Monday, November 15, 2010

Small Caps Coming Around

The market has been pretty strong for the past quarter, and as usual, many small cap stocks are a little slow to catch up.  In my opinion this is due to a few factors: 1) News flow out of small cap stocks is usually quite slow, and there are few, if any analysts to supply data to the market; 2) Investors like to wait until earnings to make decisions on these stocks (and at least all of mine report at the late end of the earnings cycle).  So, we're now in catch-up mode.  The news flowing out of the stocks I own has been quite good:

IGO (IGOI): Reported very good earnings, and announced a new partnership with Texas Instruments.  Management has been delivering quite well with both new distribution deals, and partnerships.  Many are finally noticing this stock and it has been moving.

TII Network Technologies (TIII): Reported this morning.  This is a stock where almost no news comes out.  But they did make an all cash acquisition earlier this year.  We were waiting to see how this is turning out, and according to today's report, quite well so far.  I was buying this stock as recently as last week.  Lots of upside here is they continue to deliver.

Fortress International (FIGI): Reported last Friday.  Another thinly traded stock.  I was trying to buy this thing for weeks, and didn't want to compromise on price, and was able to lock in an order last Thursday thanks to Think or Swim's handy iPhone Application.  Another cheap stock that I'll look to add to.

Jamba (JMBA) also reported last week.  This was the only stock I own that kind of "underwhelmed."  They are still on track to roll out some great new products and have a great plan in place.  Its just takings some time.  Still very confident in this company.


As always, be sure to follow me on Twitter, as I always post when I make a buy or sell.

www.twitter.com/briskycapital

Thanks!

Disclosure: Long IGOI, TIII, FIGI, JMBA

Thursday, October 21, 2010

Position Update

I continue to be cautiously optimistic, and more bullish than most.  I finally sold off my small position in ABB, at 22.90.  I've been waiting for some time to exit this position, and decided to sell into the strength here.  I like the company, but just don't see as much upside for the stock as I do in others I'm looking at.  That's what selling ultimately comes down to if you're value oriented.  I look at basically two things: 1) Is the stock fairly valued or even over valued? and 2) Do I have somewhere better to put that cash?  In this case, I feel pretty solid on both for ABB.  Sure, if the market continues to rally it could move higher, but like I said before, I have a few other ideas.

Now, I'm not looking to sell anything else I own, unless we see a lot more upside.  For a quick update on what I own for individual stocks, here goes:

General Growth Properties (GGP)
American Capital (ACAS)
Compass Diversified (CODI)
TII Network Technologies (TIII)
Etrade (ETFC)
Jamba (JMBA)
Pfizer (PFE)
Igo Inc. (IGOI)


I will add to any of these, if given the opportunity.  I've got a few new ones in my sights as well, but as usual, I'm willing to be patient and (hopefully) not overpay.

There you have it.  I'll try to update more frequently.

Disclosure: Long GGP, ACAS, CODI, TIII, ETFC, JMBA, PFE, IGOI

Monday, September 13, 2010

Buffett Sees No Double Dip Recession

We've all seen the headlines.  "Market drops as double-dip fears rise", or something to that effect.  We get bearish analysts who specialize in producing headlines to grab onto (we know who these people are).  When the market does well, those people go away; when it struggles, they come right out of the woodwork.  You know who I listen to?  People who actually run businesses.  Not people who read sets of data, use only the data that promotes their thesis, and write analysis based on it.  Is the economy clicking on all cylinders?  I don't think anyone will tell you it is.  But there is a lag.  Sentiment is going to carry on negative for awhile before things get moving again.  Rail traffic is rising, and temporary employment has improved, both of which are positive signs for the broad economy. 

Buffett sees things improving "almost across the board" by the way.  And they own dozens of businesses across a wide spectrum, as well as employ 200,000+ people.  

I think things are improving, and will continue to.  It will take time.  I'd use the negative sentiment to your advantage with regard to purchasing assets, because by the time sentiment improves on a large scale, prices will be much higher.

   

Friday, July 9, 2010

Embrace the Fear

Double-dip recession?  I've heard lots of talk about it lately.  The fear (at least prior to this week) was palpable in the headlines and you could tell by watching the tape.  Nouriel Roubini was on TV again, and they were pulling other various people who are always bearish out to give us some scary headlines (Dow 5500, Dow 1000 etc).  I found a nice post on this over at Barry Ritholtz's Big Picture, titled Can the Crowd Forecast a Double Dip Recession? 

The economy is recovering.  The recovery may not be particularly strong, but it is happening.  Todd Sullivan at Value Plays has been laying out an excellent analysis of this during the past week.  Economic indicators such as auto sales and rail traffic have been improving.  And its not like the market is pricing in some huge V-shaped recovery.  It may have been heading that way in late April, but it certainly isn't now.  As long as we continue on a path of recovery, I think stocks will be very attractive.  With rates this low, the massive amount of cash on the sidelines will work its way back into the market.

So if you're a value investor who is interested in purchasing "companies" at discounts to fair value, you should embrace the fear, as it will allow you to make even better purchases.  Too many people let the market or the headlines tell them how the economy is or whether or not they should make this or that purchase.  I try not to operate this way, but unfortunately its just the world we live in.  Its important that we use this to our advantage.

I've been adding to a handful of names over the past two weeks, and will continue to do so it valuations become even more attractive.

Friday, July 2, 2010

Adding to Current Positions

Lots of panic out there this week.  As value investors, we welcome this type of action.  All the talk of double-dip recession, another depression, etc.  I'm sure you've heard all of it.  With my time horizon, and hopefully yours, I'm quite confident the stocks I hold will be much, much higher by the time I'm ready to sell them.  The problem is we're becoming more and more programmed for instant gratification, and thus time horizons have become shorter and shorter.  This all plays into Wall Street's hands by the way.  More trading = more commissions.  The key as always, is spotting value in companies and taking advantage of a market that is full of fear and is ignoring these stocks.  But you do, however, have to know what to look for.

I added General Growth Properties (GGP) Wednesday in the mid 13's.

Late today I added Tii Network Technologies (TIII) at 1.48, and Pfizer (PFE) at 14.15.

Tii completed what appears to be a good acquisition that will immediately add to earnings.  The stock is still trading at less that half of book value.  Lightly traded stock, so you have to deal with that.  I'll continue to buy if it stays under 1.50.

Pfizer hit a fresh 52 week low today, and I bought it near that low.  I see plenty of value here.  Trading at 6.2x forward earnings?  Even if those estimates are a bit optimistic, this thing is cheap.  I know they have some drugs patents expiring in the next few years, but this stock is cheap.  Throw in a 5% dividend, I'm happy to park some money here while we wait for the market to recover.

I'll do my best to post more to the blog.  I always post when I make a transaction, but I would like to pass along more info about the specific names I own or am looking at, and will make more of an effort to do so.

Happy Independence Day!















Disclosure: Long GGP, TIII, PFE

Wednesday, June 9, 2010

Loews Corp. Presentation

I haven't been posting much here lately, but I always try to pass along valuable information on any of my portfolio holdings.  Loews Corp., and specifically CEO James Tisch presented last week at the Sanford Bernstein Strategic Decisions Conference.  Lots of great stuff here.  Tisch, as always, lays out their strategy and why their stock is a good value.  He shoots straight and is very entertaining.  Loews has obviously been impacted by the problems in the gulf and their exposure to Diamond Offshore.  Even though I'm sure the typical re-active panic legislation is coming from congress and this will likely have some effect on the industry, Diamond is a great company.  They don't operate like most energy companies that follow the cyclical, boom and bust cycles with high leverage at the peak and wash out at the bottom.  Diamond uses Loews value investing theory and scoops up assets when they are cheap.  This is one example that will make them a long-term player in an industry that could see some pressure for awhile.

