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jstratt

jstratt
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  • General Electric Has A Diverse Business Model To Keep It Out Of Trouble [View article]
    So just from memory and no research to add exact numbers...

    GE takes a dividend of $6-$7 billion each year from GE Capital which allows it to meet earnings targets and pay $8+ billion in dividends.

    Regulators finally appear to be forcing GE to reduce its GE Capital assets which I would say GE has been giving lip service to for 7 years without making any real progress.

    I think the regulators are correct in doing so as we are now long in the recovery tooth and GE is still unprepared should a financial event arise, forcing risk to taxpayers again. Dont forget we live in a world swimming in debt some of which may come to be valued far below its face value.

    It is fine to examine news on some barely relevant things to valuation like a Lufkin plant. The bigger story is likely how much GE Capital lending is related to energy.

    GE shares are about where they were 18 years ago, yet each day someone discovers what a great value GE is and writes an article based on the most flimsy and minute (mahy-noot) logic.

    Were I acting as a regulator, GE Capital dividends to GE would stop until capital levels improved and better risk management was in place. Then GE could announce a dividend to shareholders based on its mismanaged industrial businesses.
    Apr 4, 2015. 10:12 AM | 7 Likes Like |Link to Comment
  • Bank Of America: Debunking The Merrill Lynch Myth [View article]
    I will add a few thoughts as I disagree with the conclusions of this article

    - Merrill is significantly undervalued in this article and would command a premium should it be on the market some day.

    - BAC has generated at its peak $129 billion of Operating Cash Flows. So lets not make silly suggestions that it is worth marginally more than its peak Operating Cash Flow.

    It is not a time when banks are valued highly with historically low NIM's and regulators rightly in my mind forcing attention on risk management and maximization of capital.

    Lets just acknowledge that this isnt a moment of excessive bank valuations. It is left to investors to decide if over a 3-5 year period banks value could be much higher and whether to take that risk.
    Apr 2, 2015. 11:47 PM | 1 Like Like |Link to Comment
  • A Pre-Earnings Update On Gilead [View article]
    Enjoyed the article!

    It will be nice someday when GILD begins to trade in a rational manner.

    I have a full position of GILD shares so I am not in the market to buy, but at the same time I would not sell any shares without proof of a longer term decline in revenues/profits. So I wait for earnings to validate my thesis.

    I do see both sides of the GILD pipeline with a rich history of billion dollar drugs brought to market and a solid pipeline. On the other hand much of the pipeline is improvements to keep current revenue streams going in HCV and HIV. Oncology is a bright spot but name a biotech that isnt working on oncology? The key in my mind is the pipeline doesnt currently have any valuation. I think it has some value.

    The problems affecting GILD valuation are as follows

    - Wide variances exist in the revenue potential of HCV and GILD HCV beyond 2015
    - Wide variances exist in the profit generated from HCV starting 1/1/2015
    - The pipeline gets no respect or valuation because it isnt sexy
    - Biotech investors dream of 300%+ 5 year valuations and that isnt GILD any longer while value investors havent warmed up to GILD yet
    - Investors want big gains and havent been burned in years by even a small decline
    - Today a Biotech company with the potential to deliver $15 billion FCF is worth 2 X a GILD that will likely deliver $15 billion FCF.

    Heck I have been wrong many times in the market. More often however I have taken a short term approach and cheated myself. I will let the weak hands fold!
    Apr 1, 2015. 11:52 PM | 4 Likes Like |Link to Comment
  • Bank Of America: Reasons To Be Bearish [View article]
    Enjoyed the article!

    I take a different view regarding BAC and believe it is severely undervalued. BAC has resolved many issues most of which were brought on by Ken Lewis ill advised purchase of Countrywide.

    I am not heavily weighted in financials but do have BAC and believe that it can soar over a 10 year period.
    Apr 1, 2015. 09:05 AM | Likes Like |Link to Comment
  • Gilead Versus Celgene: Value Play Versus Reinvestment Opportunity [View article]
    Enjoyed the article!

    I own both GILD and CELG, and over the weekend reviewed the valuation of those and my other biotechs.

