Mark Riddix

Mark Riddix
Contributor since: 2008
Company: New Horizons Management LLC
That should say 90% of the debt.
Steve.
I agree. I don't know why Microsoft always pursues deals that make no sense for the company.
Hi Stan,
Do you have any favorite plays for the LNG sector?
Mark
Very true.
I mean that wages are shrinking because they are not keeping pace with inflation.
The Office Space analogy is a great one!
I think the time to short the bank stocks was before 2009. They were trading at high P/E multiples and the housing crisis was beginning to unfold. I think that now is a good time to start investing in the major banks because earnings should surprise to the upside in the future.
It's tough to bet against APPLE. The islate will crush the kindle.
My point is that the banking industry and government regulators as a whole did a terrible job of risk management. Excellent points minyahdaddy. I believe that Tier 1 capital requirements are way too low and that asset quality needs to be improved on bank balance sheets. Many banks that are deemed sufficiently capitalized would have been unable to survive this recession without government assistance due to the poor asset quality and insufficient capital.. Hale already owns over 21% of the existing shares and plans on purchasing more.
Warren Buffett is a long term investor and not a market timer. His performance has to be judged over a decade not over the course of a few months.
Good point. Leveraged ETF's are highly volatile and are useful for short term trading only. Most are rebalanced on a daily basis. They have no place in the core of a portfolio.
Excellent Points.
On Mar 05 06:25 PM philipmax wrote:
> I do agree with you, greedcanbegood, that there is a big difference
> between investment banking as conducted by Citi and JPMorganChase
> and plain vanilla banking such as USB and PNC. But the market isn't
> taking the time to differentiate .
> I have great faith in the "good banks" but they stood in line to
> get the TARP and I don't see them refuting the excesses that are
> attributed to the others.
>
> There is no doubt in my mind that the repeal of the Glass-Steagle
> act in 1997 was the ignition point for this debacle. It took ten
> more years of unabated greed supported by the total lack of supervision
> and enforcement to get us here.
> So, any bank that takes TARP money and reduces its dividend and still
> reporting large reserves for bad debt, is probably hiding some shenanigans
> in its balance sheet. And... Yes, the management should bear responsibility,
> either by resigning or by reducing its bloated pay scales. As to
> stock options, for what? Pray tell, for what? Why should we the stockholders
> have to suffer dilution of our equity (be it ever so small) at the
> expense of mismanagement.? I stand pat with my demands and would
> like to add that there ought to be some indictments coming soon or
> there may well be an unwelcome surge in "other" crimes in this country
> as the population reacts to injustice.
I own stock in Wells Fargo, Bank of America and JPMorgan actually. I hate seeing these dividend cuts but realize that they are essential to maintaining capital levels.
On Mar 05 06:31 AM oceansmike wrote:
> Mark, 1. Its being pounded lower by Shorts and Naked shorts , and
> 2. Why are so many short traders so interested in WFC well being,,
> as a Long I need the Dividend, 3. the shorts have ruined every other
> Company stock I own,, so the moral of the story are you a Wolf in
> Sheeps Clothing a News Journalist fronting for one of the Hedge Funds
> (who every one and his grandmothers Knows is a front for Naked Shorts,,ok
> said my peace,,Please don't do any more help to WFC ,,Cramer does
> enough for the financials,,one day you'll have to go back to using
> a Piggy Bank (or Mattress) ,,Thanks for your Understanding,,.,,Ocea...
AKS hit $5.85 today.
On Feb 27 02:17 AM PeteK wrote:
> Stop dreaming, AKS won't be in the mid-5's from now on.
> Expect AKS to reach at least $8.00 soon.
Good point. Greenspan was a big believer in unregulated free markets and now he wants temporary bank nationalization. Some people blame his "easy money" policy for the crisis.
On Feb 18 10:57 AM Dr.Jackpot wrote:
> Someone wrote this morning that Alan Greenspan favored nationalization
> of banks. Wasn't he the whole cause of this ripoff in the first place?
> Is there no justice called for here?
That is the difficult part, trying to determine which of the financial companies stocks will have any value 3 to 5 years from now.
On Feb 18 08:39 AM Jim Hawthorne wrote:
> Yes, the financials are getting slaughtered. Yes, many of these equities
> are trading at or near their 52 week lows. Yes, many of these are
> facing the delightful choice of insolvency or nationalization.<br...
>
> Are any of them really 'cheap'? When you're buying a deck chair on
> the Titanic, is any price 'cheap'?
I agree that most of the companies on this list are in danger of cutting their dividend. I don't think AT&T will cut their dividend. They just raised their dividend in December and have been rapidly cutting costs.
Good question. In a normailized earnings environment Nike's shares trade with a multiple of 18. The shares have traded with a multiple of just under 13 over the past year. The industry average is 9.5 but Nike has a higher ROE, ROA, PM than anyone else in the industry so Nike does warrant a higher multiple. You could conservatively assign Nike a multiple of 11.
Nike has historically been able to grow EPS by 12.9%. If the economy stabilizes over the next two years and Nike can resume its earnings growth then I would expect the company to conservatively grow annual earnings at 8.5% in 2010 and 2011. This would place EPS at about $4.50 for FY 2011 and $4.88 for FY 2012. If you take $4.88 EPS x 11 PE then Nike is easily a $50 stock. These numbers are based on a worst case scenario. If Nike returns to its historical PE over time then this is easily a $90 stock.
I list both my long term positons and short term trades. This market is so volatile that I have found that money can be made from short term trades. This has worked well for me while I wait for long term positions to turn.
