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Author: michael

Jobs or no jobs … but people!

Jobs or no jobs … but people!

Heisenberg posted today on the job numbers which were a continuation of terrible. Two points struck me.

First, Heisenberg did a fabulous job (consistently over the last few weeks) of making sure we remember that behind those numbers are real people. I was often reminded when i managed teams and was required to redeploy human resources that there is a curse of dehumanizing it all due to the simplicity of spreadsheets and numbers – there are humans represented by those numbers; quote: “Obviously, one can extrapolate and otherwise work with the numbers to create a smorgasbord of alarming statistics, but, as I’ve been keen to emphasize, these aren’t just statistics – they are people”

Second, the stock markets took 4.4m jobless people as a positive as it was not even higher … what kind of world is that a rational response?

Non-urgent $ reads 4-22-20

Non-urgent $ reads 4-22-20

TSM Taiwan Semiconductor Manufacturing Company Losing Its Process Leadership To Intel by Arne Verheyde

—solid update on process tech but nothing about products

RFI The Best And Worst-Performing CEFs YTD, And 5 To Buy Now: April 2020 by BOOX Research

— RFI best idea in REIT land – what are nibble prices and triggers?  An overlay of big holding earnings

RFI Healthcare REITs: Back On Life Support by Hoya Capital Real Estate

— an excellent overview – validated my approach to storage, industrials and cloud with MoB too – only MOB is Common stock all else cum pref

“Greater Fool” Bonds: Turning Portfolio Management On Its Head

— not actionable for me

10 Dividend Stocks On My Buy List When The Market Turns Negative by Mark Roussin

— his list is interesting but what the commentators are missing is his view of a tough q2 earnings- I think that will show where blood is flowing in the streets as well as where it is temporary and where it’s not discernible – too early for me to place big bets

Important Message To All REIT Investors by Jussi Askola

— the message is good imho – its just that the examples are tough to evaluate yet – for younger higher risk tolerant investors makes sense tho

The New Era: It’s Being Led By Tech And Health

— not actionable for me

Deflation And/Or Inflation by WWS Swiss Financial Consulting SA

— not actionable for me

Did Rent Get Paid? Previewing REIT Earnings Season

— not actionable for me

Cool tech to keep streets safe for non-car people (like me)

Cool tech to keep streets safe for non-car people (like me)

I almost never drive … and if I do, there must be multiple destinations or something to do that is worth the carbon guilt … However, as I walk, run, bike everywhere, I am constantly ‘on alert’ due to people driving cars who seem to just want to make it hard for non-car people

Grist published a spot on a company that is coming up with some help for us …

Quote: “Tara Pham’s company, Numina, generates the granular data that cities require to design bike- and pedestrian-friendly roads and neighborhoods. You could say it all got started by accident — two of them, as a matter of fact. We got both stories recently, after Pham, who has a background in civic technology and engineering, landed on the 2020 Grist 50, our annual list of emerging climate and justice leaders. Our conversation with Pham has been edited and condensed for clarity.”

This is cool … and a good earth day post

Non-urgent $ Reads – 4-21-20

Non-urgent $ Reads – 4-21-20

MacroView: This Time Might Be Different

—not actionable for me

TU: Telus: This 5%-Yielding Stock Should Continue To Grow Its Dividend By 7%-10% Through 2023

— the article was a bit shallow, but there was 1 comment that is important, quote: 

“You should have added a section analysing there balance sheet. The amount of long term debt they have taken over the years is too much. They went from 11B$ in 2015 to 17B$ in 2019 (+50% increase), while there operating cash flow has stayed relatively constant. It’s the same accross the industry, they are lucky to have Canadian government blocking competitors from entering the Canadian market.”

Sentiment Speaks: Can The Bears Come Back Roaring

—not actionable for me

Market Rallies Into The ‘Resistance Zone’

— echo chamber caution as his thoughts reflect most of mine at this point.  Here is key point: 

“This doesn’t mean we aren’t long equities. We are, but we are also carrying a much heavier exposure to cash, and have reduced exposure to fixed income. We continue to be selective buyers of quality companies opportunistically and will continue to prudently build our portfolios.”