    GILD is at my maximum investment level as I feel it is a great value. At the risk of repeating some comments I have previously made an 11 PE assuming 1st quarter numbers meet expectations is too bearish.

    Biotech investors dont really see GILD as an avenue for biotech type growth any more and value investors look askance at biotech names. So GILD is like a man without a country at the moment. I note that a couple of 100+ Million money managers I have run into this year seem to have minimal knowledge of GILD as an example.

    Analysts meanwhile are wildly positioned on GILD some seeing great decline while others great growth opportunity. Which makes for a great opportunity in my eyes. I am comfortable waiting for GILD to be recognized.

    On CELG I am a happy LT owner but would be interested in adding at or below $108. I find 2015 expected results to generate a PE of 24 which is fair for an expected 25% 5 year annual growth. Both Revlimid and Otezla are growing rapidly reducing near term earnings risk.

    Where I think most investors are failing is in treating both GILD and CELG as short term trades. Both have a winning track record in a growing business and even if CELG was a little highly valued today, in 10 years an outstanding return should be expected.

    I like BIIB as well but find most of the $10-$50 billion market cap biotech companies overvalued. Preservation of capital has been forgotten in the chase for growth.

    Mar 31, 2015. 11:37 PM | 5 Likes Like |Link to Comment
  • Gilead Sciences Faces An Uncertain Future After Patent Loss In India [View article]
    Just a few points to make

    I havent seen any valuation for 3rd world sales included in GILDs numbers as it is mostly irrelevant. In G7 countries and some others, patents will be respected.

    GILD's ttm PE after 1Q gets reported will be about 11 if EPS expectations are correct. The valuation suggests GILD will lose a large portion of its Hep C profits in the years ahead. As a GILD shareholder I am betting against that view.

    I remain bullish on GILD, its earnings and its future prospects.
    Mar 30, 2015. 04:47 PM | 5 Likes Like |Link to Comment
  • Does Cisco Systems Belong In A Dividend Stock Portfolio? [View article]
    A few thoughts on CSCO...

    It doesnt seem to me that CSCO management should be held accountable for its shares being hugely over priced in the tech bubble. That was a function of the time and CSCO did not force investors to buy shares.

    I own a few shares of CSCO and note that over the past 10 years it has doubled its revenue and grown EPS at about a 7% rate over the past 5 years. It seems CSCO is continually threatened by obsolescence and yet keeps on chugging ahead. The forward PE of 12 reflects the uncertainty despite analysts projecting continued growth.

    Last fall I significantly scaled down my technology investments keeping a little CSCO, ORCL and a couple others. I just no longer understand most technology valuations as well as I should.

    I do admire John Chambers for guiding CSCO with vision thru what has seemed like a cyclone during the past 10 years. Perhaps I am in the minority as I have heard lots of criticism, but I dont think anyone else would have done better.

    Even today few people have a good handle on the value of CSCO!
    Mar 29, 2015. 08:51 PM | 1 Like Like |Link to Comment
  • Paychex: Q3 2015 Earnings Review, Out-Performance Should Continue [View article]
    Thanks for an interesting article!

    I own and like PAYX because it is well managed, growing an excellent long term investment.

    I think I will wait to add more to my position but I do want to add to my position when the opportunity arises. Both V and ADP have been good to me over the years as well.
    Mar 29, 2015. 05:12 PM | Likes Like |Link to Comment
  • A Buyback Or Biotech Bubble? [View article]
    a few thoughts...

    What is wrong with stock buybacks that are well planned with capital beyond LT business needs? eg Apple or Exxon. How much is Apple going to earn on $100 bil sitting in cash?

    Cyclical businesses like GM may be a different story and undoubtedly some examples of bad buybacks will emerge.

    On to biotech investing I own several mostly as long term holdings. The potential in biotech is large, hopefully as large as the value already priced in.

    Some of my favorite biotechs are up 500% - 1000% in 5 years. If you just now looking to invest in biotech you might heed the words of Mike Tyson who famously stated "everyone has a plan until they get punched in the face"
    Mar 29, 2015. 09:05 AM | Likes Like |Link to Comment
  • AT&T's Return On Equity Suffered This Past Quarter Due To Decreasing Profit Margins [View article]
    Thanks to the author as I enjoyed the article!

