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jstratt

jstratt
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  • A Review Of Gilead's Pipeline (Part 1) [View article]
    Thanks CSYJ

    That is exactly what I am saying. FCF should be $18 billion in 2015.

    Expecting GILDs $3 billion R&D budget to grow a $30+ billion revenue company is unlikely.
    Aug 18, 2015. 01:55 PM | Likes Like |Link to Comment
  • AbbVie: The Riskiest Dividend Aristocrat [View article]
    I am not a ABBV fan, but I did want to add a little different perspective.

    If ABBV paid 5% more than JNJ was willing to offer does that make it a bad deal? My point is that highly sophisticated valuation guidance goes into these decisions and investing in Imbruvica was a lot lower risk than most other alternatives. ABBV had reached a point where doing nothing was not an option and their shares are up 25% this year.

    While you might only consider a dividend to be a true return ABBV shares have already returned 8 years of KO dividend return this year in price appreciation.

    It has double digit growth in revenue this year where KO has a 3% decline in revenue that looks to be long term but share returns are about 2% this year with dividend, JNJ is down about 2% after dividend and WMT is down about 18%.

    For some investors the little extra risk in ABBV is worth getting a positive return.
    Aug 18, 2015. 01:31 PM | 4 Likes Like |Link to Comment
  • We Believe In Emerging Market Valuations [View article]
    Since you make money selling emerging markets I am sure you do believe in them.

    Perhaps a specific investment thesis on a specific country would be more persuasive to investors.
    Aug 18, 2015. 12:30 PM | 2 Likes Like |Link to Comment
  • Are We Approaching An Investable Bottom In The Shares Of Caterpillar? [View article]
    Interesting article!

    I generally agree and would just add a few things I consider

    - Huge over investment in commodities over the past 6 years and it still hasnt changed

    - I suspect a capitulation in markets possibly after 3Q earnings hit for Oil/Minerals

    - My thesis is that Oil drilling and Mine development continues and we havent reached the capacity reduction stage.

    CAT is a fine cyclical company with plenty of negative news ahead. Its customers will likely reach a point where they stop adding capacity and focus on survival only.

    In 2009 CAT dropped down below $25 per share. So $50 isnt an unthinkable level to consider and dividends can disappear. I am not predicting that drop just thinking that if the same trends continue that started 8 months ago plenty of downside exists.

    Once the industry bottoms and some companies fold and supply matches demand CAT will be a good investment. So far we arent even close!
    Aug 18, 2015. 12:16 PM | 1 Like Like |Link to Comment
  • Decent Fundamentals Can Help Freeport-McMoRan Bottom [View article]
    So is FCX a good buy?

    As a long term investor I would say yes and as a short term investor I would say no.

    So I scraped a few shares up below $10 this morning. I like FCX's assets. I like the Oil they will produce at $18-19 brl cost. I like the Copper they will produce at $1.90 long term. I like management and their disciplined approach so I am apparently in a small minority.

    What I dont like is what I see shaping up in commodities short term and perhaps even intermediate term. I dont know how low Oil will go but strongly feel it certainly must be lower. A price that would create a balance of supply with demand could be very low.

    Metals are probably in better shape than Oil but that isnt saying much. My guess is FCX may have to delay the mines it is bringing on line both because of capital constraints and customer need.

    I am beginning to invest in stages now because I feel I can get a 300% return in 5 years. Between Hedge Funds, Private Equity, Activists and Industry Mergers activity FCX could get taken out.

    FCX trades at 28% of enterprise value, it has great assets and shares likely will go lower. Still things can change quickly and the fundamental value of FCX assets is much higher.
    Aug 18, 2015. 10:20 AM | 4 Likes Like |Link to Comment
  • A Review Of Gilead's Pipeline (Part 1) [View article]
    Thanks for another excellent article!

    Perhaps we differ on the pipeline status and a couple of reasons for that exist. When I look at the pipeline I see two pieces the HIV and HCV franchises which are well managed is the first. GILD appears to be doing a great job as it has for many years of managing its existing franchises to strangle competitors with better and more timely innovation.