JNJ: JNJ Q1 Earnings Call Key Takeaways

— basically medical devices will be hit due to non-C-19 surgeries being postponed and equipment purchasing being delayed … unless hospitals get more funding from FEDS I am not sure this will quickly correct … hard to see others (unless some magical vaccine surfaces from JNJ) make up the loss – while not something to sell, not something to buy here either until things calm down; I trimmed off ~15% of my shares from DRIPs and am back to my original position.

Alibaba’s Game-Changing Role In China’s Digital Currency

— long rambling and mixed up set of information – C-19, BABA, etc … author knows their content and worth continuing to read, but not this article.  I am still a fan of BABA but am still leaning to ETF for the play – IEMG and EMQQ being my favorites tho I do not hold EMQQ at this time.

Business Interruption Claims From COVID-19 Could Bankrupt The Insurance Industry

— outside my interest space

Verizon: 3 Questions To Ask On Earnings Day

— not actionable for me; though did have a good idea in the comments about selling PUTS – I looked into May PUTS but I will only buy more <$50, and there’s no short term PUTS that gets me there

Straight From PIMCO: A Closer Look At Emerging Markets

— not actionable for me; key point was stick to dollar based debt from quality companies – duh!

CSCO: Cisco: Unjustifiably Cheap, Yet Well Positioned For 2021

— not actionable for me, but repeats my view that the next several quarters are buying opp

— specific to oil and ETF that hold oil contracts – it’s NOT a pretty picture

This SHOULD make you mad!

This SHOULD make you mad!

Source: https://seekingalpha.com/premium-news

Publicly-traded companies raided the PPP pantry

  • Even with the U.S. Senate set to vote later today on passing an additional relief bill for small businesses in the U.S., there is a bright spotlight being thrown on where the funds from the original Paycheck Protection Program designed for small business went.
  • The first-come, first-serve U.S. government aid program saw at least $243M of the total $349M funneled to publicly traded companies, including 15 with market caps of over $100M. As has been reported over the last week, the program ran dry before many mom-and-pop operations and smaller independent businesses were able to apply.
  • The list compiled by Morgan Stanley of those +$100M market cap companies nabbing PPL loans includes DMC Global (NASDAQ:BOOM), Wave Life Sciences (NASDAQ:WVE), MannKind (NASDAQ:MNKD), Lindblad Expeditions (NASDAQ:LIND), Legacy Housing (NASDAQ:LEGH), Misonix (NASDAQ:MSON), Digimarc (NASDAQ:DMRC), Fiesta Restaurant Group (NASDAQ:FRGI), OptiNose (NASDAQ:OPTN), Quantum Cor.p (NASDAQ:QMCO), New Age Beverages (NASDAQ:NBEV), Aquestive Therapeutics (NASDAQ:AQST), Escalade (NASDAQ:ESCA), Zagg (NASDAQ:ZAGG) and Veritone (NASDAQ:VERI).
How will senior housing change post C-19?

How will senior housing change post C-19?

As part of my review of the value chain and business model impacts of Coronavirus / Covid-19, senior housing will be one of the canaries in the coal mine, or spotted owls in the old-growth timber ecosystems. I just find it highly implausible (regardless of the demographic arguments everybody fell in love with, myself included) that these value chains and human interactions will surface unchanged from 12 months ago.

Here’s a global view of deaths so far by country within “Care Homes”; note that US figures are missing

Infographic: COVID-19: High Mortality Rates Linked To Care Homes | Statista

Source: https://www.statista.com/chart/21439/estimated-share-of-total-covid-19-deaths-linked-to-care-homes/

Non-urgent financial reads April 18, 2020

Non-urgent financial reads April 18, 2020

High level summary – nothing below that materially changes my current views, strategies or tactics

DOC: Physicians Realty Trust Is A Reliable REIT On Sale

— assumes biz model unchanged post C-19

IBM’s Second Chance At Cloud Computing Dominance

—in essence IBM needs to be a cloud connector and services provider which will tie them to the oldest slowest growing companies

