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Tom Armistead

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  • Investors Get A Second Bite At Aflac [View article]
    Ray, I grabbed a starter position today, long Jan 2014 40 calls and short Aug 52.5 calls, if it goes down more I plan to enlarge the position.

    Thanks for doing the work on this, I figure between the FASTGraphs and the credential as a Dividend Champion, why not buy at a P/E of 8.25, at some point someone will pay you more for the stock.

    Meanwhile, you have the dividend, or in my case, the options premium.
    Feb 11 02:14 PM | 1 Like Like |Link to Comment
  • Dividend Champions Smackdown XXXV [View article]
    David,

    Thanks for doing the work on this. I added some MDT today, a starter position, I've owned it in the past and the mention here was a reminder of why I liked it.
    Feb 11 10:04 AM | Likes Like |Link to Comment
  • Vice Tightens For Those Who Missed The Pre-Party [View article]
    You mean "vise," not "vice."
    Feb 10 06:56 AM | 3 Likes Like |Link to Comment
  • Is The Market Safe At Current Levels?  [View instapost]
    Freekizh,

    You are correct that I'm using nominal GDP. I was just looking back at an earlier article I did using this methodology, "Market Level vs. Market Timing" and I noticed that I haven't been consistent in using the same time period to look back for the mean and standard deviation. In the earlier article, I used 10 years, in the current one I used 20 years for market level.

    The indicator is sensitive to the length of the look-back period, a short-coming.

    I'm a relatively long-term investor so while this indicator had the market level at less than the 50th percentile my thinking was simple enough, expected returns are good and I can just hold through the soft spots and lean against the wind a bit with hedging.

    I didn't work dividends into the return calculation, which would have been helpful. Particularly at the lower market levels dividends are a meaningful increment of performance. Also, when averaging returns there are several ways to do it.

    For market timing, I'm hypothetically not a timer, I maintain to work off level. As a practical matter if I have an opinion on short-term direction I feather my positions accordingly.

    One idea I've played with off and on is to make market participation proportionate to market level, ie if the market was at the 10th percentile I would be 90% invested in equities, etc. The problem is, you could sit out several years of a bull market, very frustrating.

    I lean toward staying invested most of the time, on the grounds returns are positive most of the time. I suspect that knowing when to just get out of the market is more a question of street smarts than anything a nice tidy logical model like this can develop.
    Feb 9 08:44 PM | Likes Like |Link to Comment
  • Analyzing A Synthetic Portfolio [View instapost]
    3 X 100 X .84 X 102.67 = $25,873
    -3 X 100 X .83 X 102.67 = -$25,565
    $25,873 -$25,565 = $308

    Sorry, I should have specified how many contracts.
    Feb 9 01:40 PM | Likes Like |Link to Comment
  • Analyzing A Synthetic Portfolio [View instapost]
    That would be it. Most of my portfolio consists of spreads, and when the diagonals get far enough in the money, it's surprising how little exposure you actually have to the underlying.

    Example, I'm long MMM Jan 2014 75 75 calls, short MMM Apr 2013 95 calls, delta is .84 and .83 respectively, so using the $Delta statistic it acts like $308 worth of stock, about 3 shares.
    Feb 9 12:34 PM | 1 Like Like |Link to Comment
  • Procter & Gamble: Breakout? [View article]
    Norman, thanks for a good discussion of the long-term trends here.

    I've owned PG off and on since September 2009, good profits trading in and out and with the stock doing so well lately I wish I had stayed with it.

    The last time I looked at it, they had a marketing strategy of attempting to grow in the areas and products where they weren't competing. That wasn't working and what I have seen lately is a focus on the areas where the company has seen solid growth.

    Sort of a military strategy thing, a broad frontal attack vs. a breakout on a more narrow basis.
    Feb 4 07:03 AM | 5 Likes Like |Link to Comment
  • S&P 2162: Understanding The 'Fed Model' [View article]
    Thanks for a good explanation of a workable version of the Fed Model. This has been puzzling me (and others) for some time.

    If and when the fear goes out of the market, or the memory of the financial crisis recedes into the past, something along the lines you are suggesting could come into view.
    Feb 4 06:41 AM | 3 Likes Like |Link to Comment
  • Olin: It's About EBITDA [View article]
    Thanks for your kind words, I'm glad you're able to get something out of my work.
    Feb 2 09:22 AM | 1 Like Like |Link to Comment
  • Olin: It's About EBITDA [View article]
    Even if they would just raise the dividend to 25 cents quarterly, that would reward shareholders for living through the volatility.

    Five year average dividend yield is 4.1%. So, logically, if the dividend were raised, well within the company's capacity to pay it, from 80 cents a year to $1 would make the stock price center around $25.

    My target here is $26, which appears to be within reach, but a dividend increase would make that a slam dunk.
    Feb 2 08:55 AM | 2 Likes Like |Link to Comment
  • Olin: It's About EBITDA [View article]
    Chris, that's a good point. I owned OLN back in 2007 and 2008 when the industry became capacity constrained and the shares made some very nice runs. If that happens again there will be a lot of pop here.

