Steve Birenberg

DirecTV Comes Through with Free Cash Flow - Prior Worries Recede

An AT&T buy of DTV would be purely defensive. The downside is that there are minimal cost synergies due to the different technologies. The upside is that T gets nationwide TV platform not otherwise achievable via its own FTTN network. Also, capex savings on the FTTN build out could be significant.

Our September Model Still Favors Small Caps, Value

Rob,

One of the advantages of using models is that they make the decisions for you, often when it is the toughest call. Obviously, your model needs to be well designed and regularly monitored to make sure it remains valid.

The Market Cap model includes a US dollar indicator based on 12 month rate of change. Right now the dollar is weaker on that basis and thus that indicator favors small caps. However, it may flip shortly as the 12 month rate of change has been moving toward strength.

I agree that the weak signal in favor of Value reflects a mixed economic outlook.

Our September Model Still Favors Small Caps, Value

Whidbey,

My strategy for clients is pretty much 100% stocks. I use these models to guide about 75% of the investments. The ret is in media and communications stocks, which are my specialty. Nothing wrong with gold, silver, and bonds, just not what I do. My clients know what they are getting from me so it is not a problem to have a more narrow strategy.


On Sep 03 08:23 PM whidbey wrote:

> Thanks. The value seems the best play if we get a blow off top in
> the indexes into the fall, i.e. 11500 Dow etc.
>
> Why no interest in Gold? or Silver? Are bonds a part of your portfolio
> advice?
>
> Seems interesting, but rather incomplete in a tired market.

The Market Ignores Bearish Sales Signals and Deleveraging Headwinds

Good article, Rob. I would only note that the comments here are virtually unanimous that the market has gone up too far, too fast. I think the skepticism is a bullish sign.

I am not a raging bull but I think one thing that many are missing is that the current earnings reports and government stimulus can be a bridge to a more sustainable, demand driven economic recovery. A significant portion of our problems last fall and winter were confidence related. Better headlines regardless of their source can boost consumer and business confidence over the next few months and turn currently spur currently reluctant spenders to open their personal or corporate checkbooks.

Stability Without Recovery Defines Q2 Media Earnings

Thanks, Rob. I remain hopeful that advertising will pick up this fall.

August 2009 Model Still Favors Small Caps and Value

Hi Gwyn,

I do not consider my model when picking stocks. I am totally bottoms up in that regard just looking for stocks that make sense to me.

Most of the folks who use this model as developed by Ned Davis Research do use it to guide stock selection. I looked at the model and said why take the risk of choosing the wrong stocks to represent the theme when I can buy whole theme via an ETF.

It has worked well for me for more than 5 years.

Go to my website and leave a comment if you want me to add you to my email list. Most of what I post on my site gets picked up here but occassionally there is more.

northlakecapital.com/m...

Steve

Apple Scores Again

I agree that something in the $500-800 range makes sense for Apple. Not sure if it is a tablet, a bulked up touch, or further price cuts on Mac Books.

Thanks to all for commenting.

Telecom: Where the Antitrust Investigation of U.S. Carriers Will End

Good points all around, John. Well done. Not to nitpick but as you know CLWR is in cahoots with the cable companies so I am not sure it will prove to be a real alternative to cable internet. And while cable companies would like to offer wireless, I don't think they will be overly aggressive. Telcos have not been unusually aggressive on pricing in TV and internet given the evidence of stable ARPUs. Cable will likely just push hard enough to remind telcos not to be too aggressive. The oligopoly is working well for both sides.

CBS: A Buy for Cyclical Upturn as Balance Sheet Concerns Ease

CBS is an entertianment company. news is just a small part of the business. For example, Showtime brings in $1.2 billion in revenue and about 25% of profits, dwarfing the News division. I seriously doubt people do not watch Showtime or Survivor or CSI because they think CBS is a liberal network. For those that do, the number is immaterial. Don't forget you also have radio, billboards, and some internet businesses here.

Why the TV Business Is Not Dying

Good points all around, Shawn. You obviously know your stuff.

I just don;t see online as an alternative for quality TV niche TV programming as found on many cable channels that are widely distributed (50-80 million households) as the expense of programming is too high to be supported by only online ads. Affiliate fees basically subsidizes programming.

Where we differ is that I feel that in the end most households will realize that a bundle of 100 cable channels is a better deal and a better viewing experience than going online. This leaves aside the fact that watching on the PC is not the same for the overwhelming majority of households as watching on the TV, let alone the newly purchased HDTV. For now, the ease of watching internet video on TV is just not there.

I guess I just see the challenges as developing more slowly than the current stock prices imply. I don;t deny the challenges I just feel they will play out over 5 to 10 years. The collapse in P-E multiples way below historical levels implies the financial impact will come sooner. IT also ignore the cyclical pressure that is depressing earnings and might abate later this year or in 2010.

Again. good response and thanks.

Our July 2009 ETF Model Signals a Shift to Value

Thanks again, Gwyn. I have to admit that the models I use were orginally developed by Ned Davis Research. My contribution is in adapting them to use as a portfolio management tool.

The Consumer Index measure large cap staples: www.analyzeindices.com...

The Cyclical Index has only minimal exposure to financials. It is more weighted toward consumer and industrial cyclical stocks:
www.amex.com/othProd/p...

Keep in mind I use these models for buy and hold money. The idea is that if you have certain monies that will always be invested why not rotate into indices that most make sense in the current environment based on economic, stock market, and interest rate based statistics.

Our July 2009 ETF Model Signals a Shift to Value

I only tested the model using the Russell 2000 so I never considered moving down to microcap. Assuming that IWC correlates highly with IWM I susepct the model would still offer a similar outcome.

I should note that the model still calls for small cap but the signal is not as strong as it was a few months ago.

CBS: A Buy for Cyclical Upturn as Balance Sheet Concerns Ease

Hi Larry,

I guess I should have emphasized that by cyclical exposure I mean that CBS works in the "less bad" trade. As revenue declines abate, marigns will expand form cost cutting. I will admit that I am more bullish than you on the global economy. But the key at CBS is that they fixed the balance sheet risk which means at a price it is worth owning for the cyclical upturn when ever it occurs since the operating leverage is very high. What i need to aovid is another step down in the economy.

Steve

Our July 2009 ETF Model Signals a Shift to Value

Hi Gwyn,

Sorry for the slow reply. I use a separate model got international if a client wants an intl allocation. The intl model is more momentum based and has a lot of volatility from month. More than I like so I use it less often for clients. But basically, I have chosen to focus on being a domestic money manager. Nothing wrong with intl, it is just not my area of expertise.

Steve

Our July 2009 ETF Model Signals a Shift to Value

The Style model shifts solely between growth and value. Assets dedicated to the strategy are fully invested in either IWF or IWD. Cash and bonds are not an option. I do use cash and bonds in other parts of my strategy to meet specific client needs.

It is true that value is a bit riskier if th economy fails to recover but as long as IWD provides a better return than IWF while the model flashes value then it is a win for my this portion of the portfolio.

FYI, the typical holding period for the model is 4 to 6 months but this is a weak signal that could shift back to growth sooner. Weak or strong I do not second guess the model which has a great track record over the last 28 years.

The Market Cap model works the same way -- assets dedicated to it are always fully invested in either small, mid, or large cap represented by IWM, MDY, and SPY, respectively.