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jstratt

jstratt
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  • General Electric: $30+ Price Target In Play... Here's Why [View article]
    Thanks for an interesting view on GE Industrial.

    I am bullish on GE but view the reason differently. Essentially GE has always been about operating one of the worlds largest banks disguised as an Industrial company.

    GE is only looking to sell a small portion of a 30% piece of GE Capital for now. It is the cash flow from selling part of GE capital and being able to buy back stock that will raise much of GE's EPS. I view like this

    reduce GE Cap >> credit rating inc from BBB+ to AA >> inc profits of remaining GE Cap

    reduced cap need >> stock buyback >> increased EPS

    Gone are the days when GE had a AAA credit rating and was viewed as an industrial company even though it was one of the worlds largest banks. Gone are the days of huge revenue growth from industrials.

    Feb 6 10:46 AM | 1 Like Like |Link to Comment
  • Twitter Is Collapsing [View article]
    I find it interesting and wonder whether the TWTR or FB IPOs are any different from Wolf of Wall Street with the exception that they are much more sophisticated. The only hand wringing is that the investment bankers werent able to sell it at the highest price on open that it could ever achieve.

    First FB went public and allegedly promoted heavily then privately lowered its expectations to those chosen few. They seem not to have suffered from the deceit. FB went on to post some great results.

    TWTR and its investment bankers must have waited until they could see the trends were against them increasing in value any further due to slowing user growth and chosen to go public. Again handwringing that anyone buying the stock didnt immediately lose money.

    My point is why would a long term investor participate in IPOs? Arent they stacked against investors? Even short term investors must find it hard to make a buck.

    The only saving grace is that we need public companies for the future of having investment opportunities. Quietly stocks are becoming in short supply as companies get bought out and the remaining buy back shares.
    Feb 6 09:40 AM | Likes Like |Link to Comment
  • Apple Is A Steal Even At $700 [View article]
    I would just add the perspective that AAPL turned to negative revenue growth. Supposedly in 2011 when Steve Jobs died many products were in the pipeline. I must have missed the introduction of all those new products!

    While I still use AAPL products, the difference between AAPL and its competitors has continually diminished. Given the above reality the valuation at present seems fair. While share buybacks and dividends could influence the value, one may find that what they receive becomes a return of capital versus a return on capital.
    Feb 5 05:01 PM | Likes Like |Link to Comment
  • I Don't Know What To Think About General Electric [View article]
    GE is a good investment but will be a better investment when the spinoff of a portion of GE Capital takes place. Given the market it isnt 100% that will happen yet.

    With a spinoff in place GE can put its FCF to use buying back shares and I believe they have stated such. They would likely see a rating increase above BBB+ that would be accretive to earnings.

    A 3.5% yield on a safer stock is a solid investment alternative.
    Feb 4 03:00 PM | Likes Like |Link to Comment
  • Apple Is Poised To Disrupt Another Industry [View article]
    Investors have increasing risks to face as AAPL hasnt really introduced a new product since Jobs died.

    As for Icahn, he should be tweeting furiously as his investment is losing money. I tire of hearing about him trying to manipulate stock prices.
    Jan 30 10:58 AM | Likes Like |Link to Comment
  • How To Retire At 30! [View article]
    This article is a nice fantasy!
    Jan 30 10:52 AM | Likes Like |Link to Comment
  • Janet Yellen's Impossible Task [View article]
    One should remember that the US economy has been the envy of the world since the Fed was created. The average person should recognize the value over its history of stabilizing interest rates, employment and inflation. People from the 3rd world looking in are probably better able to understand the positive impact on peoples lives.

    Without a Fed we wouldnt be debating whether a problem will be faced down the road. We would likely have lost 10 million more jobs in 2008 as an example.

    I just want to note that anyone can have an opinion on the Fed without any special skill or training and most of those offering such have little of either.
    Jan 30 10:38 AM | 10 Likes Like |Link to Comment
  • An Update On American Airlines [View article]
    Thanks for an interesting article!

    I began evaluating AAL as analysts and the CEO are gushing about the prospects. I felt the guidance of $3.70 for 2014 x 12 PE = $44.40 might be a fair expectation for the price a year from now.

    The CEO stated they have 10 billion in cash as well which is much more than they need long term. Interesting given the entire company is only valued at 11 billion market cap at this writing.

    I can buy into the short to intermediate term story for AAL. Over the longer term many of the historic risks to airline profits such as high energy, interest and labor costs that exceed what customers are willing to pay will return.
    Jan 29 10:26 PM | Likes Like |Link to Comment
  • Too Much Leverage In The Latest Episode Of The Time Warner Cable/Charter Deal [View article]
    I thought I would look a little deeper into CHTR valuation and the merger deal. Some observations

    CHTR appears to me to be wildly over valued and it never ceases to amaze me at how the value of cable fluctuates. In 1998 Paul Allen bought CHTR for 4.5 bil and after many buyouts of other cable companies went bankrupt. They were able to negotiate 21 bil debt down by 8 bil in bankruptcy.

