Seeking Alpha


Send Message
View as an RSS Feed
View wdchil's Comments BY TICKER:
Latest  |  Highest rated
  • 4 Reasons It's Time To Buy Qualcomm Right Now [View article]
    Good Article. I too am long QCOM but only very modestly. Investor's premises do modify the article's points somewhat.

    (1) Regarding IoT: The internet of things may provide opportunities but it is not clear that the revenue per unit will be the opportunity for QCOM that smartphones have been. If that revenue is a small fraction of smartphones then that would make IoT more of an incremental opportunity that has trouble moving the needle. Bottom line- this needs to be quantified better.

    (2) LT Guidance: That can change dramatically if the company can't find new opportunities big enough relative to the past. QCOM already generates almost $9 billion a year in cash flow - mostly from licensing. Trying to move the needle from here may be challenging.

    I agree with the author that QCOM is inexpensive from a PE standpoint and probably above average relative to the index. However I am much less certain about high growth in earnings going forward.
    Jul 4, 2015. 12:42 PM | 4 Likes Like |Link to Comment
  • Buying Opportunity: Coca-Cola [View article]
    "All they seem to focus upon is how cheap a stock is rather than how good a company's business model may be."

    I at least agree that you are not reading M* research since the above statement is not correct as would be readily apparent from reading a single report. If you have access to it that means that someone is paying for it.

    Most of KO's flattening earnings results is due to the effect of FX which pressures earnings as measured in US dollars. Certain fund managers like Kilbride realize this that this effect is likely to end or reverse itself.

    Regarding comparison with Kmart before bankruptcy - that is ludicrous.
    Jul 2, 2015. 06:57 PM | 3 Likes Like |Link to Comment
  • Nucor Remains Challenged As Imports 'Steel' The Show [View article]
    Great comment! WD
    Jul 2, 2015. 02:28 PM | Likes Like |Link to Comment
  • Buying Opportunity: Coca-Cola [View article]

    Dan Kilbride of the fund VDIGX has been increasing his position in KO. Thus you are in good company. M* considers rates KO as four stars (moderately undervalued). So adding to KO seems logical.

    Jul 2, 2015. 09:49 AM | 5 Likes Like |Link to Comment
  • The Best Way To Judge Past Performance: Part 2 [View article]
    Chowder, That makes logical sense. One thing that is tricky - a company sometimes has an abrupt transition from a rapid earnings growth to a flatline or worse. The trouble is - by the time the investor realizes this is happening, the stock valuation has already plummeted. That is why having insight into the business is so important. Then you can decide whether to ride out a low period or hit the exits. WD
    Jul 2, 2015. 09:42 AM | Likes Like |Link to Comment
  • Do Not Buy Annaly Capital, Yet [View article]
    Ray - I see why I always enjoy reading your responses and articles.

    I have a similar view - I can't see interest rates rising very rapidly. No more than 50 basis points or so in the next year. Therefore I feel comfortable with some assets that effectively have a long duration including mREIT's, REIT's, longer duration tax free bonds, and preferred stocks (optimized for before-tax versus taxable accounts). Also I think that the mREIT space likely is inexpensive right now but it is always a dangerous space. My exposure is with the ETF REM which seems lower risk but does carry a 0.5% management fee overhead. Well worth the cost for me.

    In case I am wrong about rates I do have a pretty good sized "war chest" in the cash and one year duration tax-free bonds - particularly in my taxable account. If I had to do some liquidation I could do so even with a 200 basis point rise in rates without significant damage. But that will probably prove to be money left on the table.

    No one can predict the future - and so we have to spend some overhead being ready for multiple scenarios.

    Jul 1, 2015. 04:55 PM | 1 Like Like |Link to Comment
  • White flag from Greece has stocks on the move higher [View news story]
    Not a rotogravure press?
    Jul 1, 2015. 11:25 AM | Likes Like |Link to Comment
  • Why Apple Will Escape The $130 Resistance Level [View article]
    Richbar, Apple can generate FCF almost equal to 10% of the market capitalization (based on last the realized numbers last year and current year extrapolation). That is even before factoring in the net cash position. Thus generous share repurchases can easily be funded while maintaining the AA- bond rating. This is still one of the better values in the market (although the market is certainly overvalued). It will remain one of my favorites unless the management starts doing something irresponsible - something I have not seen from Tim Cook & Co. WD
    Jul 1, 2015. 10:25 AM | 2 Likes Like |Link to Comment
  • What To Expect From Deere [View article]
    According to M*:

    ROE is 27.4%. The finance unit is certainly a factor in raising the ROE.

    FCF: This has been low recently but a lot of capital spending is toward growth as opposed to maintenance.