Buying This Dip: Here Are 4 Cloud-Tech Names For Consideration

— not actionable for me

Hirst: If There’s One Place The Fed Has Your Back, It’s Money Markets

— not actionable for me

Our Five Favorite Positions Right Now

—not actionable for me

DGX: Quest Diagnostics: COVID-19 Testing Not Enough To Overcome Negative Effects

— not actionable beyond warning of revenue replacements at much lower levels – C-19 revs lower than traditional rev removed

Deutsche’s Kocic: The Last Two Months Show The Intrinsic Instability Of Our Entire Economic System

— hold on to your hats – implied is that fed balloon squeezing pushes risk and volatility into equities.  Overall system is very weak and consumer and biz level of liquidity is very, very small and when those fail, all tumbles down. THIS ONE IS IMPORTANT

The Wild World of Yield Chasing

— focused on longer durations – outside my current universe

CEFs: Two Utility Funds That Survived Through The Last Crisis Without Cuts

— outside my universe right now tho could be included in the XLU / FUTY research that has been suspended currently

When Too Much Is Not Enough

— not actionable for me

Weekly High Frequency Indicators: The Last Dominoes Fall

— stating the obvious with data

S&P 500 Weekly Update: ‘Balance’ – A Winning Strategy For Investors

— not actionable for me

A Grand Reopening? Winners And Losers Emerge

— summary recap – not actionable for me

Federal Reserve Watch: Here Comes The Money

— common narrative – short term deflation roughly 1 year then inflation

Kroger: Raise Prices, Print Money, Huge Upside

— if the narrative is either margins or MSS must increase, call me skeptical – I like my KR bonds, however

DGX: Quest Diagnostics: Stress On The Healthcare System Is A Bearish Sign

— echo of above piece on DGX – moving from my ‘watch’

—Q2 is kitchen sink for rev gro – thru earnings calls rev forecasts into Q3 & 4 are the tell – what’s the gro slope?  Goddess save us if lower than q2

— same story as above – key quote

Summary / conclusion: It’s pretty clear that Q2 ’20 is going to be the bottom for SP 500 earnings, but’s the rate or slope of the acceleration moving out of Q2 ’20 that will matter. The SP 500 earnings yield near 5% is always a red flag, but the environment makes this metric less useful.

2 scientific reports sustainable energy

2 scientific reports sustainable energy

2 recent studies were published that I found interesting and worth the read.

The first is about the solar panel cell chemistry improvements. Even with all my semiconductor design and manufacturing experiences, I found this science complicated but encouraging. https://www.sciencedaily.com/releases/2020/04/200415133625.htm

The second is complex modeling on the impact of wind turbines and their disruption to the micro weather (air-flow) patterns if capacity was increased. Even the authors’ description of the modeling was complex. Yet again, way encouraging if we can increase wind capacity without increasing unintended consequences, e.g., air flow around the turbines. https://www.sciencedaily.com/releases/2020/04/200414095737.htm

Disclosure: One of my main investment themes / narratives is sustainable energy, so I have a positive bias here.

Non-urgent financial reads 4-16-20

Non-urgent financial reads 4-16-20

Note: I batch up different articles that I want to read, and then read / comment on them several times / week while riding the stationary bike. These are generally deeper analysis pieces that fit into strategy, portfolio management or economics.

This batch

Post‑Pandemic Interest Rates: Lower For Longer

— ny fed published recently a review of feds work around ww2 on rates and debt – learning from the past – start on short end and extend maturities naturally as fed releases hold on monetary control – risk this time is higher global interdependence – but totally worth a read for historical perspective on what was done before

Debt-Free Companies Of The S&P 500 – T. Rowe Price Group

— key take away: 1- how are companies with new debt (either from gov or market) spending new capital and 2- what did the company really use its old debt for? – the stock or the business. Same fallacy of strategy as investors – did you buy for the stock or did you buy for the company? (this could become a stand-alone post if investigation surfaces novel notions)

AY: Atlantica Yield: Renewable Energy YieldCo Offers 7% Yield For Clean Income

— interesting and positive on AY but the AQN story is more appealing to me. Posed a question in comments let’s see in answers – Author’s answer- “I figure AQN receives $71 million annually from AY distributions, or about $0.13 per AQN share”

Intel: It’s Go Time by Business Quant

— key here is ADSL EUV installs – lever for INTC future gains – my INTC position is about 15% of once upon a time. INTC has to win the data center, period.

