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Lakeaffect

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  • Downside For Stocks, But Also For Fed Expectations [View article]
    From the perspective of Main Street, the last time gasoline prices declined like this, a lot of people were losing their jobs, and it was a time for everyone to tighten their belts. Why is it surprising that people are not translating the current decline in gas prices into an immediate bump in other components of retail sales?

    The Yardeni data are telling. The rollover in earnings forecasts appears to have initially impacted the materials and energy sectors but also telecommunications shortly thereafter. Consumer staples and consumer discretionary are flat. Healthcare is the only sector with increasing profit projections.

    Going back to the advent of Obamacare, there were a lot of families in the individual policy markets that saw hefty increases in their premiums. These were self employed, entrepreneurial middle income families that do not qualify for the tax credits because their earnings are above the subsidy cutoffs. Those families which receive their health insurance through their jobs also saw their paychecks eroded as employers passed all or a portion of their increased premiums on to their employees. Is it no wonder people are not running out and spending a few dollars of savings from lower prices at the pump?

    The Yardeni charts are packed with information. The most frightening one is the Blue Angels for the S&P500.
    Feb 13, 2015. 09:22 AM | 6 Likes Like |Link to Comment
  • Weak retail sales print takes steam out of Treasury yields [View news story]
    Thanks, bbro.
    Feb 12, 2015. 02:51 PM | Likes Like |Link to Comment
  • Weak retail sales print takes steam out of Treasury yields [View news story]
    Census report, Table 1 shows total retail and food services for the month, both adjusted and unadjusted. Also shows auto dealer sales adjusted and unadjusted.

    Are you not using Table 1 data to arrive at your figures? Thanks.
    Feb 12, 2015. 10:52 AM | 2 Likes Like |Link to Comment
  • Weak retail sales print takes steam out of Treasury yields [View news story]
    BBro, is that 6.6% a rolling 12mos? The YOY reported in the census report is more like +1.3% ex autos, which could mean it's actually flat, adjusting for inflation.
    Feb 12, 2015. 10:21 AM | Likes Like |Link to Comment
  • Walgreens Boots Alliance: New Highs Or Time For A Pullback? [View article]
    This stock ain't going anywhere but up. Management team is seasoned and top notch. Leave it up to them to drive this thing north. The decline last August was a great buying opportunity.
    Feb 10, 2015. 08:06 PM | Likes Like |Link to Comment
  • McDonald's Letting Customers Pay With Lovin' [View article]
    Amazingly, besides the custom made burgers, they seem to be attracted to the cheese curds. And they live in AZ! They don't ask for ice cream at all.

    Culvers heavily staffs with high school part timers, a cohort that isn't looking to make a career out of pushing burgers across the counter at $20 an hour.
    Feb 9, 2015. 03:18 PM | Likes Like |Link to Comment
  • U.S. Middle Class Has Disappeared Into Higher-Income Groups; Recent Stagnation Explained By Changing Household Demographics? [View article]
    Interesting article, with thought provoking ideas.

    I suspect that the trends noted from 1960 to 2000 laid the seeds for the new trend from 2000 to 2013:

    The rise of the two earner family left nobody at home to raise the kids and teach them the qualitative aspects of life. Raising the kids was farmed out to Head Start, pre-school and the education system, with little or no involvement from their parents. Mom and Dad came home every day from work too tired to run a nurturing household, or to pay attention to what the government and politicians were up to with their wars, globalization, deficit spending, etc.

    The improved income standards which were the result of shifting from careful, economically conservative middle class to upper class spawned two generations of hyper consumptive, self centered, mentally and physically exhausted wage earners.

    After the debacle of 2008, our eyes are now opening to the damage to our society caused by the imbalance in our family and work lives. We are fully realizing that it was not and is not worth all the sacrifices, personally and societally, just to be able to buy some shiny trinkets from China. Family time is paramount. This realization appears to be the strongest in the generation which entered the workforce at about the turn of the century.

    Due to the threat of lower tax revenues which is caused by a population consciously adapting a more balanced lifestyle, government and politicians vigorously resist this return to sensibility. Therefore, all the talk about supporting middle class two wage earners.
    Feb 5, 2015. 09:56 AM | 5 Likes Like |Link to Comment
  • McDonald's Letting Customers Pay With Lovin' [View article]
    Little Dude, that's good. All I can say to that is when I ask my grand kids where they want to go for lunch, it's Culvers and not McDonalds. I guess they just like grouchy servers.
    Feb 4, 2015. 10:45 PM | Likes Like |Link to Comment
  • Calavo Growers' Shares Have Plummeted Over 15% Since Its Q4 Earnings Release - Should You Consider It Now? [View article]
    Thanks, Randall. That helps a lot. I get real jumpy when a company restates.
    Feb 4, 2015. 10:32 PM | Likes Like |Link to Comment
  • McDonald's Letting Customers Pay With Lovin' [View article]
    They could give me the food for free. I still won't go there. They need to concentrate on making the experience enjoyable instead of making one feel like they've just taken their seat on a plane run by a cut rate airline. Management should visit a Culver's store.
    Feb 4, 2015. 02:28 PM | 2 Likes Like |Link to Comment
  • Calavo Growers' Shares Have Plummeted Over 15% Since Its Q4 Earnings Release - Should You Consider It Now? [View article]
    Your comment prompted me to check the SEC filings on the matter. A reclassification appears to have had a significant impact on the reported financials for the years 2012, 2013 and first three quarters of 2014.