    Use of cash priorities for Deere from their investor relations:
    (1) Maintain "A" bond rating-because finance unit is very important.
    (2) Fund operating and growth needs.
    (3) Maintain dividend
    (4) Share repurchase.

    The fact that they have been able to keep repurchasing shares is encouraging. Long DE but not buying more at these levels (other than dividend reinvestment). DE management has a very strong track record.

    Jun 29, 2015. 04:47 PM | 4 Likes Like |Link to Comment
  • A High-Yield, Low-Price Stock That's Traded In A Tight Range For 5 Years Is Great For My Immediate Income Stream [View article]
    If you want a high yield, perhaps one of the higher quality BDC's is a better choice like Main Street Capital. A few considerations:

    M* Credit Rating is UR- The EBITDA/Interest Ratio is 2.59. That is definitely in dangerous territory. If you look at FTR's individual bond listing, they are paying pretty high interest rates which is of course a sign of weak credit.

    The company has been profitable for the last 9 years which is a positive. But the share count has roughly tripled while the revenues have doubled. It looks like the company made some big share-based acquisitions that didn't work out too well for shareholders. Not good.

    I won't buy this one. If I did (however unlikely) I would keep it to less than 1% of the portfolio but at this point I would rather find something better to put that 1% in.

    Jun 29, 2015. 09:39 AM | 1 Like Like |Link to Comment
  • Exxon, BP suspend Canadian Arctic exploratory drilling [View news story]
    That makes sense. The high capital and cost projects will go first. It may be more than a decade depending on how long this overhang lasts. It appears likely to last longer than I had originally expected.
    Jun 27, 2015. 04:19 PM | 1 Like Like |Link to Comment
  • Nike Is A Slam Dunk Stock [View article]
    Although the PE is high, the prospects may justify the valuation. A couple data points:

    (1) M* gives them two stars (moderately overvalued), an AA- bond rating (exemplary), and a wide moat rating. Overall positive but perhaps the time to hold but not buy.

    (2) The fund VDIGX is adding to their position of NKE and the manager typically looks for value along with dividend growth. So VDIGX sees more value than M*.

    So this high quality company is somewhere between being fairly valued and moderately overvalued according to these two entities. NKE seems heavily dependent upon marketing and advertising and some highly skilled marketing executives. That is probably where the risk factor lies. It is also a consumer cyclical company.
    Jun 27, 2015. 11:44 AM | 1 Like Like |Link to Comment
  • Deere & Company - An Interesting Comparison With Caterpillar And Archer Daniels Midland [View article]
    Some more things to compare courtesy of M*:

    Financial Rating: DE is A; CAT is A-; ADM is BBB+

    Moat Factor: DE and CAT have wide moats; ADM has none

    Valuation: All three are three stars - roughly fairly valued.

    I am long DE but not buying more at the current valuation. I am more interested in buying the companies with the best long-term fundamentals than looking for cyclical rises. At the moment it is difficult to find great values among equities.

    Jun 26, 2015. 07:38 PM | 7 Likes Like |Link to Comment
  • Gilead: Still My Next Apple [View article]

    GILD seems like a reasonable value for the investor. But I would prefer to compare it to Pfizer or JNJ than APPLE. The business model of big pharmaceuticals is so different than Apple. The risks are completely different and depend so heavily on drug trials - which sometimes end a drug development entirely after a huge investment. Also, a patent expiration typically eliminates more than 90% of a product's contribution - except for "large molecule medicine" which has manufacturing barriers to entry. For these and other reasons I think this has to be analyzed in a very different way than Apple. Apple can make money on things that are either un-patented or have very weak patent coverage as is the case with most things in the consumer electronics space.

    I am not currently long GILD but have been looking at it. I am not quite as optimistic as some folks - having invested in big pharma for decades and experienced some colossal disappointments during drug trials - something that just cannot be predicted. Sometimes smaller trials look great and but the big trials crash and burn. So one must be very careful in making assumptions here.

    Jun 25, 2015. 02:25 PM | 3 Likes Like |Link to Comment
  • Wal-Mart Is Now A Value Stock Not A Growth Stock [View article]
    "Wal-Mart is now more of a value stock than a growth stock and should share more of the wealth it is generating with shareholders."

    I disagree. Wal-Mart is preferring to use their cash flow to fix some issues with their business and grow some opportunities (e.g., neighborhood markets and online). That is the correct focus. They can be more generous with shareholders when those efforts pay off. But I think they are making the longer-sighted tradeoff at the moment. Whether they are a value stock or a growth stock is kind of irrelevant. You just have to decide whether dividend and total return prospects meet your criteria as an investor. In my case, I think they do and will remain long WMT. WD
    Jun 25, 2015. 02:16 PM | 3 Likes Like |Link to Comment