T: AT&T: Expect Some Pain

— nothing new but the comments help separate wheat from chaff – the main engine will remain mobility – their challenge will be to competitive and focused to win there with complexity and challenges elsewhere – needs great leadership – do they have now?

A Complete Collapse

— marketing teaser – losing confidence in the author as this is becoming pattern. plan on sending author private note.

Factory Orders And PMI Data Suggest These Industries Are Bullish

— too general to make actionable

Utility ETFs: Boring, But Tasty In Their Own Way

— good view on XLU comparison to other ETF and deep compare to FUTY on same metrics published in the author’s comparison. I started this analysis today and did not get far before I realize better to buy utility directly – not ETF

Riskiest Dividend Yields In Today’s Turbulent Markets

— good look at true cash flow – D is a risk in this analysis but PPL is not – yet street adds risk premium to PPL – why?

Analyzing Which REITs To Buy In The Post COVID-19 World by Yield Strategist

— not relevant to my strategies

Mr Duy update

Mr Duy update

Quote: “Bottom Line: Controlling Covid-19 requires drastically constricting economic activity; the proof that the plan is working is that the data collapses and we bend the infection curve. The former has definitely happened and it looks like the latter will as well – social distancing works. We still have a long way to go until we return to some semblance of normality, but expect people to begin working in that direction when the restrictions on activity ease. Most important now is to keep the pressure up on Congress to provide sustained support for the economy; that support should be open-ended, based on economic conditions not time or dollars.

Duy’s other great point is, quote: “Eventually that time will come (but don’t rush it or all the work we just did will be in vain; I am hoping by the end of June if not the beginning), and we should anticipate the economic numbers to pop on the upside. Think of the same story in reverse. Even assuming that reopening the economy is like turning up a dimmer switch, there will still be pent up demand activated and some activity will be starting from a base of almost zero. There is little place to go but up.

Bolds are his originals.

Source: https://blogs.uoregon.edu/timduyfedwatch/2020/04/16/its-ugly-out-there/

Non-urgent financial reads batch 4-14-20

Non-urgent financial reads batch 4-14-20

A short preamble. My portfolio management methodology is based in fundamental and traditional analysis – I am buying companies and as an owner have a responsibility to really know / understand the companies that I own. Recently, I have done a poor job of that — learn from failure and move on!

With that said, there is a principle to convey to help understand some of the comments below. It’s a market of stocks which are companies – there is no entity (in my financial head) ‘stock market’ (traders can have the market; investors will take the companies). As part of this, unless I can fully comprehend the business model (costs, margins, customers, risks, etc), it’s VERY hard to value a company. Without understanding the business, how can anybody value the company? Hence, we all take about the stock price being cheaper, rich, high, low, etc … until the clarity of structural changes are clearer, my valuations and stock purchases will be TRADES, not investments.

Here’s my reading from today (my comments follow the reading URL)

Qualcomm: 5G Wave Only Delayed

— weak- focused only on phones and Apple 5g phones – so much more to this story

This Chart Might Explain Why Berkshire Is Still Waiting On The Sidelines

— article didn’t really provide anything new but BRK is an interesting idea to look at salvage ops after this C-19 is thru

Even If The Fed Keeps Pumping Money, We May Still See Deflation

— primer nothing new

Inflation Is Coming

— a plausible scenario that needs to be considered but for me too early to claim one scenario

S&P 500 Valuation: When A Margin Of Safety Trumps Economic Fundamentals

— risk approach but at market level –  add to BRK article and it’s an echo chamber

Income Lab Ideas: Zero To Near-Zero Interest Rates

—take away is to look at calls within fixed income portfolio – ETF or CEF – seems obvious but I was not paying attention

http://fundamentalis.com/?p=10099  – same? Look At 2021 (And Forward Quarters) For A Better Read On Earnings