The bottom line here is I trust Loews management, and their ability to allocate capital.  That's what it comes down to with a company like this.  When you buy Berkshire, you're betting on Buffett.  Same deal here, except, in my opinion, this stock is much cheaper.

Just listen to the conference call, and you'll see what I'm talking about.

I'm also looking to add to a few names that I currently own.

Tii Network Technologies (TIII) looks like they made some good use of cash with their recent acquisition as it will be accretive to earnings in Q3.

I also may add to any of the following on further weakness: L, ETFCD, GGP, JMBA, CODI.

Disclosure: I own all of the names mentioned.

Friday, May 7, 2010

Crazy Stuff

Wow is about all I can say after watching the tape pretty closely the past two days.  My afternoon yesterday consisted much like many others, as I was shocked what I saw.  Whether it was some type of trading error, glitch at an exchange or some fund blowing up and dumping everything, it was something to see as the Dow was almost down 1000 points.

These foreign debt situations have happened before, and like previous ones, this will blow over.  The concern is about spillover into other countries/situations.  Add that to a market that was due for a correction, and well, we all can see the result.

If you feel like stepping in and buying, feel free.  I'm being cautious right now.  Although I've expressed caution that the market was due for a correction, and I'd be a buyer on any weakness, when we see it happen this swiftly, you have to step back and reassess.  Buying fear is the correct thing to do, but you have to be smart about it too.

There is so much happening out there.  The European situation, the oil spill, terrorism issues, etc.  They are all weighing on the mind of the market.  GGP has been fielding increasing offers by SPG, but seems intent on going with the Brookfield deal, which offers the most long term upside for shareholders.  In a market like this, when everyone is overreacting, many would rather have SPG's bid, because they can't even think about the long term.

Things are looking good at IGo.  They reported a nice quarter, and revenues should see a bump in the coming quarters due to new distribution deals being rolled out.  

Just remember that fear clouds judgement, and its important that we don't fall for the trap.  Sure, many stocks I own are getting nailed.  But I'm comfortable owning these stocks, and will welcome the opportunity to add to my positions at better prices, when the time is right.  What I don't want to hold are stocks I'm uncomfortable with, and believe me, I've held them before.  Its not fun in a market like this.  This is a lesson I've learned through experience, and quite frankly through past mistakes.

Let's see what Friday afternoon brings.

Disclosure: Long GGP, IGOI

Monday, May 3, 2010

Solid Results From Loews

Loews Corp. (L) reported alongside CNA financial, of which they own 90%.  Solid numbers out, like I expected.  Things just keep improving for their businesses.  CNA is the big driver of earnings, and things are really starting to turn around there.

I listened to most of the earnings call today, and didn't pick up much quote-worthy, but if I find anything in the transcript, I'll point it out later.

Truthfully, the stock is getting pushed down because of Diamond Offshore, of which they own 50%.  DO has been sold off due to earnings (they cut their special div.), and the problems due to the oil spill/Obama's offshore dilling plan.  If you're looking to buy into the offshore drilling space, now is the time, and DO (or NE) is the stock.  I prefer to buy the parent, and get a discount, but that's just me.

Loews book value is now $41.80/share.  As I write, shares are $37.29.  Value here? I'd say yes.

If you're looking for a quick run-through on their structure, this will work well.

Disclosure: Long L

Thursday, April 22, 2010

Adding to 2 Positions

I've taken advantage of this mornings sell off (I hope at least), and added shares of two portfolio holdings.

I added Etrade (ETFC) at $1.73. They reported solid earnings yesterday after the bell, and are well on their way back.  Unless a buyout comes, this is going to take some time, but I am confident that there is money to be made here.

I also added pretty heavily to Loews Corp (L) in the 37.70's and .80's.  You can buy Loews stock for basically the value of only their publicly traded assets, and they own so much more.  The market is determined not to fairly value this company, and I'm willing to wait.  It may take a big move by management for Wall Street to appreciate the value, and they have the resources to pull it off.  They are true value investors, and are waiting for the right thing.  I feel like I'm buy dollars for .70 here.  Their annual report is a good read if you have the time.  Also, take a look at this commentary from the Lonely Value Investor blog.  I really like reading this site, and its worth your time. 

There aren't many new names I'm looking at, but I have a lot of stocks I really like and currently own.  I'd rather buy more shares of current names, and will continue to do so if the opportunity presents itself.

Disclosure: Long ETFC, L

Tuesday, April 20, 2010

Added Some GGP

I've been pretty cautious on adding anything here as many of my stocks have run up a bit.  I did add some General Growth Properties (GGP) yesterday around $15.11.  I'm not going to speculate whether Simon Property Group, or the Brookfield group, or even someone else comes out on top.  From what I've seen so far, many of the best, brightest investors have been involved in this thing and that tells me that A) There are some really good assets at stake here, and B) They are being bought at cheap levels.  Now depending on the particular outcome and who emerges as the leader here, it may take more or less time, but I do believe we'll see shares higher in the months ahead.  So I went ahead and added, and increased my position by about 1/3.  I wish I could have been many, many more shares at my original buy price of $1.79.

Also, if you're looking for more analysis on the GGP situation, check out Todd Sullivan's Value Plays blog.  It is well worth the subscription, as I've made that cost back many times over.

Disclosure: Long GGP

Tuesday, April 13, 2010

Taking a Step Back

The market is taking a breather this morning, and it is definitely due.  We crossed 11k on the Dow, and that was about as far as it went.  While we're definitely due for some type of pullback, but I wouldn't be surprised if it isn't that significant.  The economy continues to improve, and you can just feel the confidence come back to the market as things move gradually higher.  To me, its still a market for picking stocks though.  I look at the large-cap stocks that most talk about and I really don't see a catalyst for them to make a sizable move.  Yes, the economy is improving, but that has been priced into many stocks.  I continue to like smaller cap names, and some other non-traditional companies.

I still would point to a company like Loews Corp (L) if you're looking to find value out there.  The market continues to undervalue the total group of their assets.  CNA financial, which Loews owns a 90% stake is a classic case of a stock beaten down badly during 2008-2009, but is primed to perform well very soon.  I also think commodities will be hot again very soon.  Loews has great assets there, with a 50% stake in offshore driller Diamond Offshore, and natural gas exploration and pipeline assets as well.  The stock still trades below book value, and I think there is a pretty good chance some of this value gets realized when Q1 earnings come out of these various companies.  I took advantage when the stock pulled back into the 35 range in January, but haven't added to the position yet.  I'll definitely look to add before earnings on May 3, and maybe a correction will play right into our hands on this one and help us buy Loews shares for cheaper.

Etrade (ETFC) is another company I may look to add as well.  Their operations are improving in the loan portfolio, and the brokerage business is a good one.  Although lower volatility has brought trading revenues down a bit, more funds and new accounts continue to help them grow.  Someone might swoop in and buy them if the stock stays this low, and if they don't, I still see shares appreciating as they move back into profitability.  Here's a good story I found at thestreet.com about a potential deal for Etrade.

If the market reacts like it has been (buying any dip), we'll probably have moved higher again by the time you read this. : )

Disclosure: Long L, ETFC

Tuesday, April 6, 2010

How to Follow My Portfolio

I haven't been able to update here as much as I'd like, but most of my recent buys have been going well.  Especially IGO (IGOI) and Jamba (JMBA).  Both have lots of good things coming ahead and I'll continue to add to those positions if the opportunity presents itself.

