Seeking Alpha

Paul Leibowitz

Paul Leibowitz
Send Message
View as an RSS Feed
View Paul Leibowitz's Comments BY TICKER:
Latest  |  Highest rated
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    "This knowledge can alert you to both the difficulty of the task of finding good value, and allow you to ascertain the short-term risk you may be facing."


    You hit the nail on the head.

    Generally, I find that when the market gets frothy or, to me, ahead if itself, finding quality companies is harder.

    I'm having a much tougher time, today.

    From your remarks about WEC and APH, I know you understand what I mean. The list, of course, is larger,
    Apr 17 01:15 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]

    Excellent article.

    I’m glad that you chose to turn off valuations and use the formula P/E= Earnings rate. I can’t think of a better way to eliminate the bias that growth has anything to do with price.

    I have a question pertaining to your use of the S&P500 as a reference point.

    Whereas I do appreciate the heuristic value of knowing the PE ratio of the S&P500, I have often wondered why any stock picker would care about that ratio (save thinking about whether there could be a “herd” effect). My personal preference is to look at the PE a stock in its sector and, even then, to pay more attention to the “normal” PE of a stock than even to a composite of its peers in the sector. From time to time I do look at the sector in relation to the whole market (but this is mostly useful when material sector rotation is expected).

    However, in all honestly, I rarely consider anything other than the valuation of a specific company of interest.

    My question is: When and how do you use the PE of the S&P500 in your decision making?
    Apr 16 07:19 PM | 1 Like Like |Link to Comment
  • The Financial Crisis Is Over For Wells Fargo Dividend Investors [View article]

    Just a big thanks for a very reasoned and welcomed comment.

    I never looked at WFC. You got me interested.

    Apr 1 06:01 PM | 1 Like Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    "In the case of HLF it would appear that SA is in cahoots with the shorts. They publish about 20 short articles for every long article."


    I stand by my comment that I don't expect Seeking Alpha to think for me.

    Let's look at the criticism voiced by Highfield against Kinder Morgan. The rules KMP uses for the categorization of capital expense are well defined and subject to audit. In order for Highfield's allegations to be proven true, there would have to be a forensic audit conducted for each and every capital maintenance expense in order to prove (find) miss-categorizations.

    It ain't gonna' happen.

    So, there ya' have it. A young analyst just starting out at a hedge fund makes the unprovable assertion that Richard Kinder padded his own pockets in KMI by reducing capital expenses for KMP .... so KMI can get a higher incentive fee ... and they succeed in tanking the stock in the process.

    Big fat bonus !!!

    Headlines !!!

    Barron's wants page views and subscriptions. So, they publish. Their name carries clout .... so of course it must be true.

    I have no way to know if there are miss-categorizations of maintenance cap/ex. There's no way to know. In fact, I have no way to know if anything I wrote about Highfield or Barron's or Kinder is true.

    So, what do I do? I hold onto my shares of KMI and KMR based on a few simple considerations. I don't believe everything I read. The comps at the Kinder companies don't seem out of line. The safety record is excellent and I question if they would be as good as they are if needed maintenance wasn't done. Besides, the pipelines are relatively new with long life-spans.

    Now, to the related issue at Seeking Alpha.

    I want to read as many contrarian views as possible. Contrarian views help me think. By analogy, the sections I like best about Zacks' reports are entitled "Reasons to Buy" and "Reasons to Sell." I normally pay more attention to the latter.

    If I have any issue with articles posted on SA it would be that too few are of very high quality. However, I find most articles useful. Besides, I can spot a poor quality article, stop wasting time reading it, and go on to another ... no differently than I do on other sites (financial or otherwise).

    With the above in mind, I want to say that I value the views of commenters. There are some extremely bright and talented readers/commenters on this site ... in many ways for more educational and instructive than the best of authors.

    I encourage all of you to continue to not agree with one another.
    Mar 30 09:45 AM | 6 Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    "Why should we trust SA.
    Why should we trust you?"

