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  • American Airlines: The Most Undervalued Company Of The Airline Industry And S&P 500 [View article]
    Great point--AAL is way less than the airline average, and the airline average is discounted at less than half price! This price is irrational. If oil stays in the 50-70 range, I expect AAL to up the buyback dramatically in the coming years, and it is already large, as the author points out. Earning 25% of your market cap just doesn't work over the long haul, or even the short haul. AAL would be able take the company private if the stock doesn't go up dramatically. The reaction to Parker's comments was insane--LUV said they were going to increase capacity by up to 1% over the previous estimate--1%! The other huge point is that the CASM difference between LUV and AAL mainline is pretty small. I don't think LUV wants a price war. Finally, the planes are so full now, it would take a large increase in capacity to drive prices down hard...ain't on the radar, folks!
    May 27, 2015. 01:36 PM | 3 Likes Like |Link to Comment
  • CBI Gives Investors False Hope [View article]
    Mike, the only people getting "crushed" are the poor shorts, and I do mean poor! This has been one of the most disastrous trades I can remember. Most of the shorts were put on over the last few months near the bottom, and CBI has since rallied almost 100%! They have been selling, while people like Grantham and Einhorn (and many of us bulls) have been buying their shares. CBI just formed a Golden Cross, too, if you like technicals. We will have to wait and see, but we could have gotten a mini-squeeze as CBI rocketed almost 40% in a couple of weeks. Also, I have taken a lot of profits, so it will almost surely rise from here! Once we clear the nuke issues, CBI is ready to run, and that is the big risk, too. I am still comfortable with it as a long term B&H. GLTA.
    May 27, 2015. 06:36 AM | Likes Like |Link to Comment
  • The Airlines Tough Start To The Week [View article]
    I agree that vigilance is good, but 4 X forward earnings? This is the same Mr. Market that ran AAL down to less than 3 X forward earnings last October. Buy and be vigilant, but that is true of most stocks. Disaster can hit any company.
    May 22, 2015. 12:39 PM | Likes Like |Link to Comment
  • The Airlines Tough Start To The Week [View article]
    I added UAL and AAL yesterday, too. The drop is remarkable in my opinion. Jetblue, Southwest, and Spirit are trading around half price, or slightly over on forward estimates compared to the major averages. So, Mr. Market is valuing good airline company earnings at just over half the price of the average US company on the S&P. AAL is trading at less than half the valuation of JBLU, LUV, and SAVE! UAL isn't much higher. These shares are being given away. In fact, the price to earnings ratio for just this quarter is discounted to the major averages. If we take the P/E valuation for the forward estimate yesterday on the S&P 500--17.89, and we multiply that by AAL's estimate for *just this quarter* ($2.92), we get a valuation of $52.94! American Airlines is a bargain even without three out of four quarters being counted. Saying that Mr. Market is giving away shares is an understatement.
    May 22, 2015. 07:17 AM | Likes Like |Link to Comment
  • American Airlines: An Analysis After The Sell-Off [View article]
    What move are you talking about, sam? That they are going to increase capacity by 7-8% instead of 7%?
    May 21, 2015. 04:24 PM | 2 Likes Like |Link to Comment
  • American Airlines: An Analysis After The Sell-Off [View article]
    I was adding both stock and calls before the close. I think they will make 10-11 dollars a share this year, depending on oil, obviously. But, thinking you can grab any stock with a 3 handle on the forward PE is just remarkable! 3.9 X just doesn't work long term. AAL can buy back a ton of stock at this level and they did that when it dropped before. I hope Parker figures out a way to vacuum shares off the market at these ridiculously low levels. AAL should be at 50 with 80-90 dollar oil.
    May 21, 2015. 04:06 PM | 1 Like Like |Link to Comment
  • Why I Bought The Dips In Both Gilead And Achillion Today [View article]
    Doc, what are your thoughts on using a targeted ETF or mutual fund rather than trying to follow the ebb and flow of news and rumors on biotech/pharma names? Any recos?
    May 21, 2015. 09:02 AM | Likes Like |Link to Comment
  • Apple: Carl Icahn Gets It Mostly Right [View article]
    Let me complement your argument and compliment Icahn and Cook. His purchase and presence has helped Apple a lot imo. AAPL, as a traded stock, was a victim when Icahn first bought into it. He had dinners with Cook and, to his credit, Cook listened and that is when the changes began. Remember, he was saying things like, "we really don't care about the stock price so much as we do the quality of the products." I think Cook learned a lot about finances. His ability to listen and make changes helped put >100% in shareholders pockets without affecting quality one iota. Apple is much harder to manipulate now, too, imo. As I said back then, great financial engineering and electrical engineering are not mutually exclusive. Why not be great at both?