I wanted to make sure that those out there reading can follow my trading portfolio via Covestor.  Covestor tracks all my trades and keeps track of performance.  They will send you email alerts when I make a trade as well.  It is only tied to one of my accounts, but it is the account where most of my activity comes from.  So if you're interested, sign up at Covestor.com and follow me.  My username is briskycapital.  You can also click the widget below to go directly to my Covestor page.



Disclosure: Long IGOI, JMBA

Monday, March 29, 2010

Sold Two Positions

Last Friday RHI Entertainment (RHIEfiled their 8-K, and things are not looking particularly well.  It appears they are still struggling with their debt load and revenues are not coming in quickly enough to meet those obligations.  I've decided to jump ship on this one, with a good sized percentage loss.  I didn't lose much as it was a very small position, and I knew going in that it was speculative.  I was able to cash my shares out after hours on Friday for around 0.26.  I'm not sure what will happen from here, but I'm going to focus on other things.

A couple of lessons to learn here:

1) Excessive amounts of leverage can be troublesome, especially for a small company.  The small cap names I've been buying lately are in much better financial shape, which gives them a nice margin of safety in case their revenue stream slows up.
2) Don't buy a stock strictly because someone else owns it.  What drew me to this stock was the fact that Seth Klarman owned it.  He is an outstanding fund manager, but everybody makes mistakes from time to time, and I should have seen it as a clear warning sign when the bailed late last year.

I also sold out of Carefusion (CFN).  Its still a solid company trading cheaper than its peers, but I have better things to put my money in.  I don't like the uncertainty occurring for them with new health care legislation, and rather than find out, I decided to split.  This is probably still a good stock, but it goes against my rules for holding stocks.  Its time to sell when either: A) The company becomes fully valued or overvalued; B) The situation changes and more uncertainty arises.  This is in the B category.  And there are cheaper stocks out there that I can buy with that money.


So, we'll move on from these.  There are lots of exciting things happening both with stocks I currently own, and ones I'm looking to buy.

Disclosure: None

Thursday, March 25, 2010

Update on Positions

Sorry its been a few days since I've posted, but plenty has been happening.  The market continues to move to the upside, with little resistance.  Some deal applies for me, I think the market is extended, but would not be surprised if it continues to run.  Consumer confidence is coming back and there is too much cash out there getting terrible yields.

Jamba (JMBA) has really performed well since I've purchased it at 1.66.  I added it last week at 2.12 as well.  Today its trading over 2.50 as rumors are flying that Starbucks (SBX) may be interested in Jamba.  The stock still has a small market cap, without a huge float and is subject to some price swings.  The pattern I've noticed since volume spiked is this:  someone has been acquiring the stock.  Probably a few different mutual and/or hedge funds.  When their big purchases come through, they are pushing the price up pretty quickly.  The stock usually pulls back once that volume slows a bit, and that is the time to add if you'd like.  For example, this morning when the volume kicked up, it traded as high as 2.82, and has pulled back to 2.52 as a write.  I've noticed this 2 or 3 different times within the past couple of weeks.  I'll probably add to my position again on any further weakness.

I'd also add iGo (IGOI) and maybe Etrade (ETFC) on weakness.  

Thursday, March 18, 2010

Added to Jamba

I added to my Jamba (JMBA) holding late in the day today at $2.12.  It has pulled back the past couple of days on a little lower volume.  I'll be buying heavier if we see shares back below $2.00.  They are just starting to roll out many new items, and coming into the busy season for their core products.

Wednesday, March 17, 2010

Just Go With It

As many have said, and most of us have felt, the market feels like its at a short-term top.  But I've learned to know better and markets can continue to run (or fall) much longer than we all think possible.  Many businesses are continuing to show improvement, and still more are being priced for it.

I still think there are more and more individual investors coming out of the woodwork as they regain confidence in the market, and that will continue, especially in a low-volatility, but upward moving market.  The yields on cash are just too low.  People are going to go after a better return, and the stock market is the best spot for that right now.  So while I know we're due for a correction, I wouldn't be surprised if we don't see a large one.

My small cap stocks continue to run, and I'll continue to add to my positions if opportunities present themselves. Specifically Jamba (JMBA) and iGo (IGOI).

TII Network Technologies (TIII) reported earnings this morning, and after a quick glance, they look pretty solid.  Gradual improvement, and better results due to cost cutting.  By the way, its awfully late to report Q4 earnings.  Q1 is almost over!  These small cap names with a lot of cash on hand have been doing well lately.  Even if operations don't improve dramatically, you're likely to see some gains as valuations return to more normal levels as the economy picks up.

Dr. Pepper Snapple (DPS) got an upgrade last week, and an analyst noted that they're likely to enter into a bottling deal with Coke, much like the Pepsi deal.  I missed my entry on that stock, and I'll buy it if it pulls back. I'm still a little surprised it hasn't taken any kind of a hit due to the threat of a soda tax.  I'll continue to keep an eye on that.

Disclosure: Long JMBA, IGOI, TIII

Thursday, March 11, 2010

Update on Positions

Jamba-  Really like where they are headed.  The next few quarters will be key as they roll out new products.  Can these products translate into earnings?  

iGo(IGOI)-  Reported last night.  Earnings pretty solid.  The big news was that Wal-Mart decided to bring them into all stores.  Yeah, that's big news for a company of this size.

Dr. Pepper Snapple- Upgraded this morning at UBS.  They believe a potential deal will be struck with Coke regarding distribution like the Pepsi deal.  I haven't bought this yet, but will.

Disclosure: Long JMBA, IGOI

Wednesday, March 10, 2010

Jamba Reports; Stock Drops

Well, those who were buying heavily last week in anticipation of strong results were mistaken.  By the numbers, it wasn't too strong.  They missed on EPS, revenue, and same store sales weren't great.

The key here though is everything they've been rolling out likely hasn't had a chance to be reflected in earnings, so anyone selling is jumping the gun here.  Hot beverages are just being rolled out.  Their relationship with Core-Mark will give them access to thousands of convenience stores.  All of that will take time to roll out.

I listened to the call last night, and I continue to be impressed with management, and their plan for growing this company and brand.  Here are a couple of tidbits I picked up:

-They are strengthening the balance sheet with $31.5 million in cash and basically no debt.

-They are selling off corporate owned stores to franchisees.

-They are expanding to one international market this year, with more likely to come.

-They now have a range of products that make them not only a year-round option, but they are capitalizing on healthy options for fast food, which is going to be a huge market.

-They did mention that coffee is something they'll be looking at, but will only add it if they can put their own twist on it.

I plan on adding to my position, maybe even today.

Disclosure: Long JMBA

Tuesday, March 9, 2010

Earnings Update

Compass Diversified (CODI) reported this morning.  I haven't had a chance to listen to the call yet, so I don't want to comment.  The stock is down 3+% as I write, but it had ran up quite a bit prior to earnings.

Jamba Juice (JMBA) reports after the bell today, and I'm interested to see what they come out with.  Although they are likely to come in pretty good, expectations have been rising among investors as the stock has rallied for the past week and a half.  It is down today, which is no surprise as people are taking some profits and getting a little defensive before earnings, which is prudent if you own a big position.  I just made a starting purchase and it ran up before I was able to add (I wanted to wait until after earnings).  So lets see what they say, and I'll make a plan from there.  I really like where this company is headed and would like to hold a larger position.

I was quite close to starting a position in Dr Pepper Snapple (DPS).  I've been hearing some rumblings about a soda tax gaining momentum, and I thought that may shake the stock a bit.  But, investors either haven't noticed, or aren't threatened by it.  I did read that DPS's management isn't particularly worried that it will happen, but I've read a few articles talking about it.  Something to watch at least.

