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  • Gilead Sciences: The Shorts Did Indeed Get Squeezed -- What's Next? [View article]
    In just 19 days GILDs 3Q will be complete and GILD will report earnings on Oct 27.

    I personally dont think many naked shorts exist. My guess is the remaining shorts are volatility plays with positions on both sides.
    Sep 11 12:21 PM | 2 Likes Like |Link to Comment
  • Apple: Pay And Watch Offerings Unlikely To Move The Needle [View article]
    I enjoyed the article!

    My own unsophisticated take is that the Watch is more sizzle than steak (ie irrelevant to profitability)

    Payments could be a different story. While I agree the near term arithmetic calculations are small, it is the geometric payment potential that will determine the value and it could be substantial.

    The article did not mention that with a software upgrade older model phones can use Passbook which runs Apple pay and a very low entry price point may emerge soon.

    Just keep in mind that mobile payments may be poised to explode and calculating a daily lunch times iPhone 6 sales may not be the best view.

    What if the reality is payment grows 1000 fold in a few years and drive phone sales as well?

    I am just asking the question because I havent been in a hurry to buy a $600 billion market cap company. But sometimes I think arithmetically when I should think geometrically!
    Sep 11 11:59 AM | 3 Likes Like |Link to Comment
  • Exactly Where We Are In This Cycle [View article]
    Thanks for the chart!

    It is interesting and worthy of consideration. I stay invested at all times regardless of market moves. My moves tend to manage risk within the portfolio.

    So today I find myself shifting more toward long term core holdings and deep value holdings, shaving off some growth holdings. Just because a company has grown the past 5 years with huge moves doesnt predict the next 5 years.

    - I am allowing IBM, HPQ, VZ back into my portfolio
    - Keeping true growers GILD, PANW, etc and still looking for true growers
    - Lightened up on banking to core holdings incl BAC
    - Cant help but notice the drop in oil prices and weak world growth prospects

    Still I see stocks growing in value as central banks are buying, the world is buying and money is everywhere on the demand side with share buybacks and reduced supply on the supply side.
    Sep 11 10:37 AM | 1 Like Like |Link to Comment
  • Update: McDonald's Sales Leaves Me With Egg McMuffin On My Face [View article]
    I looked at MCD today. Every so often I try to look at a company that on the surface seems to be the worst possible investment. Unfortunately I did not see a beaten down stock that exceeds its business prospects.

    What I see is a company in decline management that is incapable of offering consumers a message of why to eat at their restaurants. A company incapable of saying we provide our customers with the tastiest food they choose, quickly and inexpensively. A company incapable of saying that people enjoy MCD more than ever before.

    Unfortunately that means many people think of MCD as the "Supersize Me" movie. So I put a value of 14 fwd PE X $5.55 which is my estimate of 2015 EPS = $78.

    MCD will at some point become a value play, but that time isnt anywhere in sight. For now I see declining sales, at best static productivity, and with a 1.5% share buyback just about static profits.
    Sep 10 01:13 PM | 3 Likes Like |Link to Comment
  • Update: Casey's General Stores Earnings Show It Continues To Devour McDonald's Lunch [View article]
    I like Casey's leadership and growth.

    That said if Caseys tripled its business it still wouldnt be a pimple on MCD's butt.
    Sep 10 12:34 PM | 1 Like Like |Link to Comment
  • GE: Why GE Will Win In Oil & Gas [View article]
    My take is you are seeing Jeff Immelts replacement in Simonelli within 1 year.

    First came the GE statement this summer that GE was reconsidering Immelts 20 year CEO tenure plan. Which was a stupid statement meant only to signal GE was looking to change CEO while expressing great confidence in Immelt.

    GE carefully constructs its PR message and I listened on CNBC as the story started out with a future job for Immelt after GE. Then Simonelli presented his vision and the story ended with a future GE reference post Immelt.

    I could be reading too much into this but I doubt it. Also the 1 year reference is a gamble as the typical GE director probably takes a copy of War and Peace when they go to the bathroom.
    Sep 10 11:15 AM | 4 Likes Like |Link to Comment
  • Disney: Terrific Company, But Stock Currently Overvalued [View article]
    DIS has treated me well and I am reluctant to sell. The PE while higher also seems reasonable for the expected growth level.

    The other side of the story however is that DIS has had such great performance over the past several years that I question the growth going forward. Essentially they have hit on all cylinders with every movie a success, huge increases in ESPN and network profitability and theme park attendance high.

    So when I look forward the ESPN unit is suffering as the NFL has raised the cost significantly. Theme parks would seem to have had peak profits and movies once in a while in the future will fail.

    I will likely sell 30% of shares and put it into more deep value plays. As an example HPQ and IBM have low PEs and have such high cash flow that purchases of say 10% of shares are likely to yield double digit gains.

