Early on the C-19 days, even before US had acted, I predicted that senior housing and the companies that provide those services were going to be challenged in the longer term. The business model future was questioned in my mind. Hence, I sold all my shares in REITs holding those properties, e.g., WELL and LTC. (disclosure, I did NOT sell at the top and ignored my intuition; i sold later at profit, but with less than possible).
Some data on C-19 deaths and ‘where’ they occurred supports the thesis that this business model will be challenged moving forward. Will folks stop using long term senior care facilities … NO! Will people use them less or consider more options (opening up new business models) before signing that lease / agreement, YES!
The business model will be challenged, but the how, when and who remains open. That level of ‘unknown’ is just beyond my portfolio risk tolerance given all else going on … Eventhough, the LTC management is absolutely top-notch, and under most circumstances I would take the risk w/ them … but C-19 is different.
Comment – author points to three 5G announcements that they see as positive for INTC: a) network edge Si / Atom – think what’s on the towers; b) Xeons underneath the big NFV trend and c) wired adapter to meet 5G needs
My thoughts based on my previous knowledge – a)Atom on the edge – hard to see how they compete on price vs ARM – mrvl; b) not much new NFV play and c) adapter I am not smart enough to even estimate if this would move revenue / margin needle (but I assume WAY off)
I commented on article: Of the three elements highlighted- edge, nfv, and adapters … nfv is probably in everybody’s baseline, the adapter I’m clueless… but the edge with atom, price will matter imho and I remember too well the mobile battle with ARM … I wave yellow caution flag on that one – unless remote Management or security is uniquely tied to Si”
Conclusion: does not change my investment thesis wrt INTC
Comment- Aftermissing earings and revenue by a large margin, I was expecting a much more detailed discussion on root cause, strategy and forward modifications of strategy – not much. They did however declare they’re backlog is solid and sold out thru mid’21.
Conclusion: Who is the most ops efficient PV manufacturer, where are their factories and does PV space merit investment? FSLR is probably NOT the company to bet on.
Comment – They are so consistent with strategy and are both delivering above their expectations and getting noticed in a ESG oriented investment environment.
Conclusion: Position is full – increase / decrease only with allocation sizing / resizing. Overallocation (possible +7% of actively managed portfolio) only after strategy refresh next year – and if strategy supports overallocation.
Comment – equinox and core are network centric and the most resilient to both pricing and demand if digital economy slows. DLR, CONE and QTS while interesting, and especially CONE and QTS, may face trouble ahead imho (or be bought obviously).
Conclusion: no divergence from my strategy of having these in CEF / ETFs, but not individually at these valuations and dividend yield.
Comment – With 2 small speculative bond positions in TEVA, this article was helpful but seemed a bit overly optimistic on a couple of fronts. Prices have risen beyond risk / reward tolerance in my mind. Per the author, the debt outside ‘23 is risky income hold as it will probably be pushed out – replaced with lower rate bonds.
Comment – I missed this investment earlier – wanted to by ~$15 and just couldn’t pull that trigger. NUAN is the lead in medical voice activated solutions and they are now turning the corner w/ financial results. Hard to argue against their future success.
Bloomberg posted this today – while somewhat funny, the implications are terrible for ADS quality assurance teams. The magnitude of corner cases is rather breathtakingly large
Quote: “A Tesla vehicle was tricked into speeding when researchers put a strip of electrical tape horizontally across the middle of the “3” on a 35 mile-an-hour speed limit sign. The change caused the vehicle to read the limit as 85 mph, and its cruise control system automatically accelerated, according to research by McAfee. The human behind the wheel was able to slow the car. Here’s the video of the incident. “
Comment: I am currently long CAH, but wrote calls against the entire position that will likely get called. After reading the earnings call transcript, my decision remains same – it’s a trade here, not investment. If I lose my small position for a >$1000 profit, so be it. I am just not confident in the either the business model or the political landscape 3-5 years from now; hence: a trade.
Conclusion: Let the outstanding calls ride (March)
Comment- I thought was a good earnings report out and the management team covered current progress as well as future plans and challenges. I am a fan of their evolution to a much greener and regulated utility. Though their LNG business is bothersome, it’s not keeping me from investing.
Conclusion: invest more! Price is high here and I will increase position with yield target ideally 4.75-5.0%.
Comment – Another solid, no surprises, earnings report from CSCO. The stock got hammered because their strategy and outlook did not change (odd?). I thought there were two nuggets worth including in my investment decision. 1) they are in the forefront of 3 major technology evolutions in their industry and all 3 will make CSCO money (but patience will be required); 2) management identified customer hesitancy within today’s macro view that is also made more complicated by point 1 – technology transitions.
Conclusion: Invest more at right price over the next 3-6 months as investors continue to lose patience. Their mistake, my gain.
Note: During the week, I create a batch of financial articles that do not seem urgent, and I read while on a long stationary bike ride on weekend. Below is today’s batch. – the ‘thumbs up’ icon mark the better posts imho.