The bears continue to look foolish as the market continues to run.  I'm not selling anything, but not adding at this point either.  I could easily see a pullback, but it will likely won't last long.  As time goes on, investors seem content to buy the dips.  I'd welcome the opportunity to buy some of my favorite stocks as better prices, as all true value investors do.

Lets see what Jamba says after the bell!

Disclosure: Long CODI, JMBA

Thursday, March 4, 2010

Jamba Juice Moving Ahead of Earnings

Wow, it sure didn't take long for Jamba Juice (JMBA) to start moving.  I bought this thing less than two weeks ago at $1.66. It closed today at $2.08.  I really like what they're doing with new products, not to mention selling off the corporate owned stores.  Just a good overall philosophy.  I mainly just wanted to get a starting position before earnings, and see what they said, and go from there.  Well, either its been leaked that a good number is coming when they report next week, or people are, like me, realizing they've got some pretty good things happening here and the stock is undervalued.  I'd like to add more shares, and maybe we'll get the opportunity tomorrow.  We've got the jobs report, and you never know with that.  Most traders appear ready to shrug off any number, good or bad, and move higher.  But if we sell off, I'll be buying a few names.  

Jamba did put out a release today as well showing a new offering of frozen fruit bars.  Keep it coming!

Disclosure: Long JMBA

Tuesday, March 2, 2010

More Detail on DPS

I've been spending some time researching Dr. Pepper Snapple (DPS).  DPS was spun off from Cadbury in 2008.  I  love these types of opportunities where management is motivated to perform now that more eyes are upon them so to speak.  It usually makes for a positive situation for shareholders.

I've been reading the transcript from the CAGNY conference on Feb 17.  Its a good read to get the tone of the management and direction they are headed.  Check it out.  Here are a couple of quotes I wanted to highlight:

"Our win at McDonalds in 2009 marked a key milestone in the Dr. Pepper growth journey. By the end of 2010, Regular Dr. Pepper will be in all 14,000 McDonalds restaurants across the country. And we're targeting Diet Dr. Pepper to be in one half of those."


"One of the benefits we're seeing from being a core brand is greater co-promotions and tie-ins. McDonalds' 6.5 billion visitors translates to more than 22 billion impressions for Dr. Pepper."


"DPS is an amalgamation of strong brand companies and weak bottlers, acquired over a 25-year period. In fact, our company-owned DSD operations were created through acquisitions of more than 40 standalone operations over a 22-year period.  These businesses received little in the way of resources from our former parent. So Priority 1 has been to integrate, invest and optimize. And I'm thrilled to tell you that we're well on our way."

They are also well positioned in the alcoholic mixer market, and are working hard to cut costs through their distribution channels.  The big news in the industry is Coke and Pepsi buying their bottlers and what effect that may have on the industry.

The valuation is good, as the stock is trading at 12.5x forward earnings, while KO and PEP usually carry higher multiples.  The management is committed to returning free cash flow to shareholders, and we'll likely see some share buybacks this year.  I like the stock here in the 31's, and will be a buyer on any weakness.

Disclosure: None

Positive News From Jamba

I purchased Jamba not too long ago.  One of the reasons I liked it is the new products they are rolling out, including hot beverages, food, and packaged items in convenience stores.  Today, they put out a release with some detail of the hot beverages, and where they'll be starting at.  Good stuff happening here.  I bought some shares at  $1.66, and wanted to wait until earnings to add or hold.  The stock is up 6% today, so hopefully that continues.

I'm also taking a look at Dr. Pepper/Snapple (DPS).  Their stock appears to be undervalued in a growing industry with strong margins. I found some good commentary on DPS from The Lonely Value Investor blog.

Disclosure: Long JMBA

Thursday, February 25, 2010

My Current View

I'm always reading market commentary.  Where will the market go from here? etc.  While I read quite a bit, there is very little that I actually listen to and act on.  My criteria for this is someone who A) I respect and has an investment view similar to my own; B) Has been successful in the past; and C) Has their own money at stake.  Believe it or not, that narrows the list down to a select few.

One of those people is Carl Icahn.  I read his recent letter to shareholders over at Marketfolly.com.  While he says he's concerned about a double-dip recession, he sees a unique opportunity for cash-rich companies with access to capital to scoop up assets of good companies that have have poor balance sheets.  This market has punished those with too much leverage, and those in better positions will benefit.  The General Growth deal is a prime example of this.  You have a large company with a lot of great assets that had too much debt, and because of market conditions, was forced to enter Chapter 11.  Smart investors saw an opportunity from the start.  Companies with access to the capital (Brookfield, Simon, etc) want the opportunity to acquire these high-quality assets.

This is the kind of opportunity I see in this market.  I don't like the prospects of the broad economy expanding at a strong pace.  It will improve, but we're too reliant on stimulus which alone cannot create sustainable growth.  But there are opportunities, and I'm optimistic about those.  I'll continue to try and spot those, and share them here.  The biggest goal of this site is to share my knowledge with whoever would like to read it.  I spend a lot of time filtering out what I believe to be the best information, and pass that along.  I may not be an expert at investing, but I feel I'm pretty good at knowing who to listen to, and who to ignore, and that can usually get you pretty far.

Disclosure: Long GGWPQ

Tuesday, February 23, 2010

Misc. Items

The market action has been fairly quiet as we navigate through earnings season.  Most investors appear to be a little cautious at this juncture, and I'd classify myself as "cautiously optimistic."  I'll continue to pick away at stocks I like if they pull back.

Brookfield appears ready to enter the contest for General Growth Properties.  Shareholders of GGP are enjoying this, as we can sit back and wait while this gets sorted out.  Things continue to look good here.

Bloomberg had a story out about ABB today.  Nothing too new in there, but a nice overview of their businesses and demographics.

Disclosure: Long GGWPQ, ABB.

Friday, February 19, 2010

Bought Some Jamba Juice

I bought some Jamba Juice (JMBA) today at $1.66.  I've been doing some work on the stock and company, and I like what I see for the most part.  I'm not that familiar with the brand.  I've never visited one of their locations either, so maybe some people could chime in if they like it/don't like it as far as product goes.

They have an aggressive management group that is really looking to branch out and build the brand.  They currently operate 729 stores, and 511 are corporate owned.  They've been launching new products over the past year like various foods and hot beverages, and the goal is to become a more "anytime" attraction.  They are also getting more aggressive with franchising and marketing products to schools.  They just announced an agreement for their products to be offered Core-Mark, who services 24,000 convenience stores, and that's a big step for them.

The stock is fairly cheap, but this is really about a company trying to take the next step.  If these new products and offerings work, earnings are what are going to ultimately drive this stock.  They are sitting on a decent cash position, which should help them if the economy continues to struggle.

I did hear about this originally when Todd Sullivan was talking about it, but didn't look at it seriously until a few days ago.

Just took a small position to start.  We'll see how it acts.  Earnings are upcoming, and that should give us a little clearer picture, and at that point I may decide to add some shares.

Disclosure: Long JMBA

Thursday, February 18, 2010

ABB Posts Solid Results

Swiss industrial-electrical company ABB reported earnings this morning, and the results were solid.  I've been bullish on this company for awhile, and the stock has been, okay.  I love the story here.  They can service all the electrical infrastructure being built in the coming years.  That includes wind, solar, hydro.  You name it.  They'll play an integral part in updating power grids to handle new power sources.  The best part is they are truly global, so they are ready for wherever the growth comes from.  I keep an eye on their order updates, and they receive big orders from Brazil, China, the Middle East and Africa, which are all high growth areas.  They also have large operations in the US and Europe.

