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wdchil

wdchil
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  • IBM: Dividend Increase On The Way, Why I'm Expecting A Double-Digit Raise [View article]
    I am very skeptical about any double-digit dividend raise when earnings are actually down year over year and IBM's need and plans to invest more in the business. I do expect an increase but anticipate low single digits - and doubt that will change until EPS begin to rise more strongly. But we will see. I see little value in speculating on it.
    Apr 20, 2015. 07:51 PM | 2 Likes Like |Link to Comment
  • The Perfect Portfolio For Retirement Is An Illusion [View article]
    RS is one of my favorite authors and B&H is one of my favorite commenters!

    While my style is a little different I have learned (and keep learning) from you both.
    Apr 18, 2015. 10:33 AM | 6 Likes Like |Link to Comment
  • The Big Threat To Google Is Nationalizing The Internet [View article]
    Dana,

    Google has an enterprise value of just over $300 billion ex-cash (approximate).

    Cash flow is about $22 billion; FCF about half of that at $11 B although I think capital spending as a percentage of CF will fall over time. Cash flow grew 20% year over year which is excellent.

    The bottom line - Google is undervalued relative to the market as a whole assuming an ability to maintain strong CF growth. I am neutral to slightly positive on the stock due to the valuation, the regulatory risks that you have outlined in your article, and shareholder policies. I see better opportunities for return on investment right now. I bought Google the last time it was on fire sale but sold my position since then (and was quite happy). However I will keep reviewing this one along with other alternatives.

    WD
    Apr 16, 2015. 01:20 PM | Likes Like |Link to Comment
  • ConocoPhillips - Asset Sales And Conventional Reserves Development In Focus [View article]
    Alex, It depends on the position of the company. COP has strong holdings in shale and has been developing expertise to improve margins. In a sense, shale is an extraction technology play as opposed to strictly a wildcat or commodity price play and that allows COP to leverage its expertise. As for COP's valuation I am neutral right now - I think it is fairly valued given oil prices going forward. I hold some but am not buying more. The market has done a reasonable job of valuing big oil's forward prospects from what I can tell. WD
    Apr 16, 2015. 12:57 PM | 1 Like Like |Link to Comment
  • Project $3 Million - Portfolio Management, New Purchase [View article]
    Chowder - Thanks for the reply. I have learned a great deal from your methodology, articles, and comments. Perhaps I have a hybrid strategy between total return and income flow without one being the higher priority. Regarding high growth stocks, I generally don't buy them unless they are undervalued. My experience has been that very optimistic forecasts have a way of being downgraded and then there can be real losses when reality crashes into an allegedly "high growth" stock. At this point I am neutral regarding MA. My "total return" strategy is to buy great companies when they are beaten down - such as WFC during the 08/09 crisis or Apple after the huge selloff. That has allowed me to obtain above average returns and, at the same time, a rapidly rising dividend income. WD
    Apr 15, 2015. 04:38 PM | Likes Like |Link to Comment
  • Apple: A Small Change In Apple Maps, A Giant Leap Into Mobile Ads [View article]
    BEEFY136 - Apple's total return is +72% for the last 12 months. What we are seeing is just a pullback and there are many reasons (profit taking, portfolio adjustments, etc.) that can explain the recent drop. It is not worth worrying about these fluctuations if you think this is a good long term investment. I recently took a haircut (after great gains) but am staying with the remainder for the "foreseeable future." If there is a huge pullback I will probably buy more. WD
    Apr 15, 2015. 10:46 AM | 12 Likes Like |Link to Comment
  • BDC Total Returns Q1 2015: Part 3 [View article]
    BDC Buzz, All of my BDC's fall into your safer list other than AINV with MAIN and TCPC being my top two. This is still a relatively new category for me. I have spent some time studying Well Fargo's reports on this subject - along with annual reports - but have to admit that I don't yet have the best understanding of these companies. Therefore my individual positions in them are fairly small but significant as a group. I am convinced that BDC management is much like bond fund buyers - the management talent in finding the best return/risk tradeoffs for investments is really key. Management that finds higher yielding loans with overrated risk can provide above-average returns. That is why the BDC yield by itself is not the primary factor in dictating returns going forward. BDC's like MAIN seem to make the best tradeoffs. WD
    Apr 15, 2015. 10:37 AM | 1 Like Like |Link to Comment
  • Project $3 Million - Portfolio Management, New Purchase [View article]
    Chowder and B&H - The comment about the assumed yield parallels some of my own thinking. One can always selectively mix relatively high yield assets with growth assets to reasonably achieve a yield anywhere in the range of 2.5-4.5%. KMI yields 4% and T yields 5.6% for example. But, of course, the tradeoff with income is growth and that tradeoff can really affect total return. Thus my personal objective:

    >To reach a portfolio size whereby a 3% yield meets my "baseline living expenses." By mixing higher yield investments like T along with lower yielding but faster growing stocks like UPS and XOM, I can dial in a 3-3.5% yield and still get a considerable inflation-beating raise every year.

