Seeking Alpha

John D. Thomason

 
View as an RSS Feed
View John D. Thomason's Comments BY TICKER:
Latest comments  |  Highest rated
  • Eaton Corporation: One Of The Few Blue Chips Available At A Value Price Today [View article]
    Thanks. It is very gratifying to me as an author to receive positive feedback on an article. My production rate of two to three articles per month will likely never match the more prolific SA authors, but if I can generate some discussion and informative comments, it is well worth the effort. And if I should be missing something, or I just flat make a mis-statement (it happens from time to time), I appreciate feedback on that also. It's all good when everyone participates!

    John D Thomason
    Jul 31, 2012. 12:59 PM | 1 Like Like |Link to Comment
  • Eaton Corporation: One Of The Few Blue Chips Available At A Value Price Today [View article]
    I concur that it could be a show-stopper for some investors. I presented the 20 years in detail so readers would have all the data needed to decide for themselves. The valuation metrics are what put ETN over the top for me. If not for that, I would have passed on the stock.

    Thanks for sharing your thoughts.

    John D. Thomason
    Jul 30, 2012. 07:08 PM | 1 Like Like |Link to Comment
  • Eaton Corporation: One Of The Few Blue Chips Available At A Value Price Today [View article]
    Thanks for the encouraging words. I actually started working on the article a couple of weeks ago, right after I bought the second time, but life intervened, and I was delayed in getting it out. No doubt getting in when you did makes it a lower risk investment than getting in now, after the run-up since earnings came out 7/23.

    John D Thomason
    Jul 30, 2012. 06:58 PM | 1 Like Like |Link to Comment
  • Is Greif A Buy?: Detailed Stock Analysis [View article]
    Hi, USA_2012,

    See my response to your comment at my "Yield, Value, Safety" article on Miscellaneous Industrials, on the same topic, for my approach.

    I bought GEF.B at $44.25 on 6/15/2012. I only started out with a small position because I thought it was going to go down more, but since the next day was the ex-dividend day, I wanted to go ahead and get in to get at least a small payment. I used a limit order - in fact, I never use market orders. The stock reversed, and I never was able to add shares at a lower price. When the stock broke $50 the first time, I told myself, if it does that again, sell. Sure enough, it broke $50 on 7/18/2012, where I sold at $50.45, again (always) using a limit order. My rule is, if I can get a capital gain worth two or more years worth of dividends on a stock I have held only a short time, a month in this case, sell. I plan to buy it back if a market swoon brings it back down. I always start out with the intention that a stock I'm buying will be a long term holding. But if the market offers up a short term gift instead, I take it. I believe another opportunity to buy it back will come along. And if not, at least we parted on amicable terms - which is more than I can say about some other entanglements I have gotten myself into!

    John D Thomason
    Jul 23, 2012. 09:41 AM | 1 Like Like |Link to Comment
  • Emerson Electric: An Opportunity To Pick Up Shares At A Good Price [View article]
    I think public pools no longer have high diving boards, liability issues, I guess. That's too bad, that was one of the "rites of passage" when I was growing up, being able to dive from the "tower" diving board.

    Anyway, back to stocks. The declines we had prior to Friday just confirmed that, yes, EMR is a cyclical stock, and yes, when the market falls and the economic outlook is not looking good, EMR will decline. Some holders see this as something to get excited about, that buying at $45 was a "mistake", while I look at is an opportunity to get more shares at an even better price. I still believe EMR at $45 was a value, but I will concur that EMR at less than that is an even better value.

    John D. Thomason
    Jul 15, 2012. 03:17 PM | 1 Like Like |Link to Comment
  • Emerson Electric: An Opportunity To Pick Up Shares At A Good Price [View article]
    The short answer is, no one knows. Certainly, I would like to have waited a couple of days and bought lower. My reasoning for buying Friday at $45.10, late in the day, was: (1) EMR is a quality firm, and $45 was low compared to where it had traded in recent months (2) the market was down huge on disappointing Payroll data, and might rebound the following week, and the opportunity might slip away.

    I would be willing to buy more under my "average down" approach, but to do so I will really have to be tempted. If we have a terrific market swoon this summer and EMR drops to $40 or less, I will likely add to my position. $42 to $44, not enough of a bargain, compared to my current basis. On the other hand, if a big rally occurs, say into year end or next spring, and shares rally $10 to $15 above my cost, I might sell. My rule of thumb is if I can get a net gain worth 3 to 4 years worth of dividends, why wait? - sell and cash in.

