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markb

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  • GE CFO Jeff Bornstein: How We Have Reimagined Our Financial Reporting [View article]
    This is a good first step. Digging through all the crap in existing Kafkaesque SEC reporting is a pain in the butt. I hope this is the start of a trend. Thanks for trying GE!
    Mar 3, 2015. 10:43 AM | 2 Likes Like |Link to Comment
  • Dividend Safety And Capital Allocation Of John Deere [View article]
    Your key assumption that FS does not pose a threat to the company does not appear to have been stress-tested in a forward-looking further weakening agricultural environment scenario.
    Mar 3, 2015. 07:54 AM | 1 Like Like |Link to Comment
  • Buffett Increases Berkshire Hathaway's Investment In Deere By 125%: Let's Analyze It [View article]
    Good article. I think DE is overvalued and am not sure where WB is coming from. Seems like the narrative is, they've made it through cycles before and they will again, so relax and enjoy the dividend. But I don't find this ag outlook relaxing going forward.

    Anyway, could you provide a perspective on their financing operation, both how it affects the inputs flowing through your model and what risks it generates? DE has around $30B receivables and leases on the balance sheet and their 10q says "the total assets of unconsolidated VIEs related to securitizations are approximately $53B".

    It seems like the significant on-bs financing they do would cause your FCF metrics to understate. But on the other hand, it creates a credit loss risk should things get worse. They lay off that risk when they securitize, but if things got worse securitization could get more expensive or dry up, then DE would feel more balance sheet pressure as they finance in house.

    My feeling is they are ok now, but investors aren't considering that if things get worse these balance sheet issues could come home to roost.
    Feb 26, 2015. 04:49 PM | 3 Likes Like |Link to Comment
  • Deere's Low-Quality Earnings Spell Trouble For The Dividend [View article]
    High ROE is not necessarily an indicator of capital efficiency...can be achieved by financial leverage...DE debt/eq is 4x vs 2.3x for CAT. Further, more farmers are turning to leasing which if retained strains DE balance sheet and exposes it to new risk asset: leased equipment residual. And if laid off reduces margin. DE dividend ok now, but DE doesn't know where the bottom is. Capacity to increase is questionable. Good forward looking article. Looking back ten years and saying "DE has done fine up to now so its safe" is dicey logic.
    Feb 25, 2015. 10:46 AM | 1 Like Like |Link to Comment
  • Deere Has Been Stuck In Neutral, But The Seeds For Future Returns Have Been Sown [View article]
    I wouldn't call DE ROE of 31% "very impressive" necessarily. ROE is a function of capital efficiency and simple financial leverage. DE's debt/equity ratio at 4x is significantly higher than CAT's 2.3x. Not a big deal when times are good, but could make them hesitant to increase dividends if growth moderates. Further, more farmers are turning to leasing....if DE carries it increases capital intensity and puts residual value risk on the balance sheet. Given the place in the cycle I would rather see DE with a more conservative balance sheet and lower ROE right now.
    Feb 24, 2015. 01:05 PM | Likes Like |Link to Comment
  • Deere - Excellent Cost Control Alleviates Concerns [View article]
    Titanic...Excellent Safety Equipment Alleviates Concerns
    Feb 23, 2015. 06:01 PM | Likes Like |Link to Comment
  • Deere & Co. Still A Disaster; Look Out Below [View article]
    10 year div/NI around 25% and 2015 is 44% so I don't know how anybody can say "dividend is projected to grow nicely" when management doesn't even know where the bottom is. If your investment thesis is "they've always come back before", well, good luck with that, but realize that at this point no one knows what they need to come back from. Warren doesn't care cause he's got a 50 year time frame but I don't, particularly since other less uncertain opportunities are available that aren't on a slippery downward slope.
    Feb 23, 2015. 05:55 PM | Likes Like |Link to Comment
  • Deere & Company: Should Investors Run For The Hills After Terrible 1st Quarter Results? [View article]
    Longer term dividend looks solid because they have a nice 10 year backward looking history? I don't think so. Div/NI trend: 2013 20%, 2014 25%, 2015 44%. And look at how much their fc changed in the last 3 months! These guys have no idea where the bottom is right now.
    Feb 23, 2015. 05:29 PM | 1 Like Like |Link to Comment
  • Deere Earnings Paint Gloomy Picture Of U.S. Farming [View article]
    Agree with article. Prior period earnings were managed above their low expectations hurdle, but the forecast was worse. A turnaround is no where in sight and without it cost cuts will be increasingly less effective to prop EPS. Construction was ok but too small in mix pie to offset. I'm surprised price is holding up. I respect Mr. Buffett but his forever timeframe may be of little consolation to us 3-5 year types. Dividend coverage will be going down. I'm waiting...safer plays elsewhere.
    Feb 23, 2015. 09:35 AM | 2 Likes Like |Link to Comment
  • Deere Announces First-Quarter Earnings of $387 Million [View article]
    Farmers feeling squeezed and have relatively new tractors. Lucky Warren is patient cause that is not a good combo medium term.
    Feb 20, 2015. 08:49 AM | Likes Like |Link to Comment
  • Deere beats by $0.29, beats on revenue [View news story]
    I think you mean 50%, 100% would mean all. Still, their guidance is a crapshoot...must be pretty weak on the ole farm these days.
    Feb 20, 2015. 08:43 AM | 2 Likes Like |Link to Comment
  • Deere falls after cutting profit forecast [View news story]
    Yes, this looks pretty bleak. Hard for DE to issue credible guidance when they don't know where the bottom is.
    Feb 20, 2015. 08:38 AM | Likes Like |Link to Comment
  • Fabletics - The Economic Alternative To Lululemon [View article]
    Just went to their website. Virtually everything on sale is not available. Further, it appears you need to join some sort of club where they mail clothes to you each month and you pay for it whether you want it or not. If so, my guess is the teaser first month is a nice outfit and the forced months are questionable manufacturers overstock. Perhaps the authors of this infomercial/article would care to disclose how this business model is actually intended to work.
    Feb 15, 2015. 10:39 AM | 2 Likes Like |Link to Comment
  • AmEx down 6% on scrapping of Costco exclusivity [View news story]
    Terrific post TalonC, very helpful. AXP has successfully navigated various speed bumps like this throughout history. And they are the industry vanguard, generally copied by banks, V and MC. In this case the speed bump is the emerging fact that cobrands in general are asymmetrical deals that favor the retailer in the medium term as they pit competitive issuers against one another to eke out the last basis point. Because AXP is choosing not to participate in that value destroying game, don't count them out as far as a very compelling marketing response.

    And for all the posters sharing personal experience regarding AXP or Costco to make investment decisions, a smart guy once told me that "marketing research on yourself" is usually a weak rationale. AXP got to $1T global spending somehow. If its stock price gets much lower I'll be buying.
    Feb 15, 2015. 10:06 AM | 1 Like Like |Link to Comment
  • Bloomberg: AmEx also divorcing JetBlue [View news story]
    Dumping Costco is better for AXP than losing money. AXP is learning not to trust their cobrand partners not to stab them in the back. I'm sick of Costco already...first you have to pay a fee to buy their bulk junk, then flash the card like you're in some cult, then get your cart frisked at check out...and now you need to use the form of payment they dictate? Screw Costco...too Soviet.
    Feb 14, 2015. 01:31 AM | 14 Likes Like |Link to Comment
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