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wdchil

wdchil
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  • Retirement Strategy: Look Ma, No Hands [View article]
    " There has been so little labor involved in my dividend growth stock portfolio during the past 45 years that I am almost embarrassed to have made so much money with so very little effort."

    That is well articulated. This is my experience also but over more like 30 years.
    May 26, 2015. 08:34 PM | 5 Likes Like |Link to Comment
  • Mac Segment Updates Will Lift Apple Sales [View article]
    Alex,

    There has always been a "halo" effect with Apple sales. I wonder if the high iPhone 6/6+ and watch are going to cause more sales of Mac? I suspect that to be the case - particularly in China and Japan.

    Another factor is the gold MacBook. It has that "gotta have it" look and the price is moderate - for Mac that is. And again, China likes the gold color - so a gold Mac is bound to get sales. It might seem silly but colors generate strong affinities.

    Anyway, I certainly can't complain. Apple stock has probably been my third biggest money-maker ever (after the glory days of Intel and Qualcomm). At this point we are in "base hit" territory for Apple - the home run has already been run.

    WD
    May 26, 2015. 01:35 PM | 7 Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    "The balance sheet is strong, the company has ample liquidity and an "A" rating."

    The M* bond rating was A but they are potentially lowering it due to the reduced cash flow relative to various obligations. Right now it is "rated" as "UR-" meaning that the rating is suspended pending a review to take into account negative developments. I don't consider this to be dire but the above statement seems somewhat inaccurate.

    Long COP but not buying more at these levels.
    May 26, 2015. 09:57 AM | 1 Like Like |Link to Comment
  • Retirement Strategy: Look Ma, No Hands [View article]
    RS - Worried about you until I realized that you were on vacation. Welcome back!
    May 26, 2015. 09:31 AM | 3 Likes Like |Link to Comment
  • Retirement Strategy: Look Ma, No Hands [View article]
    08/09 was certainly scary but I kept on buying then until I expended all the cash in my before-tax account. I don't know what percentage my portfolio dropped - stocks like PG and WMT tend to drop more moderately during such downturns versus tech stocks. But obviously the financials were hit pretty hard. Among my purchases were WFC and USB after they cut their dividends - that was the ideal time to buy. WD
    May 26, 2015. 09:30 AM | 1 Like Like |Link to Comment
  • Deere & Company: Sell Now As The Risk Profile Heads Higher [View article]
    Also long DE.

    "RE: Buffett, you've very likely got it wrong." Agreed. Regarding Blue Pacific Partners - their comments regarding financing fly in the face of the M* bond rating of A. M* is proactive about changing those ratings and, if anything, are a bit conservative considering how they have knocked down companies like T. Some of Blue Pacific's past long winded arguments also don't seem to square very well with logical reasoning - particularly those that discount the long term WW opportunity for capital equipment.

    DE is a long term hold for me although a big rise in earnings may be a few years away. Meanwhile the dividend and buybacks will increase the long term opportunity.
    May 25, 2015. 01:16 PM | Likes Like |Link to Comment
  • Deere Investors, I've Found Your Inflationary Hedge [View article]
    Excellent article. I think the low forecast is too pessimistic because DE has various mitigating factors: spare parts business, global growth, finance, construction, and consumer. The stock seems to be a reasonable value even at the current (rebounded) price and I will stay long DE for my portfolios. WD
    May 23, 2015. 03:13 PM | 1 Like Like |Link to Comment
  • Why U.S. Bancorp Is In Warren Buffett's Portfolio [View article]
    Very nice article Tim - of course - which is why I follow you as an author. Not to mention that your articles are usually the voice of reason.

    I picked up USB during the financial crisis and it is roughly 3.4% of the portfolios I manage. That is slightly above my 3% metric for top holdings. But I'll probably not sell any until I feel that it is fully valued relative to the market and today's price is not the case. USB has a forward PE of about 12 according to M* which is a considerable discount to the market for such a high quality company (bond rating A+) with good growth prospects. A total return of 9-10% per year is my 5 year estimate for USB - and in my opinion the market index is more likely to return 5-6% total return over the next 5 years.

    WD
    May 23, 2015. 02:49 PM | Likes Like |Link to Comment
  • Deere & Co. - Higher Financings And Sales To Deere Finance Boost Revenue And Margins [View article]
    "...if you think one article of doom and gloom tells you everything you need to know, you are in trouble..."

    Agreed on that point. But I look at things like bond ratings, historical numbers (including the 08/09 downturn during which DE remained very profitable), financial receivables, etc. I also look at the macroeconomic factors studied by paid analysts (not just SA authors), and have concluded that your dire predictions regarding DE seem quite unlikely and are based on localized anecdotal evidence which is insufficient for a large global company.

