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jstratt

jstratt
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  • A Crude Oil Bottom: Where To Look For Clues [View article]
    Pertinent point to be made.

    I just want to note that in the past month Oil is down over $10 a barrel or about 18% ($47/$57).

    Oil stocks performance in past month

    Schlumberger (SLB) -3.05%
    Transocean (RIG) -6.62%
    Apache (APA) +3.95%
    Conoco (COP) +1.54%
    Exxon (XOM) +4.49%

    Reminds me of a river... deNile
    Jan 12, 2015. 11:52 AM | 3 Likes Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    How I am playing Oil

    1) Oil itself is substantially below long term fair value

    2) Oil stocks however are currently well above current fair value. Take COP as near or at end of 2014 the stock was down 1% for the year and Oil down 46%. I sold shares.

    3) Oil has a long history of dropping farther faster and staying down longer than anyone believes is possible. My thesis is we are in the disbelief stage.

    4) Happened to meet a man running an Oil and Mineral Trust discussing he is still getting $80 for Oil but next month it drops to $50. Sounds like next month might be when reasonable capital cutback reality sets in based on 1 data point.

    5) Oil companies have proudly stated they dont hedge Oil prices. Sounds massively long to me.

    I will likely layer investments into quality Oil stocks starting after earnings are announced with proper questions about future exploration activity and cash flow bring the reality of share prices to the price of even $70 Oil.

    So far no questions have been answered about whether Oil companies will issue stock, issue debt, massively cutback exploration, sell off assets or slash dividends. I suspect all of the above.
    Jan 12, 2015. 11:32 AM | 12 Likes Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    That extra 2MM barrels each day must find a place to be stored at higher and higher prices. Oil tankers floating around full of Oil just being used as storage may get reported soon.

    As bad as a low selling price is having to pay someone a significant amount to store it.
    Jan 12, 2015. 10:54 AM | 7 Likes Like |Link to Comment
  • General Electric: Weak 2015 EPS Guidance And Recent Stock Performance Have Created A Long-Term Buying Opportunity [View article]
    Immelt is on my list of CEOs that are worse than Ebola! Although Chronic wasting disease is a better fit.

    I continue to object to GE leadership under Immelt including

    Early Immelt era

    1) Immelt pushing GE into Mortgage trading
    2) Buying $40 billion of RE in 2006-7
    3) Creating a SIV (Structured Investment Vehicle)

    Middle Immelt era

    1) financing GE on Commercial paper to a larger extent
    2) collapsing GE from AAA to needing a bailout to survive
    3) Stating the dividend was safe days before slashing it

    Late Immelt era

    1) Restructuring as a 10 year plan, have they even made any progress?
    2) Building GE into a dependency on Oil based revenue
    3) Continued decline signified by Revenue, Operating Income, Net income, Gross Margin, Net Margin, Operating Cash Flow, Free cash flow, Share price and every meaningful metric lower than it was 10 years ago.

    Still some investors are unable to recognize that they are receiving liquidation payments rather than an actual dividend return.

    Throw the bum out!!!
    Jan 2, 2015. 05:45 PM | 8 Likes Like |Link to Comment
  • Dana Blankenhorn: Why Your Money Should Be On Tech In 2015 [View article]

    For what it is worth!

    I am underweight technology. I hold some ORCL, CSCO and with deep shame I still own a little IBM. Gone are FB, AMZN, PANW and others.

    I did well with FB, nearly doubled in a year with PANW and made a few dollars with AMZN. For this investor it is important to understand companies and their prospects. I just really dont understand the prospects very well.

    Over investment is a concern of mine. As an example borrowing unlimited money at low rates and a belief that Oil would always be in short supply is my real thesis for why Oil has crashed.

    In technology GOOG and several others seem to invest wildly. GOOG as an example is investing in biotech and many other areas. So I am not saying technology is bad. I am just saying that I am taking a conservative stance until I better understand the valuation.
    Jan 2, 2015. 03:53 PM | 2 Likes Like |Link to Comment
  • Why Jeremy Grantham Is Right About Corporate Profit Margins [View article]
    Having weighed the arguments carefully since Jeremy first brought up this concern I have chosen not to put much weight on either side of the argument. I simply feel other factors are more important for investors.
    Jan 2, 2015. 03:29 PM | 3 Likes Like |Link to Comment
  • ConocoPhillips: An Anti-Cyclical, Long-Term Bet On Recovering Oil Prices? [View article]
    Thank you for pointing that out. When I was in the Oil industry they all sold Oil to avoid committing billions and then having Oil drop like it just did. If COP doesnt do that now they are going to get hit worse.