    May 20, 2015. 09:41 AM | 29 Likes Like |Link to Comment
  • Chicago Bridge & Iron: More Than Meets The Eye [View article]
    There is a big problem with abnormally low valuations. While I also love getting them at the cash register, and I understand why people try to justify cheap to themselves and others, they usually don't hold up in the free market. If we put roughly the same forward valuation on the S&P 500 as CBI has this morning we are back to early 2010 levels! Remember the panic? I would love to own the S&P 500 index in the 1100s today, but I would also love to be able to buy a new Lexus for $20K, and a beautiful new condo on the beach for 250K. You can argue that it deserves to stay at half price, and you can argue that the major indexes need a huge haircut, but my experience has been that the discount washes out over time. GLTA. BTW, having 15.6 million shares short adds a variable that makes pricing hard to predict.
    May 20, 2015. 09:20 AM | Likes Like |Link to Comment
  • Chicago Bridge & Iron: More Than Meets The Eye [View article]
    A few more positives: 15.6 million shares are short as of the last report. The big fish just published their moves from last quarter when a huge portion of those shares were shorted, and we find Jeremy Grantham's fund adding a large position, along with David Einhorn's. Buffett, Einhorn, Tepper, and Grantham are pretty good company in an investment. Finally, CBI is getting ready to form a golden cross later this week. The stock is up almost 100% while millions of shares were being sold short--very bullish. There is no telling where we would be if it weren't for the huge short interest on CBI right now. It has produced a tremendous amount of artificial pressure to the downside. It is impossible to predict, but a good squeeze could easily land us in the 80s.
    May 19, 2015. 04:38 PM | 8 Likes Like |Link to Comment
  • How Much Should DIYers DIY? [View article]
    Well, no. If your wife will let you have a dart throwing monkey as a pet, then that would be much better. You could save all of your professional advisor fees and your wife could just sit out by the pool and enjoy the profits; she wouldn't have to pick stocks. You would then be protected from yourself and your advisor!!
    May 19, 2015. 03:19 PM | 1 Like Like |Link to Comment
  • How Much Should DIYers DIY? [View article]
    This is great advice from Chris, rrose, but I would add that DIY'ers have a bigger threat than themselves lurking out there--they had better also take steps to protect their assets from fee collecting advisors. The WSJ started a column almost 30 years ago to test a provocative statement by a Princeton professor that "a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts." I used to read the darts vs the pros column with interest and humor. I'm not sure they actually used monkeys...but, putting the author's wisdom together with the wisdom from many years of WSJ experimentation, I am going to stop managing my finances, fire *all* of my financial advisors, and have my wife throw darts at the WSJ stock page from now on! Seriously, though, I actually do what he recommends to some extent. I keep my investments segregated and follow different strategies in different pools. I even own some mutual funds--imagine that!
    May 19, 2015. 09:09 AM | 4 Likes Like |Link to Comment
  • Icahn hikes Apple target to $240, sees FY16 EPS of $12 [View news story]
    Icahn isn't the only news on Apple today: Digitimes quoted the head of Quanta (speculated builder of the Watch for Apple) concerning production problems and it was most interesting:
    >>>Because of labor shortages during the Lunar New Year holidays, Quanta was forced to borrow manpower from other manufacturers and was only able to deliver limited shipments in the first quarter. However, Quanta already has sufficient capacity to manufacture all the orders and should see a *giant contribution* from its wearable device business in the second quarter.<<<
    (*emphasis* mine) Quote from Vice Chairman of Quanta

    If the Watch makes a giant contribution, they must be selling a whole lot more than any of us suspected.
    May 18, 2015. 03:46 PM | 2 Likes Like |Link to Comment
  • What Does The Anadarko Project Mean For Chicago Bridge & Iron? [View article]
    They could have sold puts, too. The dynamic driving the ship right now is 15.6 million shares sold short. The stock is approaching a 100% gain in the same 4.5 months in which most of the shares were shorted! That is just incredibly bullish. What is amazing is that the stock is still, after the 100% gain, only selling at 10X this year's midpoint earnings guidance--a little over half price to the major market averages! We now know that very big and smart fish like Einhorn's company (GLRE) and Jeremy Grantham's fund (GMO) were the ones buying from the shorts last quarter! So on one side we have the shorts, and on the other we have Buffett, Grantham, Einhorn, and Tepper, and a number of other pretty smart folks. BTW, we are right on the verge of a golden cross for CBI, too. It may happen this week.
    May 18, 2015. 03:36 PM | 2 Likes Like |Link to Comment
  • Anadarko picks CBI-led consortium for Mozambique LNG plant [View news story]
    Yep, CBI's short interest simply got out of hand to a ridiculously high and dangerous level. The squeeze could just be beginning, too, but I have no way of telling. As the stock climbs, desperate shorts start getting their positions called and there is a lot of forced buying, driving prices higher. Since last week, shorts have lost between 200-300 million dollars on CBI and the pain may just be beginning. It could easily squeeze to the 70s as sellers disappear and panic and calls set in.
    May 18, 2015. 03:15 PM | Likes Like |Link to Comment