    That is my approach, which I have done well with for several years now. The key is to limit myself to solid, quality firms. A recent article I read today on SA was dismissive of averaging own, citing DECK as a stock where it would have led to disaster. The strategy will definitely lead to disaster when applied to a fad stock that has had its rise and is now into its fall. But for a solid blue-chip that has 55 years of dividend increases posted, and is only down because it is a cyclical, the market is going down, and the economy is slowing, its the best time to buy.

    John D. Thomason

    PS. I look at charts to see where a stock is in relation to where it has been. Other than that, I don't put much faith in technical analysis as far as "support" levels. Stocks move based on macro or company-specific news, company performance, and the broader market movement, in my opinion, not based on sqiggily lines on charts.

    John D. Thomason
    Jul 12, 2012. 11:01 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety: Still Available With Selected Utilities [View article]
    Just a quick 10 minute review of some basics:

    I dropped 16 or so utilities from consideration because the yield was too low - and all 16 have a higher yield than ITC!
    Of the 11 utility "finalists", ITC has a higher leverage ratio, lower interest coverage, and lower equiy to total capitalization than all but one or two of the 11 - and I dropped those one or two because of too much debt. ITC would have been eliminated because of low yield and too much debt in my review, long before considering other factors.

    Ignoring all that, and pressing on, ITC has unexciting valuation metrics: P/E 20, P/B 2.6, P/S 4.4, P/CF 12.6 - ITC is not undervalued.

    Some positives - payout ratio is low at 41%, 10 years revenue and net income data shows revenue increasing every year, and also net income, although a loss was posted in 2003, a very slim gain in 2004, then net income recovered thereafter. Morningstar has no rating on the stock, but a recent Credit Suisse report has a Neutral rating, and says the recent selloff is overdone (the stock has dropped from $78 in early April to $68 now). S&P rates it a 4 * Buy, with a low risk, although inexplicably (to me, anyway) an "earnings and dividend quality" rating was not given. S&P Debt rating was investment grade at BBB+.

    When I look at a utility, I consider that I'm giving up some growth, or at least a regulatory cap on growth, in exchange for safety and a high yield, in the 4% to 5% range. With debt levels as high as they are in the case of ITC, I consider safety of the payout is not as good as it would be if debt levels were lower. Combine that with a low yield to begin with, and I would look elsewhere. If I already owned it, I would probably hold and wait for some of the April to June loss to be recovered, then sell and look for a higher yield.

    Keep in mind this was a very cursory analysis, just a few minutes, and I did not even sign on the the company's website to learn more about them. There could be some company-specific news or developments that I missed that make ITC a reasonable speculation in the near-term. But based on the metrics I usually consider, ITC is not a stock I would be interested in.

    John D. Thomason
    Jun 27, 2012. 11:10 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety - Still Available With Miscellaneous Industrials [View article]
    I am well aware of the DuPont acquisition of Conoco - My first employer, in 1970, was Conoco, in PoncaCity, Okla. I moved on to an up & coming energy firm in Houston in 1976, the Coastal Corp (then known as Coastal States Gas), and it wasn't too long after that when DuPont acquired Conoco. The few contacts I still had in Ponca City at the time congratulated me on my foresight in "getting the heck out of Dodge", which of course wasn't foresight, just dumb luck! The DuPont era wasn't a positive for jobs in Ponca City, and of course, developments since then have eliminated most of what existed there when I was on the scene, as regards employment with Conoco. But anyway, yes you are correct - if DuPont had not spun Conoco back off, DuPont would be a much more valuable company today, with a ConocoPhillips subsidiary!

    John D. Thomason
    Jun 11, 2012. 11:14 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety: Are They Still Available For Big Pharma? (Part 2) [View article]
    I guess it's just the value investor in me looking for a bargain, but as I review the charts, I would consider NVS under $50, and would buy more if it dropped to $45. MRK, I would consider below $35, and would add to the position below $30.

    John D. Thomason
    May 14, 2012. 12:32 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety And Complications With MLPs [View article]
    Hi, biomedlives2,

    Thanks for the encouragement, and also thanks for your insights on NGL price impacts. Midstream includes gas processing, to take the raw gas up to pipeline quality, so some of the largest MLPs can be affected by NGL price fluctuations, not just E&P MLPs with gas production. I should have thought that out more. I guess during all those years I spent with Colorado Interstate Gas (now part of EP, soon to be part of Kinder Morgan), as IT manager, I was more focused on keeping the IT systems going than on what the numbers the IT systems were crunching represented.