    That is tangential to my point however. Which is that in 2014 COP stock dropped 1% from beginning of year while Oil prices dropped 46%. COP stock is down 20% from its peak and Oil is down 50%.

    When Oil companies begin to report 4Q results and update for 2015, more of a reality will set in. We are in the disbelief stage at the moment where investors IMO feel Oil has no right to drop this low.

    I am happy to have $70 in cash for each share sold. Certainly I could be wrong but I am guessing I will get a better reentry price. Trading isnt my normal method but Oil can require different rules due to higher volatility.

    For the record I am not that bearish on Oil from its current level. It is just that I think Oil will stay below $65 longer than most and that stock prices do not yet reflect that reality.
    Dec 31, 2014. 10:30 PM | Likes Like |Link to Comment
  • Verizon: Deeply Undervalued With A Near 5% Yield [View article]

    Thanks for an excellent article!

    I have VZ as one of my 2015 picks. At its current price I believe it offers 10%+ annual return over the next 3 years at a reasonable risk.

    I was a little early but VZ will enjoy the advantages of both the best wireless and the best wireline networks as well as a growing industry.
    Dec 31, 2014. 11:54 AM | Likes Like |Link to Comment
  • Morgan Stanley Provides Some Sage Words On Gilead Sciences [View article]
    It has been an interesting year with GILD as it opened 2014 priced at $75 a share.

    If at that time you were to know that GILD would have the greatest drug launch with the highest margins in history with Sovaldi/Harvoni you would have paid extraordinary amounts to get GILD.

    If you were told that at the end of the year GILD would have effectively doubled revenue and quadrupled profits and had to calculate a share price where would you have set the target?

    If you had known that Harvoni/Sovaldi at year end would be found to have a very high cure rate, few side effects, easy administration and would be viewed as distinctly superior to the competition in every way, what would you have paid?

    If you had known that every product line performed extremely well and the pipeline advanced significantly during the year what would you have paid?

    So as we enter 2015, I think GILD achieved everything it could reasonably have been expected to achieve and has a bright future. I will assume GILD closes the year near $96 and has a 28% gain for the year. Further that 2014 expected EPS comes in at $7.95 and GILD is priced at 12 PE on 2014 results.

    My holdings increased significantly this past week as GILD is a central piece of my expected 2015 plan. It isnt possible for GILD to have a better performance year than 2014 but what is possible or likely is

    - all product lines continue to grow at a double digit pace
    - pipeline excitement for a Hep B or NASH cure
    - success in Oncology launching a new area of competence
    - significant share buybacks
    - widespread acceptance that the world wants Hep C cured in 20-30 years
    - other competitive cures for Hep C are unable to match Harvoni/Sovaldi

    I wish everyone as good a year as GILD had in 2014 and that you get better compensated for it.
    Dec 31, 2014. 09:32 AM | 11 Likes Like |Link to Comment
  • ConocoPhillips: An Anti-Cyclical, Long-Term Bet On Recovering Oil Prices? [View article]
    A different view offered!

    COP is a good company or I wouldnt have invested in the first place. However I sold most of it today and here is why.

    Oil has dropped but we havent had a true bottom and I expect a normal blowout high volume bottom. The 2nd point is Oil companies like COP sell their Oil out for a year in advance. As we move along COP will have more impact on earnings. Finally, with Phillips 66 spun out, COP has a more volatile profile.

    So I sold most COP with a small profit. COP is a great company and I could be wrong. However Oil usually goes down faster to levels far below what anyone thinks is possible. Then it stays down longer.

    So I consider myself an investor in COP with my 25% position. After Oil has crushed investor hopes and the fast money gets tired and leaves, I will scrape a few shares off the bottom.

    Oil hasnt crushed investor dreams in the few weeks since it dropped. So far no pain, no bankruptcies, no dividend cuts, no financial impact, no rigs stacked up, no barges full of Oil floating around, and stock prices havent really dropped all that much.

