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  • American Realty Capital Properties Yields 8% But Not In My Portfolio [View article]
    AA -- I wish those disagreeing with your selling ARCP would buy my shares.
    Sep 30 11:41 AM | Likes Like |Link to Comment
  • Philip Morris International Inc: 3 Trends To Watch Going Forward [View article]
    I've read quotes from some health care types regarding potential "extinction" of tobacco use.

    OTOH, for investors, rather than extinction, the relevant question is:
    In what year might PM and MO no longer generate added revenue from price increases?

    Unlike the companies producing cheap cigs, or knock-offs in China or local competitors like Mighty in the Philippines, the tobacco majors have higher production costs and expensive overhead structure. Any trend toward decreased revenue will be followed by decreased profits and dividends.

    In view of long-term declining trends in tobacco use in the U.S., and the notable increase in tobacco curtailment actions in some countries--the risk is real, and to be recognized.

    However, insofar as I know, no stock analysts are yet forecasting a tipping-point.

    Long: MO & PM
    Sep 30 11:16 AM | Likes Like |Link to Comment
  • Should General Electric Break Up? [View article]
    <<< In my opinion. Mr. Davis could not be more correct. GE clearly needs to shift gears to reverse the decline in its share price. >>>

    Albert -- I'll take you at your word--you're "a bull on GE". But I also note your bullish opinion of GE didn't come through to myself in your article's text--or your conclusion.

    GE is a conglomerate, and has been 'forever' for most investors. Those SDIs not wanting GE to be a conglomerate shouldn't own GE (they have zero influence in changing it).

    Conglomerates have their pluses and minuses. Among the pluses is diversification to mitigate market risks (not unlike my portfolio). Among the minuses is conglomerates can also be difficult to manage effectively (as Mr. Davis and yourself are saying).

    FYI, conglomerates are about 5% of all the S&P500--the GICS classification of the S&P500 companies include 24 conglomerates. Conglomerates most investors recognize include:
    Eaton, Honeywell, Emerson Electric, Ingersoll-Rand, L-3 Communications, Leggett & Platt, 3M, Parker-Hannifin, Rockwell Automotion, United Technologies, & Textron.

    Among the world's largest companies by market cap, GE is #7. The next largest conglomerate is Siemens @#53 (Siemens is not in the S&P500), followed by United Technologies @#90.

    I too am 'irked' by GE's YTD performance. OTOH, my total returns are 24%, and their CAGR is 13%. I expect some of GE's divisions to pull its wagon, while others trail behind, resting and grazing. When those pulling tire (which is always the case), those resting can resume pulling--this is what I expect of all my portfolio's 55 positions.

    IMO, the GE BoD has been, and continues, tweaking GE's structure by divesting businesses not fitting their vision for GE's more focused future (The CNN article included an impressive list).

    I also suspect GE's share price decline has nothing to do with GE's organization structure, and much to do with a slowing of world growth, as evidenced by Germany and Europe slipping back toward recession, and a slowing China, which also notably slows Australia and SE Asia.

    GE had a poor 1st quarter, with declines in both the top and bottom lines vis-a-vis 2013, but recovered in the 2nd quarter to nicely top 2013 results.

    More recently, 90 days ago, analysts forecast GE would earn 42 cents in the quarter ending today, 60 days ago, the estimate was reduced to 40 cents, and today it is reduced again to 39 cents. The current year estimate was also reduced over the last 90 days, from $1.70 to $1.68. (Most analysts are neutral on GE.)

    On June 30th, GE closed at $26.28. If GE closes unchanged today, it's 90 day decline to $25.42 is $0.86 cents, or 3.3%, which is a lesser decline than the forecast quarterly 4.8% earnings decline, and reflects analysts forecast 4th quarter improvement (presently forecast at 56 cents, versus 53 cents in 2013).

    S&P Capital IQ rates GE A- for growth & stability of earnings and dividend, has a $32 12-month price target, a FV of $26.40, and forecasts a 3yr EPS CAGR of 7%, forecasts 2015 EPS of $1.85 (a 10% advance from $1.68 for 2014), and rates GE a Buy.

    Live long and prosper!

    Sep 30 07:31 AM | Likes Like |Link to Comment
  • McDonald's: A Matter Of Taste [View article]
    Pen -- I suspect you miss-stated your mean to say..."The claims are a myth, according to the company, which says it removed so-called "pink slime" from its meat three years ago."