On Jan 16 08:13 AM Paul Price wrote:
> Your own website is called "Buying Like Buffett" yet you show mostly
> trades of extremely short duration [e.g. Bought AAPL pre-market on
> Wed. - sold during Thursday's regular session].
>
> This is as "anti-Buffett&amp;... as you can get.
I don't know if it will drop to 6 again. I do think that the stock could easily see the single digits again. If it hits 8 I would look to buy it.
Thanks.
The past quarter the company had a 2 million dollar profit compared to a 4 million dollar loss previously. The company would have been profitable if not for the losses from Texas. The higher gross margins are encouraging because it demonstrates that management is becoming increasingly efficient. The company is getting a better handle on operating expenses. Distribution and transportation costs have remained flat.
I can't speak for the reasons that the company's strategy failed to work in Texas. Management has to be held accountable for that. I do take solace in the fact that 90 percent of their revenue is generated outside of Texas.
On Dec 03 10:07 AM brombonz wrote:
> I'm aware of the Texas situation. It has not been the only problem.
> I've followed the company since its IPO. It would be correct to say
> it is positioned properly to benefit from economic bad times. It
> is another thing to say management can turn that into profit, and
> increasing profit at that. I don't know that they have overcome their
> warehouse/distribution problems. I lived in L.A. for 35 years and
> am quite familiar with the stores. I last shopped there in the summer
> of 2006 while vacationing from my current home in Florida. I've been
> a shareowner at various times, as recently as earlier this year.
> Since I liked the stores (all the locations I've been familiar with,
> have been jammed with shoppers), the great appeal to me had been
> the exceedingly small store base compared with DLTR, FDO and the
> former DG, and the potential for national expansion. The failure
> in TX has lessened, if not eliminated, that appeal. It remains to
> be seen if management can transcend its previous shortcomings and
> turn steady, possibly growing, revenues into profit.
I did not state that one fund will beat all index funds. I used Vanguard because it is one of the larger fund companies. I looked at Fidelity, T Rowe Price, Legg Mason and others. There are a vast array of index funds that track different benchmarks.
And of course all sectors will not perform poorly. Some of the sector index funds, energy funds and REIT index funds have performed just fine. I am only referring to index funds that track the overall stock market's performance such as the S&P 500, Dow Jones, Wilshire 5000.
Too many investors rely solely on a stock market index fund as the one stop solution to investing. I believe investors will be better served by taking a more active approach to investing. I do not think it is unreasonable for investors to expect a positive rate of return over any 10 year period.
On Dec 02 02:39 PM Kyle Waller wrote:
> Mark,
> You say a lot of things. I think there is a lot investors don't understand
> about indexing. I also think some of the things you said were right
> yet still uninformed. Index Funds do not make any investment decisions
> and to say that index fund performance will continue to be poor is
> saying that all sectors, asset classes, and countries in the world
> will have, on aggregate, poor performance. This may be your opinion.
>
>
> You say you expect a, "conservatively managed balanced fund with
> a low expense ratio" to beat an index fund over the next few years.
> Sir, There are hundreds of index funds, will your fund beat all of
> them? Maybe you only mean an index in the same peer group. If that
> is the case, a better comparison would be to compare a mix of index
> funds, weighted to match your conservative mutual fund's asset allocation.
>
>
> I know this is a lot but I'd like to make the point that indexing
> is more complicated than just comparing a conservative mutual fund
> with 40% bonds, to the S&amp;P 500.
Hello YankeePride,

I consider US Bancorp to be very similar to a Wells Fargo. They manage risk well and typically keep a very conservative loan book. I do think that US Bancorp could benefit by acquiring a bank to give them a larger national presence. I don't know too much about Downey Financial. So maybe that is the deal they were looking for.
On Nov 30 10:42 AM YankeePride77 wrote:
> HI Mark et al,
>
> Why is U.S. Bank (USB) at least as good a long term play at these
> others?
>
> I totally agree re WFC and JPM. Comparing them all, USB has a solid
> balance sheet like WFC and JPM, pays a great dividend yield, also
> is regarded as somewhat conservative with their loan portfolio. It's
> also trading well off its 50 and 200 day moving averages.
>
> Any feedback here would be appreciated. I have successfully traded
> WGC, JPM and am now considering Long positions in two or three solid
> banks. I am a bit wary of BAC despite their low price per share and
> expect their dividend to be cut again soon.
By profit, I mean that I am expecting them to benefit from this recessionary environment. The 99 cents has seen an increase in comps, increasing revenue and has virtually no long term debt. The company's earnings were good except in Texas. The 99 cents store is closing all of its Texas locations because they are unprofitable. They incurred charges relating to the closing of the Texas locations(leasehold fees, impairment charges). Gross profit margins outside of Texas were 39.2% Comps rose almost 5% and retail sales rose 9%.
On Nov 30 02:33 PM brombonz wrote:
> "99 Cents Store (NDN) ....will continue to profit as consumers downsize."
>
>
> In the last three quarters, NDN has cumulative losses of $21.4 million
> before tax credits: $12.6 million in the Sept. quarter and $.7 million
> and $8.1 million in the two preceding quarters. After tax adjustments
> that works out to cumulative losses of $15.3 million (by quarter
> $9.4 million, $1.5 million and $4.4 million.(Data from Morningstar
> via Yahoo! Finance)
>
> In what sense do you employ the phrase "continue to profit?"
I agree with that comment. They overpaid for Countrywide.
On Nov 30 09:24 AM I should know wrote:
> I like Wells and JP Morgan Chase. B of A bit-off a little more than
> they can chew, especially with Countrywide. They could of had the
> "parts' of the company they wanted and little, if any, of the toxic
> loans. AND, they could of had it for pennies.