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randolphdeleon

randolphdeleon
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  • Update: After Moynihan's Commentary, We Still Like Bank Of America [View article]
    Funfun, I think there is a distinct difference in today's legal environment than what was seen six or seven years ago. The money center banks then had always assumed that any mortgage loan guaranteed by Fannie Mae and sold subsequently will free them up of any liabilities, contingent or otherwise. The banks learned traumatically that their assumption was pathetically wrong.
    In other words, while greed indeed came into play in these loan originations, it was easy then for the lending arm of the banks to justify its deals with the risk evaluation arm of the bank (and the attendant government supervising agencies)of the risk profiles of these near zero down payments mortgages. The mortgages were reportedly not only guaranteed by Fannie Mac and Sallie Mae they were subsequently sold and had gone off the books of the banks.
    This is why lower down payments to less than 10% will not be seen in the forseeable future for these banks. In addition, to the stiffer requirements of the risk committees of these banks, FDIC and state supervisory agencies will not allow them to be "off the book" without some contingency bad debt provisions.
    Nov 17, 2014. 12:41 PM | 3 Likes Like |Link to Comment
  • Can General Electric Return To Its Previous Blue-Chip Dividend Growth Stock? [View article]
    Like Buyandhold, I treat GE as one of the integral parts of my conservative portfolio. Because I have bought GE over the last four years, my present dividend payout of the stock averages 4.9%. I view the 88 cents per share dividend stable as it represents less than 50% of the forward EPS of GE in 2015 to 2016. As such it would be difficult for people like me to find a more stable alternative stock in terms of yield. I agree then with buyandhold that GE is one stock we just have to "bear " as it goes about meandering in the mid 20's to high 20's if you are a conservative investor like me. The only way to propel the stock price past into the high 30's is for GE to either break up the company or double its EPS growth rate to 20% . Either alternative is wistful thinking.
    Sep 23, 2014. 05:24 PM | 3 Likes Like |Link to Comment
  • Bank Of America Has Been Dead Money For 20 Years: Did They Fire The Right People? [View article]
    This is remarkably a thoroughly irrelevant article. Of all the billions of reasons to criticize Bank of America, Don chose to focus on a few trees! The article is pointless! I had been long on WFC ever since two years ago and have unloaded recently to add to my long position of BAC. BAC unlike WFC has the potential to increase by more than 50-80% within the next two years. The mortgage problem I feel will inevitably become irrelevant (just as this article is) to the price movement of BAC in the next two years as Bank of America reaps the rewards of the "rationalization" of its unwieldy operations. The Bank stock price will eventually move closer to its book value. If this comes true, Moynihan indeed deserves every single cent of his $14 million compensation.
    Jul 2, 2014. 12:59 PM | 4 Likes Like |Link to Comment
  • CNBC: GE revised proposal creates three joint ventures [View news story]
    Here is an excerpt from WSJ Bugle Boy
    "Those concessions, along with a sale of GE's rail signaling business to Astom, would lower the $17 billion price the U.S. industrial giant had been offering to pay for Alstom's businesses. Mr. Immelt said the new price is still being calculated, but the underlying valuation of the assets remains the same."
    Jun 19, 2014. 03:56 PM | Likes Like |Link to Comment
  • CNBC: GE revised proposal creates three joint ventures [View news story]
    From a long term GE shareholder's(since 09) viewpoint, this is a very disciplined, deliberate and benign move. By sticking to his price,Immelt is not overpaying Alstom. Going forward, this will probably add incremental profits( rounding errors?) without jeopardizing the cash till too much. But what is truly important about this deal is this. It will assure access to the relatively "closed" European market for GE's power and energy related businesses. This market access in essence is the primary benefit for GE.
    Jun 19, 2014. 01:40 PM | 2 Likes Like |Link to Comment
  • GE to present improved offer tomorrow [View news story]
    Agree! GE should just stand its ground submit the same bid and receive the $250 million+ breakup fee. GE can grow organically and really does not need huge acquisitions like Alstom.

