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ConservativeOutperformer

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  • Long-Term Favorites In This Market [View article]
    Bingo, looking around I saw the same thing.... Good companies, trading below or around BV, decent balance sheets. As usual you get the typical crowds who loved it high and hate it low. Stocks go up and they go down. Seems simple, but people don't capitalize on it....

    Oil stocks are down right now. These companies will be around in 10 years. If you're investing in individual stocks, picking out names that should emerge as winners over the rest is the whole point. Figure out what something is worth and buy it at a certain price below that. Doesn't matter what the market is doing......

    The guy commenting below you just doesn't get it......

    Good luck!
    Aug 27, 2015. 08:26 PM | 1 Like Like |Link to Comment
  • M&A Daily: Free Dan Loeb! [View article]
    BHI up nicely this week. If people are squirrely about the transaction closing, no shame in taking the 10-15% from Monday and running.

    Good luck!
    Aug 27, 2015. 03:30 PM | 1 Like Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Exactly right..... A bunch of words and articles lately on where the market is going. Who cares? Look at 100 companies and start trying to figure out what is overvalued and undervalued........

    As always, there are pockets of undervalued securities. However, as you mentioned Rudolf, there are far more names trading above historical levels. Some of these names may, or may not, be facing slowing growth and/or declining margins. In my eyes plenty of them are overvalued.

    Let's face it, after a straight line up over 6 years with a small blip in 2011, the market probably deserves to go down for awhile. There are plenty of stocks that are not particularly attractive. Plenty of TSLA's out there that are ripe for significant declines. Lots of KO's with huge multiples and average, at best, prospects. Plenty of stressed balance sheets and weak dividend coverage in the energy sector, like CVX.

    I always try to read The Intelligent Investor whenever markets around the world start going haywire. Got through the important stuff last week, before the carnage (I guessed right on significant declines here). It's easy to forget the basic concepts.... At the end of the day, let's start putting those CFA designations to work by doing some analysis on specific companies................ Everyone will be much better off.

    Good luck!
    Aug 25, 2015. 04:53 PM | 3 Likes Like |Link to Comment
  • IBM's 21st Century Transition Is Failing [View article]
    No optionsexpert, he's not God, nor is he always right.

    What he does understand though is that IBM isn't going away tomorrow. The enormous cash flow probably won't decline 50% next year either. And as much as the author wishes to write about the culture of IBM, it's virtually impossible to get any reality out of any of it. Why? Because this monster employs 400,000 people. Cherry-picking opinions from a few hundred probably doesn't give anyone an accurate description of what's going on inside the company. I appreciate his time and attempts to help the public understand the company, but it's one data point. The reality is every company has its ups and downs and there's a million reasons why.....

    By the way, if I took the opinions of every retired 60+ year old person about a place they worked for 30 years what do you think those opinions would look like? Would they say things like, 'things aren't the same as they used to be', 'back in my day....' and 'remember when....'. The author does a good job not emphasizing that mindset, but it's there.

    At the end of the day, this company will continue on its trajectory. They will probably report sales declines going forward. They won't grow 20% a year from here. But, it's really impressive to watch huge, bloated corporate dinosaurs that never go extinct. Situations in the past that speak to 'meeting payroll' don't seem relevant for a company currently generating between $10 and $15b of Free Cash every year over the last 3 years.

    I saw similar opinions a few years ago when CSCO was 'dying'. 'The culture sucks, I worked there all my life, I'm still selling their gear and they don't do anything well' and on and on. Read the posts from 2011 to 2012. CSCO has tried to acquire their way out of sales declines (doing a far worse job than IBM has done), meanwhile squandering significant sums of money. At the end of the day the stock doubled from where I bought it (then I sold) even though the enormous acquisitions were terrible and they barely offset significant sales declines in their primary business (somewhere between $25 and $30b in acquisitions in 4 years with $3b in overall revenue increases).

    You know why? Because at some point these companies get too cheap. And the world isn't ending tomorrow there. Whether or not IBM as a stock (which is all anyone cares about here) does well from here relies more on the quantitative side than the qualitative side. No one can say for sure if we're there yet, but we're certainly closer than we were at $215 in 2013.

    Today, we have a $140b company that is extremely conservatively financed, has enormous financial resources, expected to do about $10b in FCF this year and paying that out to owners in the form of dividends and buybacks. If they decide to pay out 100% of FCF this year, you make roughly 7% as an owner pre-tax. In years past they have paid out all their OCF and financed CAPEX with debt (or paid CAPEX with FCF and returned money via debt, although it's the same thing) resulting in returns above Free Cash Flow (120-130%). Obviously this has weakened the financial position, so it stands to reason this could impact future distributions over time. A counter argument would be, IBM will be around for another 50 years and they are taking advantage of low rates (both interest and tax) to distribute money to owners.

