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richjoy403

richjoy403
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  • HSBC: Amazing Banking Franchise But Management Is Asleep [View article]
    I've started to build a position in HSBC, but it is a project to be watched closely. IMO, it has the ability to perform strongly in recovering Emerging Markets, which is my principle reason for holding it. I believe the dividend is safe, though I also expect little growth for the next 2 or 3 years.

    Capital IQ rates HSBC a buy, with a 12-month price target of $51, and projects earnings per ADS of $4.10 in 2015 and $4.80 in 2016.

    Rich-unck:12hrs
    Mar 2, 2015. 05:19 AM | Likes Like |Link to Comment
  • Intel: What The Company Will Show At Mobile World Congress [View article]
    OK, it was a gutsy call (no one is 100% right 100% of the time).
    Mar 1, 2015. 10:22 AM | Likes Like |Link to Comment
  • Intel: What The Company Will Show At Mobile World Congress [View article]
    << I see [QCOM] under attack on all fronts, regulatory and traditional competition. I guess some agree with me, the stock is down $8.50...I think it bottoms at $30. I might play it again on earnings. >>

    << I won't write about QCOM because I don't like writing about stock I would short....it's too controversial....and depressing. I might act on my convictions like I just did. I'd rather write about companies with a bright future. >>
    http://seekingalpha.co...
    __________

    Russ -- On January 28th QCOM closed at $71; on the 29th (when you wrote those above comments) closed at $63.70; and closed Friday at $72.50.

    Now that this INTC article is a few days old, I'm asking if you are standing by your call for QCOM to go to $30?

    Rich
    Mar 1, 2015. 09:23 AM | 1 Like Like |Link to Comment
  • Procter & Gamble Co: Despite Negativity, We'd Go All In - An Algorithmic Perspective [View article]
    I'm long a full PG position in my core portfolio because it fits my Growth & Income total return objectives for those investments. I consider PG a strong hold, or candidate for accumulation for value investors.

    Presently PG is resting, grazing, and building strength so it can join other horses in replacing those pulling my portfolio wagon so they can rest and graze.

    There is no serious fundamental problem at PG; its leadership is strong. It made a mistake in elevating the former CEO to his level of incompetence , and is now fixing itself and its product lines (meanwhile he has embarrassed himself at the VA).

    Rich-unck:12hrs
    Mar 1, 2015. 08:45 AM | 8 Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Economic News Alter Fed Policy? [View article]
    As usual, thanks Jeff -- Especially thanks the Silver Bullet and link to the work of Nicholas Cola and Jessica Rabe of Convergex wherein they set the record straight with respect to the oft-cited Jeff Gundlach slide deck on the 2015 outlook, in which he states that equities have never risen for seven years in a row since 1871.

    Rich-unck:12hrs
    Mar 1, 2015. 08:34 AM | 1 Like Like |Link to Comment
  • Ensco Slashes Dividend, But Here's Why I'm Not Selling [View article]
    If I still held ESV, I believe I would sell following this dividend cut for the reason that investors will be reluctant to bid the drillers up to there former levels because the Saudis have now demonstrated they have the capacity to knock them down at will. Investor expectations of attractive total returns are reduced.

    Rich-unck:12hrs
    Feb 27, 2015. 03:09 PM | 2 Likes Like |Link to Comment
  • Rate Increases May Come, But Realty Income Dividends Keep Piling Up [View article]
    Tax -- You are welcome.
    Feb 27, 2015. 06:26 AM | 1 Like Like |Link to Comment
  • Rate Increases May Come, But Realty Income Dividends Keep Piling Up [View article]
    << Could you comment on what you look at to help determine price appreciation? >>

    Tax -- Hopefully, this will address your query:

    Your question looks simple enough, but quickly leads to a lengthy response. I've developed the following overview, followed by the details and examples...

    My core portfolio is no different that of DGIs (earlier I pointed out some major differences in managing our portfolios). Typical DGIs and myself can agree our core portfolios are weighed to the conservative side of risk/return (e.g., almost all our positions are low beta & standard deviation; are large caps; are in non-cyclical sectors; have investment grade credit ratings, and low debt:equity; have long earnings and dividend histories; and so forth).

    Many of us are fond of stating our belief the companies we've selected for our core portfolios will...should...might.... our portfolios above our point of maximum-pain* during a deep and prolonged bear market. Therefore we don't need to hold the traditional counter-equity asset class (bonds), whose price traditionally advances as stocks decline in price.

    The least of us thinks himself a near-genius stock-picker in this 6-year bull market. However, the 2008-09 bear market was deep--but not prolonged--its duration was only 18-months. Thus our various will-should-might beliefs are only half-tested among those who actually maintained their strategy through the last bear market.