— key here is to not get bogged down in q1 or 2 numbers – use annual averages and estimates

‘Boomer Crisis’ – Crash Permanently Delays Retirement Plans

— nothing new but reminder to make sure daughter has sufficient fund

Consumer Prices Sharply Decline In March: Keep Your Eye On Wages

— watch wage growth go negative in sustained trend – very bad

Income Lab Ideas: Zero To Near-Zero Interest Rates by Nick Ackerman

— duplicate

Technically Speaking: The Reward Doesn’t Justify The Risk

— quote

With only a 6.7% advance available to achieve the 62.8% retracement, the “risk” required to achieve that gain is heavily offset by the 19% decline to retest the March 23rd lows.

In other words, for each $1 of capital you have exposed to equity risk currently, you are risking nearly $3 of loss. Such hardly seems to be a “rewarding proposition,” but those are odds any casino in Las Vegas would love to give you

Today’s Crisis And The Impact On The Real Estate Market by Jussi Askola

— fair analysis but imho overly optimistic – didn’t highlight different segments – disappointing from author as his posts are usually deeper analyzed

CSCO helping its customers

CSCO helping its customers

Seems like CSCO has a good idea, imho. Helps everybody if everybody helps out (rather than everybody expecting tax payers to help out).

quote from Seeking Alpha

Cisco (CSCO +2.4%) has launched a $2.5B Business Resiliency Program designed to help customers and partners invest in recovery while deferring costs.

“Cash flow is a top concern for Cisco customers and partners in the current environment,” the company says.

The vendor financing program offered through Cisco Capital includes an upfront 90-day payment holiday, and allows customers to defer 95% of the cost of a new product or solution until 2021.

Starting in January 2021, customers then make monthly payments based on the total amount and remaining term of the financing.

Non urgent financial reads – batch April 12

Non urgent financial reads – batch April 12

Disclaimer – just my observations – no recommendations

Coronavirus Roundtable – Still In The Early Innings

— nothing new

Mirror, Mirror On The Wall, Who Is (One Of) The Ugliest (Market) Of Them All?

— relative values by country markets – Korea surfaces as does UK as better values / cheaper based on current metrics (question their accuracy given stale earnings forecasts)

Weighing The Week Ahead: So Many Good Questions, So Many Poor Answers

— nothing new

LEVI: Levi Strauss & Co. (LEVI) CEO Chip Bergh on Q1 2020 Results – Earnings Call Transcript

— well articulated strategy and focus on recovery tactics – build position out

D: Dominion Energy: Nearly Decade-High Dividend Yield, But Wait For A Better Entry Point

— nothing new

SJR: Shaw Communications Inc. (SJR) CEO Bradley Shaw on Q2 2020 Results – Earnings Call Transcript

— impressive articulation of strategy and position – factual that ‘this quarter is dead and next q could be wrt new subs

The Case Against Treasury Bonds by Movement Capital

— key point is opportunity cost of cash is not enough to shoulder treasury real rate return

High-Yield Bonds: Not So Junk Anymore

— duplicate read from earlier

Dividend ETFs: Anomalies Are Great, So Long As They Aren’t Mirages

— common sense for newbies but nothing new

Beware Lazy Diversification In Preferreds

— key action – look for fixed + float to diversify current positions – could think same in bond space too – a good view on diversification

Bank Of Montreal: Comprehensive Analysis And Today’s Value Vs. The Great Recession

— positive view but did not dive into oil loan book; which seems like the largest risk area

The Frightening Economy On ‘The Other Side’ Of COVID-19

— L shaped recovery but some changed forever … not much confidence in V or short U recovery

AT&T: Brace For Impact by Business Quant

— nothing new

Key Takeaways From PIMCO’s Cyclical Outlook: From Hurting To Healing

— baseline U shape recovery – high quality debt longer durations and TIPS shorter

The U.S. Likely Faces A Deep, Hopefully Short Recession by PIMCO

— nothing new

Closed-End Funds: Bear Market ‘Buys’ by Nick Ackerman

—likes RNP at lower price at discount of >5% – hard to hold in volatile market but makes sense as leveraged diversification