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  • Is Baxter Guidance Portending A Dividend Cut? [View article]
    Expected trade July 1.

    If so, I think the record date would be Friday, June 26. Don't quote me.
    May 25, 2015. 11:36 AM | Likes Like |Link to Comment
  • Is Baxter Guidance Portending A Dividend Cut? [View article]
    Fcfrag, I found nothing unclear about the company guidance. A 35% payout ratio for Baxter and roughly half that for Baxalta will certainly result in a lower dividend than the current 60% payout. Further, the announcements a year ago were clear that the biopharma spin out would be investing in growth and had a very different risk profile. See and There has been plenty of time to buy in or opt out of this strategy.

    BTW, I see in your comment the implication that divi growth investors achieve absolute certainty in other investments. Surely you don't mean that, right?
    May 24, 2015. 06:30 PM | Likes Like |Link to Comment
  • Seadrill: Why Crickets Can Be A Good Thing [View article]
    I think that they have clearly shown that their framework agreement is expressive of their strategic direction if and when commodity pricing recovers. There was certainly no point for them to say anything at all - especially since termination for convenience is a given.

    So for me, it is simply a matter of when. I don't believe that we are in a secular inflection point re: petrochemicals. Rosneft wants more control of their own destiny in harsh environment drilling and is assuming that it will pay. I think so too.
    May 24, 2015. 06:07 PM | Likes Like |Link to Comment
  • Is Baxter Guidance Portending A Dividend Cut? [View article]
    Thanks for the article and analysis. I'll point out my disagreement and hope that it doesn't come off as unduly critical, since this is a good article.

    My main point disagreement is that I bought BAX more than a year ago based on the announcement of the split. The current or future dividend played no part in my decision to own the stock, so the statement, "Cut or freeze, neither option is very attractive for investors, especially those who are relying on a growing dividend to fund their retirement" is overly general. I'm an investor. The lower payout actually made the company more attractive to me as an investor. The fact that management considers it likely that they will make better use of capital than by returning it to me (or buying back shares) is encouraging. I would much rather they grow it in multiples of the return - this is what made the business what it is today.

    As a quibble - contrary to what the article stated, dividends are not really paid out of earnings, which include non-cash accounting entries. They are paid out of FCF.
    May 24, 2015. 02:37 PM | 3 Likes Like |Link to Comment
  • The Math Could Get Weird, But Intercept Pharmaceuticals Looks Too Cheap [View article]
    I had sold ICPT prior to this news but I think for some of the same reason(s) that the market reacted as it did (aside from the fact of a quick double being irresistible).

    1. No one has really focused on the costs, but these large scale trials will be quite expensive. I find it highly likely that a significant secondary will be required before any application can be filed.

    2. Given point #1, and the lack of a development partner, failure risk is unacceptable at the current price - even in light of the size of the market opportunity if successful.

    3. OCA is all there is. It looks good, but given point #2 there are better spec bio plays for my portfolio.

    Nevertheless, I do very much appreciate this article and comment threads. Good luck to all.
    May 24, 2015. 01:53 PM | 1 Like Like |Link to Comment
  • Seadrill: Why Crickets Can Be A Good Thing [View article]
    Thank you for the article AR. I have no position in SDRL since I'm playing some other assumptions and possibilities via NADL - e.g. levered benefit in the event of commodity recovery or sanctions end, or the possibility of SDRL buying back the 30% they don't already own in the event of continued trouble since they own and/or are responsible for so much of the EV.

    One quibble I have with the stated SDRL situation is when you began the snapshot (late November). Yes, it's down 30% since then, but it had already lost close to 50% in the few months prior to that point (like the rest of the industry).
    May 24, 2015. 01:31 PM | 1 Like Like |Link to Comment
  • NiSource Split Progressing Well, Questions And Moving Parts Cloud Overall Valuation Analysis [View article]
    I bought NI simply to own CPG. Based on a macro view of increasing production and export of natural gas, I own SE, WMB, and to a lesser extent KMI (based on valuation) since they have the long haul pipeline capacity to the gulf coast. CPG will join that group, and is an obvious take over target.

    Unfortunately (given the strength of the share price) I didn't establish a very large position because of the lack of substantially complete pro forma info. The analysis I've seen hasn't done much to clarify the stand alone values of the post split businesses.
    May 24, 2015. 01:08 PM | Likes Like |Link to Comment
  • American Realty Capital Properties: Time To Risk A Position? [View article]
    For me, one of the biggest pleasures in recent articles about ARCP is the absence of condescending and/or belligerent bulls. Beginning about a year ago, they were telling anyone who had reservations about how Schorsch flip flopped on the secondary offering pricing, changed deal pricing and spin-off plans at the drop of a hat, and in general showed a complete willingness to throw shareholders under the bus, that they were dumb (is that what boo bear means?) and would probably happier selling so that the big boys could get on with making money.

