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  • 8 To 14% Discount On Energy Stocks [View article]
    Noticed that the BCX distribution has a high % of RoC even though the fund does NOT use covered calls/options. So one would be paying the manager to return one's capital.

    Still, it's not necessarily a bad thing taxwise and the sector is so beaten down, NAV is bound to increase -- someday. Methinks some patience and more D/D is required here.
    May 1 01:46 PM | Likes Like |Link to Comment
  • 8 To 14% Discount On Energy Stocks [View article]
    Speaking of discounts, BCX does seem to get a bit more respect -- traded at a premium as recently as mid 2011. Investors seem to prefer the Blackrock name or is it the higher yield? Investor psychology is part of the equation and must be considered.

    Took a 1/3 position in GGN after the gold debacle last week. Currently eyeing the commodity/resource names (esp. BCX for the income -- >9% as I type). Might put a toe in for a 1/3 position soon. Thanks for bringing PEO to my attention.
    May 1 01:22 PM | Likes Like |Link to Comment
  • Quad/Graphics: 15%+ FCF Yield [View article]
    Good stuff, IV, and I agree with your 'voodoo/BS' comment about WACC. Actually, I also prefer to reverse engineer, as you apparently did with the companies above, i.e., given today's market price, what are the expectations implied by that price.

    Thanks for all your work here. Lots of puff pieces on SA, but no one can accuse you of that. I don't follow many, but you're on my short list.
    Mar 22 01:59 PM | Likes Like |Link to Comment
  • Quad/Graphics: 15%+ FCF Yield [View article]
    For the most part, I agree with Buffet Jr., although 20% is a bit too conservative for me. My default Discount Rate is 12% (a double every 6 years); for another view, I might use the company's actual Weighted Average Cost of Capital.

    I certainly think that the author's use of 9% is off base here, although he does offer a valuation using 14%. 9% is a number I would only use for a blue chipper.

    By and large, DCF valuations are based on guestimates. I prefer FCF yield, which I also calculate at 22%. FWIW, using Yahoo's number for levered FCF, the levered yield is a whopping 33.9%. My main reason for not taking a harder look at QUAD, however, is the fact that only 3 years of financials are available. I'd like to see at least 5 years worth, preferably 10.
    Mar 22 12:41 PM | 1 Like Like |Link to Comment
  • NorthStar - Even A Fool Should Know Better [View instapost]
    Patrick nailed it. When I inadvertantly click on a Fool link, I immediately exit without reading. It is dumbed-down and I can't afford to get any dumber. It seems that most of the MF authors use templates into which they just plug different tickers over and over.

    No thought involved, just assembly line drivel.
    Mar 18 03:41 PM | Likes Like |Link to Comment
  • Desperately Seeking Yield Through Equities Redux: Part 8 - MLPs [View article]
    "I don't understand why shy away from K-1s. With Turbo Tax on your side its easy to report them.."

    I agree, although I only own 1 MLP. Any experience with Turbo Tax when one sells? Can I be confident that it will calculate my cost basis correctly?

    I've been using TT for @ the last 8 years, so it has been recording my passive loss carryovers, etc. I'm not being snarky. Sincere questions....
    Mar 18 03:06 PM | 1 Like Like |Link to Comment
  • Altria And Lorillard: Smoking-Hot Cigarette Stocks With Juicy Dividends [View article]
    All? That's an inaccurate statement. Granted that big pharma, telco and utilities carry lots of debt, but certainly NOT ALL profitable companies do. AAPL has no debt at all, GOOG's recently-added LT debt is a small fraction of its cash and those firms appear to be doing alright. Depends on the sector and how capital-intensive the enterprise is.

    I, for one, have no quarrel with MO's use of debt. But where you see sky high ROEs you will, more often than not, see a company which uses a significant amount of debt. That's certainly the case with MO, where, fortunately, its returns handily exceed its cost of capital. With lots of splits and a few spinoffs, this savvy management team has made me a happy camper thru the decades.
    Mar 12 10:00 PM | 2 Likes Like |Link to Comment
  • Altria And Lorillard: Smoking-Hot Cigarette Stocks With Juicy Dividends [View article]
    "The one thing that would really help Atria diversify is if they owned a large portion of global brewer or something. Well, one can dream. "

    Are you joking ? Hard to tell from the printed word. MO owns a substantial piece of Miller Brewers.

    As for the author's line about MO's astronomical ROE, that's often the case when a company has high debt loads. ROIC (or better yet, CROIC) is a more meaningful metric with high-debt firms.