As far as results, here are some highlights from the release.  Take a look at the link for a detailed story and many stats.



  • Fast cost take-out keeps full-year EBIT margin well within target range – 2-year savings program expanded to $3 billion


  • Pace of base order decline year-on-year slows in Q4, stabilizes versus Q3 2009


  • Q4 net income was $540 million after approx. $350 million of restructuring-related expense


  • Record cash from operations for Q4 of $1.8 billion


  • Proposal to increase dividend 6 percent to CHF 0.51 per share

Zurich, Switzerland, Feb. 18, 2010 – ABB reported earnings before interest and taxes (EBIT) of almost $800 million in the quarter, despite approximately $350 million in restructuring-related charges. Full-year profitability was well within the company’s EBIT margin target range of 11-16 percent on a combination of rapid cost take-out and solid operational execution.

Combined with record cash from operations and double-digit order growth from emerging markets, the results “show the resilience of ABB’s business portfolio and geographic scope, as well as our ability to execute in a tough market environment,” said Chief Executive Officer Joe Hogan.







Results were helped by cost-cutting, but they are obviously delivering on their goals.  Lots of cash coming in as well, and as you can see the dividend was increased, which is always nice.


I've considered selling this stock a few times because I do have stocks that I think may perform better.  But, I like the story, and if they continue to deliver, the stock will be a steady performer, and will probably take off once we see things heat up again in the emerging markets.


They got an upgrade this morning, and the stock is up 6%.


So, good stuff for now.  I'll continue to hold my shares, and we'll see where we're at next quarter.


Disclosure: Long ABB

Wednesday, February 17, 2010

Market Continues to Like GGWPQ

Yesterday's bid for GGP has raised a lot of speculation as to how things will end up.  The market continues to like the news and is speculating that value for GGP shareholders will be higher as the stock moved higher another 7.5% today.  We'll have to just wait and see, but for now it looks good.

We're seeing the quarterly filings come out, and they are always worth keeping an eye on.  In particular, I take a look at Einhorn, Ackman, Buffett, Klarman, Soros and Icahn.  Market Folly does an excellent job in covering these, and you should take a look at that site if you're interested.

I'm still looking to buy quite a few names.  Etrade, Loews, and Forest Labs are probably at the top of my list right now.

Other than that, just enjoying the Olympic Games.  Go USA!

Disclosure: Long GGWPQ, ETFC, L

Tuesday, February 16, 2010

SPG Makes Offer to General Growth Properties

Interesting Tuesday as we awoke to news that Simon Property Group made an offer for General Growth Properties.  For equity holders, it amounts to about $9/share, which was below last Friday's close.  This is a classic low-ball offer.  This type of offer may have worked a few months back, but GGP is on track to emerge from bankruptcy, and many have expressed interest in their assets.  The market obviously feels shares are worth more, as they are currently up 25% as I write this. 

When I see statements like this from their CEO, I knew it was a low-ball offer. " Simon is in a unique position of being able of being able to offer General Growth creditors and shareholders full, fair and immediate value."  Immediate value is the key statement.  They're looking for a quick close before the competition heats up for GGP's assets.  I think its too late for that at this point.  It will be interesting to see the response not only from GGP, but from some of the large shareholders like Bill Ackman.  

Todd Sullivan at Value Plays has had the playbook for this whole thing, and I thank him for that.  If you haven't seen his site, you need to get there and subscribe.  

I'm into GGP at $1.79 after reading Todd's analysis.  My only regret is not buying more shares.  

We'll see where this takes us, but its likely a lot more will be happening here soon.  

Disclosure: Long GGWPQ

Friday, February 12, 2010

End of Week Update

Lots of back and forth action this week, without any real pattern.  Good market for traders.  The more time we spend at these levels, the more confidence returns back to the market.  I'm seeing much more bullish commentary and buying amongst small traders compared with this time last week.

Berkshire Hathaway is joining the S&P 500 today, so there is a lot of talk about that stock.  I like their businesses and I like Buffett.  Whether the stock is a good deal, I couldn't say, as I haven't looked too hard at it.  My guess is the stock will make a run over the next few weeks though as many will look to ride the wave of the index funds who are buying in.  Berkshire also closed on the Burlington deal today.  I like the rail space moving forward, but as many have reported, Buffett paid fair value for BNI.  It almost felt like Buffett was just committing a huge amount of capital to something he feels good about for the next few decades in case he's not around (he is 79).

Lots of uncertainty around Greece, Dubai, and China.  Any of these issues could shake the market, but any impact on the market will probably be short lived.

I'm still pretty bullish, but have been taking my time and buying small amounts of shares at a time.

The market is closed Monday, so enjoy the long weekend.

Wednesday, February 10, 2010

Wednesday Misc.

Carefusion (CFN) reported yesterday after the bell.  Earnings were pretty solid, and they upped their guidance for the upcoming quarter and the remainder of the year.  The market sold the news this morning as they were hoping for a bit better numbers.  I'm not particularly worried about the stock here and am taking no action.  Stocks tend to be quite volatile around earnings as we all know.

I'm still waiting for Compass Diversified (CODI) to report.  They have a great business model and I really appreciate the transparency of their management.  Here's a nice presentation of their business model and various stats.

Market volatility has picked up and most are trying to figure out whether buyers will step back in and buy the dips, or if the correction is on.  Right now, it feels like we're headed lower.  As someone looking to pickup stocks, that is a good thing.  I'll be buying or adding to these stocks if the opportunity presents itself: FRX,CODI,L,ETFC and a few others.

Disclosure: Long CFN, CODI, L, ETFC

Tuesday, February 9, 2010

Carefusion Reports

Portfolio holding Carefusion (CFN) reported earnings after the bell today.  I just had time for a quick glance at the numbers, and I'll listen to the call later today, but I wanted to get a quick post up here.  At first glance, the numbers look pretty solid with a beat on revenue, and EPS excluding non-recurring items.  They also raised revenue and net income guidance for FY 2010.  Overall, nice to see this report, but we'll have to see the reaction the market gives because lately it has been selling numbers like this, so we'll see.  Some commentary from the CEO:


"We continued to execute well during our second quarter and performed ahead of our expectations," said David Schlotterbeck, chairman and CEO of CareFusion. "Hospital capital spending made modest improvements during the quarter and we continued to win key customer contracts. We also benefited in our respiratory business from government and hospital flu preparedness planning.

"As I look ahead to the second half of the fiscal year, we will make progress on our long-term plans for growth, stepping up our investments in R&D and sales and marketing to grow our key franchises and extend into important market adjacencies."

Disclosure: Long CFN

Jim Tisch Tells It Like It Is

We bought Loews yesterday after their quarterly results.  I always like to listen to their call (or read the transcript; thank you Seeking Alpha), because CEO Jim Tisch always gives some great commentary.  It usually is during the Q&A portion, and he speaks about the economy, often in detail.  To me, there is aren't many better places to get good info than someone like this, who oversees businesses in many industries.

Bloomberg had a great article out today.  They must have interviewed Jim Tisch because these are not quotes from the call.  Either way, he tells it like it is, and I agree with him 100%.

