George Fisher's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/201941/comments http://seekingalpha.com/article/291990/comments?source=feed#comment-11455411 11455411 Sat, 10 Nov 2012 12:13:02 -0500 http://seekingalpha.com/article/681941/comments?source=feed#comment-6841721 6841721
Account cash flow can come from investments other than what is commonly called DGI. These could include utility stocks, REITs, LLCs and MLPs just to name a few. I also consider writing covered calls as a form of income, along with Treasury Inflation Protection Securities where the bond interest and principal payments grows along with inflation. ]]> Wed, 27 Jun 2012 10:04:38 -0400
Account cash flow can come from investments other than what is commonly called DGI. These could include utility stocks, REITs, LLCs and MLPs just to name a few. I also consider writing covered calls as a form of income, along with Treasury Inflation Protection Securities where the bond interest and principal payments grows along with inflation. ]]> http://seekingalpha.com/article/681941/comments?source=feed#comment-6814001 6814001
You are correct that properly identifying an investment objective is paramount to achieving that objective. If the objective is to generate an increasing "income" stream, a conglomeration of assets can be accumulated that satisfy this goal, and dividend growth stocks should be one of those assets. Understanding one's eventual needs for the invested capital and risk tolerance should lead to the formulation of the investment objective.

"Income" comes in many forms and I prefer to look at it as "account cash flow". Within the objective of increasing "account cash flow", there are other opoportuities than solely DGI.

Changes in the stated objective of course may alter the structure of the assets. ]]> Tue, 26 Jun 2012 14:04:56 -0400
You are correct that properly identifying an investment objective is paramount to achieving that objective. If the objective is to generate an increasing "income" stream, a conglomeration of assets can be accumulated that satisfy this goal, and dividend growth stocks should be one of those assets. Understanding one's eventual needs for the invested capital and risk tolerance should lead to the formulation of the investment objective.

"Income" comes in many forms and I prefer to look at it as "account cash flow". Within the objective of increasing "account cash flow", there are other opoportuities than solely DGI.

Changes in the stated objective of course may alter the structure of the assets. ]]> http://seekingalpha.com/article/681941/comments?source=feed#comment-6806701 6806701
The matrix I use to compare potential opportunities include S&P equity ranking for 10-yr consistency in eps and divy growth, consensus timeliness, Forward PEG ratio, divy growth and current yld, earnings yield, anticipated 3-yr TSR, and Graham Value based on current book value and projected earnings.

There is the old saying that what is considered "value" today may be of greater "value" tomorrow, and value investing is not market timing. A great company that is currently overvalued is not necessarily a great investment.

My advice is to stay nimble and diversified.]]> Tue, 26 Jun 2012 11:24:56 -0400
The matrix I use to compare potential opportunities include S&P equity ranking for 10-yr consistency in eps and divy growth, consensus timeliness, Forward PEG ratio, divy growth and current yld, earnings yield, anticipated 3-yr TSR, and Graham Value based on current book value and projected earnings.

There is the old saying that what is considered "value" today may be of greater "value" tomorrow, and value investing is not market timing. A great company that is currently overvalued is not necessarily a great investment.

My advice is to stay nimble and diversified.]]> http://seekingalpha.com/article/681941/comments?source=feed#comment-6773981 6773981
"If you adopt a long-term investing horizon and spend your time searching for dividend growth stocks that grow earnings and dividends by at least 7% or so per year, then you don't have to worry about stock price."

Your article is about searching (ie new capital investments) for dividend growth stocks without consideration of current or future valuations, only eps and divy growth. It is not about finding growth at reasonable value, it is about growth at any value. If the article was about findiing divy growth at reasonable value, there would have been comments about how to evaluate reasonable value.

I believe investing based on ignoring current/future valuations is a mistake except for those who acknowledge their lack of concern for overall portfolio performance. Don't include me in that group, please.]]> Mon, 25 Jun 2012 14:20:16 -0400
"If you adopt a long-term investing horizon and spend your time searching for dividend growth stocks that grow earnings and dividends by at least 7% or so per year, then you don't have to worry about stock price."

Your article is about searching (ie new capital investments) for dividend growth stocks without consideration of current or future valuations, only eps and divy growth. It is not about finding growth at reasonable value, it is about growth at any value. If the article was about findiing divy growth at reasonable value, there would have been comments about how to evaluate reasonable value.

I believe investing based on ignoring current/future valuations is a mistake except for those who acknowledge their lack of concern for overall portfolio performance. Don't include me in that group, please.]]> http://seekingalpha.com/article/681941/comments?source=feed#comment-6772541 6772541
But this is not the premise of the article, which is to ignore current valuations and focus strictly on future yield on invested capital. Even the title says, "Ignore Stock Prices".

So which is it: "Reasonable Valuations" or "Ignore Stock Prices"? Can't be both. ]]> Mon, 25 Jun 2012 13:47:14 -0400
But this is not the premise of the article, which is to ignore current valuations and focus strictly on future yield on invested capital. Even the title says, "Ignore Stock Prices".