    The conference call featured a discussion of capacity, worth reading. The impression I got was that captive Chlorine capacity gets most of the increase from automotive and housing, so that OLN is not as big a beneficiary as you would think.

    OLN with their bleach strategy is reducing the effect of the business cycle on their earnings, a plus.

    I've had no success predicting ECU trends, what with the variation in demand for the coproducts, so I gave it up and went with a straight buy low sell high approach.
    Feb 2 08:49 AM | 2 Likes Like |Link to Comment
  • Life Insurers: Resolving Issues Raised By Beta, Cost Of Capital And ROE [View article]
    Brent,

    The way I did the math, they have just spent $2 billion, shares are 1.1 billion, so that's $1.82 per share, accretive is 15 cents, so PE on the acquistion is 12.

    I thought from the discussions of ROE that they would be looking for higher returns. Then again that's return on equity, MET has a lot of debt, just because they didn't borrow to do the deal doesn't mean they could not have done so, or worn't borrow in the future against the stream of income.

    I have a prejudice against Brazil, based on limited experience with business practices in the country. I'm assuming MET who already have a stake in the country are familiar with business conditions and believe the deal makes strategic sense.

    I've been scaling out of MET, my position was double size, a trade that went against me and I was holding out for the shares to increase, which they have done. I don't like the deal, I was looking forward to them buying back shares, or starting to increase the dividend on a regular basis.

    They also had talked about an opportunity in pension takeovers, along the lines of what PRU did with GM, and Wheeler saw great things possible there, in due course. It seems they have now deployed a big chunk of their excess capital.

    Tom
    Feb 1 03:32 PM | 1 Like Like |Link to Comment
  • Xerox: Review Of Growth, Buybacks And R&D [View article]
    optifan,

    If you really want to test your thinking in the arena here at SA, you would do well to come under your own name, write articles, and interact with commenters. It works for me.

    1) A cheap shot. This episode was resolved over ten years ago, and involved the timing of revenue. The last three years involved were adjusted up. Here's a link: http://cnnmon.ie/VzixAE
    2) You're taking "extremely flexible" out of context. Burns was talking about leadership style, not accounting ethics.
    3),4) and 5) Metrics of the type you're discussing tend to be lumpy, and need to be taken in the context of prior years performance and expected future performance. You can't extrapolate from one year's results in isolation.
    6) For an objective discussion of patents, see the 10-K:

    "Xerox and its subsidiaries were awarded 1,030 U.S. utility patents in 2011. On that basis, we would rank 19th on the list of companies that were awarded the most U.S. patents during the year. Including our research partner Fuji Xerox, we were awarded over 1,600 U.S. utility patents in 2011. Our patent portfolio evolves as new patents are awarded to us and as older patents expire. As of December 31, 2011, we held more than 10,500 design and utility U.S. patents. These patents expire at various dates up to 20 years or more from their original filing dates. While we believe that our portfolio of patents and applications has value, in general no single patent is essential to our business or any individual segment. In addition, any of our proprietary rights could be challenged, invalidated or circumvented, or may not provide significant competitive advantages.

    "In the U.S., we are party to numerous patent-licensing agreements and, in a majority of them we license or assign our patents to others in return for revenue and/or access to their patents. Most patent licenses expire concurrently with the expiration of the last patent identified in the license. In 2011, we added 12 new agreements to our portfolio of patent-licensing and sale agreements, and Xerox and its subsidiaries were licensor or seller in 9 of the agreements. We are also a party to a number of cross-licensing agreements with companies that hold substantial patent portfolios, including Canon, Microsoft, IBM, Hewlett-Packard, Oce, Sharp, Samsung and Seiko Epson. These agreements vary in subject matter, scope, compensation, significance and time. "

    Companies are like people: they have strengths and weaknesses, virtues and vices, etc. On a balanced view, Xerox is a solid citizen.
    Feb 1 05:38 AM | 1 Like Like |Link to Comment
  • Xerox: Review Of Growth, Buybacks And R&D [View article]
    tap,

    You don't get a random selection of employess on glass door. They are looking for a job, either because they were terminated or because they are unhappy. So you can't extrapolate the numbers to the employees as a group.
    Jan 31 03:43 PM | 1 Like Like |Link to Comment
  • Xerox: Review Of Growth, Buybacks And R&D [View article]
    My thanks to readers who contributed comments on the probable importance of Ursula Burns' apparent unpopularity with employees.

    As investors we need to look at all available information, and while glass door information is anonymous and derived from job seekers, it still needs to be weighed together with everything else we know about the company.

    Clearly, a CEO who has to downsize a company or a segment on a regular basis will not be feeling the love. A CEO who drags their feet on restructuring for years and then does a bloodbath isn't doing investors any favors. After all, the CEO is responsible to shareholders, whose interests are at time diametrically opposite those of employees, particularly inefficient or surplus employees.

    I'm planning to do some work on what's available at glass door and maybe do an article on the investment implications.
    Jan 31 09:15 AM | 2 Likes Like |Link to Comment
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