Regarding the hotel industry:

 Jim Tisch, the leader of Loews Corp., said the U.S. did a “good job of killing” the hotel business by lambasting corporate travel and hurt American International Group Inc.’s ability to return bailout funds by curbing pay.
“The criticism that took place of group travel was really a death knell for the industry,” Tisch said yesterday in an interview at an office of the New York-based holding company, which owns hotels. “It’s easy for the politician to get the sound bite. What they are doing with those sound bites is putting maids and bellmen out of work.”
About AIG:
Loews also owns natural gas exploration operations and the majority of commercial insurer CNA Financial Corp., which competes against AIG selling commercial insurance. Loews reported its third straight quarterly profit yesterday on improved results from gas exploration and Chicago-based CNA.
Loews has hired AIG staff, primarily to manage investments, who “do a phenomenal job for us,” Tisch said. New York-based AIG has a harder time retaining the “best and the brightest” managers after lawmakers criticized the company’s retention bonus awards and the Obama administration limited compensation for top executives, he said.
“Last time I looked, we don’t have indentured servitude in the United States,” he said. “The situation is such that the good people have every incentive to leave to maximize their income.”
Regarding the new bank tax:
Tisch joined billionaire Warren Buffett in opposing the Obama administration’s proposed fee on lenders to repay bailout funds. He said it is unfair to penalize financial firms when regulators, mortgage brokers and borrowers contributed to the recession as well.
“It sounds good when you say it fast,” Tisch said. “To take out this retribution solely on the banks makes sense from the populist politician’s perspective but is not necessarily good economic policy. If they put this tax in place, it will simply make it more expensive for people to borrow money because banks are in the business of earning a rate of return on their capital.”

This is one of the main reasons why Loews is so attractive to me.  Not only does the company have great assets, and is trading at value prices, but their management is top notch and knows how things really work.  These guys are conservative managers who don't over leverage their businesses, but know when its time to deploy capital and take risks.  

Disclosure: Long L

Monday, February 8, 2010

New Purchase

Loews Corp. (L) reported earnings this morning, and I'll be listening to the call momentarily.  The numbers were pretty solid as operations continue to improve at CNA financial, which could really propel earnings in the next couple of quarters.  Diamond Offshore was off just a bit, as we found out late last week.  But overall, things are strengthening here as book value improved to $39.76.  I bought some shares this morning at $35.08 to get started.

Here are the details from the announcement.  I'll be posting again after I listen to the call, if there is anything noteworthy.  Also, they did buyback 5.8 million shares during the past quarter, which they said they will continue to do as long as the stock stays undervalued.

We'll see what happens here, but I'd ultimately like to build this stock into one of my largest positions.

Disclosure: Long L

Monday, February 1, 2010

Predictable Monday

Today's action was pretty predictable considering what happened last week.  We got what appeared to be a oversold bounce.  When I say oversold, I mean very short-term.  I still would like to see a few more percentage points come off before I like valuations.  Plus, looking back over the past few months, Mondays have been very very good.

Some stocks I am close to buying: Loews, Forest Labs, and adding to Compass Diversified Holdings.

Not much otherwise to talk about today.  I'll be watching earnings in these names tomorrow: COCO,CMI,FISV,MTW,NWSA,OESX,DOW,UPS.

Disclosure: Long CODI

Friday, January 29, 2010

Good Earnings, Data Not Enough

When the market decides to sell the news, or just plain sell off, there is little that can stop it.  We've had three pretty significant things within the last 24 that would have allowed the market to turnaround.

1) Bernanke re-appointed. -Takes uncertainty out of the market, rates will stay artificially low, and someone on board with more stimulus.

2) Strong earnings from Amazon. -The market loved this in the past couple of quarters.  They are performing well, although I couldn't buy the stock at that valuation.

3) GDP number comes in at 5.7%.- Fastest gains in six years, although we were coming off some pretty low numbers in previous quarters and that pace will be pretty hard to sustain.  But, the market would have applauded this a few weeks ago.

FYI, another interesting name I found in the Pharmaceutical Industry is Forest Labs (FRX). The valuation alone makes it worth a look, and I'll write more about it if I decide to make a purchase.

Disclosure: None

Thursday, January 28, 2010

More Earnings...ETFC, MOT

Etrade reported after the bell yesterday, and results were pretty much in-line with expectations, with a solid revenue number.  Even in a difficult year for investors, they performed well as trading volumes were up and net new accounts and assets were up for the year.

I purchased shares yesterday in anticipation of a good result, but am holding the shares for longer than just a trade.  As I said yesterday, I believe they will pull off a merger, but even if that does not happen, we should be okay.  As a stand alone entity, Etrade's operations are improving, and they are cleaning up their mortgage portfolio as well.

Motorola also reported this morning.  Things weren't so solid there.  I was keeping an eye on them due to the success they've had with resurgent sales of smart phones now that they added Google's Android platform.  That transition will likely take some time, and but they are definitely behind the likes of Apple, RIM, and Nokia.  Activist Carl Icahn has a large stake in Motorola, and he's in for the long haul.  He usually manages to unlock some value for shareholders, so this may be worth a look as shares plunged this morning.

The market is continuing to sell-off, and many stocks are starting to look attractive again.  Most investors I follow aren't doing much buying yet.  We're still likely to see that rally in the dollar, which has carried a negative correlation to stocks for quite some time.

Disclosure: Long ETFC

Wednesday, January 27, 2010

Made a Purchase

I went ahead an started a position in Etrade (ETFC), at 1.58. They do report after the bell, and I don't normally like to buy before earnings, but I just feel its a pretty good price. It has sold off a bit as it seemed to hang in the 1.70's forever. I think it is mostly due to overall market weakness. I've read a lot of research and analysis on Etrade, and the case at these prices is pretty justified, in my opinion. They have one of the strongest discount brokerages out there, and a merger of some sort seems likely. Their loan portfolio, which is been its biggest problem, has stabilized.

Here's a some good reading regarding ETFC.

I basically wanted to have some kind of a position in case they report a strong number and the stock takes off.  I still think a merger is where the price increase will come from, but they are improving and should be fine on a stand alone basis in the event a merger doesn't happen.

Disclosure: Long ETFC

Friday, January 22, 2010

Patience Paying Off

Finally starting to feel a little better about being cautious over the past few weeks.  The market has obviously changed its mood and is selling all the news out there.  Whether its low revenue numbers on earnings results, or Obama and the government announcing a new strategy with Wall St., or China, the market doesn't care right now.  We've now fallen a bit more than all those mini-dips that were swiftly bought all fall.  Now this one could end up just the same and we could see heavy buying next week.  But we just have to wait and see. 

Everybody wants a quick fix these days, and thats just not how it works.  They expect the president to have a reaction to anything that goes wrong.  I get the feel that him going after the banks was a political response to the Dems. losing that seat, and its unfortunate.  Employment is whats really hurting him politically right now, and I wouldn't be surprised to see a few more big items tried to stimulate growth.  Not what I like to see, but like I said, everyone wants a quick fix.  If the market falls much further, they'll probably bring back the uptick rule debate and why we should outlaw short selling or leveraged ETFs. 

Meanwhile, we just look for good businesses at good prices.  I like the quote that goes something like this (Buffett may have said it) "we just wait for the money to be lying over in the corner, and we walk over and pick it up."  Probably messed it up, but you get the idea.   

Carefusion (CFN) has held up really well during the past few days.  I imagine this was largely due to the fact that there are major questions about health care reform being passed due to the Mass. election.  I liked CFN and their potential to grow earnings regardless of what does or does not pass. 


Heavy earnings coming up the next couple of weeks.  Everyone here know's I love Loews and am getting excited seeing it pull back.  There was a nice piece written at another blog I found that you can read here.  Ultimately it will come down to if Loews management can unlock the value.  There is no doubt its there.  Its a matter of if they need to spin off some assets, or buy something to call attention to themselves.  At the end of the day, they're value investors though, and they won't sell assets at low prices.  I'd say they will look to scoop up assets at a good price if they can find them.  Beyond that, they will build up cash and buy back the stock if it remains this undervalued. 