    Therefore, just like I build a position in a series of limit-buys, I'm also willing to reduce a position in a series of limit-sells...and I want to do so BEFORE reaching my point of maximum-pain. (IMO, the missed-opportunity 'costs' of taking profits early is preferable to the risk of waiting to take actual losses at the point of maximum-pain. (Mine's a more active portfolio management designed to preserve wealth, as opposed to maximizing dividends or capital gains.)
    ______________

    Yesterday’s comment included: “When I find a dividend-paying company that offers significant price appreciation, I don't defer buying until it has established a record of 20, 10, or even 5 years of consecutive dividend increases”. I also don't automatically sell (or avoid) a company that has cut dividend”. That comment applied to my Opportunistic Portfolio. I'll expand upon that comment:

    These opportunistic companies have made mistakes; their earnings may have declined;many investors have abandoned them; their share prices are significantly below their former levels (and FV); sector rotation might be a factor--and I have reason to believe the company will fix its problems, will not cut its dividend, and their prices have bottomed or are approaching bottom. Such companies may have been growth companies, and are now value stocks.

    My process starts with limiting my downside risk. I want dividend-paying companies with investment grade credit ratings having the potential to deliver attractive total returns (distributions + price change) within my strategy and suggesting little added risk--taking the long-view, one might consider these companies to be mis-priced. I limit my position size to about 75% of that I consider normal for core positions. I do not invest in IPOs, or micro-caps, nor the Googles, Netflexes, or Facebooks that have produced wealth for many investors (and congratulations to those that have done so successfully!).

    From there it is a matter of determining the probability the assumed potential will be realized in a reasonable period (usually up to 2 years). In my experience, companies that lead their industries sometimes make mistakes--but those having the above characteristics (paragraph above) usually have the ability to correct their mistakes and lead again.

    Success in these opportunistic buys is not limited to selecting well the companies bought...portfolio results are also shaped by avoiding costly mistakes such as reaching for maximum returns in low-probability investments and speculations.

    At this point, you’re wondering if I’ll ever get to those examples:

    Oct. 2011: Started a position in MSFT. Avg. shr cost = $26.78 (incl. commissions) in a period when company was being criticized for lack of innovation and keeping up with new technologies. (Closed today @$44)
    Trimmed 3 times on its way up, including once at a price higher than today’s.
    75% of original shares remain. Received over $3,300 in dividends to date.

    Nov. 2012: Started a position in CSCO. Avg. shr cost = $19.83 some 14 years after it was the most valuable company on the planet(!), and in a period of declining top and bottom line. Note CSCO only begin paying a dividend in 2011. (Closed @$30)
    Trimmed twice on way up, including @ $29.88 today.
    90% of original shares remain. Received over $1600 in dividends to date.

    Dec. 2012: Started a position in INTC. Avg. shr cost = $20.76 when top and bottom lines were declining, the company was severely criticized for not investing in mobile and tablet technologies. INTC paid the same 22.5 cent dividend for 10 quarters--and many DGIs sold it. (Closed @$33.50)
    Trimmed 6 times on the way up, including 3 times at prices higher than today’s.
    75% of original shares remain. Received over $2,000 in dividends to date.

    I have 10 additional opportunistic positions, such as GE, DOV, & BBL (which is where I keep my cyclicals), as well as 40 core positions.

    Hopefully you now have a sense of what I had in mind when I referred to “a dividend-paying company that offers significant price appreciation”.

    Should have added questions, either ask or send PM.

    Rich

    * Investor psychology is the subject of many studies. Investors sell at their point of maximum-pain. That point varies among investors, some sell at a principle loss of 8%, some 20%, some 40%, some 60%, and some ride a stock down to much greater losses.
    Feb 26, 2015. 04:53 PM | 5 Likes Like |Link to Comment
  • Rate Increases May Come, But Realty Income Dividends Keep Piling Up [View article]
    Tax -- It's taking a while to construct an adequate reply to your question...please bear with me, I'll have it completed later.

    Rich
    Feb 26, 2015. 11:17 AM | 2 Likes Like |Link to Comment
  • Tech Giant For Sale [View article]
    Thanks Steve -- You summed up my views also.

    Rich
    Feb 25, 2015. 09:21 PM | 1 Like Like |Link to Comment
  • Medtronic Inc. Dividend Stock Analysis [View article]
    Thanks D4L -- Medtronic is an excellent example of the difference between your focus on income, and my focus on total returns.

    Whereas you have outlined MDT's score by your metrics and found it not eligible for your portfolio; I have found it an outstanding performer in my portfolio...

