still in pretty good shape. If however, the value falls to $120,000, then I'll have problems.

    The great arrogance here is the idea that a few bureaucrats and politicians with no experience whatsoever in lending have some expert understanding of the bubble and its causes. In reality, the regulations have only exacerbated problems.

    Consider that maybe many of the people who are being pushed out of the housing market are completely able to service their loans. Consider that one of the primary ways that middle income people advance themselves is through lending, whether it be for a home or for a small business.

    So why is it beneficial for the Federal government to arbitrarily intervene in the market and say, "these people are unfit to borrow?" Don't the banks have more expertise in that than a bunch of bureaucrats?

    The idea that 'loose lending standards' cause bubbles is only half the story. It's true that 'loose standards' are present during bubbles, but that's because the price of money for the banks is often too cheap. When you say "here's cheap money, but we'll only give it to you if you find someone to lend out to," then of course the banks do their best to find someone to lend out to. But this shouldn't be an indictment of all lending to the middle and lower-middle income borrowers.

    This is a case of politicians and regulators not understanding the true causes behind the bubble. Arbitrarily preventing banks from lending to certain lower-middle income individuals is not going to prevent banking crises. It's merely going to shift where the banking crises occur.
    Jan 16, 2014. 03:53 AM | 2 Likes Like |Link to Comment
  • Five Major Underreported Economic Threats [View article]
    Don,

    When I start receiving 3-5 more comments like yours per article, that's when I'll know the market is officially in bubble stage.
    Jan 16, 2014. 03:35 AM | 3 Likes Like |Link to Comment
  • BP: What's The Catch? [View article]
    It's likely that most of the BP longs know the legal situation is messy, but most of us believe that BP can service the costs anyway, and the stock looks cheap regardless. For this reason, I wouldn't be totally shocked to see the stock rally on bad news. Uncertainty is dragging it down more than anything, more than BP's inability to service the costs.
    Jan 13, 2014. 01:51 AM | 4 Likes Like |Link to Comment
  • Outlook For Gold In 2014 [View article]
    If you want to hold Charles accountable, here's a start:

    http://seekingalpha.co...

    http://seekingalpha.co...

    http://seekingalpha.co...

    Charles has been right on gold since at least 2011. Even the "too early" 2010 articles where right in the long-term, as gold now sells below the mid-2010 prices, while equities have outperformed dramatically.
    Jan 7, 2014. 05:39 PM | 2 Likes Like |Link to Comment
  • Rising Minimum Wages - The Most Vulnerable Sector And Company [View article]
    MCD has greater volume and is less reliant on labor for every dollar of revenue than virtually every single competitor. If anything, MCD benefits from minimum wage increases, in the same way WMT does. It's the smaller restaurants with lower volume that tend to get hit.
    Jan 6, 2014. 07:43 PM | 1 Like Like |Link to Comment
  • The Ticking Time Bomb Under The World Economy [View article]
    Excellent article. I find myself in agreement with most of it.

    Italy is Europe's Detroit, with zero population growth (and zero real economic growth) to fund is ever growing liabilities. Its highly corrupt, as the Fraser Institute has scored it below virtually every other developed nation on this measure.

    The impact of Italy's problems would be rather isolated, if it weren't for the eurozone, the huge trade imbalances it creates, and the financial inter-connectivity it fosters. For this reason, Italy is the most likely "first domino" to trigger a broader eurozone crisis (with Spain being the other possibility).
    Jan 3, 2014. 06:24 AM | Likes Like |Link to Comment
  • Midday Gainers / Losers [View news story]
    Papa John's (PZZA) split. It's not down 49%.
    Dec 30, 2013. 12:50 PM | 1 Like Like |Link to Comment
  • Why I'm Not Selling My Worst Performing REIT Of 2013 [View article]
    FFOs can be misleading, especially with a younger company that is ramping up investment. Also keep in mind that FFOs use weighted-average # of shares, which means it tends to inflate FFOs (per share) if the # of outstanding shares is rising rapidly.

    I'd also look at balance sheet valuation, using cap rates to guesstimate property values. On that basis, NAV per share growth has been good, but not spectacular over past few years.

    Even if you look at diluted FFOs per share, YOY growth has been about 5.8%. Once again, good, but not great. You really have to assume 5% - 6% growth just to get to the current stock price.

    IMO, DLR is an OK investment right now. It's close to fairly valued, but I like it as a "limited downside" investment, with some upside growth potential. But I don't necessarily see it as "cheap" yet and I'd probably exit my stake if I saw the price spike back over $55 or $60.

    In order to make a strong case for the valuation to be at that level, there has to be a case for growth (including the share dilution) in the range of 8%+ over the next few years. Which is possible.

    Brad did address dilution a bit, by saying no new equity issuances in 2014. I'm playing Devil's Advocate to some extent.
    Dec 27, 2013. 01:17 PM | 4 Likes Like |Link to Comment
  • Why I'm Not Selling My Worst Performing REIT Of 2013 [View article]
    Brad,

    Great article.

    Any thoughts on DLR's dilution of shares? At end of FY 09, there were 77 million shares outstanding. As of last quarter, there were about 128.5 million. It seems like the share count has risen very consistently and quite substantially; muting the return to investors.

    I have a small stake in DLR, but I admit I have major concerns. I see a mediocre track record at generating returns for shareholders over the past few years. I see a lot of positives, as well, but I have difficulty explaining away the dilution issues.
    Dec 27, 2013. 11:23 AM | 5 Likes Like |Link to Comment
  • 5 Inexpensive Stocks In An Overheated Market [View article]
    RI,

    No opinion.

    To my understanding, that investment essentially is predicated upon government action that could give the company value again. Very difficult to predict how that will all play out IMO. Not really my type of investment personally and I don't have a lot of expertise in that realm.

    I'd view General Growth in 2009 as being completely different. No real government entanglement / complications there. Its bankruptcy was due to liquidity issues rather than insolvency and its assets still had very significant value. It had to work through the legal side of things, but the odds were always in favor of it exiting bankruptcy and the equity value jumping significantly.
    Dec 22, 2013. 07:57 AM | Likes Like |Link to Comment
  • 5 Inexpensive Stocks In An Overheated Market [View article]
    A portfolio equally weighted with these picks returned 15.4%, while the S&P 500 returned 11.6%. Not sure how that makes me "wrong", even using the most liberal definition of that word.

    Regardless, my stated timeframe was "the next few years", which would imply no less than 2-3 years and probably no more than 5 years.
    Dec 22, 2013. 04:43 AM | Likes Like |Link to Comment
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