So which is it: "Reasonable Valuations" or "Ignore Stock Prices"? Can't be both. ]]> http://seekingalpha.com/article/681941/comments?source=feed#comment-6767481 6767481
As a value oriented investor, I believe the opposite - it's all about current yield and anticipated total stock return (TSR). The increasing dividend should be only one factor in specific stock selections, and not the overriding singular criteria. While consistant divy increases is a great sign of past consistancy in earnings growth, overpaying for each dollar of incremental income seems to add the potential of future underperformance on a TSR basis - both with investable capital and re-investment of the divy. With a static share price, what would the TSR be for an investment yielding 3% and a dividend growing by an above average rate of 7% a yr? Taking the old fashion of Rule of 72, your annual return on invested capital will be 6% in 10 yrs.

Individual current yields go up and go down, and I prefer to buy when the current yield is high - ie individual stock prices are depressed.

If the goal is to increase overall wealth, TSR would be a much better indicator than future income growth. ]]> Mon, 25 Jun 2012 11:56:26 -0400
As a value oriented investor, I believe the opposite - it's all about current yield and anticipated total stock return (TSR). The increasing dividend should be only one factor in specific stock selections, and not the overriding singular criteria. While consistant divy increases is a great sign of past consistancy in earnings growth, overpaying for each dollar of incremental income seems to add the potential of future underperformance on a TSR basis - both with investable capital and re-investment of the divy. With a static share price, what would the TSR be for an investment yielding 3% and a dividend growing by an above average rate of 7% a yr? Taking the old fashion of Rule of 72, your annual return on invested capital will be 6% in 10 yrs.

Individual current yields go up and go down, and I prefer to buy when the current yield is high - ie individual stock prices are depressed.

If the goal is to increase overall wealth, TSR would be a much better indicator than future income growth. ]]> http://seekingalpha.com/article/677181/comments?source=feed#comment-6713961 6713961
You are correct that G&A operating expenses and fees total 15%. For a better description of the relationship between DMLP and it's GP, I suggest you review pages 45-48 and pg 5 of their 2011 annual report overview here:
http://bit.ly/MLEbOb

Overall, GP fees are 4% of the royalty income and 1% of the NPI income. G&A expenses were 9.7% of revenue. From their 10K, "General and Administrative Costs; In accordance with our partnership agreement, we bear all general and administrative and other overhead expenses subject to certain limitations. We reimburse our general partner for certain allocable costs, including rent, wages, salaries and employee benefit plans. This reimbursement is limited to an amount equal to the sum of 5% of our distributions plus certain costs previously paid. Through December 31, 2011, the limitation was in excess of the reimbursement amounts actually paid or accrued....General and administrative (“G&A”) costs increased 11.1% from $3,715,000 in 2009 to $4,128,000 in 2010 due to increased costs related to, among other things, regulatory reporting changes, increased number of unitholder accounts requiring K-1s and professional fees related to revenue audits. G&A decreased slightly in 2011 to $4,088,000."

I don't believe management hedges and DMLP should be considered as having greater exposure to the short-term movements of energy commodities. I find that aspect to be attractive, working against you in times of weak pricing environments and working for you in times of strong environments. Currently, we know which cycle nat gas is in. Due to this, the distribution is volatile and may be unattractive to the typical divy, MLP, RT investor. In the long-term, I prefer DMLP with no debt leverage over the need to hedge to cover interest/principal repayments. ]]> Fri, 22 Jun 2012 23:00:15 -0400
You are correct that G&A operating expenses and fees total 15%. For a better description of the relationship between DMLP and it's GP, I suggest you review pages 45-48 and pg 5 of their 2011 annual report overview here:
http://bit.ly/MLEbOb

Overall, GP fees are 4% of the royalty income and 1% of the NPI income. G&A expenses were 9.7% of revenue. From their 10K, "General and Administrative Costs; In accordance with our partnership agreement, we bear all general and administrative and other overhead expenses subject to certain limitations. We reimburse our general partner for certain allocable costs, including rent, wages, salaries and employee benefit plans. This reimbursement is limited to an amount equal to the sum of 5% of our distributions plus certain costs previously paid. Through December 31, 2011, the limitation was in excess of the reimbursement amounts actually paid or accrued....General and administrative (“G&A”) costs increased 11.1% from $3,715,000 in 2009 to $4,128,000 in 2010 due to increased costs related to, among other things, regulatory reporting changes, increased number of unitholder accounts requiring K-1s and professional fees related to revenue audits. G&A decreased slightly in 2011 to $4,088,000."