    TWC meanwhile isnt performing very well and nervous investors would like a payday. Few alternatives exist as Comcast would face FCC restrictions and no other players are big enough including CHTR.

    What makes sense is combining into a larger cable competitor for both TWC and CHTR. Malone wants control and can offer Chtr and Liberty assets for a deal but really needs more money. At the perceived bargain price he offered TWC he can get other investors.

    I will estimate that some TWC investors with CHTR, Liberty and a few investment banker/PE types along with combined operation savings might be able to seal a deal. However it might take a market or industry drop of 15% to help the parties seal the deal. The problem is the assets seem too highly valued to encourage the outside money needed for a deal.
    Jan 28 02:59 PM | Likes Like |Link to Comment
  • Johnson & Johnson Is A Dividend Growth Giant [View article]
    Guess I am a little more bullish than others on JNJ, here's why

    - I like a dividend growth company with huge cash flow and strong balance sheet

    - I like a company that has revenue growth along with productivity improvement and share buybacks driving results. Lots of stability with growth

    - After a huge run in 2013 I like a less volatile way to get returns so low beta and strong balance sheet is a nice compliment

    - JNJ has a good valuation that offers a 10%+ gain opportunity in 2014. Most of the difference I have with others is that JNJ had a horrible CEO up until 2 years ago who tried to destroy every product it seems. Viewed over a longer term that was a blip and JNJ has returned to its normal PE and operating performance in good markets and bad.

    - JNJ is not an average company and deserves a PE that reflects more than mediocrity given a unique combination of highest credit rating, huge FCF, stability in good and bad markets and growth in revenue and earnings.
    Jan 28 10:16 AM | 2 Likes Like |Link to Comment
  • BofA probed over trading practices [View news story]
    I would be more surprised if it didnt happen.

    How is this different than flash trading which is legal?
    Jan 26 06:34 PM | Likes Like |Link to Comment
  • GE's Immelt: 'We End The Year With Momentum' [View article]
    Good article with a valid conclusion IMO.

    I tend to think GE at its current price ($24.95) is a good buy. Some reasons include that GE is opaque and more complex than other companies. That is complicated by Immelt who investors with good reason tend to distrust.

    The stock rose rapidly in late 2013 as plans to list a piece of the financial business created a story for a rapidly rising market. The sharper drop than the market probably includes concerns about that happening in the time frame indicated.

    Then came earnings with 2.9% revenue growth projected in 2014 and 4.3% earnings growth on the earnings call. The 2015 projection of -0- revenue growth. Those numbers were delivered with Immelt throwing around double digit growth in what seemed like every division and record backlog as well. He reminds me of a a guy offering to double your money in 30 days with a get rich scheme.

    My own assessment is that GE is still not seen as properly capitalized to run its finance business which constitutes one of the worlds largest banks. So huge cash flow is used to increase capital levels.

    In the end I believe the finance business is satisfactorily capitalized and growth projections are sandbagged. As balance sheet pressure drops the credit rating will rise and at the current level I believe I can get a 20% return with GE at the current price.
    Jan 26 12:00 PM | Likes Like |Link to Comment
  • Apple: Too Many Upside Catalysts For The Stock To Go Down [View article]
    Just wanted to add that I dislike Icahn manipulating stock prices for his personal gain and note that he has driven AAPL above the market determined value.

    That said Icahn does have a point. Assuming the $150 bil is accurate it is hard to understand why AAPL would need more than say $50 bil in cash/short investments. Adding in the $31 bil annual free cash flow plenty of flexibility exists.

    addl thoughts

    The company doesnt want to use its cash however and even borrowed 16 bil to help it buy back 22 bil in stock.

    Icahn is out for Icahn only and if incidental benefits would accrue to other investors it would only be because Icahn couldnt move them into his pile.

    Mgt's with more cash than ideas probably lose the cash in one way or another

    In the end AAPL is unlikely to grow revenue or cash flow significantly so share buybacks should be part of investors return instead of going exclusively to employee bonuses or wasted.

    Jan 25 10:17 AM | Likes Like |Link to Comment
  • Why We Expect More Credit Rating Downgrades For Verizon [View article]
    I appreciate the perspective offered in the article.
    Jan 25 09:30 AM | 1 Like Like |Link to Comment
  • IBM - Revenues Continue To Slide As Stabilization Is Not In Sight Yet [View article]
    It is likely IBM needs the cash as well as getting rid of a unit it appeared to be running into the ground. They agreed to buy lots of low end servers from Lenovo as part of the agreement.

    While it is possible IBM will stabilize for now one must assume the trend is down as virtually every business looks to be suffering. Even software is just treading water.

    I have no position in IBM after many years I sold all in 2013.
    Jan 23 02:43 PM | Likes Like |Link to Comment
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