    IBM is a stock selling for a certain price with a bunch of financials supporting that price. IBM as a business has a million things going on. The most important question is, can I make money based on the current price? That certainly relies more on the current quotation than whether or not they're listening to certain people within the company...... That stuff is important, just not as much as everyone thinks.

    Good luck!
    Aug 25, 2015. 03:33 PM | 11 Likes Like |Link to Comment
  • M&A Daily: Free Dan Loeb! [View article]
    Looked at BHI in January but didn't do anything. Touched down under $45 yesterday....... I don't think someone could do bad even with BHI @ $48 today, soon to be 1.12 HAL @ $35 and $19 ($58 and change). I think HAL will be around for awhile and probably worth more down the road, so if someone wanted to hold that instead of selling after the merger......... they get in pretty cheap. If not you don't do too bad.

    Good luck!
    Aug 25, 2015. 01:17 PM | 1 Like Like |Link to Comment
  • At the open [View news story]
    Yea, great prices there. Been eyeing XOM for awhile, thought of buying Friday but waiting till Monday was the right move. I don't see how investors can lose with the price where it is now. Just about every oil company has to go bankrupt before XOM cuts the dividend or endures some significant financial deterioration.

    XOM probably goes lower from here, but you're getting 4+% a year to wait. And nothing from treasuries or high-quality corporates (searched a few dozen last night)...... I mean, compare a company like CVX with XOM right now, there's almost no comparison.

    After the recovery today, there's really no reason to be a hero and buy hand over fist. However, there is plenty of good value out there and sometimes it's right in front of your face (XOM/IBM).

    Good luck!
    Aug 24, 2015. 01:30 PM | Likes Like |Link to Comment
  • At the open [View news story]
    Tried to get in on CVS and some others, couldn't buy when it was down over 20%.... Still can't get in to my wells fargo account lol. Bought some MSM and FAST here, knowing they'll go down over time. Even XOM and IBM look very attractive. Been raising cash for a long time now.... Sitting pretty with a few hundred thousand ready to roll.

    Good luck!
    Aug 24, 2015. 09:51 AM | 1 Like Like |Link to Comment
  • At the close [View news story]
    That's a good post dude.

    Good luck!
    Aug 20, 2015. 05:46 PM | Likes Like |Link to Comment
  • Tesla: You Are Funding Elon Musk's Iron Man Lifestyle [View article]
    My favorite 2 words in investing................

    Map Collection

    Good luck!
    Aug 19, 2015. 10:17 PM | Likes Like |Link to Comment
  • NYT delivers harsh expose on Amazon's workplace culture; Bezos responds [View news story]
    Guy with the early 20's friends making over $100k..... I'd do a little math there. If a guy works 60-70hr weeks and brings in $100k, he's making the same as I am and working 50% more. So, explain how working 3000 to 3500 hrs a year and making $100k is doing well? Dude could work 2 manager jobs at Abercrombie and Victoria's Secret and pull the same salary with probably less hours. Plus he gets to pork half the patrons after 'sizing them up' in the fitting rooms.

    People rave about these salaries without ever understanding 'what they're truly making'. My buddy starts at Uber soon and told me he gets a free dinner and an uber ride home every day..... You just gotta stay till 8pm to get the food and 10pm for the ride. Then they have socials at 'certain times', no doubt after a quick 10-12hr stint.

    Sounds like a blast........ Meanwhile I'll have a blast. With the driver about 340 at 3pm on a Thursday before knocking a 6 iron close on a par 5. That's right before 3 putting from 12 feet though (what a joke).

    Good luck!
    Aug 18, 2015. 10:20 PM | 1 Like Like |Link to Comment
  • Wal-Mart lowers full-year profit guidance [View news story]
    Agree.

    WMT was my largest position by far at one point, but I sold out of all the profits and only hold about $10-15k left. Earlier this year I was thinking at $90 and $5 EPS that's expensive and sold my last 50 share bucket (I think it was actually $88). Definitely a mistake to not sell it all then (lost a few grand there) knowing it was expensive.

    I just couldn't bring myself to completely sell out of an investment that had made me so much with their investment in the future (wages, ecommerce, etc). But, going back to my original work up on WMT shows I had far higher EPS estimates than they are currently forecasting for this FY......

    As much as I want to believe holding stocks for a long time is an ideal way to invest, there really is no sense in holding mega caps for someone my age. Especially when I can find other companies that are more attractive from a valuation standpoint. WMT at $90 earlier this year is sort of like buying FAST at $40 today or MSM at $67 awhile back. Both of those companies I have purchased recently and those businesses have far more growth in front of them at a similar valuation.

