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ArtfulDodger

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  • A Deep Look At How You Can Prevent Investing In Frauds [View article]
    Jae Jun and Fellow Investors:

    Good piece, Jae Jun. Excellent reminder that this type of skullduggery has gone on in the past — and will happen again in the future. It is indeed difficult for investors to protect themselves from all of the
    hocus-pocus thieves and con-artists can come up with, but it is fairly simple to protect themselves from most risky situations.

    Companies may be able to disguise some debt. But that was not the case with either Enron or WorldCom. And it is not normally the case with bust out companies. There were clear dangers signs that should have kept investors away from the both of them.

    Worldcom, Inc. declared bankruptcy owing about $40 billion! Enron hit the dust owing $50 billion! Neither had any worthwhile assets. Investors were buying hope and air — both pumped to the max by the financial media and the Big NY Houses.

    Both companies had frighteningly low GPMs & NPMs with a large a gap between the two — a sure sign of inefficiency or a major burden of some type somewhere within the company.

    In the last quarter of 2000, Enron reported losing over $4b — yet shortly thereafter and just before declaring bankruptcy executives paid themselves and a few select employees $50m in “bonuses.”

    The reason I remember these things so well is because of all the bust out companies in US history the Big NY Houses touted these two moreso and more often than any others — at least since I’ve been around in 1965.

    I had previously thought that we would never see the wild pumping by touts that we did of the “Nifty Fifty” in the early `70s. I was wrong — because every single day there would be a fresh tout yelling that Enron and Worldcom were the new future. They had to be owned!

    I must have looked at them both ten times to see whether I had overlooked something. Nope! Nothing there but danger signs.

    The lesson is simple and you don’t have to have an accounting degree to learn it: Debt is deadly! Consistently low or crashing PMs are a sign of danger.

    Last part of this simple lesson: Never, ever buy a stock because an emissary from one of the Big New York Houses or Big National Banks touts it. In fact, when they upgrade or tout one, stay far away from not only that company — but that entire sector. If you happen to be invested in that company, take a second look at your investment. For it may be time to flee. The reverse is true when they downgrade one: you might want to take a look at buying it. No exceptions!!

    Nobody much mentions it — but it’s just been a few months ago that every Big House, Big Bank tout was screaming for investors to buy into the oil and drilling sector. Just watch these cads — almost every time they press an investment it’s already stretched to the skies and/or is sucking for air.

    Thank you again for the piece, Jae Jun.

    I remain, the ArtfulDodger
    Apr 15, 2015. 01:26 PM | Likes Like |Link to Comment
  • Time Warp: Warren Buffett On The Stock Market, Circa 1999 [View article]
    Fellow Investors:

    Buffett almost always says that returns on equities are going to be less than everyone thinks. You can pick out many times that he's said that that the market has risen to the heavens. No one seems to pay any attention to that, though.

    He often says he would not be buying anything at that time. However, a couple of months later we discover he's been buying with all the float Geico can dump into BRK.

    He also lauds Benjamin Graham's investing methods, but has never followed them (at least since 1967).

    Lesson: Buffett's true investing philosophy is one thing; it comes more from Charlie Munger than anyone. No matter!

    Listening to what he says he's doing or comparing what's he's said in the past to today to try to predict a position is useless and is definitely the fallacy of false comparison.

    So then, search for good, high-quality stocks that are out-of-favor (or at least down in price), and buy them. If they perform, hold them as long as you dare; if they do not, dump them quickly — and move on without looking back.

    I remain, the ArtfulDodger
    Apr 14, 2015. 01:15 PM | 2 Likes Like |Link to Comment
  • Cisco Leads Among Its Peers For Disclosing Key Environmental, Social And Governance Metrics Valued By The Capital Markets [View article]
    Good Lord!!
    Apr 14, 2015. 12:48 PM | 2 Likes Like |Link to Comment
  • 4.2% Dividend Duke Energy Should Benefit From The Dovish Fed And Growing Profits [View article]
    Fellow Investors:

    There are certainly utilities that have relatively more debt than DUK, SO for one. There are others that I would say should be placed on an emergency alert list, mainly because of the debt they've accumulated over the last few years to continue paying dividends and to comply with government mandates.

    Let's put it this way, to simplify: DUK has about $40b in debt to service. It has about $2.5b in cash. It has negative FCF, mainly from servicing its debt, updating its utility business to comply with government mandates, and paying its dividend.