I don't believe management hedges and DMLP should be considered as having greater exposure to the short-term movements of energy commodities. I find that aspect to be attractive, working against you in times of weak pricing environments and working for you in times of strong environments. Currently, we know which cycle nat gas is in. Due to this, the distribution is volatile and may be unattractive to the typical divy, MLP, RT investor. In the long-term, I prefer DMLP with no debt leverage over the need to hedge to cover interest/principal repayments. ]]> http://seekingalpha.com/article/677181/comments?source=feed#comment-6699601 6699601 Fri, 22 Jun 2012 14:03:20 -0400 http://seekingalpha.com/article/677181/comments?source=feed#comment-6696641 6696641
FD: Long DMLP since 2006]]> Fri, 22 Jun 2012 12:57:58 -0400
FD: Long DMLP since 2006]]> http://seekingalpha.com/article/662361/comments?source=feed#comment-6641321 6641321
Dahl is not what investors may typically considered an "insider" as he is an outside investor rather than an officer or on the BOD. The SEC lumps large outside investors together with functional "insiders" of officers and directors for transaction reporting purposes. ]]> Thu, 21 Jun 2012 09:16:47 -0400
Dahl is not what investors may typically considered an "insider" as he is an outside investor rather than an officer or on the BOD. The SEC lumps large outside investors together with functional "insiders" of officers and directors for transaction reporting purposes. ]]> http://seekingalpha.com/article/671061/comments?source=feed#comment-6602541 6602541
Another great timber article. I thought you may have some sawdust in your veins. With such high insider ownership, do you really think management would be open to a buyout? I like your analysis on timber valuation and shows how POPE could be considered a bit undervalued. However, much like oil companies where NAV is a bit less important than OCF for valuation, I don't think an underfollowed small cap with a very small float like POPE will trade anywhere close to its underlying timber value without a catalyst like an acquisition. Keep up the great work.

FD: Long POPE since 2003]]> Wed, 20 Jun 2012 09:46:50 -0400
Another great timber article. I thought you may have some sawdust in your veins. With such high insider ownership, do you really think management would be open to a buyout? I like your analysis on timber valuation and shows how POPE could be considered a bit undervalued. However, much like oil companies where NAV is a bit less important than OCF for valuation, I don't think an underfollowed small cap with a very small float like POPE will trade anywhere close to its underlying timber value without a catalyst like an acquisition. Keep up the great work.

FD: Long POPE since 2003]]> http://seekingalpha.com/article/662361/comments?source=feed#comment-6470191 6470191
http://bit.ly/M0ctea

Look at the Feb 05 gap up and spike from $27 to $55 (some trades that day went for over $75). The reason was a single newsletter recommended the shares and investors piled on. What happened when they were satisfied - shares dropped back to the low $30s. With thinly traded stocks, events that generates higher interest can temporarily raise prices.

Timber is a cyclical business. This is especially evident looking at the highs and lows of share prices. As a cyclical, investors should evaluate where in the cycle we are and how it is reflected in share prices. In my mind, the latest movements up to $55 puts us at late cycle valuations, ie 2007, but are not at late cycle fundamentals.

There needs to be discussions of sustainable harvest vs current harvest and the amount of "banked" harvest that is available from under-harvests of the past few years. If there is a spike in earnings is it from an increase in sustainable or from temporary additions from "banked" harvest volume?

There needs to be discussions on the future of Distributable Cash Flow vs share prices to determine if this rally is a fundamental change in valuations or some short-term bump in interest.

As a commodity driven company, discussions on current and future log pricing would be helpful, especially with the impact of the recent (and possibly flightly) Chinese demand.

I agree that the underlying business is improving with a potential bottom in US housing, the previously uninterested Chinese demand for Northwest timber, and the mountian pine beetle. However, I feel these are baked into the current share price, especially after the 22% runup in price over the past 4-6 weeks on higher volumes.

I sold a bit today into the rally that I bought in 2009 for a nice total return. I will relook at it again if it drops back to the mid/low $40s. I would caution newcomers to do their homework before jumping in.

Don't forget to use limit orders with thinly trade stocks so as not get caught like those in Feb 2005 (I wrote a commentary way back then on this exact trade, and think I have a copy for those are interested, send me a message with your email and I'll try to dig it up).

FD: Long POPE since 2003]]> Fri, 15 Jun 2012 14:33:06 -0400
http://bit.ly/M0ctea

Look at the Feb 05 gap up and spike from $27 to $55 (some trades that day went for over $75). The reason was a single newsletter recommended the shares and investors piled on. What happened when they were satisfied - shares dropped back to the low $30s. With thinly traded stocks, events that generates higher interest can temporarily raise prices.

Timber is a cyclical business. This is especially evident looking at the highs and lows of share prices. As a cyclical, investors should evaluate where in the cycle we are and how it is reflected in share prices. In my mind, the latest movements up to $55 puts us at late cycle valuations, ie 2007, but are not at late cycle fundamentals.

There needs to be discussions of sustainable harvest vs current harvest and the amount of "banked" harvest that is available from under-harvests of the past few years. If there is a spike in earnings is it from an increase in sustainable or from temporary additions from "banked" harvest volume?

There needs to be discussions on the future of Distributable Cash Flow vs share prices to determine if this rally is a fundamental change in valuations or some short-term bump in interest.

As a commodity driven company, discussions on current and future log pricing would be helpful, especially with the impact of the recent (and possibly flightly) Chinese demand.

I agree that the underlying business is improving with a potential bottom in US housing, the previously uninterested Chinese demand for Northwest timber, and the mountian pine beetle. However, I feel these are baked into the current share price, especially after the 22% runup in price over the past 4-6 weeks on higher volumes.

I sold a bit today into the rally that I bought in 2009 for a nice total return. I will relook at it again if it drops back to the mid/low $40s. I would caution newcomers to do their homework before jumping in.