    Thats not the Oil business I know!
    Dec 30, 2014. 04:54 PM | 1 Like Like |Link to Comment
  • Gilead Sciences: Extremely Attractive At These Levels [View article]
    Outstanding article!

    The charts are excellent information for investors.

    GILD is one of my 2015 opportunities.
    Dec 30, 2014. 09:24 AM | 2 Likes Like |Link to Comment
  • DoctoRx Positions For 2015: I Have Cut Back On My Exposure To All Biotech Substantially [View article]
    I always enjoy articles from DoctoRX.

    I share Docs concern on biotech overall as the assumption that US drug prices will remain non negotiable may have practical limitations. Huge investment may be bringing more products to market than patients and PBMs have the ability to pay for. Even companies like GOOG are investing in biotech at this point and activists/hedge funds are active in the space.

    GILD is different in my mind as the market has already taken a sober view of its prospects. It is one of my 2015 opportunities and I took the opportunity to double my position with the recent drop in share price.

    After 5 years of huge growth in biotech I dont disagree with a focus on conservatism regarding biotech. I have cut my other holdings substantially keeping about 50% positions.

    As an investor, allocations to cash above 20% are forbidden in my portfolio. That has been true in 2001, 2008 and into the future. Perhaps a JNJ is a less risky healthcare alternative with a yield.

    With a 10 year yield around 2% and Oil driving production costs lower and effective income higher, I dont see such a negative outlook for the 2015 market.
    Dec 30, 2014. 09:09 AM | 5 Likes Like |Link to Comment
  • Gilead Sciences: After The Bloodbath The Stock Is A Strong Buy [View article]
    Thanks for an excellent article!

    - GILD is still one of the best opportunities for 2015 appreciation.

    - Pricing has more chapters to be written. My view is decreasing prices for the next 3 years with reductions in cost from higher volume offsetting. GILD will do well as patients around the world rise substantially to a level well above 1MM treatments annually.

    - The goal is to eradicate Hep C over 20-30 years. Put any number you want on that and it is bullish.

    - GILD will need to match and beat prices from other PBMs in 2015. The real customer is the US Government as prisoners, medicare and medicaid cover a vast and growing proportion of the Hep C population.

    - The biggest threat from ESRX is that their real goal may be to force Hep C customers to delay treatment as peak volume moves to government plans over the next 2 years. PBM competitors may have an incentive to avoid GILD regardless of price. Patients delaying treatment are much more profitable than treating Hep C at any price.

    GiLD should not be trading below $100. It will likely trade around $102 until 4Q earnings are announced. The weak hands have sold and buyers are having to raise the share price.

    At $150 by year end is a reasonable estimate.
    Dec 29, 2014. 06:02 PM | 4 Likes Like |Link to Comment
  • Biotech Weekly: Charts And Themes Present Mildly Bullish Outlook Into 2015 [View article]
    Enjoyed the article!

    It is a great run for a biotech investors. Thought I would offer a few ideas.

    One of my biggest concerns is that everything seems to move higher until something happens. I would prefer more discrimination in biotech company valuation between winners and losers.

    As GILD got hit investors received an opportunity to invest in biotech at extremely attractive levels. At a GILD price below $100 that opportunity still exists.

    Another concern is valuation based on potential. Generally potential is highly valued at present. After 5 great biotech years, attention to actual product sales in the market along with potential would be advisable.

    Pricing is a concern and it should be. Part of the biotech run involves the ACA limiting the US government from negotiating drug prices. Expectations that companies can dictate prices long term are unrealistic.

    On the bullish side money has been flowing into biotech for good reason as it is a true source of growth with phenomenal new products hitting the market on a regular basis.

    The biotech winners are eager to snap up smaller biotech companies with promising pipelines, and activist investors are eager to help that process.

    Perhaps 2015 will be a 6th straight excellent year for biotech. Perhaps not! Over a longer term however biotech is taking over the $1+ Trillion pharma business and it is the biotech century.

    Dec 29, 2014. 11:00 AM | Likes Like |Link to Comment
  • Gilead upgraded by Morgan Stanley: "Diamonds in Santa's Coal" [View news story]
    GILD should never have dropped below $100!

    It remains a great value for 2015. As investors look into the recent negative news that caused the stock to drop, they see less and less substance.
    Dec 29, 2014. 09:45 AM | 4 Likes Like |Link to Comment
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