    You ask: "Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond?" My response is why not? MDT entered the last recession with a quarterly dividend of 13 cents, did not cut it, and today pays 30.5 cents. MDT's 5-yr DGR is greater than 8%. MDT's total returns are +9.5% YTD; +39.3% for 1 yr; +29.3% for 3 yrs; and +14.1% for 5 yrs (each of those also exceeds the market's performance).

    Yet in spite of MDT's past outstanding performance, even today, analysts are bullish on MDT. S&P Capital IQ has a 12-month price target of $89, a 3-yr EPS CAGR of 8%, and rates MDT "A" for investment quality.

    It appears like the 3 blind men who encounter an elephant, SDIs can view the same company quite differently.

    Rich-unck:12hrs
    Feb 25, 2015. 04:42 PM | 5 Likes Like |Link to Comment
  • Why Kellogg Is Obsolete [View article]
    h -- K's earnings release included a section on free cash flow. K's cash position remains strong at $1.2 billion. That's an improvement over 2013, and almost matches 2012's peak. K has also bought back shares, and now has a share float of about 353 million shares (compared to 416 million in 2004).

    IMO, K's dividend is not in danger.

    OTOH, Project K will require investment. Should K not right the ship and resume growth, cash will leak, the share price will decline, dividend increases will be quite modest and eventually would be cut. However, it is way premature to be thinking along those lines.

    Rich
    Feb 25, 2015. 03:22 PM | 2 Likes Like |Link to Comment
  • AT&T's DirecTV Purchase Will Pay Dividends For Shareholders [View article]
    << S&P and Moody's reduced their credit rating on AT&T from A to BBB... >>

    Bruce -- I made the mistake of assuming the author had his facts correct.

    Paul has provided the correct rating, as well as the best source (thanks Paul).

    Rich
    Feb 25, 2015. 12:27 PM | Likes Like |Link to Comment
  • Rate Increases May Come, But Realty Income Dividends Keep Piling Up [View article]
    Happy -- You are welcome. Should you have another question, you can PM me anytime.
    Feb 25, 2015. 12:17 PM | 2 Likes Like |Link to Comment
  • Rate Increases May Come, But Realty Income Dividends Keep Piling Up [View article]
    Happy -- According to your profile, you are a DGI (a fine strategy). I am a Growth & Income investor, and about 20-yrs your elder.

    Therefore, I'll preface my response to your question, as you may find little of value to yourself in my portfolio management practices...

    I own the same companies as DGIs, but there are some differences in how I manage my portfolio compared to the more passive practices of many DGIs...

    A few briefly described examples: I invest for long-term total return (BOTH legs), rather than solely to build an income stream, yet my growing income stream exceeds my expenses. I am not a 'rule-based' portfolio manager; thus much of my portfolio management is based upon experience and comfort zone. When I find a dividend-paying company that offers significant price appreciation, I don't defer buying until it has established a record of 20, 10, or even 5 years of consecutive dividend increases. I also don't automatically sell (or avoid) a company that has cut dividend.

    I only buy when priced at FV or below. I never DRIP dividends because those monies should be invested at FV or below--just like other monies. I focus on my total portfolio, and don't hesitate to trim positions when overvalued (or become uncomfortably large). I don't track YoC on a position basis because doing so puts the return of the position ahead of the return of the portfolio. I put far more emphasis on a company's ability to grow its net income, and less on assumptions as to its 10-year or longer dividend growth.

    Moving on to your specific overvaluation question..."At what price do you consider O overvalued enough to sell?"

    First, like yourself, I rarely sell a position unless monitoring suggests it will soon encountered significant deterioration in fundamental metrics (only rarely does that event sneak-up on me); more importantly, I trim 5% to 10% of a portion of a position when it has become overvalued, or grown to become uncomfortably large. If it continues to advance 5% or more further into over-valuation, and without justification, I'll trim again at a higher price.

    I twice trimmed a greatly over-valued O in May of 2013, and applied the proceeds to an under-valued position. A few months later (October) I bought back several times the trimmed shares when O's price had significantly declined.

    This year I've twice trimmed O, and will likely buy back more shares if it declines to FV as I believe it will, but if not, that's OK too.

    I assume you are looking for a formula--but I have none to offer. There are too many factors in play to arrive at a one-size-fits-all approach to timming. For example, in the short-term O responds to investor's view or concern related to changes in interest rates (far more so compared to a PG, a JNJ, or a XOM), so a rule formula applied to O might not fit those others.

    Rich
    Feb 25, 2015. 08:05 AM | 7 Likes Like |Link to Comment
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