    Stated another way T has debt rising significantly toward $100 billion which I suspect it will reach after it completes the DTV deal. It has lower profitability with increased competition and it is self liquidating with a dividend above its earnings.

    The huge investment of $21 billion annually is only able to help it maintain a relative stability which is masked by a buyout frenzy which provides nominal growth in sales.

    T will not go bankrupt, but it may have problems maintaining its dividend long term. I maintain the dividend is part return of capital and not a return of earnings hence the higher debt.

    If GOOG or another world carrier were to enter the telecom space in a big way T investors would be in trouble. That may happen with interests taken in TMUS or S.
    Mar 28, 2015. 07:19 PM | 4 Likes Like |Link to Comment
  • Time To Load Up On Biogen? [View article]
    I hold BIIB as a long term holding along with GILD, AMGN, REGN, CELG and a few other biotechs. A few lazy thoughts to add...

    - BIIB isnt cheap

    - Potential can be tricky as shown by GILD which had the greatest year in biotech history in 2014 judged by product launch success yet only increased share price by about 25%.

    - Still I like growing companies and the revolutionary innovation in biotech is real, and real amazing. BIIB is one of the best.

    So what I am saying is I wouldnt buy BIIB at todays price but I wont sell either. In time given either launch success or failure an opportunity to buy at a attractive valuation will arrive. When that happens I will add to my holdings.

    The secret is BIIB is a great long term growing company. In the short term I havent a clue and essentially for all the analysis neither did the author.
    Mar 28, 2015. 11:39 AM | 1 Like Like |Link to Comment
  • How Gilead And AbbVie Closed The HCV Door On Merck [View article]
    The supposed 2015 competition in Hep C faded away. The consensus for new competition in 2016 dividing up the market and causing further price drops may also fade away.

    Viekira will find it hard to attain more than 10% usage. Any new competition will face a strong entrenched competitor in GILD. It is hard to believe that competitors will have a superior product. Even if that should occur at some point GILD has its next generation Hep C product in the pipeline.
    Mar 26, 2015. 08:50 AM | 2 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    I am sorry to hear of your changes. SA has been an excellent forum to share ideas for the betterment of all. I have enjoyed countless hours on SA over most of a decade.

    Unfortunately I wont be paying to read SA articles and I doubt others will sign up to pay for articles.

    My recommendation would be that you try adding some premier authors on top of the existing service so you can test the waters. Perhaps with a delay such that a month later the articles would enter a free realm.

    I hope you are as excited in another month!
    Mar 25, 2015. 09:52 PM | 4 Likes Like |Link to Comment
  • Wells Fargo says recent weakness is a buying opp for Gilead [View news story]
    I like the way 1Q is shaping up for GILD.

    GILD is growing and should grow throughout 2015. Perhaps competition will arrive in 2016, but it may disappear like the competition that was supposed to arrive in 2015 while GILD pumps new drugs out of its pipeline.

    Meanwhile the short term traders with big dreams are being replaced by longer term value investors. GILD would appear to rise in the near term as a rising floor pushes the stock ceiling higher. As I write 1Q will be over in 1 week and GILD will be trading at a 11.3 trailing PE based on 1Q estimates.

    I will stick with a $135 price target for 2015 and roughly a $10.00 EPS with a 13.5 PE.
    Mar 24, 2015. 08:59 AM | 7 Likes Like |Link to Comment
  • Bristol-Myers Is Playing Chess, Gilead And AbbVie Are Playing Checkers [View article]
    If BMY is such a great company why have they lost over 20% of their sales over the past 10 years?

    With the brilliant pharmaceutical leadership one would think they might have found a few successful drugs to introduce over the past decade.

    I recognize that BMY has some potential new drugs but a 56 PE on a company that has declined for over a decade ignors history. It might not be best to compare BMY against proven superstar companies with a track record of success.
    Mar 24, 2015. 12:09 AM | 2 Likes Like |Link to Comment
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