    Earlier today as an example I calculated that with the current stock price and OCF HPQ could buy every share in 5.5 years. The assumptions are just too negative and I find the risk/reward ratio skewed in favor of value over betting that consumer spending will generate significant growth.

    In growth I still like GILD, HON, PANW and several others and I wont abandon DIS. At the same time world growth is anemic and cash flow plays have more visibility to this investor.
    Sep 9 11:12 PM | Likes Like |Link to Comment
  • Deere & Company: An Undervalued Dividend Grower [View article]
    I assumed that would be the case. Still debt that matches sales and is increasing faster must be acknowledged. I am not motivated to research DE further but will check back on it from time to time.

    I captured a 40% gain several years ago on DE. DE is just not in my core portfolio, and does not qualify for my deep value or growth portfolios
    Sep 9 12:11 PM | Likes Like |Link to Comment
  • Thanks Burger King For The Whopping Profits: Here's Where The Money Went [View article]
    I could never eat at BK again.
    Sep 9 12:00 PM | Likes Like |Link to Comment
  • Hewlett-Packard: A Better Return Than Apple Since Late 2012? [View article]
    HPQ is a good buy as little is expected of it other than avoiding incompetence.

    HPQ should be considered a deep value play. Some reasons for my view

    1) Huge FCF to market cap allows significant value build
    2) HPQ is quietly conducting excellent research and product innovation
    3) Revenue has flattened and is turning
    4) share buybacks increasing EPS faster than others revenue growth
    5) Meg Whitman has demonstrated competence
    6) HPQ is set up to perform

    Most often I view critically those who cant or wont look ahead.

    Sometimes however a view of the future suggests an existing company's products are rapidly becoming obsolete. When one looks closely that isnt always the case. This is especially true when a high cash flow company is investing heavily in their future.

    As an example with $12.45 in Operating Cash Flow it would take 5.5 years for HPQ to buy all of its stock at todays price. Just imagine if HPQ spent half of its OCF building its value and the other half buying 10% of the stock.

    HPQ isnt going out of business, it appears to be managed well and when the market realizes that it can even grow, shares will surge.
    Sep 9 11:59 AM | 3 Likes Like |Link to Comment
  • Snow Job [View article]
    Schiffs gloom and doom outlook and focus on gold has been one of the worst strategies since 2008. Why anyone would want to emulate his decline is beyond me.
    Sep 8 03:35 PM | 3 Likes Like |Link to Comment
  • Deere & Company: An Undervalued Dividend Grower [View article]
    Interesting idea presented!

    Some of the concerns I would need to overcome before buying include

    - large debt level and a stock purchase would seem to add to that in a significant manner

    - lack of FCF and in fact negative FCF

    - huge years of transformative farm grain income that might be unlikely to continue. As an example good farm land may have quintupled over the past decade.
    Sep 7 07:42 PM | 1 Like Like |Link to Comment
  • Performance Nonsense: Why Past Performance Is A Poor Indicator And How To Do Better [View article]
    I actively manage my own portfolio and find past performance to be helpful. I think a couple of things that are more important are

    1) Understanding how a company will perform in the coming 5 years in detail. Including the product mix, revenue growth, share activity and profit margin.

    2) Knowing a core group of companies so well over multiple cycles that long term valuation sticks out

    Lets face it today an active investor is competing against computer models that forecast valuation in detail. It is the in depth knowledge that gives an advantage.
    Sep 7 05:41 PM | Likes Like |Link to Comment
  • Hewlett-Packard: A Less Risky Investment [View article]
    HPQ is really a cash flow story. Here is why!

    Some people myself included pay high PE multiples for growth that will improve earnings. HPQ may have the same growth in a different manner that will have the same impact on earnings with its 9 PE.

    So a roughly $10 billion FCF for a $70 Billion market cap company means HPQ could buy 14.29% of shares with its free cash over the next year. Theoretically they should either invest for a return above that level or buy shares. I am ignoring dividends to make my point.

    Further I do see HPQ performing excellent research and development to maintain and build growth. My point is an undervalued high cash flow company can make just as big or bigger gains than the high revenue growth company.

    HPQ still has risk of incompetence at the board level but Meg Whitman should be able to contain that risk. I look for continued 10%+ growth over the next year due to stock buybacks which will be accelerated this quarter.
    Sep 7 05:13 PM | Likes Like |Link to Comment
  • 3M Company Seems Overvalued Relative To Historical Averages [View article]
    Excellent analysis by the author!

    I have owned 3M for 20+ years and at times have been disappointed by the growth but it has always been impeccably managed and a good holding in an IRA.

    3M in the past couple of years has been growing faster than its historical trend as have some of my other favorite manufacturers. It is probably not a great bet to extrapolate future gains at these higher rates.

    That said you could do worse than invest in a low debt company that invests heavily in its product development and internally generates consistent long term growth.
    Sep 6 05:27 PM | Likes Like |Link to Comment