    So, where did we go? Down 30% and months of suspended dividends later there is little doubt that that view was sadly mistaken. ARCP will likely recover, but berating and mocking those who questioned the course of management decisions were obviously right.

    Best wishes.
    May 23, 2015. 09:07 PM | Likes Like |Link to Comment
  • Lower For Longer: Why You Should Stand Aside On U.S. Oil Producers [View article]
    Bravo, ToT! Having studied epistemology at some depth, I didn't expect to learn something like that on SA. And in such an entertaining way.
    May 23, 2015. 01:01 AM | 1 Like Like |Link to Comment
  • Gilead, Merck And Achillion/J&J Square Off In An HCV 'Nuc'lear Showdown [View article]
    Very comprehensive and organized presentation. Quite helpful. Thanks.
    May 23, 2015. 12:41 AM | 1 Like Like |Link to Comment
  • Procter & Gamble: Real Problems, Decent Value [View article]
    Indeed swisser. The dividend is over emphasized as a reason to own PG, and even so the calculus is different when the valuation is seen to actually be more than 25x earnings (which are planned to contract further).
    May 22, 2015. 09:55 PM | Likes Like |Link to Comment
  • Procter & Gamble May Be Headed Lower [View article]
    jgarf, you made some apt observations. I would add that the business under performance has gone on for quite some time, and management is only now taking action because they have been forced to do so. This size business puts division leaders in a position of relative anonymity, whereas in smaller stand alone businesses the focus would quickly reveal their ineptitude. As for the bullish view, it has ignored the poor performance for more than 5 years because of some misjudgement of the value of the dividend.

    I don't agree that a break up would be in order for PG, since there are clear synergies between their brands (e.g. advertising buys, shelf space negotiations with retailers, etc.). At the same time, it will be some time before organic growth convinces the market that their multiple should not be significantly lower. At 25x earnings, with divestitures destined to reduce earnings, it is hard to justify even a hold rating over a 2-3 year time frame since it will sell for a price beginning with $6_ at some point IMO. It could be even lower if they have many more 17% EPS declines.
    May 22, 2015. 09:49 PM | Likes Like |Link to Comment
  • Johnson & Johnson: The 'Tragedy' Of Paying 17 Times Earnings [View article]
    an10, thank you for your comments - you understood the level of generalization I intended, while others seemed to make assumptions about what might be understood by "emergency funds." My initial comment was not intended to address the usual definition of an emergency fund (for instance, Dave Ramsey might define the usual understanding as 6-12 months of expenses).

    My comment actually was intended to address the benefits of cash as a portfolio allocation which appear when potentially decades long equity performance is poor. Check out tables like this to view some history of such periods Cash allocations do have opportunity cost, but they also have tangible benefits in this context. I think the fact that this is seldom discussed on SA reinforces the widely reported statistical evidence that Americans in general have insufficiently prepared for retirement.

    My only point in this discussion is that it is not inconceivable that a portfolio 100% invested in equities designed to produce needed income could be negatively impacted in the event that illness, legal changes, or any number of political events forced a liquidity event at the wrong time. Even granting that JNJ (and similar conservative holdings) continue to make money and pay dividends, a forced sale could be trouble. Of course, all portfolios are subject to these risks. My only point is that assuming they don't exist is probably a mistake.

    Commenters on this subject who are likely fine in any event since their assets are sufficient to survive any eventuality ought to consider that some readers will not be in that situation. I see many blithely recommending 100% equity portfolios as low risk as long as the right companies are chosen. Setting aside the fact that knowing which are the right companies is not easy except in hindsight, I think the assumption is still a bad one for the reasons given.
    May 22, 2015. 02:40 PM | Likes Like |Link to Comment
  • Lower For Longer: Why You Should Stand Aside On U.S. Oil Producers [View article]
    Great article and comment stream. Also mentioned, but not fully considered here is the stock market price effects of SEC rules on assets. One such here, and another is what will be considered economically recoverable after the low prices show up in the allowed 12 month rolling price average. Book values are subject to rapid change when assets must be MTM..
    May 22, 2015. 10:45 AM | Likes Like |Link to Comment
  • Williams Does Not Quack Like A Duck [View article]
    Good information, and cleverly presented. Thank you.
    May 22, 2015. 12:27 AM | 1 Like Like |Link to Comment