Don't forget to use limit orders with thinly trade stocks so as not get caught like those in Feb 2005 (I wrote a commentary way back then on this exact trade, and think I have a copy for those are interested, send me a message with your email and I'll try to dig it up).

FD: Long POPE since 2003]]> http://seekingalpha.com/article/659521/comments?source=feed#comment-6426281 6426281 Thu, 14 Jun 2012 13:39:06 -0400 http://seekingalpha.com/article/658981/comments?source=feed#comment-6425801 6425801 ROIC) as a comparison as this includes total shareholder return based on equity and debt utilized. While it does not provide a specific "value" price target, it is a great method of comparing management performance with another sector competitor or the sector average.]]> Thu, 14 Jun 2012 13:28:46 -0400 ROIC) as a comparison as this includes total shareholder return based on equity and debt utilized. While it does not provide a specific "value" price target, it is a great method of comparing management performance with another sector competitor or the sector average.]]> http://seekingalpha.com/article/650671/comments?source=feed#comment-6380581 6380581
Nice article. I include bond exposure in all my portfolios for income and lower volatility. However, I believe the 30-yr bull market in bonds is over and interest rate risk is looming large on the horizon. As the bond cycles are much slower to develop, this turn will take time. I generally figure long Treasury yields could rise to about 4.25% and still be within the long-term downsloping yield trend line.

To protect principal, I have been taking a laddered approach to the BulletShares (both investment grade corporate and high yield) and iShares Muni date specific bond ETFs going out 2015-2016. In addition, I have been adding 1-5 yr TIPS ETFs. While I am giving up current yield, I believe the risk to principal is greater.

While these are relatively new and don't have much of a track record, I think they are suitable vehicles for my goal of capital preservation. The game plan is to move back to longer maturities when the risk/reward improves.

I appreciate owyee insight in the preferreds he mentioned. ]]> Wed, 13 Jun 2012 11:27:01 -0400
Nice article. I include bond exposure in all my portfolios for income and lower volatility. However, I believe the 30-yr bull market in bonds is over and interest rate risk is looming large on the horizon. As the bond cycles are much slower to develop, this turn will take time. I generally figure long Treasury yields could rise to about 4.25% and still be within the long-term downsloping yield trend line.

To protect principal, I have been taking a laddered approach to the BulletShares (both investment grade corporate and high yield) and iShares Muni date specific bond ETFs going out 2015-2016. In addition, I have been adding 1-5 yr TIPS ETFs. While I am giving up current yield, I believe the risk to principal is greater.

While these are relatively new and don't have much of a track record, I think they are suitable vehicles for my goal of capital preservation. The game plan is to move back to longer maturities when the risk/reward improves.

I appreciate owyee insight in the preferreds he mentioned. ]]> http://seekingalpha.com/article/650461/comments?source=feed#comment-6325051 6325051
Also, investors looking to buy TIPS directly should be aware that the formula for calculating the cost of TIPS bought in the secondary market is a bit different. The cost of the bond is the market price x the adjusted principal, so a $10,000 1998 original issue TIPS maturing in 2028 yielding 3.625% selling at $156 with an accrued principal of $1419 would cost $22,164 and would generate $514 in interest payment annually.

If you hold the bonds directly, there are tax issues as Uncle Sam taxes the annual inflation adjustment.

I have believed for the past 16 years that TIPS are investors best friend and the stupidest idea for the governement. Historically, governments have made out better than bond investors by paying back long maturity bonds with greatly inflated dollars. TIPS are a way for investors to generate a real rate of return over the lifetime of the maturity. ]]> Mon, 11 Jun 2012 20:09:44 -0400
Also, investors looking to buy TIPS directly should be aware that the formula for calculating the cost of TIPS bought in the secondary market is a bit different. The cost of the bond is the market price x the adjusted principal, so a $10,000 1998 original issue TIPS maturing in 2028 yielding 3.625% selling at $156 with an accrued principal of $1419 would cost $22,164 and would generate $514 in interest payment annually.

If you hold the bonds directly, there are tax issues as Uncle Sam taxes the annual inflation adjustment.

I have believed for the past 16 years that TIPS are investors best friend and the stupidest idea for the governement. Historically, governments have made out better than bond investors by paying back long maturity bonds with greatly inflated dollars. TIPS are a way for investors to generate a real rate of return over the lifetime of the maturity. ]]> http://seekingalpha.com/article/610801/comments?source=feed#comment-5986191 5986191
Keep in mind these are cyclical companies and are priced about mid-cycle, imho. If the southern region has been harvesting an average of 30% below sustainable levels, these firms should be able to increase harvests by 30% above sustainable when US demand picks up, adding a nice positive boost to revenues and earnings at least for a while.

We don't hear much about the mountain pine beetle, but its impact will be felt in a few years throughout the timber regions of Canada (ex-BC for the most part) and the west. As these trees are harvested, their use due to "blue stain" will be in the lower quality ranges potentially pushing down prices there and higher quality logs will be in short supply pushing up prices there.

Who says money doesn't grow on trees?]]> Thu, 31 May 2012 16:28:57 -0400
Keep in mind these are cyclical companies and are priced about mid-cycle, imho. If the southern region has been harvesting an average of 30% below sustainable levels, these firms should be able to increase harvests by 30% above sustainable when US demand picks up, adding a nice positive boost to revenues and earnings at least for a while.

