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  • An Analysis Of The Price War Between American And Spirit Airlines [View article]
    I agree fuel is important, bulls. When you are raking in cash, you are a much stronger competitor, and AAL is printing money right now. And, hedging makes fuel more expensive in sideways or down pricing environments. It works when prices go up, obviously. This has been an advantage for AAL. Also, I'm not sure about SAVE's presentation numbers that WT quotes. AAL's systemwide CASM was only a hair over 11 cents last qtr, and SAVE was a hair under 8 cents. That is a much smaller delta than the presentation gives. We have to remember that AAL is a big, international airline, and their costs are higher, but their yields are higher, too. They may get a lot tougher with SAVE in the future. Other possible problems: SAVE is an ultra low service airline, charging extra for checking in with a person at the airport, or even offering a small bottle of water--everything you could imagine costs extra, and even some things you couldn't imagine. As long as you go without any baggage and you eat and drink before flying, and you can handle being one of the cattle in the cars, it can work well. They pay their employees a lot less, and that can end up manifesting in poor service, too. LUV found a way to pay their people and make them happy. That came through in dealing with SWA's employees. Also, LUV has a much higher level of service imo. SAVE could work out on cost alone, but there is more to running a successful company than having the lowest costs.
    Nov 25, 2015. 09:26 AM | 4 Likes Like |Link to Comment
  • Is Gladstone Commercial's 10% Yield Too 'Good' To Be True? [View article]
    GOOD article, Brad! It seems to me that many externally managed REITs have a very high FFO to FFO/SH growth ratio. Externally managed REITs often get paid based on total revenue, or a similar metric, so they will do most anything to grow assets under mgmt. Well managed REITS, OTOH, manage for *shareholders,* so they are trying to grow FFO/SH. It might seem like a subtle difference, but this is why many externally managed REITs show zero growth in share price over 5-10 year periods, while better managed REITs have doubled over the same 10 years. I think investors are also discounting externally managed REITs to give them a shot at competing with the well managed group for total return. The discounting ruins the WACC variables for externally managed REITs and that makes them cheaper. Having said all of that, the 64K question is whether some of these RIETs have gotten too cheap. At 10%, all GOOD has to do is not cut the dividend and stay out of serious trouble and it will end up being a very GOOD investment. Externally managed REITs, I think most people agree, tend to be dogs, but many are so cheap right now, the investments could still work out well.
    Nov 16, 2015. 09:35 AM | 2 Likes Like |Link to Comment
  • Kinder Morgan: Should You Buy The 9.75% Convertible Preferred Stock? [View article]
    AR, good discussion, but I think it is worth restating for readers that the preferred has unlimited downside potential, but very limited upside potential. If KMI goes up ~$2/sh from here, or it triples in price the pref owner will get ~$50 in common for the shares in 2018. However, if oil tanks further and we get into a recession and KMI were to cut the dividend, precipitating another price drop, the prefs go down in price from here with the stock price. For instance, if the stock went to $15 you would only get a little over half of your expected $50 in common stock in 2018. They can also pay the pref divvy in stock, so if you expect the stock to drop you would have to sell the new shares immediately to cash out, creating tax issues. The typical preferred buyer thinks of the shares as being between a bond and common. This issue is unusual, in that it is married to the common price on the downside, but it isn't on the upside! It is an interesting issue that I'm watching, too. GLTA.
    Nov 11, 2015. 05:55 AM | 8 Likes Like |Link to Comment
  • Should You Use The Kinder Morgan Preferred Shares To Diversify? [View article]
    I believe they are qualified, sorso, but everybody needs to remember the mandatory conversion price formula dictates that you will get less than $50 worth of KMI common stock if it is selling below $27.56 when it converts. The current price on KMI-A is compensating for the decreased common price forecast, not the preferred divvy, or credit worthiness, imo. Take-away: if KMI tanks, KMI-A will, too!! There is more downside here than most preferred lovers are used to seeing. I'm certainly no expert, but I would encourage buyers to make sure they understand this one fully...GLTA.
    Nov 10, 2015. 01:46 PM | 5 Likes Like |Link to Comment
  • Silly Rabbit, Shorting STAG Is For Market Timers [View article]
    Nor does it to me, greenway! With many REITs paying 6-8% in dividends, a short position seems like as much fun as practicing bleeding, outside of a major RE meltdown. You have to pay the dividend, the borrowing costs, and the transaction costs, so you need the price to drop about 10%/yr to even have a chance at breaking even--compounding works against you because your yield (short's payout) goes up as the price drops. The referenced author's call certainly could work because I agree with his logic, but I'm with Graham and Thomas on this one....investing usually works better than speculating for me, too.
    Nov 4, 2015. 09:31 AM | 5 Likes Like |Link to Comment
  • Apple beats estimates, guides in-line [View news story]
    I think that is a fair assessment, Cinci. They aren't likely to repeat last year's growth rates this year imo. However, I would expect the rest of the year to do single digits. It is worth noting the FX headwinds, too. They would likely get to double digits in a better currency scenario. That is going to affect all exporters, and it is hitting some of my stocks already. But, Apple should still easily top the analyst estimates this year--estimates will head north again from here. Assuming ~$10-$11 sh., Apple is dirt cheap, especially when you discount the net cash. The booming iPhone sales with increasing ASPs, and receding iPad sales, are causing margins to go up. Macs are helping, too. It is a valid point that if Apple's phone sales were hit by something, it could create a devastating blow to profits. (They have enough cash to survive a couple of depressions back-to-back). Phones are their wheelhouse, and they are also the golden goose. AAPL had better hope the goose stays healthy.