    Thanks again.

    John D. Thomason
    May 8, 2012. 08:23 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety And Complications With MLPs [View article]
    The coverage ratios of these high yields are based on cash flow, not GAAP earnings, which include a lot of non-cash (some would say, non-real) hits to earnings, such as depreciation. I do concur that MLP coverages are generally pretty tight - that is why their record overall of maintaining and increasing payouts is somewhat surprising, at least to me. They probably would not be able to ride out a bad period of any duration with no distribution impact like a C-corporation with a payout ratio of 50% or less would be able to do. Even though the record shows they have held up, I do believe their distribution levels are not as safe as some of the more famed C-corporation dividend payers that have paid without interruption for a thousand years or more - ok, that is an exaggeration, but for me, 25 or 50 years might as well be a thousand, it implies a great deal of sustainability.

    Thanks for commenting.

    John D. Thomason
    May 2, 2012. 09:42 AM | 1 Like Like |Link to Comment
  • Yield, Value, Safety And Complications With MLPs [View article]
    Thanks! I had to upgrade my Excel to view it, but what a great data set. Wish it had been available when preparing the article. I got my info on the tiers from 10K PDF files, using the search function, or just grinding through page by page. I then deduced the current status from the current distribution. The IDR issue probably doesn't factor in so much at IPO time, the pain doesn't start until distributions start to increase. At the max, it is a heck of a headwind for unit-holder distribution increases, it seems to me.

    A lot of individual investors may not have Excel on their PC. For those in that situation: Excel files can be viewed with the free OpenOffice product suite. To get OpenOffice, do a Google search on OpenOffice.org, to bring up a download site.

    Thanks again, mlpguy!

    John D. Thomason
    May 1, 2012. 01:55 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety And Complications With MLPs [View article]
    The difficulty in finding data on IDRs and coverage ratios would make a WF account very valuable for an investor in MLPs. Unlike regular stocks, I could find no single source for the MLP-unique data, I had to dig through 10Ks, press releases, analysts reports, and so on to get it. Thanks for the tip. I did notice in preparing the article that Credit Suisse seems to cover MLPs fairly extensively.

    John D. Thomason
    May 1, 2012. 10:31 AM | 1 Like Like |Link to Comment
  • Yield, Value, And Safety Limited With 'Consumer Indiscretionary' Stocks [View article]
    Hi, Cactus02,

    Well, I have to agree that they have been great investments for anyone who bought in before the huge run-up in price. And the status quo may continue for a long time, since the states' interests are now aligned with these companies staying in business. And to stay in business, they need to continue to pump out dividends. I conceded these points in the article. As a value investor trying to apply the principles of Graham and Dodd as I understand them, I felt obligated to point out the risks as I see them. I can understand your point of view, no one knows the future, the concerns I have may not be realized for a long time, if ever.

    In fact, I had expected some feedback of a different point of view on these stocks when I hit the submit button.

    Thanks for sharing your views.

    John D. Thomason
    Apr 12, 2012. 04:14 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety - Available With (Some) Integrated Oils [View article]
    Hi again, Vorgriff,

    You stirred my interest in SSL. I did some further checking on it. The dividend has been pretty steady the last 5 years, with an inital payment early in each year, and a larger payment later on in the year. After finding no research reports with ratings available through E*Trade, Schwab (other than their own B rating), and TD Ameritrade, I found some opinions from reports available through Fidelity, which provides the most research of the four. Findings:

    Ford Equity Research - Strong Buy
    Eva Dimemsions - Buy
    Columbine Capital - Sell
    Thomas White International - Buy
    Ativo Research - Strong Buy
    Zacks - Neutral
    Market Edge - Buy

    I don't take the ratings too literally, but if a number of firms have a buy on it, the stock can't be too bad, I would think. The research reports of analysts are probably more valuable for their content than as a guide to actually buy, sell, etc, as they delve into a companies' financials and performance, and can frequently make an investor aware of details that he/she would not otherwise know about.

    Also, as I noted on my Daily Blog at my website, SSL was downgraded today from OutPerform to Neutral by Credit Suisse. When I checked for research reports, I expected to find one from Credit Suisse, which a couple of the brokerages where I have accounts provide, but no research report from them was available.

    Like you, I'm debating maybe trying out SSL, starting in my case with only a small position.

    Good luck!

    John D. Thomason
    Apr 5, 2012. 10:29 AM | 1 Like Like |Link to Comment
COMMENTS STATS
307 Comments
187 Likes