    DUK sells for about 20 X earnings and yields 4% — along with an astronomical return on investment of 2.3%. To DUK’s credit, it has been able to maintain its GPM. But then its NPM crashes by over 70%, a certain sign of inefficience — most likely due to all the construction the company has going on.

    Its utilities are heavily dependent on coal — which our government has practically declared war on. Due to this fanatical hatred of coal, DUK has had to place a deadline on closing its two coal units at the Crystal River Energy Complex. DUK will retire three steam plants in 2016. They’re being forced into new construction and updates over their entire business.

    Thus, for all utilities, especially those involved in coal-based fuels: updating and new construction to comply with government mandates, rules, and regulations have been never-ending.

    I know DUK very well and have a good friend who is an executive with DUK. I have been putting friends and family in the stock since it was selling for 5 X earnings and paying a 14% dividend. Over the years I've had many of them in DUK's DRIP. I still have a few holding DUK, but I've told them to keep their sell trigger on alert. I’ve already had them sell SO.

    Why? I don't fear anything in this life, death, or anything else, except for two things: debt & government mandates.

    Our government has pounded the US utility industry with rules, regulations, and mandates. With only a couple of years to go in this current Administration, no doubt the industry can expect more of the same — most likely rising to a brutal peak.

    I believe our economy is doing better than most people think. I'm not predicting anything negative. But if interest rates rise, it's going to be more expensive for these companies to service their debt. What’s going to come first, the dividend — or the debt — if it were to come to that?

    If we do have another economic downturn, I truly believe the utility industry will be at the head of the resulting blowout, because of the reasons mentioned above. Oh yes, our illustrious government will save them — in that case — but dividend hogs will get slaughtered as they did with the banks and car companies during the last blowout.

    Every time I warn people on this site about a company's debt (or the whole industry’s), the touts and owners of that company (or the industry) twist what I write and come up with novel ways to justify their ownership or tout. FCF doesn’t matter; debt doesn’t matter. Only the dividend!

    (Check out my comments on how strongly I warned holders of SDRL regarding its debt. And also on some of the REITs.)

    I do not own DUK at this point, though I have owned it several times in the past. If I did own it I would not necessarily sell it unless I had a better place to put the money (which I do).

    But before I would buy it or any other utility simply because of the dividend and because some tout says it’s cheap, I would cerebrate very carefully — and check to see whether there are not better places to put my money.

    However, for those who own DUK or other utilities, or who plan on buying them, I certainly wish you well.

    I am, the ArtfulDodger
    Apr 7, 2015. 02:51 PM | 1 Like Like |Link to Comment
  • 4.2% Dividend Duke Energy Should Benefit From The Dovish Fed And Growing Profits [View article]
    Fellow Investors:

    Evidently this author neither owns DUK nor does he answer comments. So this question may as well be rhetorical, but DUK's debt his risen drastically over the years to almost 100% to equity.

    Though the company does have about $2b in cash, that type of debt always means that any serious problems, any economic downturns, higher debt expense, such as interest rate hikes, could easily force the company to cut its dividend.

    No concerns there I suppose?

    I am, the ArtfulDodger
    Apr 2, 2015. 08:11 AM | Likes Like |Link to Comment
  • Santander: Global Retail Bank With Leading Cost Efficiency [View article]
    Junius:

    Excellent work in quantifying and qualifying SAN as a worthwhile investment. You see a lot of quantifying only on SA — yet not much qualifying.

    Thank you for going into the way SAN runs its businesses and the care its management takes to obtain customers and keep them satisfied. Managing their money well is another plus. No way to compare the management of this bank with the vast majority of US banks.

    It's difficult to add the value of this type of management into a stock price, but with SAN it ought to be a premium addition.

    Thank you for the piece. I'm giving you a follow tap.

    Nice bio, too!

    I am, the ArtfulDodger
    Mar 25, 2015. 08:59 AM | 7 Likes Like |Link to Comment
  • Oil Will Bottom In 3 Weeks: A Comprehensive Analysis Of Domestic Oil Production [View article]
    Fellow Investors (er, should I say Traders, in this respect):

    When I saw the title to this one, I didn't expect much — and that's what I got.