We don't hear much about the mountain pine beetle, but its impact will be felt in a few years throughout the timber regions of Canada (ex-BC for the most part) and the west. As these trees are harvested, their use due to "blue stain" will be in the lower quality ranges potentially pushing down prices there and higher quality logs will be in short supply pushing up prices there.

Who says money doesn't grow on trees?]]> http://seekingalpha.com/article/596351/comments?source=feed#comment-5537001 5537001 Thu, 17 May 2012 12:25:01 -0400 http://seekingalpha.com/article/192609/comments?source=feed#comment-5167781 5167781
I would think that buying around $250 during a market swoon could generate a 5% dividend, based on their new divy policy. Although much of the yield will be paid as an annual special divy based on earnings and it may disappoint some traditional divy investors, the yield would be attractive, along with the cap gains potential. When rates begin to rise, the market for rate hedging will be a bit more robust than now. I like their international growth of the past few years.]]> Sun, 06 May 2012 23:20:50 -0400
I would think that buying around $250 during a market swoon could generate a 5% dividend, based on their new divy policy. Although much of the yield will be paid as an annual special divy based on earnings and it may disappoint some traditional divy investors, the yield would be attractive, along with the cap gains potential. When rates begin to rise, the market for rate hedging will be a bit more robust than now. I like their international growth of the past few years.]]> http://seekingalpha.com/article/560611/comments?source=feed#comment-5157601 5157601 Sun, 06 May 2012 13:49:55 -0400 http://seekingalpha.com/article/560611/comments?source=feed#comment-5102931 5102931
Nice article. I agree and have been a shareholder since 1997. Steve Ferris has proven to be a pretty smart guy in the oil biz (while he does get slammed occasionaly with claims of overpaying for acquisitions). I have nibbled a bit over the recent past at prices around and below $82, and if we get there, I'll nibble again. Thanks.]]> Fri, 04 May 2012 12:42:01 -0400
Nice article. I agree and have been a shareholder since 1997. Steve Ferris has proven to be a pretty smart guy in the oil biz (while he does get slammed occasionaly with claims of overpaying for acquisitions). I have nibbled a bit over the recent past at prices around and below $82, and if we get there, I'll nibble again. Thanks.]]> http://seekingalpha.com/article/557031/comments?source=feed#comment-5073671 5073671
Nice article. My suggestion is to add two more comparisons: 1)sustainable harvest volumes, current harvest and amount of "delayed harvest" over the past few years than can be turned into future cash flow; 2) amount of export exposure. These will bring to light current harvest levels, potential future harvest levels vs sustainable harvests and the amount of cash flow exposure to the fickle nature of Asian exports, specifically China. I think it was the RYN guys who noted there is a slowing of Chinese appetite for US logs. ]]> Thu, 03 May 2012 16:14:46 -0400
Nice article. My suggestion is to add two more comparisons: 1)sustainable harvest volumes, current harvest and amount of "delayed harvest" over the past few years than can be turned into future cash flow; 2) amount of export exposure. These will bring to light current harvest levels, potential future harvest levels vs sustainable harvests and the amount of cash flow exposure to the fickle nature of Asian exports, specifically China. I think it was the RYN guys who noted there is a slowing of Chinese appetite for US logs. ]]> http://seekingalpha.com/article/538421/comments?source=feed#comment-5058381 5058381
However, by being a "retro" advisor where individual stocks are selected within a framework of value fundamentals and diversification, advisors should be able to provide a value-added service. Is it not about seeking alpha? What if an advisor could generate a portfolio alpha of 4.9 with a beta of 1.25 over 3 yrs, 5.3 alpha with a beta of 1.24 over 5 yrs, and 8.9 with a beta of 1.06 over 10 yrs and would that alpha/beta relationship be appropriate for the specific client? Would he/she have earned their fee?

Most readers here are self-directed, and don't have a high regard for "advisors". However, there is a place for good ones, especially for those clients who don't have the time nor passion to be successful with their assets - as it takes both to be successful.

For example, I have a son-in-law who works a minimum of 60 hours a week and chooses to spend the balance with his family. He could be a good candidate to use advisory services.

Not all advisors offer out-of-the-can advise. Look for ones that don't.]]> Thu, 03 May 2012 11:04:36 -0400
However, by being a "retro" advisor where individual stocks are selected within a framework of value fundamentals and diversification, advisors should be able to provide a value-added service. Is it not about seeking alpha? What if an advisor could generate a portfolio alpha of 4.9 with a beta of 1.25 over 3 yrs, 5.3 alpha with a beta of 1.24 over 5 yrs, and 8.9 with a beta of 1.06 over 10 yrs and would that alpha/beta relationship be appropriate for the specific client? Would he/she have earned their fee?

Most readers here are self-directed, and don't have a high regard for "advisors". However, there is a place for good ones, especially for those clients who don't have the time nor passion to be successful with their assets - as it takes both to be successful.

For example, I have a son-in-law who works a minimum of 60 hours a week and chooses to spend the balance with his family. He could be a good candidate to use advisory services.