    Yes, I know. Just because one's paranoid doesn't mean they're not out to get you.


    I think now would be a good time for us to ask the last time anyone witnessed an editor, and the staff at a publication, take so bold a move as to post articles on a contentious matter and, much more to the point, engage in an ongoing dialogue with its readership as one of many corrective measures being undertaken.

    I can't come up with any names (although there may be a few that I'm unaware of; if so, then I suggest that interested commenters post examples as they might be helpful to Eli).

    Here's what I do trust. I trust Seeking Alpha to make as many improvements as is reasonably possible, and then some.

    I expect the changes to take time to formulate and implement. But, I don't expect anything to be perfect.

    By way of contrast, do implicitly trust Barron's or Highfields Capital Management?


    There are others whom I don't trust:

    If transparency and high standards were so desirable as to be diligently practiced by companies, analysts, banks, writers, and so forth then there wouldn't have been a financial meltdown.

    If pump and dumpers didn't crawl through the smallest openings, we wouldn't have this article by Eli.

    Do I trust Seeking Alpha? Yes.

    But, I don't expect Seeking Alpha to think for me.
    Mar 29 03:35 PM | 13 Likes Like |Link to Comment
  • The Financial Crisis Is Over For Wells Fargo Dividend Investors [View article]
    "To me, it seemed counterintuitive to accept that a megabank could possess superior qualitative characteristics."


    I agree with that statement except I would have written "sustainable superior qualitative characteristics."

    In this article, you mostly described quantitative performance metrics, not qualitative characteristics. It's the qualitative aspects if any business that determines if there is a sustainable advantage in its space (think AAPL, or MSFT, or some company like them).

    Banks are nothing more than the people than run them, as are all businesses. So, there should be something else about WFC than the people running it that is likely to sustain its superior performance; one such attribute might be a persistent (renewable) competitive advantage of varying moat size.

    I've got two questions:

    What is it about WFC that distinguishes it from its brethren?

    What is it about WFC that caused Buffett to buy such a large chunk of it? I understand AmEx (sort of) but not WFC or USB.

    I'm long USB
    Mar 29 11:35 AM | 2 Likes Like |Link to Comment
  • Downward Pressure On SolarCity [View article]
    " It's pretty hard to convince people of global warming when they have to buy extra natural gas to heat the house. "

    @David at Imperial Beach,

    You need to learn about global warming. The location of cold climates shift, and weather patterns change.

    Study planetary changes in temperature, not those in your back yard.
    Mar 26 05:15 PM | 2 Likes Like |Link to Comment
  • Mark Zuckerberg, The Warren Buffett Of Technology? [View article]
    @Felix Salmon,

    Why do you (and most people) attribute FB's current moves to Zuckerburg?

    There are more people in FB than Zuckerburg.

    There is a board of directors at FB, as well.

    The BOD is involved in every decision involving the use of equity, and especially all large purchases (whether paid for with cash, stock, and/or debt).

    What's smart about this deal is the use of stock because every business should use their most overvalued currency before considering cash or debt.

    Buffet would not use BRK stock as a form of payment if he considered it to be undervalued, especially with regard to intrinsic value.

    Do you think Zuckerburg gave this any thought? I do. I think he knows he has to pay with his most overvalued currency even if he doesn't know its worth.

    But, the real kudos goes to FB's board who made the decision to approve the purchase (uh, maybe "gamble" is a better word) without using too much cash or using debt.

    Zuckerburg is no Warren Buffett. Stop kidding yourself.
    Mar 26 09:38 AM | 3 Likes Like |Link to Comment
  • Seeking Alpha Crowd Wisdom Predicts Future Stock Returns [View article]

    Your reference to "What Strategy from the 1930' brokers don't want you to know" is appreciated, as it was a fun read.

    For those who need the link, it's here:

    Question. This is/was true for "specialists" (or, "market makers") but, today, how much of an impact do specialists still have?

    For example, trades on NASDAQ are automated. It's the New York Stock Exchange that uses designated specialists.