Something to think about over the weekend.  I'll probably be buying at some point next week.  Hopefully the Vikings can pull out the big win this weekend!!!

Disclosure: Long CFN



Thursday, January 21, 2010

Selling the News

The market seems fairly set on "selling the news" during the start of earnings season.  We also had the major announcement of the restriction of various trading activities for the big banks.  Something tells me the likes of Goldman and their friends will find ways around these rules.

Hopefully this sell off, which is largely in financial shares (which I don't care to own), gives us opportunities to pick up shares in companies we do like for a discount. 

Etrade has been interesting for a speculative play.  It is, however, no secret, and the stock has seemed to have a bid under it.  I would like to pick up some shares as their operations are improving and a deal with another broker appears likely.

I also like Loews shares, which I've mentioned many times.  I'm being patient here as stocks are falling, but these shares are undervalued.  One of the problems with Loews is the market doesn't like to give them their due with regard to realizing their value, and it may take spinning off one of the companies, or a spike in energy prices, for this to happen.  Meanwhile, Loews management seems content to buyback their own shares

There are a handful of other stocks I'm following as well.  Although I haven't bought anything yet today, I'm definitely getting closer.  I did buy some shares in ACAS last Friday around 3.89, and that trade has started off well.

On days like this, you have to give the market a little breathing room, and if you do buy, don't jump in too big.  I'm still pretty bullish overall. 

Disclosure: Long ACAS

Wednesday, January 20, 2010

Earnings Roundup- Some Caution Voiced

Just quickly going through after-the-bell earnings and spotted the result from business services (they handle credit card and bank transactions) company Total System Services. What jumped out at me was their 2010 outlook

TSYS’ guidance for 2010 includes the impact of deconverted portfolios (whether as the result of bank failures, portfolio sales or otherwise), price compression, reduction in one-time termination fees and currency impact, and the current economic environment of the credit card market.



2010 Guidance

Total revenues $1,616 to $1,648 (4 %) to (2 %)

Reimbursable items $279 to $284 3 % to 5 %

Revenues before reimbursable items $1,337 to $1,364 (6 %) to (4 %)

Income from continuing operations $187 to $191 (15 %) to (13 %)

EPS from continuing operations $0.95 to $0.97 (15 %) to (14 %)

Average Shares Outstanding 197.7

“While 2010 is going to be a challenging year, we will continue to work aggressively to reduce our costs, including reducing staff, while expanding internationally and maintaining our technological advantage in the market place. We have an experienced and talented team at TSYS who will successfully execute our strategy to return growth to our business. In addition, with our strong balance sheet and cash flow, we will continue to aggressively pursue strategic acquisitions that diversify us and expand our presence in the payments processing business,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.


I'll have to listen to the call to get a little clearer picture, but this is an industry that I was looking at quite favorably.  The revenue estimates were only lower by 2 to 4%, but they are clearly a bit skeptical, and keep in mind we're looking at estimates compared to the abysmal 2009.  I've always liked Fiserv as the best of breed in this industry, but its important to keep up with what competitors have going.
 
I'll monitor this situation some more, and definitely pay attention when FISV reports.  If I remember right, TSS was having problems a couple of quarters ago when others were a bit stronger.
 
Disclosure: None

Tuesday, January 19, 2010

Opportunity in For-Profit Education Stocks?

I've been scouring the market universe looking for undervalued stocks.  Unloved sectors, turnaround situations, companies re-capitalizing, re-negotiating with lenders.  One of the key factors when looking for value is find stocks that have been discarded by the market, and polish them off and see if any value is there.  Benjamin Graham often referred to these as "Cigar Butts." 

I find the for-profit education industry a bit intriguing here.  This industry was hot the past few years.  You had the perfect storm of adults looking to further their skills to stay competitive, and the convenience of night, weekend, or online classes.  Then the recession hit and many people became unemployed.  Boom!  They're going back to school.  Subsequently, these stocks got bought up.  Apollo (the University of Phoenix) was a big name, along with COCO, ESI, DV, STRA, CPLA. 

Last fall, some studies were released that showed default rates on loans being higher in for-profit universities than state or community colleges.  These stocks have since been tossed aside.  Actually, STRA and CPLA are still up near highs, but the others have sold off.  Do I think the defaults on loans are an issue? Yes.  Do I think they will be enough to derail this industry?  Probably not.  So you still have all the previous positive factors in place, and earnings growth is still expected.  But the risk of loan defaults has pushed these stocks to fairly cheap levels, and they are sitting with big short positions.  So, a solid earnings announcement with an outlook that still shows good enrollment rates and no red flags about loan defaults could cause a nice rise in these stocks.  The short squeeze would only be pouring fuel onto the fire. 

The bottom line here, as it is with many value plays, is the risk/reward appears tilted in our favor for a little while.  I wouldn't own some of these stocks if they become expensive, but at these levels, they may be worth a look. 

I'm going to do some more digging, and will post anything relevant, as well as any related purchases.

Disclosure: None

Monday, January 18, 2010

Interesting Reading-Monday

Whenever I have time (like days when the market is closed), I try to update what I'm reading for the day. 

Vale to Grab Ore Share From BHP, Rio as Demand Surges - I continue to believe the in the secular growth of this industry, due to the rise of China.

Kraft’s ‘Wiggle Room’ to Win Cadbury Must Be in Cash - I like this stock, but I have no way to forecast what might happen with this deal.  Ackman entering the fray obviously made it more appealing.  But like Buffett said, why issue all this stock when you were buying it back over the past year. Its not like it is overvalued.  I still may have to dip a toe in on this one.

Apple to Host Event Jan. 27, Signaling Tablet Debut - People go nuts over anything new from Apple these days, and this should be no different.  I haven't owned the stock for a couple of years.  It's not really my style of investment. 

Vikings Roll Cowboys. Not exactly market related, but I just couldn't help myself.  One of the best games ever for a Viking fan.  I've been a Vikes fan since I was old enough to watch football.  Just enjoying these games, and maybe we'll have a shot to win it this year.   

Saturday, January 16, 2010

A Discussion About Brokerages

I wanted to take a few mintues to talk about brokerages.  Everybody's using at least one, and many people use what are termed "discount brokerages."  I'm talking about brokerages where trading is done primarily online, without broker assistance, and trades are usually less than $15. 

I currently use two brokerages for my three accounts.  I have a cash account with Scottrade, an IRA with Scottrade, and a cash trading account with Think or Swim.  I have used Schwab in a limited basis, but these two I have the most familiarity with.

Scottrade is an excellent brokerage for someone looking for a straightforward, easy to use system.  They have good customer service (I always get email responses within about 15 min), and they are cheap.  Trades are $7.  There is no fees on my IRA, which I appreciate.  They are a little light on features, especially details about your cash, positions, etc.  They do not offer dividend re-investment on stock positions.  Another issue is idle cash.  This doesn't come into play too much currently because rates are so low, but in more "normal" times, this is an issue.  Schwab allows you to sweep money directly into a money market mutual fund, and I believe Etrade does as well.  They can do this because they are banks and offer these funds.  With Scottrade, you don't have that feature.  You can buy into these funds, like Fidelity Cash Reserves, or Schwab's fund, but you have to pay for the mutual fund trade.  For some reason, mutual fund trades are realatively expensive at Scottrade (they are $17), so $17 in, $17 out just to move your money around.  Overall, I'd recommend Scottrade to beginners or anyone looking to just trade.  This works fine for me because I'm constantly monitoring the market and market-related sites, so I get my research and information elsewhere, and use Scottrade strictly to trade.