    Having said that,Immelt and his cohorts would never do such a thing due to their huge corporate egos!
    Jun 18, 2014. 06:09 PM | Likes Like |Link to Comment
  • It Appears As Though Shares Of Bank Of America Will Be Taking A Hit On Monday [View article]
    Regarded Solutions, great article! I think though these are the jeopardies in looking at a stock with a short term horizon. There will always be events that will affect stock prices in the short term. I think for long term (at least 5 year horizon) investors like me the question is whether such short term events will affect my perceived long term "story" for the stock. I encountered the same travails with some of my other individual stocks seen in my present portfolio specifically AITV and INTC. In Activision, there were constant noise of the demise of the console videogames with the advent of handheld games. My contention was that the console videogames will always have their niche and that the medium term catalyst for the AITV is the divestment by Vivende. For Intel, despite all the huffs and puffs about Intel being conspicuously absent in mobile devices, my contention was that the decline in the pc industry in recent years was caused more by the recession(thus cutbacks in corporate spending) than the long slow process of purchase transformation from pc's to hand held devices by corporations. The price movements of these stocks seem to bear out my long term contentions. The long term question for BAC is this. Would all the short term "huffs and puffs" of the legal liabilities affect the long term cost restructure, business rationalization engineered by Moynihan? If the events won't, the stock price would eventually find valuation equilibrium with the rest of the industry as operating earnings expand in the coming years. The obvious answer is no! As such any dip in stock prices should be viewed as buying opportunities for long term investors like me. Do you agree?
    Jun 15, 2014. 02:05 PM | 1 Like Like |Link to Comment
  • What Will The Alstom Deal Bring To General Electric? [View article]
    Isn't this much ado about nothing? On one hand, you mentioned:

    "Furthermore, the deal will allow the company to come closer to its target of 70% earnings from the industrial segment. There is no doubt about the operational importance of the deal to GE"

    On a subsequent paragraph, you stated:
    "GE expects to gain considerable benefits from the deal -- the company is expecting that the acquisition will improve its earnings per share by $0.08 to $0.1 by 2016"

    Really?
    10 cents is almost a rounding error for a projected $2.00 EPS for GE in 2016. In the meantime, top management is nearly spending 100% of its time on this deal for the past two months. Their precious and expensive time is surely better off spent on improving market shares and cost efficiencies of its most promising divisions in oil services segment and aircraft related manufacturing. Those are the critical moves that will really move the needle in profitability.

