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Pat Stout

 
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  • Short Sellers Should Thank Herbalife
    Fri, Dec. 12 HLF 54 Comments

    Summary

    • The capital structure was weakened with an increase in long-term debt, which went from $431 million in December 2012 to $1.728 billion in September 2014.
    • Long-term debt per share expanded to $18.82 from $4.18.
    • $3.1 billion was spent buying back stock since 2007. That is 80% of today's market value.
  • Cliffs Nervous Bondholders
    Thu, Dec. 11 CLF 11 Comments

    Summary

    • A rough year for Cliffs stockholders and bondholders.
    • Impairment charge reduced total assets as a percentage of total liabilities from 210% to 96%.
    • Possible December tax loss and or margin selling may send prices lower.
  • 4 Energy Stocks That Are Down 12% To Over 60% Since June 30
    Thu, Dec. 11 CVX, HAL, RIG 9 Comments

    Summary

    • Loss in stock market value tops $137 billion since June 2014.
    • Loss of stockholder wealth is roughly $467 per capita.
    • Energy issues paid dividend yields in excess of the SPY average.
  • 2015 Interest Rate Outlook And Review Of 2014
    Wed, Dec. 10 IEF, TLT, SPY 1 Comment

    Summary

    • Interest rate articles from April 7 and October 16 reviewed. Did the 10-year yield act as expected? You be the judge.
    • Higher short-term interest rates expected in 2015.
    • Range bound trading along most of the Treasury curve.
    • Keep a watchful eye on the velocity of money.
  • Expect Cliffs To Terminate The Common Stock Dividend
    Sat, Dec. 6 CLF 24 Comments

    Summary

    • Statutory 'surplus' test failed.
    • Earned surplus test failed.
    • Dividend cut expected on the common stock and the Mandatory Convertible Preferred Stock.
  • The Economic Risk Of Falling Crude Oil
    Tue, Dec. 2 40 Comments

    Summary

    • Falling crude oil prices good news or not?
    • Remember what toppled the Penn Square Bank?
    • Could lower government oil revenue and royalties result in higher taxes?
    • There is a risk of foreign instability and/or the sale of US Treasury obligations and higher interest rates for 2015!
  • Is The Federal Reserve ... Boxed In?
    Thu, Oct. 30 3 Comments

    Summary

    • The Federal Reserve conducts monetary policy for maximum employment, stable prices, and moderate long-term interest rates, per the Federal Reserve Act.
    • Congress in 1977 amended the Federal Reserve Act.
    • Unemployment has been declining.
    • The FOMC uses the annual change in the personal consumption expenditures, PCE as its price gauge and targets a 2 percent rate of change.
  • Bond Yields Have Little Room To Fall
    Thu, Oct. 16 PLW, GOVT, TAPR 2 Comments

    Summary

    • October 15, 2014 may go down as a key turning point for interest rates.
    • German and US Government bond yields compared.
    • Review the trend in inflation and 10-year interest rates.
  • Cliffs Versus Vale: Stock And Bond
    Thu, Oct. 16 CLF, VALE 14 Comments

    Summary

    • The stock prices of Cliffs Natural Resources and Vale have moved in a similar manner.
    • The bond prices of Cliffs and Vale have diverged.
    • Shareholders should pay attention to the bond market.
  • Apple With 3.50% Yield Can Reach $203
    Fri, Oct. 10 AAPL 76 Comments

    Summary

    • Do you think the market value of Apple has increased since September 2012?
    • The forest (all investors) versus the tree (individual investor).
    • Why not give owners the money rather than departing owners?
  • Cliffs' New Board Is Off To A Rough Start
    Fri, Sep. 26 CLF 33 Comments

    Summary

    • Shareholders have lost nearly $850 million in market value, Stock closed on August 7, 2014 at $17.09 and on September 25, it hit $11.31.
    • The new Board authorized the purchase of up to $200 million of its own shares.
    • The 6.25% bond due 2040 has gone into a free fall since the share repurchase plan announcement.
  • Walgreen Weakness - Is It Time To Buy?
    Fri, Aug. 8 WAG Comment!

    Summary

    • Stock price fell sharply.
    • Financial outlook for FY 2016 reduced to $4.25-$4.60.
    • Dividend increased to 33.75 cents per share for a 2.28% dividend yield.
  • 10-Year Versus Average Hourly Earnings
    Thu, Aug. 7 DTYL, DTYS, GOVT 3 Comments

    Summary

    • What is the relationship between the 10-Year US Treasury Note and the yearly change in average hourly earnings? A look at a long-term chart might provide some answers.
    • 10-Year yields and average hourly earnings moved higher from the 1960s until the 1980s. Which one increased at a faster pace? Look at the chart.
    • Did average hourly earnings or 10-Year yields fall first?
  • Income Opportunity - Northern Trust Perpetual Preferred New Issue
    Tue, Aug. 5 NTRS 4 Comments