    [That's a quote from your link]
    Sep 30 05:42 AM | Likes Like |Link to Comment
  • Philip Morris International Inc: 3 Trends To Watch Going Forward [View article]
    <<< High debt level relative to what? >>>

    BDGG -- Oh, did you miss the part where I specifically addressed debt?
    I wrote: "PM's debt is 187% of equity (versus industry average 5.25%)"

    Thus the answer to your question is "relative to their industry average".
    Sep 29 09:48 PM | Likes Like |Link to Comment
  • Philip Morris International Inc: 3 Trends To Watch Going Forward [View article]
    BGDD -- Accounting fiction? PM's equity is what it is (and according to PM's balance sheet, "stockholder equity" is -$9.3 billion).

    As for "intangibles", you neglected to include the 2nd word, "assets" ("Intangible assets" are by definition assets--not equity). PM carries $3.2 billion in intangible assets on their balance sheet, which you attempted to assign to equity. Incidentally, PM also carries another $9.1 billion in Goodwill, which along with intangible assets are over 50% of PM's non-current assets.

    PM has a single-A credit rating from S&P ("Strong capacity to meet financial commitments, but more subject to adverse economic conditions"). Because their debt is so great, PM has said several times they "must protect their single-A rating".

    As your reference to the great cost required to "recreate everything PM has"--agreed, it would be very costly to replicate PM--which is a factor in PM's wide economic moat.

    Sep 29 06:06 PM | Likes Like |Link to Comment
  • Philip Morris International Inc: 3 Trends To Watch Going Forward [View article]
    numa -- Sounds like a plan...and many others would agree with you.

    IMO, when a long-term investor buys a company, he/she effectively ties his position to the decisions of the BoD.

    Your BoD has engaged in extensive share buybacks since splitting from MO; therefore, if you were paying attention (aka monitoring) PM's share buyback program is not a surprise.

    There are basically 6 application options for excess cash:
    Save it as retained earnings (a 'rainy day' fund);
    buy new property and equipment to expand, or improve productivity;
    apply it to an acquisition;
    retire debt;
    issue a one-time special dividend to shareholders (or raise the dividend); and/or
    buy back shares of their stock on the open market (or from existing shareholders).

    For myself--share buybacks make sense so long as shares are retired at prices below FV, I am OK with buybacks.

    OTOH, some downsides must be examined: PM's debt is 187% of equity (versus industry average 5.25%); PM is having a poor year--it's raining!; PM is signaling it has no better use for its cash (that's always a bummer); and potentially, PM would be making a mistake in expending excess cash on buybacks if its share price subsequently declines below the buyback price.

    An inappropriate buyback program is financial engineering, intended to artificially inflate share prices by increasing EPS, and therefore the p/e ratio. (Also sometimes used to engineer metrics to favor executive compensation.)

    I suggest you watch PM's top line (revenues), if over several years, revenues remain flat or trend in decline, it indicates buybacks are most likely financial engineering, and miss-allocated cash. However, in that event, dividend increases might also be a miss-allocation of cash.

    <<< Buybacks do nothing for the value of a company. It just reduces the number of shares outstanding. It’s a financial maneuver to increase the “earnings per share” in order to boost the stock price. That makes the stock options of management more valuable. It often hides the fact that total company earnings are not rising and may even be declining. But naive stock buyers don’t realize this. >>>
    Sep 29 01:14 PM | Likes Like |Link to Comment
  • CVS Purchases Navarro - What Can Shareholders Expect? [View article]
    Thank you, and I agree this acquisition is a positive; the Hispanic population is a growth market.
    Sep 29 11:53 AM | 1 Like Like |Link to Comment
  • Should General Electric Break Up? [View article]
    Thank you ga -- Agreed, GE is facing the law of large numbers (which means it is increasingly difficult to post large growth numbers; it does not mean no growth).

    As I too have read dozens of nonsensical and hate comments directed at GE, and written by persons who are obviously not shareholders or even potential shareholders.

    I too assume many of them are reflecting their sour-grapes for taking large losses; some still holding a grudge for GE having to cut the dividend back in 2009; and some are just trolls who spread their venom for the h*ll of it.

    Have a great day!
    Sep 29 09:37 AM | 3 Likes Like |Link to Comment
  • Why Is Verizon A Better Pick Than AT&T For Income Investors [View article]
    Dealer -- I very much doubt more than a few investors, and likely zero SA moderators have any idea I was referring to the Camel cigarette advertising campaign of the 1950s/60s.
    Sep 29 09:08 AM | Likes Like |Link to Comment
  • Should General Electric Break Up? [View article]
    The 2 YTD charts displayed above certainly tell a story supporting the article, but I prefer to take a longer-term view.

