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  • U.S. Steel Is Continually Depressed [View article]
    "The industry will file trade cases one by one, but until we address the underlying cause of allowing governments to subsidize their steel industries and allowing them to build massive overcapacity they are then forced to export into the world - with the U.S. the most open market in the world, we will be challenged as an industry.'"

    I am usually pro-free trade. But in this case I think we need a tariff structure that fully offsets those subsides including tariffs on imported products that benefit from the subsidies to the extent of their reduced input costs. It might spark a "trade war" but the idea is to level the playing field for US-made products. I am against protectionism but am in favor of having even-handed competition. Of course the difficulty is in performing the computations to determine the magnitude of the subsidy.
    Nov 28, 2015. 04:26 PM | Likes Like |Link to Comment
  • Fiscal 2016 Outlook For Deere & Co. [View article]
    John, While I agree that the 2 year outlook for DE is tough, the 5-10 year outlook for the stock looks pretty compelling. I estimate that a 15% total return is attainable provided that revenues and margins return to former levels and make new records. Meanwhile, you get paid to wait. Of course my assumptions can be wrong and that is why I did a computation for both 5 and 10 years with peak earnings estimated at about 40% higher than the prior peak due to investment to grow the business. With an ongoing decline in share count and the dividend, the numbers look quite good even with the 10 year assumption. Therefore I will remain long DE although I am only letting the dividends accumulate and not increasing my allocation to DE. WD
    Nov 28, 2015. 12:52 PM | 5 Likes Like |Link to Comment
  • Qualcomm: Pandora's Box Could Spell Doom In South Korea [View article]
    Steve Rasher, I do find your posts to be extremely informative as they properly put the intermediate term risk on QTL in perspective. Since that is the primary revenue source for QCOM, it is all-important. In fact, the net present value of the QTL revenue going forward may be roughly equal to QCOM's market capitalization.

    Regarding QTC, the business is still has a lot going for it although its estimated value has clearly declined. QCOM still has a lot of talent and has been the center of a lot of innovation. Based on anecdotal comments from engineers that work there, the hours worked by many of their engineers sound excessive but none of them seem intent on leaving. It is kind of the expectation of folks that work in the high tech arena these days.

    In any event, I am long QCOM and comfortable with the current valuation. What gives me pause is the longer term. I can't help but think that companies like Samsung and Apple will file enough patents to reduce QCOM's dominate IP position in the very long term. That will reduce their royalty rates eventually. Patent monopolies are wonderful but tend to be transient. Maybe it will take a decade or more, but someday the big advantage will be gone.

    Nov 28, 2015. 12:26 PM | Likes Like |Link to Comment
  • Qualcomm: Recent Woes Bring New Opportunities [View article]

    I would guess (speculate) that the S Korea investigation will end similarly to that of China but after some concessions. Once concluded it will lift a cloud on the stock. But I am unsure as to the timeframe.

    Your writeup regarding the July case is impressive. As you say the facts are different in certain respects but that won't stop other entities like S Korea from trying to show the "similarity" between that case and the current complaint. If nothing else it is a new hydra-head to deal with and to hit with the "legal club". It adds more uncertainty.

    I am long QCOM to a small/modest extent. I work in the patent and technology field writing patent applications and doing analysis for law firms and corporations. My feeling is that QCOM will retain their licensing business model for this round but that it will slowly erode over time because the higher value patents will eventually expire. But if the erosion takes long enough it can be a good investment.
    Nov 24, 2015. 10:23 AM | Likes Like |Link to Comment
  • Exxon's Buybacks Since The Oil Plummet [View article]
    Texirish, I agree with your comments and would add a bit more:

    >XOM is very slowly winding down execution of a number of long life capital projects on such as LNG projects. This is consuming a lot of cash right now. At the same time the low price of oil is reducing cash flow. So XOM does not have ample FCF to devote to share buybacks over the next year or so.

    >As time goes on, these large projects will be coming on line and there are no plans to substantially increase capital spending. At the same time we can expect a recovery in upstream commodity pricing. Thus, FCF will greatly increase for multiple reasons. Then XOM will have plenty of cash flow to increase share repurchases and other purposes.

    I therefore see XOM as a great long term investment. However, we may have a relatively weak stock price over the next year or so as these factors play out. But I expect to see FCF increase tremendously within 2-3 years and that will be a joy to behold.

    Nov 23, 2015. 08:13 PM | 3 Likes Like |Link to Comment
  • Apple Will Soar After Solving This One Problem [View article]
    "Apple needs to grow sales 20%/year to sustain its growth model."

    I disagree with this. Apple has an enterprise to FCF ratio in the double digits - more than double the same metric for PG for example. Apple's stock price valuation actually assumes a shrinkage in the business. That is not a very high bar to jump over and one that I think Apple will easily hurdle. Long Apple with little concern.

    Nov 23, 2015. 03:25 PM | 1 Like Like |Link to Comment
  • Qualcomm: Recent Woes Bring New Opportunities [View article]
    Excellent and balanced article including both risks and an assessment as to why QCOM is a good value despite the risks. This exemplifies how articles on SA should be written. I am in agreement with this article. The QTL risk - the potential of someday losing the licensing revenues - has always been a concern for QCOM - even when the company had a very high P/E. But now the low P/E suggests the QCOM is probably well above average risk-adjusted value for the investor. I am long QCOM but with a relatively low allocation. The reality is that almost every company has substantial inherent risks - they are just different according to the business model. WD
    Nov 23, 2015. 03:20 PM | 3 Likes Like |Link to Comment
  • Retirement Strategy: Is Now A Good Time To Begin A Retirement Portfolio? [View article]

    Right now I am roughly 75% equities (stocks) and 25% fixed income and cash. So for the most part I am invested like you are. I cannot predict the trajectory of equities in general of course.