Not all advisors offer out-of-the-can advise. Look for ones that don't.]]> http://seekingalpha.com/article/542571/comments?source=feed#comment-4949851 4949851
Long rates could climb to about 4.25%-4.50% and still be within the 30-yr trend line of the long-term decline of rates that started in 1982 at 14%. With this rise, long bonds could lose upwards of 20% of their current value - how about that for preserving capital.

FD Long BSJE.]]> Mon, 30 Apr 2012 16:37:36 -0400
Long rates could climb to about 4.25%-4.50% and still be within the 30-yr trend line of the long-term decline of rates that started in 1982 at 14%. With this rise, long bonds could lose upwards of 20% of their current value - how about that for preserving capital.

FD Long BSJE.]]> http://seekingalpha.com/article/316552/comments?source=feed#comment-4923521 4923521 I think this purchase of JD Oil & Gas is problematic. Current valuation for EGAS = $90m market cap/$17.3m ebitda (estimate for 2012) = 5.2 x ebitda. It seems JDOG’s ebitda for 2011 was $0.8m, and $17.3m+$0.8m (ebitda for JDOQE in 2011 per SEC filing)*5.2 = $94.1m market cap.

The acquisition will be $2.875m in EGAS shrs plus estimated performance payouts of between $2.875m and $5.29m as per example given with the SEC filing. Total purchase price could be as high as $8.1m, or higher as there is no cap on the payouts and represent paying upwards of 10x JDOQE ebitda multiple per the example. The number of shares to be issued should be a at least 500,000 at a purchase price of $5.6m ($2.8m initial and $2.8m performance), and could be over 750,000 and upwards of 1 mil shares. This represents a dilution of over 6.1% and could reach 12%.

JDOG is current in bankruptcy reorganization. For a company that is in bankruptcy with negative stockholder equity of -$4m (assets $8m and liabilities of $12m), paying upwards of $8 mil purchase price seems a bit self-serving for Osborne, JDOG’s largest shareholder, personal guarantor of much of JDOG debt, and CEO of EGAS. JDOG’s trailing 12 month revenues as of 9/30/11 was $1.56m, making the purchase price upwards of 5x revs and is also a bit high. Current market cap of JDOQE is $24,000 (hasn’t traded in a while, but yahoo reports last trade was 4/13 at $0.0026 on volume of 4200 shrs and there are 9m shrs outstanding) and EGAS will be paying upwards of $8 million?

There is no current filing I could find concerning the reorganization plan of JDOQE and one is not due until May 27, according to the original court filings. What happens to the $12m in liabilities and Osborne’s personal guarantees of much of this debt?

I think this is a way for Osborne to push his liabilities of JDOQE onto EGAS shareholders, creating a potential dilution of upwards of 12% to existing EGAS shareholders with little accretive cash flow or earnings. If Osborne was not personally liable for JDOG’s debt that is in default, would he be willing to pay $0.64 to $1.00 a share for a company whose most recent trade was below half a penny a share?

From EGAS SEC filing:
"Earn-Out Calculation
GNI shall pay to Seller the Earn-Out based on the annual EBITDA of JDOG. JDOG’s EBITDA will be determined on a stand-alone basis, without allocation of overhead or other costs of GNI and its affiliated companies, as of December 31 of each year for five years following completion of the Transaction.

The target EBITDA is $810,432, JDOG’s EBITDA for the year ended December 31, 2011. If JDOG’s annual EBITDA equals $810,432, then GNI shall pay to Seller $575,000 for that year, or $2,875,000 in total over the five-year earn-out period if the target EBITDA is met every year. If JDOG’s EBITDA exceeds $810,432, then GNI shall pay to Seller an amount equal to JDOG’s actual EBITDA divided by $810,432 and then multiplied by $575,000. There is no cap on the annual or total amount of the earn-out payments. If JDOG’s EBITDA is less than $810,432, then no earn-out payment will be made in that year. By way of the example only, the following table illustrates sample EBITDA calculations:

31-Dec EBITDA Target EBITDA Actual JDOG Earn-Out Payment

Year 1 $810,432 $810,431 —
Year 2 $810,432 $810,432 $575,000
Year 3 $810,432 $972,518 $690,000
Year 4 $810,432 $1,620,864 $1,150,000
Year 5 $810,432 $4,052,160 $2,875,000

TOTAL $5,290,000

The Earn-Out, if any, shall be paid in validly issued, fully paid and non-assessable shares of GNI common stock. The share price to be used to determine the number of shares to be issued for any annual payment of the Earn-Out shall be the average closing price of the stock for the twenty trading days preceding issuance of the shares for that installment."]]> Sun, 29 Apr 2012 23:17:10 -0400 I think this purchase of JD Oil & Gas is problematic. Current valuation for EGAS = $90m market cap/$17.3m ebitda (estimate for 2012) = 5.2 x ebitda. It seems JDOG’s ebitda for 2011 was $0.8m, and $17.3m+$0.8m (ebitda for JDOQE in 2011 per SEC filing)*5.2 = $94.1m market cap.