    As far as relatively minor, I would disagree. For the first nine months of 2014, net income was reported as $1.69 per share but revised down to $.08 per share. For the first nine months of 2013, EPS was reported at $.76 but revised down to $.11. These are not immaterial adjustments in my book.

    Looking at the full year income statements for 2014 and 2013: Net income in 2014 is reported $97k or $0.01 per share income. But this includes a gain on the deconsolidation of Fresh Start of over $12 million. Back that non-operating gain from the bottom line for a hefty loss in full year 2014. Full year 2013 reported LOSS was $1,795 or $0.12 per share.

    This information is from the 10k which Calavo Growers filed with the SEC at the end of January, 2015.

    Perhaps someone who knows what's going on here can explain how this stock can sport a $40.00 quote?
    Feb 4, 2015. 11:47 AM | Likes Like |Link to Comment
  • My Bullish Investment Thesis On General Electric [View article]
    Alexander, thanks for writing this article and putting it on SA. Whenever I'm doing DD on a company I always check to see if you've written anything on it. I am inclined to start nipping at GE here. We'll see how it goes.
    Feb 2, 2015. 11:39 AM | 1 Like Like |Link to Comment
  • The Fed's 'Crazy Train' And The Stability That Breeds Instability [View article]
    It is entertaining but also laughable watching pundits on these boards massage and obscure their historical positions as QE becomes less popular now that Bernanke has exited center stage.
    Jan 30, 2015. 09:39 PM | 1 Like Like |Link to Comment
  • Chevron suspends share buybacks for a year, shares -3% [View news story]
    JD, if you don't sell, then there are no capital gains to be taxed.

    That's the argument that the investment bankers tell Boards when they're selling a buyback proposal. What they don't say is that the Boards will probably erode shareholder value by repurchasing the shares at too high a price thus frittering away financial resources that could be used to buy assets at fire sale prices.

    If buybacks are so wonderful, then why do companies like Buffett's Berkshire eschew them?
    Jan 30, 2015. 01:08 PM | Likes Like |Link to Comment
  • Chevron suspends share buybacks for a year, shares -3% [View news story]
    Buybacks are no good for the long term shareholder. Many companies use buybacks at exactly the wrong time, as pointed out in previous posts. They waste financial resources that should be set aside in anticipation of buying opportunities, which are soon to be rampant in the oil and gas industry.

    Given they've spent billions on buying their own shares back at high prices, what flexibility will CVX now have to participate in the upcoming fire sale of frackers, drillers and leases that will soon be coming onto the market.

    Buybacks hide deteriorating balance sheets and income statements by reducing the denominator in the EPS calculation. This is a primary reason the US stock market has held up so well over the past few years, and is a primary reason that many companies have been reporting increasing EPS over the past few years. Once these buybacks dry up in the face of declining business prospects, we are going to witness a decline in stock prices. This is because weak fundamentals can no longer be swept under the rug by buybacks.

    Managements use buybacks to prop up their companies' EPS, because their bonuses and stock options are tied to that metric. Compensation Committees should be held to task for this shareholder unfriendly manner of rewarding managements.

    Buybacks are not tax efficient. All those proponents of buybacks, who say that their share price increases go untaxed because they still hold the stock, can now gloat at their potential for a wonderful tax loss, or at minimum a reduced tax liability because their stock values are now much lower than they were several months ago and after several months of CVX buying their stock back at much higher prices.

    Buybacks are dilutive to shareowners because they are almost always executed at high market prices and then suspended when the price drops, as can be seen in the current case of CVX.

    The beneficiaries of buybacks are the upper management team and the investment banker consultants that make presentations to the Board about how wonderful stock buybacks are (for their own pocketbooks).

    I don't own any shares of CVX, but I do own other companies that engage in this disgustingly shareholder unfriendly practice, which I can only hope that one by one they'll cease and desist.
    Jan 30, 2015. 12:38 PM | 12 Likes Like |Link to Comment
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