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Richard G. Pearce  

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  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    The_Mick--Your comment is spot-on about the difficulties in selling. I would not blame anyone for continuing to hold it. Also, I DRIP all of my DGI stocks when possible. My point is that if you believe that any stock, with CBRL as an example, is trading that far above your calculated fair value, then sell it and pursue something that you believe is a much better value. For CBRL, I want to be right so that I can buy back in at what would likely be closer to a 4% yield if the stock drops into the $70s.
    I want to be clear that, as a dividend growth investor, it is my intent with any stock purchase to use DRIPs, and periodic additional purchases when the price is right, to accumulate shares for the long-haul. Even with the US stock market at all-time highs, less than 5% of the stocks that I track appear to be trading above the margin of safety to consider selling them.
    Jun 12, 2013. 11:10 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    argo_NOT--Interesting point. It always pays to do your homework.
    Jun 12, 2013. 10:35 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    justareader--Note my comment above that yield on MT is closer to 1.7%. I have certainly seen stocks that I wanted to purchase refuse to wait on me to have the cash available (or the intestinal fortitude) to purchase them. I remember reviewing the gambling sector back in late 2008-early 2009 and thinking that I would be a genius to buy 2-3 of those stocks, such as WYNN. Much to my dismay, I was too skittish to take that risk...
    Jun 12, 2013. 10:30 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    chopchop0--I agree completely with your first paragraph and that it is essentially a duopoly, albeit one that many companies are trying to break into with innovative technologies. Stocks that appear to be expensive can stay expensive, with elevated fundamentals, for an extended period of time. In other cases, the company grows fast enough to make what once looked expensive to now look reasonable or cheap. We are all at the mercy of the market, regardless of our valuations.
    Jun 12, 2013. 09:57 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    Michael Bryant--I've made the same mistake (or had the same poor luck) with holding on to winners. The decision of whether to sell, and how much to sell, certainly has to take taxes and fees into account in addition to opportunity costs and the risks in holding onto the stock. In some situations, selling half is a great way to lock-in some profits without completely cutting the emotional chain that we can sometimes have to a stock. Of course, you pay double commissions when you sell the second half of the your holdings, but that is often a very small amount. Part of the goal in requiring a margin of safety on the sell-side is to give me enough comfort to go ahead and sell all of my shares of that particular holding.
    Jun 12, 2013. 09:45 AM | 2 Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    Thanks, Vireoman!
    Jun 12, 2013. 09:39 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    OneMarketJunkie--HP is a great stock, but I do not believe it is trading with a sufficient margin of safety to be a purchase right now. It is definitely on my watch list. I try not to rely heavily on forward P/E ratios since the E component is a guess, but the same can be said about so much of stock valuation...
    Jun 12, 2013. 09:36 AM | Likes Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    Here is where I found the dividend: http://bit.ly/16djJPh

    Upon further review, you are right. See http://bit.ly/YnzMGw

    With the yield currently around 1.7%, then my discounted dividend model indicates that the stock is fairly valued. The discounted cash flow analysis and relative value analysis indicate that the fair value is closer to $25 as mentioned above. I still think that it is a significantly undervalued stock. I do not think that it is a dividend growth play until the dividend actually grows again, but when that happens, long-term holders should be well rewarded.
    Jun 12, 2013. 09:30 AM | 1 Like Like |Link to Comment
  • Know When To Hold 'em, Know When To Fold 'em And Know When To Run [View article]
    Rockbox--Great question. The short answer is that none of the restaurant stocks that I have analyzed are trading at a sufficient discount to justify buying. I have CBRL, SBUX and MCD on my watch list for when the price is right.

    Note that I do not believe that there is any need to replace CBRL with another restaurant stock. Although I want to avoid being overexposed to any particular industry or country, I am not worried about having exposure to every industry. As an aside, since my US stocks holdings have become over-weighted in my portfolio, selling CBRL for one of the stocks listed in the article or another foreign or emerging company will also help with rebalancing.
    Jun 12, 2013. 09:18 AM | Likes Like |Link to Comment
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54 Comments
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