The acquisition will be $2.875m in EGAS shrs plus estimated performance payouts of between $2.875m and $5.29m as per example given with the SEC filing. Total purchase price could be as high as $8.1m, or higher as there is no cap on the payouts and represent paying upwards of 10x JDOQE ebitda multiple per the example. The number of shares to be issued should be a at least 500,000 at a purchase price of $5.6m ($2.8m initial and $2.8m performance), and could be over 750,000 and upwards of 1 mil shares. This represents a dilution of over 6.1% and could reach 12%.

JDOG is current in bankruptcy reorganization. For a company that is in bankruptcy with negative stockholder equity of -$4m (assets $8m and liabilities of $12m), paying upwards of $8 mil purchase price seems a bit self-serving for Osborne, JDOG’s largest shareholder, personal guarantor of much of JDOG debt, and CEO of EGAS. JDOG’s trailing 12 month revenues as of 9/30/11 was $1.56m, making the purchase price upwards of 5x revs and is also a bit high. Current market cap of JDOQE is $24,000 (hasn’t traded in a while, but yahoo reports last trade was 4/13 at $0.0026 on volume of 4200 shrs and there are 9m shrs outstanding) and EGAS will be paying upwards of $8 million?

There is no current filing I could find concerning the reorganization plan of JDOQE and one is not due until May 27, according to the original court filings. What happens to the $12m in liabilities and Osborne’s personal guarantees of much of this debt?

I think this is a way for Osborne to push his liabilities of JDOQE onto EGAS shareholders, creating a potential dilution of upwards of 12% to existing EGAS shareholders with little accretive cash flow or earnings. If Osborne was not personally liable for JDOG’s debt that is in default, would he be willing to pay $0.64 to $1.00 a share for a company whose most recent trade was below half a penny a share?

From EGAS SEC filing:
"Earn-Out Calculation
GNI shall pay to Seller the Earn-Out based on the annual EBITDA of JDOG. JDOG’s EBITDA will be determined on a stand-alone basis, without allocation of overhead or other costs of GNI and its affiliated companies, as of December 31 of each year for five years following completion of the Transaction.

The target EBITDA is $810,432, JDOG’s EBITDA for the year ended December 31, 2011. If JDOG’s annual EBITDA equals $810,432, then GNI shall pay to Seller $575,000 for that year, or $2,875,000 in total over the five-year earn-out period if the target EBITDA is met every year. If JDOG’s EBITDA exceeds $810,432, then GNI shall pay to Seller an amount equal to JDOG’s actual EBITDA divided by $810,432 and then multiplied by $575,000. There is no cap on the annual or total amount of the earn-out payments. If JDOG’s EBITDA is less than $810,432, then no earn-out payment will be made in that year. By way of the example only, the following table illustrates sample EBITDA calculations:

31-Dec EBITDA Target EBITDA Actual JDOG Earn-Out Payment

Year 1 $810,432 $810,431 —
Year 2 $810,432 $810,432 $575,000
Year 3 $810,432 $972,518 $690,000
Year 4 $810,432 $1,620,864 $1,150,000
Year 5 $810,432 $4,052,160 $2,875,000

TOTAL $5,290,000

The Earn-Out, if any, shall be paid in validly issued, fully paid and non-assessable shares of GNI common stock. The share price to be used to determine the number of shares to be issued for any annual payment of the Earn-Out shall be the average closing price of the stock for the twenty trading days preceding issuance of the shares for that installment."]]> http://seekingalpha.com/article/538421/comments?source=feed#comment-4913581 4913581
In addition, selections should be reviewed as a basic US growth, int’l, or income selection

Within this matrix, beginners should look for investments that fall into one of each of these with a long-term strategy of owning a bit of each classification.

I would propose that a beginner incorporates mutual funds only if it is difficult to replicate exposure through individual selections, such as Bonds (since bond prices are going to fall, my suggestion would be to look at the new date-specific bond ETFs, such as BSJE) or emerging market exposure.

Concerning dividends, investors should be cognizant of the potential for dividend tax increases in 2013. The desire/need to increase the gov’t take of our personal income will drive the tax rate on dividends higher. This may have the potential impact of reducing dividend increases in the future. While I’m a strong advocate of DRIPs, the need to diversify outweighs the advantage of reinvestment for one who is beginning to building a portfolio. Reinvesting dividends into other securities helps gain diversification.

It is also critical for beginning investors to be able to describe in 3 sentences why the specific selection is made for inclusion and to have a price target with which to evaluate future performance. In addition, appreciating underlying long-term trends together with value investing adds to the potential for future gains. Buying a great company whose stock is overpriced is not a bargain and may hamper future gains.

My selections may include:
HAL – Energy, Growth, US Large Cap
DMLP, or a similar MLP – Energy, Income, US Small Cap
HBC – Financial, Growth, Int’l (developed)
EXC – Utility, Income, US Large Cap
BSJE – Bonds (very short), US.

This combination should generate about a 5.1% yield and provide a base to add additional selections over time, with the opportunity to add more growth selections over time. Beginners should be more conservative as they start the learning curve of successful investing. There is just about nothing worse than to have a beginner get discouraged due to capital losses created by poor investment selections.