    Of course, I could easily just make the goal 4% and declare victory sooner and that would probably work out also although the total return would be lower. But at this point the 3% goal looks achievable and will be my objective.

    WD
    Apr 15, 2015. 09:57 AM | 3 Likes Like |Link to Comment
  • Deere & Company: Long-Term Outlook Looks Good But Wait For A Dip To Buy [View article]
    DE is a hold for me as I have enough allocated to it. Whether it drops to $80 (or any other value) is speculation though although I don't expect immediate gains from this point forward except perhaps along with the overall market. M* rates DE at 97% of fair value, so a hold seems like a good strategy for this great company. M* also rates DE at 15.8 times forward earnings and an "A" credit rating.
    Apr 14, 2015. 01:25 PM | Likes Like |Link to Comment
  • Should You Consider Wells Fargo & Company? [View article]
    I bought WFC during the financial crisis when it was at $15. Regarding that, you stated:

    "It could have went under without a taxpayer bailout."

    The challenge was the Wachovia portfolio. However, it is not clear that taxpayers needed to bail out WFC. Taking the TARP money was mandatory and was done uniformly so that the bad banks would not be singled out. USB (another one that I bought during the crisis) also had to take TARP money despite being profitable during every quarter of the crisis. TARP cost the USB shareholders money in terms of interest and option repayment but yet added no value for them. With regard to WFC and USB, TARP was quite profitable for the taxpayer.

    Not that I think the TARP program was wrongful overall - just want to be clear that stronger banks like WFC and USB probably would have done fine without it. The inclusion of these banks was a matter of public policy to avoid drawing too much attention to the really troubled banks - and that strategy seemed logical at the time.
    Apr 14, 2015. 01:18 PM | 5 Likes Like |Link to Comment
  • Dumping Apple Makes Sense For Immediate Income Growth [View article]
    RS - I seem to have misplaced by crystal ball, so I can't say whether your move is brilliant or folly.

    For myself, I have just over 3% of my portfolio in Apple but have been recently upping my stake in T, JNJ, and UPS during some "asset allocation" adjustments from fixed income. I'll stay with my position in Apple for now because I want to see how well the watch does & then re-evaluate. Right now Wall Street is effectively valuing the watch as nothing so I don't see much down side risk. The watch will make money - the only question is how significant that profit will be.

    At the same time I plan to keep stepping up T, JNJ, and UPS (and perhaps KMI) as allocation limits and adjustments permit. I like to "combine" rapid dividend growth with high dividend stocks with an overall yield currently at about 3%.

    WD
    Apr 13, 2015. 03:46 PM | 1 Like Like |Link to Comment
  • ConocoPhillips' New 3-Year Plan [View article]
    Casey, Very good synopsis and update for COP. Where oil prices settle out is a good question given the low cost of producing shale oil. Keep in mind that the long term decline in WW conventional equals a large percentage (perhaps about 30-40%?) of the total production from shale in the US. So at some point rising shale production will not be able to keep up with the rising global demand coupled with declining conventional production. For that reason I am "estimating" oil prices to rise above $100 per barrel within 5 years. WD
    Apr 13, 2015. 09:55 AM | 1 Like Like |Link to Comment
  • Johnson & Johnson: Steadily Making Its Owners Richer [View article]
    As part of an asset allocation process I have been bumping up JNJ, UPS, and T in recent months and will likely continue until they reached targeted allocation levels. JNJ is probably at full fair value right now so I will keep it a little underweighted for the time being. I don't try to time the market - I just make adjustments between fixed income and equities as the market runs one way or the other - and that has served to increase the portfolio return.
    Apr 12, 2015. 04:34 PM | Likes Like |Link to Comment
  • Exxon Mobil Vs. BP [View article]
    Don, great work as always! I am long on XOM the equity and don't lose much sleep over this company. WD
    Apr 10, 2015. 07:40 PM | 1 Like Like |Link to Comment
  • GE sets plan to exit almost all of GE Capital; launches $50B buyback [View news story]
    JD - Very good point. Both CEO's had a hand the debacle that followed. The expansion of GEC seemed almost too good to be true back then. It is a good case history to look at WRT future investments. WD
    Apr 10, 2015. 12:08 PM | Likes Like |Link to Comment
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