    The Nasdaq is younger than the New York Stock Exchange but actually much bigger in terms of daily dollar volume, number of issues listed and total market capitalization, or price multiplied by number of shares.

    The Nasdaq does not operate from a single physical location or a trading floor where specialists meet, as does the New York Stock Exchange. The Nasdaq is a sort of virtual stock market, a vast electronic agglomeration of stocks, exchange traded funds, warrants, preferred shares and other investments, each with an identifying ticker symbol and each quoted and traded through a network that automatically matches buyers with sellers. Nasdaq actually is made up of three exchanges.

    When I think about it, I tell myself it's likely still true for companies listed on the NYSE but only to the extent that other boards process fewer trades.

    The NYSE Euronext contracted as market structure changed, and became more electronic.

    More on that, here:
    Mar 21 03:36 PM | 4 Likes Like |Link to Comment
  • Seeking Alpha Crowd Wisdom Predicts Future Stock Returns [View article]
    @Eli Hoffman and Intangible Valuation,

    I appreciate both of your responses.

    Not knowing much about the technical aspects of tracking, the first thought I had was key-logging which, if were happening, would concern me because the security software I use is supposed to prevent it.

    I don't mind being tracked when it's innocuous provided I can stop it when I want to. I told myself rightly or wrongly that one way to stop it would be to clear all cookies (which I do regularly several times a day, when cache is deleted and so forth).

    I care about security which is why I use a second laptop solely for financial matters (and any other topic where I might need to enter sensitive information, such as the IRS or other government agencies).

    Eli, I especially appreciate your response because it reinforces my inclination to favor Seeking Alpha over many other sites, and it gives me the opportunity to say so to you.

    Itangible Valuation, I use GMail but am careful not to ever put anything sensitive into an email ... no matter whether the provider is Google. Moreover, email is never cleared from storage whether or not it's on a provider's server because of the network through which it travels.

    As for FB? I can't imagine anyone using FB for anything.
    Mar 20 04:41 PM | 3 Likes Like |Link to Comment
  • Seeking Alpha Crowd Wisdom Predicts Future Stock Returns [View article]

    Seeking Alpha is my go-to site, and now I understand why and no longer have to guess.

    You wrote something which, I believe, warrants clarification, that being: "The researchers looked at pageviews and reads-to-end (how many readers finished reading an article) for articles that were destined to be predictive of future returns, and for articles that were destined to be counter-predictive of future returns."

    Does that mean Seeking Alpha uses key-logging?

    How else could you track the movement from the top of an article to its end, ad then onto a comment thread, if not by tracking keystrokes and/or the use of a mouse?

    If so, please describe the characteristics, features, breadth/limitations, how it is activated (e.g., signing on ?), what it logs, whether it continues to track movements to other websites while logged into Seeking Alpha and also after signing out, and how anyone can opt out.


    Mar 20 11:05 AM | 2 Likes Like |Link to Comment
  • Stryker Corporation: America's Fastest Long-Term Dividend Grower Trading At A 16% Discount [View article]
    @Adam Galas,

    Your calculations assumed a projected 8.85% earnings growth rate. The problem is that you modeled "assuming the PE ratio regresses to the mean rate of 26.7" from around 30, when the article was written.

    The past is behind us. You are using a lower forecasted value, but you chose a historic PE ratio assuming the future will be no different than the past.

    But you already know it will be different or else you wouldn't have used the lower value of 8.85%.

    Moreover, why do you assume that *any* company with a projected 8.85% earnings growth rate should be valued at a PE of 26.7?

    In my view, any such company should have a P/E of around 15 +/- ?

    I could be convinced, based on other parameters, that such a company is worth more than 15, such as maybe 18. But I can't wrap my head around 26.7 today (not to mentioned 30), and especially in five year's time.

    The PEG payback period for any growing company will be shorter than the P/E payback period.

    For any company growing at 10%, the payback period is seven years.