    At the same time competitors are also catching up. So MRK will take some share in 2016 by pursuing a strategy to get a return on its investment. That means that they will do what it takes to get at least 10% market share. ABBV with Viekira Pak will also take whatever action is needed to stay relevant in the market. BMY and JNJ down the line as well.

    It is the expansion pipeline that is concerning to investors and is holding back the share price. I would advocate that GILD spend on the order of 50% of FCF on building its pipeline or diversifying its product line. Otherwise the pipeline that looked good for a $10 billion revenue GILD looks weak for a $30 billion revenue powerhouse company.

    Whether those of us who are long GILD like the pipeline isnt really the question. The investment community as a whole has serious doubts about GILD forward growth and is assigning it perhaps a 10 PE on 2015 results. Lets be clear that valuation arrives because of an expected decline in GILD prospects looking forward.

    I believe GILD will make an acquisition in the next 6 months because it is clear that the best use of FCF is to build for the future as well as the return of capital to shareholders.
    Aug 18, 2015. 09:13 AM | 8 Likes Like |Link to Comment
  • Can Any Upstream MLP Withstand $60 Oil Through 2019? Part 2 - EV Energy Partners [View article]
    So let me ask some questions and extrapolate a little further.

    Does anyone think that a huge over investment in energy has taken place that will not soon go away? Perhaps $100s of billions worldwide or more.

    If MLPs and other large entities like hedge funds experience problems shouldnt that hit banks and financial institutions with an arctic blast?

    I am not really suggesting a banking collapse as I dont think that would occur. It is just that we could face a $25 Oil price that would cause investors to consider such a possibility.

    My guess is that Oil will drop to $30 a barrel in a crash but reach $60 within perhaps 2-3 years. Exports from the US will be allowed to help get a higher Oil price realized. Probably relaxed loan covenants in some manner but I wouldnt bet my money on that.

    3Q results could be very interesting and it is hard to see energy shares higher in October. Even in October MLPs may seem much riskier at much lower prices.
    Aug 17, 2015. 06:51 PM | 2 Likes Like |Link to Comment
  • Can Any Upstream MLP Withstand $60 Oil Through 2019? Part 1 - Legacy Reserves [View article]
    I just want to thank the author for a timely article!

    I had been questioning how MLPs would hold up in an Oil crash. Since they havent really been tested in my mind they present a greater risk than most assume. Barron's as an example apparently feels they are a great investment at current prices.

    Cant wait to read part 2.
    Aug 17, 2015. 06:19 PM | 2 Likes Like |Link to Comment
  • General Electric: Are We Going Sideways For Another Year? [View article]
    I want to suggest a few things about GE.

    GE has so many moving pieces that it is hard for anyone to have confidence in earnings projections.

    In my mind GE is in the middle of determining what is a fair price for shares. I am glad that GE has been selling the GE Capital financial segments because more than a little risk to financial assets could arrive this fall.

    I like to know what I am investing in and I really dont know that with GE at this time. Some things I would like to know include

    1) How much debt will be attached to the remaining GE
    2) How much Oil/Energy/other troubled lending if any will remain with GE
    3) Does an excess of capital exist that will allow any share buybacks and dividends.

    My guess is that come April Jeff Immelt will not be the CEO. To me GE is making this restructuring under his leadership to allow a new hopefully long term leader to emerge and drive the company forward.

    I find this fall to be a time of much higher risk than we have faced in the past 5 years. It would be historically accurate to consider that financial risk can accompany a commodities bust.

    Even a GE that is revealed to have been properly capitalized to achieve all of its stated goals could face a rather tough end to 2016. As could other financial and industrial companies.