    Anyways, still holding here because I believe in the cost structure of the business. Still don't find the valuation as compelling as when I first invested in WMT ($50 in 2011), but I don't really see a scenario where stocks roar from this point either....... I'm ok in a defensive name that probably will be more profitable 5 years from now than they are today.....

    Good luck!
    Aug 18, 2015. 05:25 PM | 1 Like Like |Link to Comment
  • Apple slips as BofA/Merrill downgrades, predicts slower growth (updated) [View news story]
    I have found BAML to have an excellent research department. They've found things in companies other firms didn't.

    Great point about the 'hot money extremes' above. Clearly these people aren't serious investors. It's kind of sad that people get so emotional. Now it's the CFA's at ML doing research who bankrupted the company? C'mon folks, wake up......

    Good luck!
    Aug 5, 2015. 10:29 AM | 1 Like Like |Link to Comment
  • Mt. Gox CEO arrested in Japan [View news story]
    Not a problem at all to admit that. I don't really get it either. It makes my life really easy when I see the word 'Bitcoin', I usually just stop reading..... Unless of course I can read articles about the people who can explain it to me but somehow managed to lose 'millions'. That usually piques my interest.

    Good luck!
    Aug 3, 2015. 12:56 AM | Likes Like |Link to Comment
  • Microsoft states Windows 10 downloads top 14M; reviews largely positive [View news story]
    Hilarious how all the followers of the world unite.

    I notice very little difference between 8.1 and Windows 10. If you were smart and spent 20 seconds configuring your old Win8.1 machine to boot straight to desktop, you never saw the weird stuff.

    I tried Cortana out and it's fun, but I turned it off. Continuum is a cool feature, except no one has Windows Phones. Start Menu? Already had that on 8.1..... I like Windows 10, but any fair reviewer out there will admit the major features of 10 are simply bolt-ons to Win8.1. I like the live tiles in the start menu side by side with the legacy things (I mentioned in a post on this forum years ago they should have done that). But to act as if 8 and 8.1 were Vista-like just doesn't hold weight. Except of course all the writers in San Jose who hang out in Starbucks said so.

    The only thing abundantly clear from all the reviews, is how lonely tech editors are..... 'YOU'RE EITHER WITH US OR YOU'RE AGAINST US! AHHHHHH' Unless of course Win10 is that much better because I can snap to multiple desktops, multitask in a different way and there's a search bar at the bottom of my screen........

    The whole reason this website exists is because there is a large enough group of people who thought 'collective wisdom' was a red flag............. And yet individual thought and 'daring to be different' are traits that appear to be just as scarce.

    Weird.
    Jul 31, 2015. 02:58 PM | 9 Likes Like |Link to Comment
  • PayPal: A Teenager's Perspective [View article]
    Therein lies the problem..... I've used PayPal a few times, but in general the service is a bit restrictive. It doesn't seem economically competitive to me either. I believe there is an opportunity with the business, it is a fantastic cash generation machine, but I'm having a hard time convincing myself that they are going to come out ahead. The caveat here is, maybe they don't need to.....

    However, back to my original point, anecdotal evidence from younger people is a data point, but I don't see many of my friends and co-workers using the service. All these people have 6 figure salaries. I don't see how PayPal differentiates from other options available to higher net worth individuals (I have multiple opportunities to send money to someone, free of charge). Quite simply, it's not economically competitive for me compared to larger financial institutions. And that's who they are competing against. It is a transaction business, and as far as stocks are concerned I got MA for that......

    PYPL is not cheap. It has gotten slightly cheaper recently, but I wouldn't assign a comparable multiple to PYPL as I would MA or V. Maybe it's growing slightly faster, but those are great companies without the 'internet' moniker that could very well drag down margins and/or multiples over time as new entrants come in. No one is displacing MA or V, especially amongst higher net worth/big spender types.

    Having said all that, it's a great business. The growth is there, but you're paying for it. It's already a $50b company..... At the 10,000 foot level, if we just asked a simple question like 'Would I expect PYPL to be half the size of MA?' I think the answer is maybe. Like 60-75% of yes. So where does that leave us? Does PYPL turn into a $100b business? Well, maybe. But if so, MA is probably a $200B business. If I had to guess which one has a higher likelihood of getting there, I think the answer is MA.

    It's not a terrible stock to be long, but I'm having a hard time seeing it as superior to MA...... Especially for younger investors (like me), although MA has run so much over the past 5 or 6 years.

    Good luck!
    Jul 29, 2015. 01:37 PM | 2 Likes Like |Link to Comment
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