    As someone taught by an old-fashioned grammarian, I had thought the subjunctive mood was truly dead — no more. The next to last paragraph is enough of an example:

    “Should oil rebound” — Oh, okay.
    “[I]f and when crude oil again reaches $60/barrel” — A near 50% increase!
    “I believe that oil may ultimately see higher prices” — Really?

    How can anyone base a trading (much less an investing) plan such thinking?

    And how about this one for a concluding sentence: “Nevertheless, I believe that the peak in oil production will represent a significant psychological inflection point and that crude oil is poised for a rally once production begins to roll over.”

    Now, that is not at all a cliché.

    I would hope that young and novice investors, especially those who attended public schools in the US, will listen to me and not pay any attention to these type of articles.

    Trading is not about predicting prices or the future — no one has ever consistently done that. Trading is about money management.

    I didn't see one shred of that in this piece. Run — don't walk!

    I remain, the ArtfulDodger
    Mar 24, 2015. 08:40 PM | Likes Like |Link to Comment
  • Why Has Santander Struggled To Deliver Consistent Performance? [View article]
    CS:

    You should check out SAN's history a little more, because it's on its common path of buying on the cheap after crashes, changing some of its structure (such as dividends) after the buying is over (now), then building its business internally (just beginning), by honing the new assets it's bought as well as the rest of its business.

    Last, after a year of two, it is generally payoff time for those who build positions when the stock is out of favor, as it now is. However, if you don't think the economies where SAN does business are going to improve and you don't think the company can repeat its prior actions successfully, then you might ought to move on. But let me tell you: over the years SAN has built its equity and its stellar reputation by doing exactly what it is now doing.

    Me, I've been through four similar cycles with SAN. This one is admittedly a slight bit longer than the others, but the company is on its usual track. If I were taking over a company, the first thing I'd do is put in people I know well, that I trust to carry out my plan, and who are capable of doing so.

    Also, SAN is profitable, and it stands to be moreso. The stock price also stands to follow that profitability.

    Your argument for concerning yourself over SAN, CS, is therefore weak.

    Traders might out to move on. Of course, if you're a stock trader it probably doesn't make any difference anyway, because if you want to trade you should be trading futures. No leverage in stock trading. Makes absolutely no sense. Stock traders cannot finish ahead in the end.

    Those who are holding SAN surely know the odds are highly in your favor that the payoff is still a couple of years away — but it's coming.

    I remain, the ArtfulDodger
    Mar 24, 2015. 02:56 PM | 5 Likes Like |Link to Comment
  • Millennials have the steering wheel now [View news story]
    Friends & Fellow Investors:

    Never would have believed this. Aren't these the people whom the media have told us are so brilliant because they are social media experts, or something like that? I count generations by the culture they have experienced together, and it seems to me that people born from about 1970-1995 have the same (or at least similar) outlook and ideas about the world.

    Too deep for me to think about at this point. I'm off anyway. See you in a few weeks.

    See here: http://bit.ly/1AqCxYu
    Mar 15, 2015. 06:28 AM | Likes Like |Link to Comment
  • Santander, N.Y. reach accord over bank account access [View news story]
    Fellow Investors:

    This is the very reason I won't own an American bank: a meddling, controlling government that is determined to use banks as another way to transfer wealth to the parasitic classes. The result, as occurred after the Cash-Credit-Crunch Crash of `08-`09, the wealth of the working classes gets transferred to pay for these sneaky shenanigans.

    This far-left wing-nut nonsense really went into high gear in 1992 when the meddling, transfer-wealth crowd had total control of the government for two years and made the laws that forced lending institutions to create what became known as "sub-prime loans." Yes, indeed, we need another round of what that brought about.

    Why don't banks have the freedom to lend and service and do business with anyone they please? Say what you like, it's pure fascism to force lenders to lend to people they don't want to and to do business with people they don't want to.

    Of course, we have perhaps 150-million people in this nation who don't care whether others are free or not, just so they get what they want for little or nothing.

    I'm not a cynical person, but anyone who looks closely at government actions such as these and what they result in has to admit it's a sad case, and that such actions will most likely cause the nation to repeat the crash and ensuing recession we've just gone through.

    I remain hopeful for all things non-governmental, the ArtfulDodger

    Long SAN averaged in at 6
    Feb 20, 2015. 11:20 AM | 1 Like Like |Link to Comment
  • Bullish On Intel: Fundamental And Algorithmic Analysis Summary [View article]
    Fellow Investors:

    Having commented on INTC articles off and on over the last few years, everyone knows I had been long from under 15.