    So I ask what is wrong with JNJ or some alternatives that minimize some of the risk?
    Aug 17, 2015. 05:57 PM | 1 Like Like |Link to Comment
  • Is Barron's Catching A Falling Knife? [View article]
    I have read Barron's for years. For a while it was a joke that the last thing anyone wanted was to be on Barron's cover because it signaled the end. I do enjoy some of their work.

    Oil in particular shows every sign of having more supply and less demand. I would submit that a huge over investment in commodities of $1 trillion plus is causing a crash that will not end until capacity is reduced. Absolutely no reason to think stocks will be higher after 3Q earnings.

    Lets take it a little farther. This could turn into a financials issue as well. One could even suggest that farm land prices will be affected before it is over.

    Barron's also sees no problem with MLPs and thinks that they are cheap because they usually have contracts in hand before building. However contracts get broken and even one MLP in trouble would create a whole new point of view.

    History has been much more brutal than most of our recent stock market experience and I do think the government will try to support Oil say with lifting exports etc.. That said it is time to clear up some excesses such as the potentially huge commodity loans that could find trouble.

    My investment strategy is not to sell out of the market as it is more long term in nature. That said I reduced Oil at the end of 2014, reduced banking and financial more recently and am suspicious of earnings prospects for industrials, and exporters.

    My expectation for the next 3 months is to limit losses and enjoy a resurgence thereafter.
    Aug 17, 2015. 05:03 PM | 5 Likes Like |Link to Comment
  • 3 Canaries In A Coal Mine: The Global Government Bond Bust Is Finally Underway [View article]
    Greece and PR are the beginning of the end? Wow!

    I will offer a more valid potential concern at least in my view.

    Oil will possibly hit a blowout low after 3Q results and with it the Trillion dollars of energy loans get called into question. That would put a chill on markets.

    In my view the big banks have more indirect exposure as hedge funds and big commodities players could get scalped. Makes me wonder about MLPs as well.

    The history of Oil suggests we have not hit bottom. I have not seen

    - blowout lows
    - cutback in production
    - realization that paying to store Oil is high. Ships are stacked from here to China
    - bankruptcies, or any real pain yet

    Sounds like opportunity ahead as well as pain! As for the end of the world as constructed by some guy who wants to manage your money?

    Come now!
    Aug 16, 2015. 01:43 PM | Likes Like |Link to Comment
  • Chevron And Exxon Mobil: Swirling Near The Drain? [View article]
    I thank the author for an interesting article!

    I was not convinced of his position regarding CVX or XOM yet the question he asked was timely. My guess is that after 3Q EPS come out I can buy Oil shares at more attractive prices.

    Perhaps I should also agree that nothing in Oil should be above suspicion right now.
    Aug 14, 2015. 05:55 PM | 4 Likes Like |Link to Comment
  • Antibiotics Stocks To Benefit From 21st Century Cures Act [View article]
    Thanks for an interesting article!

    I spend significant time investigating pharma and had not heard of this legislation.
    Aug 14, 2015. 05:37 PM | 1 Like Like |Link to Comment
  • Reuters: EU likely to approve GE deal to buy Alstom power unit [View news story]
    So this love hate stuff with stocks is out of place. Find yourself a girlfriend!

    GE has made me a lot of money. I should add that most GE investors really dont know much about GE. For instance I sold in late 2007 because while even most analysts didnt know GE was a huge financial company I knew it.

    Perhaps you can help me. Tell me how much the assets of GE will be worth after they sell off GE Capital? Then tell me how much debt they will have? Because right now GE has $31.28 in debt for each share and a 1% return on assets.

    You are probably lucky GE got bailed out the first time and also lucky the government dragged them kicking and screaming into selling GE Capital assets.

    Just my opinion!
    Aug 14, 2015. 05:25 PM | 1 Like Like |Link to Comment
  • Reuters: EU likely to approve GE deal to buy Alstom power unit [View news story]
    I may be an idiot but I dont own any investments that have been negative over a 17 year period.

    For the record I dont generally write insults either. Good luck to you!
    Aug 14, 2015. 05:06 PM | Likes Like |Link to Comment
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