Based on a Barron’s survey of the top 50 wealth managers, the following is an “average portfolio” exposure to the basic asset classes: US Stocks 30.9%, Non-US Stocks 14.0% (developed 8.4%, emerging 5.6%), Real Estate 2.8%, Resources 3.4%, US Bonds 29.4%, Non-US Bonds 3.9% (developed 1.8%, emerging 2.1%), Hedge Funds 11.7%, and Cash 3.9%.

To me, knowing the composition of specific asset classes will go far in developing both a diverse portfolio and the financial education required to be successful in the long-term.

FD: Long HAL, DMLP, EXC, BSJE]]> Sun, 29 Apr 2012 14:17:04 -0400
In addition, selections should be reviewed as a basic US growth, int’l, or income selection

Within this matrix, beginners should look for investments that fall into one of each of these with a long-term strategy of owning a bit of each classification.

I would propose that a beginner incorporates mutual funds only if it is difficult to replicate exposure through individual selections, such as Bonds (since bond prices are going to fall, my suggestion would be to look at the new date-specific bond ETFs, such as BSJE) or emerging market exposure.

Concerning dividends, investors should be cognizant of the potential for dividend tax increases in 2013. The desire/need to increase the gov’t take of our personal income will drive the tax rate on dividends higher. This may have the potential impact of reducing dividend increases in the future. While I’m a strong advocate of DRIPs, the need to diversify outweighs the advantage of reinvestment for one who is beginning to building a portfolio. Reinvesting dividends into other securities helps gain diversification.

It is also critical for beginning investors to be able to describe in 3 sentences why the specific selection is made for inclusion and to have a price target with which to evaluate future performance. In addition, appreciating underlying long-term trends together with value investing adds to the potential for future gains. Buying a great company whose stock is overpriced is not a bargain and may hamper future gains.

My selections may include:
HAL – Energy, Growth, US Large Cap
DMLP, or a similar MLP – Energy, Income, US Small Cap
HBC – Financial, Growth, Int’l (developed)
EXC – Utility, Income, US Large Cap
BSJE – Bonds (very short), US.

This combination should generate about a 5.1% yield and provide a base to add additional selections over time, with the opportunity to add more growth selections over time. Beginners should be more conservative as they start the learning curve of successful investing. There is just about nothing worse than to have a beginner get discouraged due to capital losses created by poor investment selections.

Based on a Barron’s survey of the top 50 wealth managers, the following is an “average portfolio” exposure to the basic asset classes: US Stocks 30.9%, Non-US Stocks 14.0% (developed 8.4%, emerging 5.6%), Real Estate 2.8%, Resources 3.4%, US Bonds 29.4%, Non-US Bonds 3.9% (developed 1.8%, emerging 2.1%), Hedge Funds 11.7%, and Cash 3.9%.

To me, knowing the composition of specific asset classes will go far in developing both a diverse portfolio and the financial education required to be successful in the long-term.

FD: Long HAL, DMLP, EXC, BSJE]]> http://seekingalpha.com/article/532441/comments?source=feed#comment-4831231 4831231
I have followed and owned APA since 1997. Great management. Ferris is quoted a long time ago as saying, "If you want to sell $1 billion in oil, you had better find $2 billion in oil." Expanded in the niche of buying cast-offs from other E&Ps at rock bottom prices (hopefully, but management has been slighted ocassionally for overpaying) using private placement shares over debt for expansion financing.

I agree it is a good stock to "trade" the longer-term cycles in oil markets, buying when oil is "cheap" and selling when it's "expensive", keeping a core holding. Right now, it's a luke warm buy with a personal price target in the $130ish range. ]]> Thu, 26 Apr 2012 16:57:34 -0400
I have followed and owned APA since 1997. Great management. Ferris is quoted a long time ago as saying, "If you want to sell $1 billion in oil, you had better find $2 billion in oil." Expanded in the niche of buying cast-offs from other E&Ps at rock bottom prices (hopefully, but management has been slighted ocassionally for overpaying) using private placement shares over debt for expansion financing.

I agree it is a good stock to "trade" the longer-term cycles in oil markets, buying when oil is "cheap" and selling when it's "expensive", keeping a core holding. Right now, it's a luke warm buy with a personal price target in the $130ish range. ]]> http://seekingalpha.com/article/528151/comments?source=feed#comment-4786821 4786821
Nice article. I have been looking at HBC common with a 6.8% yield. The possibility of both divy growth and potential cap gains seems better with the common over HBC preferred. In addition, I used to own the HBC prf A as it is "issued" by the parent co ADR rather than the US sub, which is the old Household Finance business. Keep up the great work.]]> Wed, 25 Apr 2012 15:41:15 -0400
Nice article. I have been looking at HBC common with a 6.8% yield. The possibility of both divy growth and potential cap gains seems better with the common over HBC preferred. In addition, I used to own the HBC prf A as it is "issued" by the parent co ADR rather than the US sub, which is the old Household Finance business. Keep up the great work.]]> http://seekingalpha.com/article/527261/comments?source=feed#comment-4785991 4785991
Common misconception.

FD: Long SCCO ]]> Wed, 25 Apr 2012 15:19:31 -0400
Common misconception.

FD: Long SCCO ]]>