    [Incidentally, for those who prefer the short-term, simply change the chart period to 2 months--GE has been trending down for the last 5 days, but is nonetheless now the BEST performer of the 4 companies!]

    OTOH, I also agree GE has been dead money this year and is under-performing its large competitors in a very slow-growth world economy.

    In fact, GE has divested, is continuing to divest, and divestitures are summarized by CNN.

    GE is quickly moving from consumer goods and services toward a more capital goods industrial model [and that's a good thing]. I'm willing to be convinced Scott R. Davis is smarter than is GE's BoD, but I haven't yet seen adequate evidence...

    First, Mr. Davis's comparison to AT&T is bogus. AT&T was broken-up as a result of the Justice Department's anti-trust suit (the original AT&T became noncompetitive and marginal. It was eventually bought by one of the former baby bells, which took the name AT&T). GE has a $260 bullion marketcap, is about 2.5 times the size of its largest competitor (Siemens), and is a national treasure and without anti-trust issues.

    Second, the Davis statement investors are demanding GE be broken-up is far-fetched, and without verifiable evidence. According to Morningstar's ownership tab, over the last 8 quarters, institutional owners (well over twice the mutual fund ownership) are standing pat, and their ownership has declined by only <1%. As for mutual funds, their share ownership has declined even less than that of institutional investors! In both cases, the recent trend is both fewer buyers and fewer sellers.

    Third, Davis would divest GE's medical devices because "Basically, anything that's not part of GE's global infrastructure related divisions (think energy, aviation and transportation) could be fair game to go." However, GE's medical devices do sell globally, and are often counter-cyclical to the energy, aviation, and transportation businesses.

    Fourth, according to the article, "Davis said he INFORMALLY surveyed many of the 30 largest mutual funds this summer about GE and that the response he got from portfolio managers was that the company was "uninvestable, unmanageable, too complicated, too diverse, too slow."" What does that me an informal survey means he telephoned them. Telephone surveys are notoriously subjective, and the reported result often fits the pre-conceived notions of the caller. Also why did he limit his reported result to only mutual funds?...why not survey the far larger institutional investors?

    Fifth, those actually reading the CNN article will also discover (a) Davis himself has a BUY on GE (!); and (b) CNN does not support the Davis thesis.

    Thus irrespective of Davis's BUY on GE--he says "it is worth buying due to its valuation, dividend and a "hope" that GE management will take further steps to simplify the company."

    The question for value investors [excluding GE haters] I buy an undervalued GE; do I hold GE [at least a while longer]; or do I sell GE?

    I knew GE was a conglomerate when I bought. I'll wait for at least one or two well-written articles taking the opposite view before I am I ready to give up on GE. Thus I'm holding. Furthermore, if the world economy does not improve, all the multi-nationals will suffer.

    Sep 29 08:05 AM | 9 Likes Like |Link to Comment
  • Philip Morris International Inc: 3 Trends To Watch Going Forward [View article]
    RH -- Very interesting, and I was unaware of the importance of the issue in the Philippines (Mighty is a local manufacturer of low-priced cigarettes).

    Hopefully, your next article will expand on your minor references to "terminal demand"*...which IMO, is a more important discussion impacting my long-term investment in PM than are the 3 trends discussed.

    Long: MO & PM

    * "Philip Morris believes that it will be able to sell around 30 billion units of iQOS, which would add around $700 million per annum in profit, offsetting [some] of the terminal decline in traditional cigarette sales."

    "If the [HeatSticks] roll-out goes to plan, Philip Morris may have exerted its life as a tobacco company, to some extent removing the dependence upon traditional cigarettes."
    Sep 29 06:07 AM | Likes Like |Link to Comment
  • McDonald's: A Matter Of Taste [View article]
    That filler rumor sounds like another unstoppable urban legend (not unlike the PG logo being a Satan symbol).

    McDonald's hamburger patties are made with 100% USDA-inspected ground beef, cooked and prepared with salt, pepper and nothing else.

    However, like others, McDonald's formerly used the product known as 'pink slime', but no longer.
    Sep 29 05:36 AM | Likes Like |Link to Comment
  • Royal Dutch Shell Is A Buy [View article]
    DS88 -- I did not say anything about share buybacks.
    Sep 29 05:20 AM | Likes Like |Link to Comment
  • Why Is Verizon A Better Pick Than AT&T For Income Investors [View article]
    No problem -- We all make mistakes (as I did above).

    Live long and prosper!
    Sep 28 02:19 PM | Likes Like |Link to Comment