    So I wanted anyone who may be interested that I sold all my INTC at 36, the reason's being that it was (in my view) priced to perfection. (one of my rules for taking a serious look at whether I want to continue holding a stock or not is when I believe it is priced to perfection)

    That is, every ounce of positive information the (mostly) non-investing touts could conjure up about INTC they have posted over and over and over in one repetitive article after the other.

    When a stock of INTC's size is priced to perfection, it doesn't matter how great its products are or how good the management is — and INTC's, in both respects, are (for the most part) topnotch — because one mistake can poison the whole well.

    On top of that, INTC has (at least) one area that it is losing significant funds, and I can't see that changing anytime soon.

    Worse in my view, something I have pointed out in several past comments, touts who could not stand INTC when it was 20 — all of a sudden love it now that it's in the 30s. In my over 45-year investing experience that stands as an extremely bad sign. Not one that would absolutely make me sell, but combine that with the other things I've pointed out, and I believe it's time to put my few bucks in greener pastures (er, ah, ones not quite as popular as INTC has gotten).

    I do, however, wish all my fellow-investors well with their INTC holdings.

    I remain, the ArtfulDodger

    Note: I am reposting this comment from another thread because I have several SA friends who have a long position in INTC and, after having let them know I was thinking of selling my position, they asked me to let them know if I sold mine.

    I do want to reiterate that I am not claiming to know which way INTC's price is going. I do not have any idea. I simply think for my investing purposes there are better places to put my funds.

    Be well. I will be offline for a while.
    Feb 17, 2015. 09:25 AM | 1 Like Like |Link to Comment
  • Can Intel Succeed In Tablets? [View article]
    Fellow Investors:

    Having commented on INTC articles off and on over the last few years, everyone knows I had been long from under 15.

    So I wanted anyone who may be interested that I sold all my INTC at 36, the reason's being that it was (in my view) priced to perfection. (one of my rules for taking a serious look at whether I want to continue holding a stock or not is when I believe it is priced to perfection)

    That is, every ounce of positive information the (mostly) non-investing touts could conjure up about INTC they have posted over and over and over in one repetitive article after the other.

    When a stock of INTC's size is priced to perfection, it doesn't matter how great its products are or how good the management is — and INTC's, in both respects, are (for the most part) topnotch — because one mistake can poison the whole well.

    On top of that, INTC has (at least) one area that it is losing significant funds, and I can't see that changing anytime soon.

    Worse in my view, something I pointed out in several past comments, touts who could not stand INTC when it was 20 — all of a sudden love it now that it's in the 30s. In my over 45-year investing experience that stands as an extremely bad sign. Not one that would absolutely make me sell, but combine that with the other things I've pointed out, and I believe it's time to put my few bucks in greener pastures (er, ah, ones not quite as popular as INTC has gotten).

    I do, however, wish all my fellow-investors well with their INTC holdings.

    I remain, the ArtfulDodger
    Feb 16, 2015. 08:27 PM | 1 Like Like |Link to Comment
  • Millennials have the steering wheel now [View news story]
    Good for you, Mac. Glad to hear of someone with enough gumption and grit to break the mold.

    The best to you and your family. You are doing the right thing! Your children will be better off, and so will the nation.

    AD
    Feb 7, 2015. 11:47 PM | Likes Like |Link to Comment
  • Santander lifted by heavy profit [View news story]
    Thank you, VC, for the comment and for your work re SAN.

    You are correct, as I stated in my comment: "... as far as I know, the company has never publically described this plan. But it is one that I have observed during the four cycles I have ridden it with SAN. Patient investors who ride along stand to get well paid for their patience."

    At this point I couldn't imagine AB dumping over a hundred years of a 3 Phase strategy that has been amazingly successful. So far, she's going right along the old path. But it could happen. If I see that occurring, I'll do the ole scram-a-roo as fast as a butterfly winks.

    The best to you and your investing: AD
    Feb 4, 2015. 06:40 PM | 1 Like Like |Link to Comment
  • Avangardco: A Strong Egg Producer With A Strategic Edge [View article]
    BG:

    I have to give you credit for finding silver needles in rusty haystacks.

    Thank you for the work.

    AD
    Feb 4, 2015. 02:29 PM | Likes Like |Link to Comment
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