    In reality, in the scale of things, Alstom is a benign distraction in the best case scenario
    Jun 4, 2014. 05:56 PM | 4 Likes Like |Link to Comment
  • I Might Very Well Be Wrong About Bank Of America [View article]
    What's that they say: "A man must be big enough to admit his mistakes, smart enough to profit from them.." (John Maxwell). I have enjoyed your articles. I have been long with BAC for a long time. Reading "bi-polar" articles here has really tested my original premise for being long on the stock since 2009- "turnaround situation piloted by a hard nosed CEO", "below book value stock price", " significant upside potential despite the litigation problems","enough litigation and loan loss reserves" et al. I do hope the price finally reaches the 20 levels to allow me to get out of this stock. It is exhausting. Similarly, I have been very pessimistic with money center banks the past two years. And I do need to move into Indian stocks and high tech companies in a bigger way.
    But honestly your previous articles and your new article on BAC have been very informative. They do weigh heavily and sometimes convincingly against the gamut of more optimistic articles on the bank seen in this site. Thanks.
    May 27, 2014. 04:48 PM | 1 Like Like |Link to Comment
  • General Electric's Grand Illusion [View article]
    Duhaus, I bet you do not even own a share of GE! I think right now it is a matter of ego for Immelt. As the article seems to allude, Immelt and his cohorts of accountants miscalculated the reaction of the French Government. The French Government is acting how a socialist government would have reacted. It is characteristically protective of the industries who are key players in its grand multi-year plan. Immelt probably thought that the French government would act logically and not politically. In the end, I don't see how GE can come out ahead of this deal when the French government who basically holds the veto card has invested so much political capital in stopping the deal. Hollande, Valls and Montebourg have come out on a limb against the deal and for them to back out GE have to make such concessions that will make the deal indefensible. Look at what is happening to the car companies heavily invested in Europe- GM, Ford. It is taking them more than a decade to turn around their operations due to intransigent labor laws. Why should the shareholder's interest be suborned to the egos of GE's management. I have been a dividend investor of GE since 09. I'm in it for the long haul because of the dividend yield which is significantly more than what the rest of the market yields. Simply counting on organic growth and gradual divestment of the financial sector can accomplish what Immelt hopes to do with Alstom in two to three years. Hopefully, with enough activist investors like us crying foul as the deal drags on due to French intransigence Immelt would walk away from the deal and suborn his ego needs. GE should indeed walk away from the deal at this point and pay the breakup fee. That is the best case scenario.
    May 23, 2014. 12:37 PM | Likes Like |Link to Comment
  • Bigger Is Better At General Electric, Stop Dumping On Immelt [View article]
    I too am long in GE. Like a lot Immelt supporters I have accumulated my stock position in recent years. I in fact treat GE as a core holding of my portfolio. This is primarily because the stock currently yields me a near 5% yield which I wouldn't be able to find elsewhere among blue chips.
    My point is this. I feel GE's stock is thriving despite Immelt and not because of Immelt. I truly question his strategic vision. Historically, he hasn't done that well. While it is true it was Welch who built up the Finance portfolio in the 90's, Immelt nonetheless took rein of the company in 2001. And he had 7 years to rectify the situation should he have that strategic vision then for GE to revert back as an industrial company. His decision to steer GE into an industrial company was a reactionary move to the traumas the company went through in subprime collapse.
    His current obsession to reduce the company's dependence on "non-industrial" components of the company has driven him to do three things. One, his decision to dump 50% of Universal-NBC. Two, his decision to spin off GE credit card division. Three, to make a bid of Alstom hostile to the wishes of the French government. I question all three moves as they were indeed made with strategic visions formulated using rear view mirrors. The stake in NBC was sold when the network was doing poorly limping as a poor third or fourth network in overall ratings. The movie studio and entertainment were also underperforming. Despite the doubling in income ever since GE got rid of its stake, Comcast's Roberts recently said that the division is still underperforming vis-à-vis its peers. On hindsight, should GE have kept its stake, its earnings per share would have increased significantly. Even with a measly 15 P/E ratio, GE would now have been a $30+ stock. His decision to spin off GE credit card may be a good move in the short term(any spin off will obviously help a stock), it is questionable though whether GE may be giving up a potentially high growth division. I feel the stock with its unique position as a "third party" issuer may actually enjoy a higher P/E eventually than GE. Third, I feel GE is courting disaster by taking over a French company with its intransigent and ridiculous labor laws and practices against the wishes of the French government. Invariably the synergy benefits accrued in merging of two competing companies in an industry are seen in major overhead reductions. I can only foresee GE struggling with the French government and bureaucracy with their ridiculous labor laws and rules. GE could very well be left with an elephant in its hand having to deal with a company which almost declared bankruptcy a decade ago and survived because the French government decided to prop it up. GE's position right now is tremendous because it is benefitting from three industries on the rise for the next decade or so- petroleum related industry, power and infrastructure industry and airplane industry. These industries are driven by insatiable demand from BRIC and newly industrializing countries. The company should just sit in its existing portfolio and let internal organic growth boost up its earnings.