Think or Swim is truly an innovative product.  I haven't used all the brokerages out there, but I can guarantee you Think or Swim is doing things that no other brokerage does.  There software has so many features, I couldn't begin to use all of them.  They have a software program that you download and log directly into.  You can also use web-based trading, and there is a nice application for your iphone as well.  Think or Swim is made for option traders, but it can handle so much more.  I'm a stock trader for the most part, but love the features they have for stocks, options, forex, etc.  Its all there.  You can pay commissions on a flat-fee basis ($9.95) or a per-share basis ($.015/share with a $5 minimum).  At Think or Swim, I end up paying $5 per trade for stocks.  Pretty dang good.  As for idle cash, you can move it into one of the big funds like I mentioned before, but Think or Swim has 3 free mutual fund trades per month, so you're set there.  The have other interesting features like live CNBC TV feed (even though I'm not a big fan of CNBC, I wish they'd have Bloomberg too).  They also have a live feed of someone they call the "Shadow Trader" which is this guy that follows the market and executes trades and broadcasts everything.  You can trade right along with him.  They also have live webcasts and tutorials.  Also, on their website, they have a big area that educates you about options trading.  All free.  I could go on and on about this brokerage.

In closing, both brokerages I use serve a good purpose for me.  I'd be interested to hear what other people use and what they think about theirs.  Please comment if you feel like it.  Also, if you're thinking about switching brokerages or want more info about either of these, feel free to email me as well.

If you'd like to open an account with one of these, please let me know. They have refer-a-friend programs.

I'll look forward to any discussion on this. 

Thanks!

Friday, January 15, 2010

A Little Different Reaction...

So Intel beats, and guides higher.  No surprise here, as analysts continue to play ball.  But the reaction was a bit unexpected.  I was thinking this was a situation where we traded higher on good news or bad news, and traded lower only on bad news.  This has been the case lately.  But, the market loves to make people look foolish, and if you think you've got it figured out, you usually don't.  JP Morgan also reported a big profit number today, even though Dimon expressed caution.

We got a fairly ho-hum sell-off.  No panic out there.  Lots of interesting stuff though.  I did buy a small position into American Capital (ACAS), following a few good value traders out there. 

There is a ton of value out there at Loews (L).  I was doing some quick math on their holdings and you can buy the stock and basically get their private businesses like Loews Hotels for free.  I'll be writing more about it as a buy shares. 

I've got a lot of stocks I'd like to buy, but am seeing how this plays out.  If we get more "sell the news" reaction to earnings regardless the outcome, I can't say I'd be unhappy.

We've got a couple of really interesting weeks coming up, and I will be posting a lot more as I'll likely be glued to the monitor. 

Have a great weekend all!

Disclosure: Long ACAS

Thursday, January 14, 2010

It's All About Intel, and Then JPM

The market has been extremely quiet the past few days.  Volume and volatility have been low as investors are waiting for the next catalyst.  Never fear, however, as earnings season has arrived.  Alcoa disappointed, but the market shook that off easily.  Now, we're looking to Intel after the close today, and JPMorgan tomorrow morning.  In the past two cycles, Intel in particular was of high importance.  So, we wait.

Health care stocks, and particularly big pharma, has been rocking.  Portfolio holding Pfizer has gained about 5% this week, and its one of the few mega-cap names I really like right now. 

Sticking with health care, I also really like Carefusion (CFN), and almost added to my position a few times this week.  There will be some good opportunities to add soon (I'm hoping). 

I still would love to establish a large position in Loews (L).  They have an awesome management team and a great group of businesses.  They provide us exposure to a lot of industries I like at the present (offshore drilling, natural gas, luxury hotels, to name a few).  The stock is still trading below book value.  They figure to earn $4.00/share this year.  At a 15x multiple, that puts them at $60.  You can buy shares today for $37.90.

The market could get moving again following Intel's report.  To be honest, I'd love to see a bit of a pullback.  I do feel the recovery will be slow, but we're still burning the stimulus fuel, and until there is a better alternative than stocks and we don't see any shocks to the system, things should be good.

Disclosure: Long PFE, CFN,

Friday, January 8, 2010

End of Week Wrap-Up

The market was pretty quiet this week.  The jobs report came in below expectations, and the market pretty much brushed it aside.  There are plenty of risks out there, but investors are becoming a bit complacent and the risk has shifted.  Earlier this year, there was the risk of collapse and the risk of being in equities.  As the market snapped back, there was the risk of being out of equities.  Now, there is still some risk in being out of equities as there is just no good alternative, but many equities are fairly valued or overvalued based on where the economy is at.  That is why I continue to preach picking stocks and searching for value, and not "buying the market."  There are plenty of opportunities if you're willing to do your homework (or read the right websites!).   I'm doing my best to balance into a group of stocks that are undervalued, while still protecting against a market correction that ultimately will come. 

Earnings are the next catalyst for this market, and they could cause a good-sized breakout to the upside.  Analysts are still on the conservative side with estimates, and companies that have been positioning themselves well in the past quarter will likely blow through estimates.  This we have to be ready for. 

We'll hit it hard again Monday.  Until then, enjoy the weekend.  Should be some good football!

Consumer Credit in U.S. Drops Record $17.5 Billion

Interesting headline out today showing this massive drop in consumer credit during November.  Here's the story (via Bloomberg):

Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.


The slump in credit to $2.46 trillion was more than anticipated and followed a revised $4.2 billion drop in October, Federal Reserve figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease of $5 billion. The series of 10 straight declines was the longest since record-keeping began in 1943.

A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery.

“Double-digit unemployment is eroding consumer confidence and the uncertainty is prompting consumers to pay down their credit card debts,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We have not seen such a wholesale reduction in consumer credit since the last time we had double-digit unemployment rate following the early ‘80s recessions.”

Stocks were mixed and Treasury two-year notes gained the most in three weeks after the Labor Department said earlier that companies reduced payrolls in December by 85,000 workers after adding 4,000 a month earlier. The unemployment rate held at 10 percent last month.

With an economy so dependent on the health of the consumer, figures like this are a little disturbing.  Consumers are obviously still de-leveraging, and savings rates are growing.  Meanwhile corporations still aren't hiring at increased levels (as evidenced by today's report).  This will all factor into just how robust the recovery is, and how soon it will come.  There has been evidence of strength returning, but the consumer is still in rough shape.  It's also important not to get too wrapped up in stories like this as the market still appears to have momentum.

Thursday, January 7, 2010

Opportunity Knocks...

The market has been pretty boring.  We've been in the pattern of hovering near unchanged most days, with the occassional move of 1%.  Everytime it appears the market is headed for a lower open, prices are scooped right up and we move higher.  Fund My Mutual Fund had an interesting piece showing more evidence that the government is manipulating the market.  This wouldn't be a big shock considering what else we've seen.  At the end of the day, we're just looking for stocks at good prices, so we can't spend too much time worrying about things like this.

Lots of stocks I like out there right now.  I've said this a million times before but I'd love to see just a little pull back to give me some comfort about moving into larger positions.  My pattern lately has been to buy a small position so I'm at least in, but am waiting before getting in heavier.

Some stocks I like here are: CFN,CODI,TIII,CNI, L, EFTC, OESX, MOT.  There are others that I own and may add as well like PFE and ABB.  As always, I'll post transactions.

Disclosure: Long CFN, CODI, TIII, PFE, ABB