    The payback periods from a company with a projected 8.85% earnings growth rate are longer than with 10%, and are calculable.
    Mar 19 03:23 PM | 1 Like Like |Link to Comment
  • Rich And Retired? Why Buying Dividend Growth Stocks Might Not Be Your Best Move [View article]

    To be blunt about it, I thought the plan by Early Retiree was pure lunacy.

    To be honest and upfront about it with his friend, he should have his friend read all the comments in every one of the related articles following his.

    As an aside, I suspect the tax hit I subtracted will be less than 50% if the cash-out was through a sale of stock held over one year. I used 50% to be conservative and also because I don't know the particulars.

    In fact, if a certain type of trust owned the shares of the JV, it could be even better tax-wise (depending on how a trust is set up, it doesn't need to distribute principal which is taxed when it does; it pays taxes, but not necessarily on principal).

    He could juice the yield several different ways known, of course, to dividend investors.

    Anyway, I only went on about trusts to help you prepare. In other words, you may want to set of a trust to hold your lottery tickets : - )

    BTW, tonight's the drawing for the $400 mega-million jackpot in NY.

    Are you still loving your new home?
    Mar 18 07:40 PM | 2 Likes Like |Link to Comment
  • Rich And Retired? Why Buying Dividend Growth Stocks Might Not Be Your Best Move [View article]
    "I think that the strategy for using the money is a lot less important than having an overall plan for how best to use the windfall to secure future outcomes."

    Dave, I agree.

    Here's mine ... what I would do for me if I were in his situation. (Let's remember that the goal is $200,000/year forever and forever increasing at no less that the rate of personal inflation):

    (1) Remove $200,000 for one year of living expenses, and other $50,000 for whatever, the whatever includes legal fees and the like for setting up some fancy strucuture someone else convinces me I should have.

    That leaves $15 million less $250,000 = $14.75 million

    (2) Assume 50% is paid in taxes.

    That leaves $15 million less $7.5 million less $250K = $7.25 million

    (3) Invest $7.25 million in a diversified portfolio (not less than 50 companies) of financially safe dividend paying companies with a history of growing operating earnings at a rate of not less than 6%/year (pick your own timetable), payout ratios less than or around 50%, and highly manageable debt (the metrics for which vary with the sector) with a blended starting yield of 3%.

    3% x $7.25 million = $217,500/year


    If he can't figure out how to invest in such companies on his own, then he should hire a professional for only ONE year and save the fees after that.

    Why the above strategy?

    It's simple.

    Yes, I know it's his decision. And, the advice in your article is good. It's not what I would do, but it's a good alternative.

    I gotta' tell you it mystifies me as to how the advice put forth in the first article on the topic by "Early Retiree" was to *consume* the cash portion of the holdings over the first 20 years (about $5 million) while gambling on hand-chosen non-dividend paying stock picking for the remaining portion ... which portion was only projected to deliver a measly 8% yield (just as easily accomplished with an index fund).

    By consuming it, the bar is raised for the remaining portion. NO ONE can see that far into the future. NO ONE is a consistently great stock picker ... unless that's all they do with their time, and even then most are average performers.

    This guy has a chance to succeed while being only an average performer.

    Why get fancy smanshy?
    Mar 18 04:51 PM | 2 Likes Like |Link to Comment
  • Debunking The 'Dividends Don't Add Shareholder Value' Myth [View article]
    @Aids Patient,

    You wrote: "The FDA requires that a new drug have results that are better then placebo not better then existing proven medications.

    That's not strictly true. It may apply to situations where there is no other therapy but there are many other situations.

    For example, new drug approvals can mandate that "comparative effectiveness" trials are needed to prove superiority to older medicines.

    In addition, "Breakthrough Therapy" designation is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).

    So, it's not just "insurance companies and Medicare who worry about comparative effectiveness and then only so far as it would impact the price they are willing to pay for the new drug."

    And, that's a good thing.
    Mar 14 03:25 PM | 2 Likes Like |Link to Comment