    Oct 28, 2015. 04:49 PM | Likes Like |Link to Comment
  • Apple beats estimates, guides in-line [View news story]
    Good question, Cinci, but he missed by about 10Bn last year. That isn't too far off of Intel's entire quarter, and isn't a real good job if you think about it. You can look back and you will note that he has been consistently low. This quarter was one of the closer guesses. I'll be surprised if they don't break 80Bn. They should get their with the higher ASPs and very modest unit growth.
    Oct 28, 2015. 03:21 PM | Likes Like |Link to Comment
  • Apple's call: Chinese iPhone sales, forex, iPad, Android switching discussed [View news story]
    Aussie, actually Apple is a lot cheaper than the indexes, which is hard to believe! The average NSDQ 100 stock is about twice as expensive as Apple. You can buy the Apple house, or the average stock's house--the Apple house costs half as much. Their electronics are much more expensive than their house!
    Oct 27, 2015. 07:56 PM | 5 Likes Like |Link to Comment
  • Apple's call: Chinese iPhone sales, forex, iPad, Android switching discussed [View news story]
    Well over 100 million, beefy. And, option *sellers* are the key to understanding Apple's price movements imo. They were selling tickets to this week's show by the tens of millions today--you can bet up and you can bet down, sellers always win when the price is stable, or close to stable! They sold almost 3 million share rights via 115 calls with a ~3% premium today, according to YHOO. Over 10 million on that one call and it all goes to the seller if we stay at $115. The option market for Apple is huge. The stock seems to move in big chunks when option buyers least expect it.
    Oct 27, 2015. 07:50 PM | 7 Likes Like |Link to Comment
  • Apple beats estimates, guides in-line [View news story]
    Gregg, nice points. The other points that aren't getting noticed are the buyback and the cash pile. Raging is the only word to describe the buyback. Assuming they buy a lot this quarter, too, I think $4 a share is very possible.
    Oct 27, 2015. 07:25 PM | 3 Likes Like |Link to Comment
  • Apple's call: Chinese iPhone sales, forex, iPad, Android switching discussed [View news story]
    Don't forget that Maestri sandbags, particularly in this qtr--he guided almost 10Bn too low last year! Also, the buyback is raging. Run ~83Bn X.41 with their numbers and with another big buyback this quarter; we are really close to $4 a share!!
    Oct 27, 2015. 07:20 PM | 11 Likes Like |Link to Comment
  • Apple beats estimates, guides in-line [View news story]
    I think it is worth noting that Maestri is a chronic sandbagger in the 1st qtr. Last year he guided almost 10Bn too low in this quarter!! This is actually stronger guidance than I expected. As I have pointed out, the ASPs are the story here--up over 10% YOY. That is due to the memory tier structure and the increased sales of both the new and one year old Plus models. Assuming they get anywhere close to 10% this quarter they will be well over $700 on the ASPs. If they don't break 80Bn I will be surprised, and the margins should be in outer space regardless.
    Oct 27, 2015. 07:03 PM | 6 Likes Like |Link to Comment
  • Apple reports 39.9% gross margin, $670 iPhone ASP; dividend declared [View news story]
    Folks, the story here is ASPs, ASPs, ASPs! $670 into stiff FX headwinds, or over 10% higher YOY, is remarkable! Assuming they get anywhere close to 10% this quarter, they will be well above $700! This is the first year they have had a one year old phone at full price, and the second year they have had the Plus $100 phone. The 16GB phone is, I expect, selling very poorly, as most everyone would get the 64GB for $100 more. Brilliant strategy by Apple, but it is likely to cause some upgrade fatigue at some point; however, the ASPs and iPhone units are carrying the company on their shoulders. Remarkable quarter for that story alone. GLTA.
    Oct 27, 2015. 06:40 PM | 8 Likes Like |Link to Comment
  • American Airlines Can Not And Should Not Compete Against Spirit [View article]
    Good comment, mark. I heard AAL is going to introduce a no-frills service on the TV today. Actually, I think that could work out. The key for me is clear communication. They had a package they were offering the last time I flew, and it was decent, but it didn't solve the seating issue. I think they could offer different levels of service pretty well. If you want no-frills, fine. If you want service, you pay $100-$200 more for the round trip. That could give you a bag, a pre-assigned seat, in-flight service, early boarding, and easier reservations. Then, the people traveling by themselves in combat mode could save the $$, and the people who value the service can buy it. They could put the cheap tickets in the back of the plane, so the FAs would know who to charge for air and water! Very close to 1st, business, and coach except now it would be more like business, coach, and cattle car/SAVE.
    Oct 27, 2015. 06:22 PM | Likes Like |Link to Comment
  • Apple beats estimates, guides in-line [View news story]
    Looks like another great day for....option sellers on Apple...we'll see tomorrow.
    Oct 27, 2015. 04:36 PM | 6 Likes Like |Link to Comment