    A big issue is the trajectory of inflation and interest rates. Based on a WW oil surplus and the dollar as a "safe haven" I expect any rate increases to be small, oil to remain below $70/barrel, and for a strong dollar over the next year or so. That means that high yield investments (mREIT, T, preferred stocks) will do relatively well and that companies like KO, IBM, and JNJ with heavy foreign revenue will face strong headwinds. I have a hefty investment in such companies though.

    But of course that is just my prediction so I bet both sides of the fence to some extent. If I am wrong then part of my investments may do well and the other part not so well. I reallocate to maintain certain ratios that seem optimal for the given environment and that allows me to buy things relatively on the cheap. At least that is the basic idea.

    Nov 22, 2015. 05:05 PM | Likes Like |Link to Comment
  • Apple: Does It Matter That iPad Pro Isn't A Notebook Replacement? [View article]
    Techy46, You make some good points but lets keep it respectful. There is just no need or justification to berate Apple users and developers.

    There are a number of successful business owners I know - technology businesses - that primarily use Apple products. They have good reasons for doing so including quality and security. For many of us the cost of the client device is not significant.

    At the same time one of my past clients was a Microsoft spin-off and of course they all had Windows machines. Very cerebral group and I miss working with them.

    Nov 21, 2015. 01:36 PM | 1 Like Like |Link to Comment
  • Wal-Mart's Struggling Online Business Is A Big Concern [View article]
    I am not sure what conclusions we can draw other than that he believes that certain other investments are a better opportunity and that he wants to maintain a certain cash position ($20 billion is my understanding). With regard to specific allocations I don't have any insight as to his process. WD
    Nov 21, 2015. 12:07 PM | Likes Like |Link to Comment
  • Wal-Mart's Struggling Online Business Is A Big Concern [View article]
    "But why reduce WMT holdings rather than something else?" Apparently he would rather sell WMT rather than something else like WFC or IBM stock. Perhaps WFC and IBM represent better risk/reward prospects or he expects them to perform better over the next year. He doesn't comment on his actions so there is no way of knowing for sure. Anyway, he kept 93% of his WMT (glass is half full comment). I am unsure of his reasoning. He also exited XOM while adding to higher risk upstream assets (Suncor). He also bought lower risk downstream assets (PSX). I am not sure why these decisions were made. WD
    Nov 20, 2015. 06:09 PM | Likes Like |Link to Comment
  • Energy Transfer Investor Day: Go Big Or Go Home [View article]
    Hi Ray,

    You and Jennifer Warren are rich sources of information and insight. I confess that I am not invested in either of these but will need to study them further. I have considered KMI but the debt load and other investment opportunities have kept me out of that one. I always like to keep educated so that I have a "pipeline" of future investment opportunities - pun intended.

    Regarding oil prices, you seem to have the opinion that we will be above $60 sometime in 2016. Is that correct? I have to admit that I am perplexed by the current situation. About 30% of the world oil production is offshore oil and the general opinion in the industry seems to be (or have been) that this percentage must increase in the long term. But it seems to me that offshore oil exploration is getting cut drastically by companies wanting to balance cash flow with capital spending and dividends. My speculation is that Saudi Arabia is primarily targeting offshore oil with their seemingly insane production levels. At some point, when a number of offshore efforts have been shuttered, I would expect them to cut back production knowing full well that offshore will take a very long time to reinvigorate. The damage will have been done for long term production. At least that is my take - it actually has little to do with oil shale in my opinion.

    What do you think?

    Nov 20, 2015. 03:06 PM | 2 Likes Like |Link to Comment
  • Wal-Mart's Struggling Online Business Is A Big Concern [View article]
    Not only that, but WMT grew free cash flow from $12.7 billion to $16.4 billion from FY 2013 to FY 2015 during Amazon's rapid revenue growth. Clearly online is NOT severely impacting the stores.

    WMT views online as more of an opportunity that a threat and acknowledges that the bringing growth to the unit requires investment.

    Regarding WB's sale of WMT stock that was part of a cash-raising exercise to buy Precision CastParts which is an immense purchase. WB may have viewed other stocks as being more undervalued than WMT. If WB felt that WMT was a bad long term investment he would have exited his position.

    Long WMT without high concern.
    Nov 20, 2015. 11:58 AM | 1 Like Like |Link to Comment
  • Which BDCs Are Outperforming The S&P 500? [View article]

    Thank you for another article. I really consider you to be the expert in this space. I am glad to see that 5 of my BDC's are top performers in your chart including MAIN, TCPC, HTGC, ARCC, and AINV - although some of these are still depressed in terms of share price.

    MAIN is intriguing. There is a lot of implied value of the the management. Management is what makes a company worth more than its tangible assets.

    Nov 17, 2015. 12:55 PM | 4 Likes Like |Link to Comment
  • Do You Buy Stocks Or Stock Symbols? [View article]
    ABROSEY, It is a reality of investing. Peter Lynch, in one of his books, talked about behaviors of mutual fund managers (of which he was one). The basic problem is this - fund manager is much of a salesman as an investor and sometimes the former traits dominate. So, they sell their beaten down IBM's and Gilead's and add to their inflated momentum stocks like AMZN in order to "window dress" their portfolio. It makes it look like they know what they are doing because the hot stocks in the portfolio are the biggest positions. As long term investors we need to have a tremendous amount of patience to go with our convictions. Otherwise we may as well buy a Vanguard fund (which has managers that are long term investors fortunately) and be done with it. WD
    Nov 16, 2015. 09:49 AM | 5 Likes Like |Link to Comment