    Summary

    • The new preferred issue by Northern Trust offers an attractive dividend yield.
    • Preferred yield is 385 basis better than common yield, 226 basis points over the bond due 2025, and 333 basis points over the UST 10-year.
    • Less risk than common, with a nice yield pickup.
  • Coca-Cola: Capital Allocation - Paper Versus Hard Assets
    Wed, Jul. 16 KO 10 Comments

    Summary

    • A greater portion of revenue was allocated to the repurchase of shares than for plant, property and equipment during 8 out of the past 10 years. Meanwhile, long-term debt increased.
    • Long-term debt has increased by $17.997 billion with higher interest expense. That is less capital available for shareholders and employees.
    • Should the compensation plan base reward on share price or market value of the firm?
  • Institutional And Retail Cash On The Sidelines
    Tue, Jul. 15 5 Comments

    Summary

    • Factors that influence the optimal level of cash, and how cash balance can affect portfolio performance.
    • Charts showing retail and institutional cash balances.
    • One strategy to benefit from a steep yield curve.
  • J.C. Penney Stock Versus Bond Update
    Thu, Jul. 10 JCP 17 Comments

    Summary

    • Determine which portion of the capital structure provided the better return to investors. Did the common stock or bond outperform?
    • Explore decisions that may have contributed to the poor financial performance. And the tough management decision that helped aid the turnaround.
    • A few catalysts that might improve investor sentiment and move the stock and or bonds..
  • Mortgage Debt Versus M2 Money Supply
    Tue, Jul. 1 IYF 2 Comments

    Summary

    • Review M2 money supply growth.
    • Review mortgage debt outstanding growth.
    • Compare mortgage debt growth with M2 money supply growth.
    • Key takeaways and thoughts on the future.
  • Trends In GDP, 10-Year Yield And Compensation
    Thu, Jun. 26 PLW, GOVT, TYO 1 Comment

    Summary

    • Trend in government spending as a percentage of GDP.
    • Rate of GDP change versus change in compensation and the 10-year yield.
    • 10-year yield versus CPI and compensation.
    • Key takeaway and interest rate outlook.
  • Did May Retail Sales Miss Or Beat Consensus?
    Fri, Jun. 13 XRT, RTH 3 Comments

    Summary

    • Zero Hedge headline – May Retail Sales Miss.
    • May Retail Sales missed expected 0.6% increase with a 0.3% print.
    • Did May Retail Sales beat or miss?
  • Stock Market Versus Net Corporate Dividends
    Wed, Apr. 9 AAPL, CME, DIA 6 Comments

    Summary

    • Dividend and stock price charts compared with different base index date. The same data reveals a different look.
    • Apple and CME made capital allocation changes during 2012.
    • Dividends do matter and share repurchase programs may not increase the value of the firm.
  • Higher 10-Year Yield Ahead - Not According To These Charts
    Mon, Apr. 7 KO, IEF, AGG 8 Comments

    Summary

    • 10-year yield versus MZM Velocity.
    • 10-year yield versus the 3-month yield – long-term.
    • 10-year yield versus the 3-month yield – shorter-term.
    • Outlook.
  • The Flash Boys Have It Wrong - The Market Is Not Rigged
    Mon, Apr. 7 SPY, XLF 20 Comments

    Summary

    • Speed advantage to the HFT - so what. Someone will always have a speed advantage.
    • Arbitrage is good. The examples in Flash Boys appear to be arbitrage related.
    • Econ 101 - supply and demand curve. Try to buy 100,000 shares with 10,000 offered then expect the market to re-price.
    • Unfair advantage, oh really? Who determines what is fair?
    • Unintended consequences. Could investors be facing wider spreads and higher costs?
  • Don't Fear Cyprus: Market Weakness Brings Buying Opportunity
    Mar. 28, 2013 SPY 6 Comments
  • Is Home Depot Or Lowe's The Better Value?
    Mar. 27, 2013 LOW, HD 2 Comments
  • Herbalife J.C. Penney And Pershing
    Mar. 25, 2013 JCP, HLF 8 Comments
  • Leaders And Laggards Of The Dow Jones Industrial Average
    Mar. 25, 2013 DIA, AXP, CVX 3 Comments
  • There Is No Bond Bubble
    Mar. 22, 2013 AGG, BND, BSV 12 Comments
  • J.C. Penney Bonds Change Of Control A Good Thing?
    Mar. 6, 2013 JCP 20 Comments
  • Herbalife: Do Not Expect A Short Squeeze
    Feb. 19, 2013 HLF 53 Comments
  • Debt, Corporate Profits And Economic Thoughts
    Feb. 19, 2013 1 Comment
  • Herbalife Big Market - CDC Says 78 Million Obese
    Feb. 15, 2013 HLF 17 Comments