    Longtime LONG MO....
    Mar 12 05:21 PM | 3 Likes Like |Link to Comment
  • My Mad Method: What Next To Buy And Why - February, 2013 [View article]
    HRS has some outstanding metrics. Those I look at are:
    CROIC - 5yr Median 14.8% ttm 16.2% (low 10.7% in FY 2011)
    FCF Yld - FY 2012 12.0% ttm 12.8% Levered ttm 8.8%
    Positive FCF for at least the last 10 years
    5yr FCF CAGR 14.8% 9yr FCF CAGR 25.5%
    FCF Margin 5yr Median 10.9% (low 8.6% in FY 2011)
    Dividend CAGRs 3yr 15.1% 5yr 22.6% 9yr 25.3%

    A DCF valuation using a 9% discount rate and 3% growth (the 5yr CAGR of revenues is 5.1%) puts a value of @$70/shr on HRS. Using even a 35% Margin of Safety, this puts HRS securely in buy territory. The problem with DCF valuations is its reliance on guestimates.

    I have had HRS on my watch list for quite some time, but I haven't been able to get myself to pull the trigger. In 1999 and again in 2007, I was lucky enough to go almost totally into cash (with an emphasis on lucky). On a seat-of-the-pants basis, I don't feel the market euphoria that I did on those occasions, so it must be some apprehension with the firm's dependence on government customers.

    Mar 7 11:22 AM | Likes Like |Link to Comment
  • Pfizer's Cash Position Is Signaling Activity [View article]
    Kapusta = cabbage = dinero, greenbacks, moolah, etc.
    Mar 5 10:30 AM | Likes Like |Link to Comment
  • Batting .406 With Dividend Growth Stocks [View article]
    An amazing thing about Williams hitting > .400 was that he didn't run well. Don't think he beat out too many infield hits. In 1957, at age 39, Williams hit a robust .388 in 546 plate appearances. He drew 119 walks, hit 38 HRs, and struck out only 43 times.

    In his last season, 1960, at age 42, he batted .316 in 113 games.

    And although he didn't run well, he made a very select list. Only 3 Major League players have stolen a base in four different decades: Ricky Henderson, Tim Raines and Teddy Ballgame.

    I only saw him play once in person, my second ever MLB game. Ted went 1-4 against Ford -- single up the middle. Very interesting game for other reasons. Piersall was on first, Jensen on second. Ford tried to pick Piersall off, but threw low and toward home. Skowron had to dive to his left to stop it and landed flat on his face with the ball in his glove. Piersall took the opportunity to sit on Moose's back. While that was going on, Jensen scored from second. Gigantic rhubarb ensued with Casey and Billy Martin going totally nuts. And Skowron wanted to kill Piersall. Game went to the 10th, Yogi led off in the bottom of the inning and hit the first pitch out. Memorable game. I can close my eyes and see it as if it were yesterday.
    Feb 22 01:00 PM | Likes Like |Link to Comment
  • High Yield Vs. Dividend Growth [View article]
    This also from Morningsta's report on ETY:
    "The fund typically sells at a large discount, and because of this, ROC (return of cpital) boosts the fund's total return calculations..... Heavy reliance on destructive ROC also points to a fund that is unable to earn its stated payout and should consider lowering it. The fund has used destructive ROC in every fiscal year since inception."

    SA author Doug Albo would probably disagree with Morningstar's take on ETY:

    Albo's main point of contention in these and other articles is that ETY's ROC strategy is not necessarily destructive; it's part of the fund's option-income strategy. I recently initiated a small position in ETY. We shall see....
    Feb 19 10:08 AM | 2 Likes Like |Link to Comment
  • Nam Tai Shares Could Triple Despite Apple's Issues [View article]
    Up, up and away this AM. VI, you're a seer...
    Jan 28 09:50 AM | Likes Like |Link to Comment
  • Nam Tai Shares Could Triple Despite Apple's Issues [View article]
    Bought NTE backi in early '09 when the shares were priced at a fraction of the company's cash (no L/T debt), so I'm already sitting on better than a triple.

    Here's hoping the author is correct -- another triple would be SOOOO sweet. I'm holding, expecting to easily see at least a $20 print.
    Jan 25 08:12 AM | 3 Likes Like |Link to Comment
  • Variable Rate Preferred Stock Shares Unlikely To Beat Fixed Rate Returns [View article]
    ote, I'm in pretty much the same boat as you and it's not a bad boat at that. I own floaters from MS, GS, HBC and SAN and I can only attribute the recent price action to a belief by yield-seeking buyers that they will pay higher coupons when rates go up -- and soon. Since these issues pay the higher of a floor (usually 4%) or 0.6-0.9% plus LIBOR, with LIBOR at ~ 0.3%, there will definitely be a lag and probably a long lag. LIBOR would have to increase 10-fold for the coupons to increase. I recently sold AEB as it has gotten near par and my capital gain is equal to about 8 years worth of dividends. I'm also getting ready to pull the trigger on my shares of HB-pG. It is my hope that buyers will continue to push up the prices of the MS, GS, and SAN floaters. Perhaps not too many of them will read this article.

    Doug is spot on. Current buyers of these shares are in for a surprise when rates do go up. If the economy improves, Senior Loans will start to look more attractive than floating-rate preferreds.
    Jan 21 12:20 PM | Likes Like |Link to Comment