    2015 is predicted by DE to be a trough year - keep in mind that finance, spare parts, foreign growth, and construction are all factors here. So far DE has done even better than their earlier guidance, so I find them to have good credibility.
    May 23, 2015. 12:04 PM | Likes Like |Link to Comment
  • A Simple Reason Why AT&T Is The Most Exposed To T-Mobile Competition [View article]
    One key factor that this article failed to mention is subscriber churn, and the most recent quarters indicate that there is not much difference between Verizon and AT&T. That would seem to vacate the premises of this article. Actually T-Mobile's churn rate is nearly double that of AT&T - probably a result of poor service. Of course estimates for churn rate vary, but AT&T is not having much difficulty there.

    http://bit.ly/1LucXsc

    Moreover US consumer wireless will be a minority of AT&T revenue after acquisitions are complete. So in summary the premises of this article seem to be highly anecdotal and don't do much to move the needle in terms of T as an investment.
    May 22, 2015. 05:09 PM | 12 Likes Like |Link to Comment
  • Deere & Co. - Higher Financings And Sales To Deere Finance Boost Revenue And Margins [View article]
    "2015 is maybe at mid cycle but one can think that 2016-2017 will need to get lower than mid cycle to stabilise long term trends." That is not what DE said earlier - stating that this is likely to be their "trough year." Moreover, they are raising their earlier estimates which gives their guidance strong credibility.

    Berkshire Hathaway added to their DE holdings recently suggesting that the company is undervalued. M* considers them to be at fair value with an A financial rating. The statement about Deere pushing equipment flies in the face of actual revenue numbers and the financial rating - that assertion simply does not look correct.
    May 22, 2015. 03:34 PM | 1 Like Like |Link to Comment
  • Deere & Co. - Higher Financings And Sales To Deere Finance Boost Revenue And Margins [View article]
    "But it appears management is choosing to support the income statement with its balance sheet, leading to short-term gain and higher risk in the long term."

    DE's bond rating according to M* is A which is a very strong rating.

    M* also gives DE an exemplary stewardship rating. Moreover the finance unit appears to a be a considerable strength helping to offset a reduction in farm capital equipment sales.

    Hence I have to disagree with the author on this point along with others made in earlier comments & articles concerning global potential for expanded equipment sales. Long DE and will remain long. Apparently big investors feel the same way as DE has done an exemplary job in managing the current downturn as the stock is up 4% on their recent report.
    May 22, 2015. 11:13 AM | 2 Likes Like |Link to Comment
  • Exxon Mobil And Berkshire's Energy Investment Skills [View article]
    I prefer to do my own independent analysis for each security, taking note of Berkshire Hathaway's choices. In this case I will remain long XOM. According to M* XOM is still 11% undervalued and earns four stars - not a screaming bargain but probably an above-average selection. My own analysis suggests that XOM will have an improved FCF in coming years as their current capital investment cycle reaches maturity as cash flow rises relative to capital spending. I will stay with the stock during what looks to be a favorable multi-year period during which more cash will be available for stock buybacks and dividends.

    Regarding Berkshire Hathaway's sale, this can be for any number of reasons including a desire to invest in other companies or sectors. Obviously BH believes that they have better opportunities for their investment dollars. In my case XOM appears to be a favorable choice looking forward.

    In some cases I have made similar choices to BH including IBM, Deere, WFC, and USB to name a few, but only after independent analysis suggests that these are above-average choices.
    May 22, 2015. 10:56 AM | 5 Likes Like |Link to Comment
  • Sector Allocation As It Pertains To Dividend Growth Investing [View article]
    Jason, If your focus is dividend growth and you don't ever sell a stock (like Buy & Hold) then I think sector allocation is not important. On the other hand, if you rebalance to get the best total return then sector allocation can be very helpful. I think you have to look at your long term strategy and decide whether and how asset allocation fits in.

    For myself, I do a certain amount of "sector allocation" and rebalancing. However, my only set targets are between fixed income and equities in the before tax market. I use this to take advantage of low prices in the marketplace. Some of my fixed income includes preferred stocks which yield 6%. My before-tax portfolio is currently 80% equities and 20% fixed income due to low expected returns from fixed income but wanting to have some firepower when a big market correction occurs. When (and this may be a while) rates return to "normal" levels then I'll probably make the ratio 70/30 but we will see.

    For other industries like energy and financials I stop buying once my holdings are significantly higher than the industry benchmarks. My before-tax portfolio is about 12% energy versus a 8.5% benchmark so I am holding fast there. I am expecting weakness in the energy sector for 1-2 more years. I also have an over-weighting in financials because I think they are still a relatively good value compared to other sectors. Most of these holdings are the higher quality banks (WFC, USB) and Berkshire Hathaway.

    WD
    May 21, 2015. 10:43 AM | Likes Like |Link to Comment
  • Wal-Mart Faces The Long-Lasting Fallout Of The Great Recession [View article]
    Based on M* numbers the number of shares was reduced from 3389 to 3243 (in millions) from FY 13 to FY 15. This equates to $11.2 billion for two years or about $5.6 billion per year which is roughly in line with your $15 billion for three years estimate.

    Thus, the float is being reduced by about 2.2% per year. Assuming no organic growth or valuation change that would result in just under a 5% return per year counting the dividend. To justify an investment in WMT one must assume that they will have at least 3% organic growth per year above and beyond share repurchases and dividend. I think that assumption is reasonable and will stay long but will not actively add to the position.
    May 20, 2015. 12:32 PM | Likes Like |Link to Comment
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