    May 12, 2014. 06:06 PM | 1 Like Like |Link to Comment
  • Bigger Is Better At General Electric, Stop Dumping On Immelt [View article]
    Seriously? Consider this.
    Immelt took over in Sept 7, 2001. The adjusted closing price then was 26.21. Thirteen years later, GE is 26.68. When Immelt took over GE's net income was $15.1 Billion in 2002, in 2013- $16.9 Billion. And the touted sale of 50% share of NBC Universal? If GE had kept it, its earnings would have significantly increased because NBC Universal had a near 130% jump in net income ever since GE sold its share in 2012. The NBC earnings is what's driving up the stock price of Comcast now.
    How much time do we give a CEO? Thirteen years is a long, long period in modern Corporate America! If GE had any other CEO coming from the other DJ Industrials, we would now be looking at all time high for GE. And I am not one of long suffering shareholders, I basically got in a few months after Buffet got his sweetheart deal. I have also consistently bought in and am holding on for the next one to two years.
    Immelt at best is a mediocre CEO. His performance since he started with GE had shown that.
    I agree though that GE is in its best position (technical wise, business portfolio wise) ever since 07.
    May 12, 2014. 12:28 PM | 3 Likes Like |Link to Comment
  • Alstom Desperate, General Electric Moves In For The Kill [View article]
    Immelt took over in Sept 7, 2001. The adjusted closing price then was 26.21. Thirteen years later, GE is 26.19. When Immelt took over GE's net income was $15.1 Billion in 2002, in 2013- $16.9 Billion. And the touted sale of 50% share of NBC Universal? If GE had kept it, its earnings would have significantly increased because NBC Universal had a near 130% jump in net income ever since GE sold its share in 2012. The NBC earnings is what's driving up the stock price of Comcast now. We don't really need a Steve Jobs for GE- all we need is any Tom,Dick and Harry running most of the other Dow Jones industrials who have seen their company stock prices gone back to their all time highs! I'm saying this despite being one of the more fortunate GE shareholder who has consistently bought in since late 2009.
    May 7, 2014. 05:23 PM | 1 Like Like |Link to Comment
  • Another $800 Million Down The Drain For Bank Of America Shareholders [View article]
    That's the point Mr. Dion. If BAC did not purchase Countrywide, it would have been a lackluster stock . $800 Million appears to be the tail-end of Bank of America's troubles and can actually be construed as a "rounding error" should Bank of America earn in excess of $20 Billion in 2014 before tax as projected.
    I have never been a fan of money center banks and the only reason why I got in BAC coincided with the time Buffet got his "sweetheart" deal from the bank. Even with my average costs at single digits, I'm still holding on until the market recognizes its book value and the stock price' value reflects both the bank's book value and the earnings growth potential of the bank( given rising interest spreads and successful cost reduction programs instituted by Moynihan).
    I still feel that BAC is one of the low lying fruits for the taking coming out of the recession for amateur investors like me. It probably still has some legs to run on to the mid-20's levels.The bank, GE and Gencorp are my core holdings and they all represent once in a lifetime opportunity to hold on to "disgraced blue chips" that have survived the recession and have thrived afterwards.
    Apr 4, 2014. 06:46 PM | 1 Like Like |Link to Comment
  • Will General Electric Face Activist Pressure? [View article]
    The bottom line is that this may be the best time to get in the GE bandwagon. I have held my shares since Warren Buffet got in and have loaded up throughout the years. It remains one of my core holdings primarily in view of its dividend yield and projected dividend growth.

    It will be difficult for any "activist" shareholder to hold any sway in the company. Aside from the fact that GE's shareholders are primarily major staid institutions and small shareholders- its shareholding base is deep and wide. Besides, management has the backing of people like Warren Buffet plus management's political connections are incredibly established with current administration.

    No, Peltz' motivations are primarily more "fundamental investing" oriented. He knows the stock is well placed at this point in time with the spinoff of an incredibly promising subsidiary in GEC. Its final valuation may surprise everybody on the upside as a stand-alone seeing how it is incredibly placed in the now hot again consumer finance market. The rest of the company is also nicely positioned to grow with its bulging orders portfolios.

    Any "activist" generated hype will certainly do no harm to the stock at this point in time. It could serve as one of the catalysts from the perception of short term traders.

    I am continuing to load up my position this year at any sign of weaknesses despite the relatively low average cost of my position in GE in the mid-teens.
    Mar 21, 2014. 12:37 PM | Likes Like |Link to Comment
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