Sunday Reads & Comments – June 25, 2107

With all that to think about, the week ahead for me is cautiously looking for building floors on profits and potential losses, as well as further research into:  a) emerging value, b) muni / <10 yr corp debt and c) building better alerts on news and press releases.

Sunday Reads & Comments – June 18, 2017

A bit short this week, as there’s too much going on beyond Wall St.

KR: just lucky sometimes

Recently, i bailed out of KR with a break-even trade, eventhough i was expecting to hold the company much longer, i just couldn’t see the intermediate success on either a company or dividend income basis … so i sold.

Take a look today (i sold north of $29) … https://seekingalpha.com/symbol/KR

There was nothing here about marketing timing, or predicting AMZN purchase of WFM … just pure, dumb luck.

Sunday Reads & Week Review – June 11, 2017

  • Jeff Miller (WTWA) pointed to this article suggesting that wholesale inventories were declining suggesting slowing economic growth and possible GDP impact.  Here’s a sample quote (bold is my add):
    • “The decline this month was in non-durables. Overally, I believe the rolling averages tell the real story – and they significantly declined this month. There is an obvious growth trendline in wholesale – but this was a bad month.  Inventory levels returned to recessionary levels.  To add to the confusion, year-over-year employment changes and sales growth do not match.”
  • The 10yr note crawled up a bit, S&P500 basically flat, but boy was there a bunch of noise in last week’s market activities.  So easy to get lost in the noise … (taken from WTWA)
  • Another pointer from this week’s WTWA – https://seekingalpha.com/article/4078993-value-valuation.  A solid opinion and teaching piece valuations.  I have my own thoughts on this topic, and slightly disagree with the author’s opinion about holding cash.  I hold cash often and if not, have targets to sell to raise cash; i am a vulture investor.  I try to take advantage of the inefficiencies in the market to purchase companies at a reasonable or discounted price.  Not having cash complicates my vulture behavior.
  • A good summary of GE valuations by Brian Gilmartin https://seekingalpha.com/article/4079472-ge-insider-buying-always-good-sign. GE is one of my top holdings (>5% of taxable account with cost basis of $17.50), and i continue to hold but uncomfortable exceeding my 5% with additional purchases until the sentiment starts to turn … per Brian’s review, it may be at the next earnings report, or trading activity breaking thru $27 or landing on $25.  For me, if it declines below $27 it will be hard to pass for a possible intermediate duration trade (12-18 months).
  • Portfolio changes this week included:
    • the removal of KR.  I made a mistake with the trade and let my emotional attachment to Fred Meyer and KR private brand products cloud my judgement.  The potential capital appreciation and dividend flow were not within my standard guardrails.  I sold with materially a break-even point – no loss, no tax penalty for my mistake.  Fail, fail fast, and learn …
    • the reduction of 75% of FPI due to management performance in my opinion – posted earlier.
    • the trimming of NWN to 50% of position.  The upper levels of valuation were reached, and as a Radar 2 stock, the position was reduced.  My purchase yield on NWN is 4.5% and there are equally interesting yields with greater capital potential (and less loss) than NWN.
    • the re-entry and increase in DSW.  I added to my daughter’s account and re-entered in my taxable at $16.40.  For my daughter’s account, i may sell the higher priced position for loss after 30-day wash.  For my account, a solid entry point before ex-div date, and a solid short or intermediate term trade for another ~5% gain.
  • What is the one company that i want to buy but the stock valuation is not yet right? …. MSFT.  I kick myself as i passed on purchase at $65 thinking that >%60 was better entry point.  MSFT is a missing element in my IOT narrative and i believe the better investment than the data center REITs, DLR or QTS.
  • Positions that could be added next week … PFE, but below $32.  I had opportunity Friday morning, but passed given all the thrash going on within the market and US / UK politics.  New positions on Friday make me nevous at times ….. less rational decision making i guess.
  • Later additions (after the first go in morning)

Another view of monetary policy trap

https://seekingalpha.com/article/4079545-america-still-trapped-box-bernanke-built

The paradox seems to be a ‘growth objective’ … we see it in corporate world, small businesses, etc.  What if, no growth beyond desired employment levels was sufficient?  What if there was another measure of success, e.g., health, security, peace, etc?  Can not those be achieved w/out economic growth (covering employment needs of course)?

Lost patience w/ FPI

Lesson learned and patience lost wrt FPI.  Yesterday’s news and stock repricing was too much for my patience tolerance.  I sold off w/ a stop loss order at$9.30 (removed all emotion from the trade).  Kept 30% of the position that was purchased below $10.  A SA article yesterday maybe too dramatic, but i lost faith in management team … this reset was just too close to their reporting.  Integrity lost.  I will try to capitalize on a dead-cat bounce and get as close to neutral as possible and leave this company / REIT.  https://seekingalpha.com/article/4079209-farmland-partners-sky-falling

I can typically stomach a pricing reset in companies that i respect, but when management does not play their role sufficient … confidence lost and money moved elsewhere.

Healthcare REIT summary – Hoya Capital

Hoya Capital posted a summary view of a short list of healthcare REITs.  https://seekingalpha.com/article/4079347-obamacare-uncertainty-remains-drag-healthcare-reits

i appreciated their differentiation of the REITs (and segments) vis-a-vis interest rates and current risk profiles.  This article has me starting to evaluate my HCN position (i.e., in non-taxed account, a decent gain so far, consider selling to lock profit and take position in DOC).  In healthcare REITs, i am long OHI, HCN and LTC.  I consider LTC rock solid, OHI is the yield machine, and HCN was opportunity.

Sunday Reads – June 3, 2017

  • First of all … credit to Jeff Miller WTWA Sunday post
  • Blackrock posted an interesting update and here is a take-away i found interesting
    • “Bottom line: Trump trades have been dented, but we expect reflation trades – negative for government bonds, positive for cyclically geared assets – to resume in an environment of US growth slightly above trend, which we see at around 2%.”
    • On wage growth (bold is my add), “Wage growth stalling here would suggest a structural shift making this cycle truly distinct from all the others in the post-war period. We have a hard time seeing why this would be the case but see two potential factors. Poor productivity growth could offset the labour market’s recovery, keeping wage growth tepid. Technology’s displacement of workers may be having a broader impact.”
  • The refutation of bad data usage … looking at graphs without understanding the data is hazardous to your financial health.  this is good example http://disciplinedinvesting.blogspot.com/2017/05/the-unfortunate-rise-of-misleading.html
  • Jeff’s weekly scorecard (look at 10yr yield this week)
  • Farming report from Goldman Sachs … this fits into a couple of my narratives (IOT and land scarcity).   http://docdrop.org/static/drop-pdf/GSR_agriculture-N1sH6.pdf – this a thick report and requires more than a 1x read.