Comment: I so much wanted to fall in love w/ FEYE. The conference call was a snoozer – the set up (think election) is perfect but they just don’t seem to have the wherewithal to string together. In the end, the call was way underwhelming.
Conclusion: I will keep the Jan ’21 calls but no new$ added.
Comment: Given the stock price response to earnings, I was expecting something valuable. However, I found it just a bunch of noise and long winded ‘plans’ – execs totally missed the div stop and impact to cash flow while remarking about their increased cash flow in back-half 2019; India highlighted as major risk – still see major revenue inflection 2h 2020 – next earnings report will be interesting. Their comments about China business allow some interesting inferences but nothing actionable.
Conclusion: remains on my buy list but valuation must be right and urgency is lacking (on the purchase) – happy with my ERIC position!
Comment: This conference call was another lesson in executive strategy statements within the context of performance – didn’t hurt that they had a blow out quarter and the macro sentiment increases value perception. I actually passed this on to folks as a great example of exec communication – clarity and repetitious. This transcript is a must read if you are interested in executive communications, BEP and / or sustainable energy generation.
Conclusion: Even though i took profits on 20% of my position (at price >$52.00), I will buy more in multiple accounts – target price mid-$40s. I will also turn DRIP back on!
Comment: A good high level narrative look at the past future decade in Emerging Markets – but NOT an actionable analysis. I used this to compare my narrative stance wrt EM but the deeper dive details for actions are sorely missing here (tho to be fair, it was not their intent). I think worth a quick look
Comment: A quick and solid look at old truisms about valuations, investing and bear markets. Chuck is a master investor and does show a pretty good historical trick with FastGraphs. I think only relevant if you are new to investing or a current user of FastGraphs and want a new trick.
Comment- There’s a bit of doom and gloom inside this post but not without value for an investor with current or planned investments in Asia. I found their sections on India and Korea most interesting and helpful for my own EM narrative constructs — of the EM opportunities in the next phase (2-3 years?), I am leaning more toward Korea as last year’s dog and my experiences partnering w/ Samsung. – India is confusing imho but with demographics that cannot be ignored (this article didn’t help).
Conclusion: Keep my lean toward Korea and hedge my China exposure accordingly.
This may be a heavy hand to INTC (it was afterall a piece on INTC), but the overall picture on ADS was pretty good.
This is a pretty standard pic on the ADS levels
To get beyond today’s current best in class Level 3, many pieces need to fall together – some technical and some government approvals. The author states, quote:
“Intel will not be able to do this, as the roadshow presentation from CES 2020 also shows (see above). But this is not necessarily due to Intel. The competition is not ahead of Intel either. It is more that there is a need for multiple approvals and the infrastructure for enabling autonomous driving does not even exist yet. To make all this possible, a decisive development is needed and this development is 5G. 5G is generally considered to be decisive in this respect. However, this will change this year. With the coming rollout of 5G right ahead, I don’t think that the years 2024 and 2025, which Intel is aiming for, are unrealistic.”
Regardless of the hype, this is a long road (pun intended) … there are two things that will matter more than others: a) who has the largest and most ‘learnable’ dataset for AI / ML, and b) where will 5G infrastructure be reliable to send around the datasets required. (my opinion) … that completely skirts the government approvals (policy, etc).
Inside a nondescript warehouse on the outskirts of Austin, Texas, Apple’s Daisy robot breaks apart iPhones so that 14 minerals, including lithium, can be extracted and recycled.”
If Apple can do it, and the article expresses the notion that they intend to share the technology, why not everybody? Reuse and recycle rather than extract. Just think what government investment could do worldwide to reduce the demand on extractions – environmental and human impact seems to be worth every dollar spent!
Update 01/08/2020: from SA today and I totally agree. While I am NOT planning on reducing my CSCO position, I surely will use 2020 to increase if opportunity arises. The CSCO goodness (assuming economy and 5G roll out does not materially change to negative), will surface in 2021 – quote:
Cisco Systems (CSCO -1%) slips to its lowest level so far this year after BofA Merrill Lynch downgrades shares to Neutral from Buy with a $52 price target, trimmed from $56, citing a lack of expected catalysts in 2020.
“We see several headwinds that could continue to weigh on upcoming results,” BAML’s Tal Liani writes. “Challenges include 2-3 quarters of difficult [comparisons], slower potential growth for campus switching, secular pressure on routing and reduced share repurchase activity.”
Key risks according to Liani include the Catalyst 9K campus switching cycle plateauing, ASC 606 and M&A tailwinds in FY 2019 hurting comps, and exceptional performance in Security and Applications potentially decelerating.
A SA author beat me to the punch as priorities kept me from posting something intelligent. I commented on the author and will be spending time between now and EOY fleshing out this thesis (not specific to CSCO but it will be included).
I agree w/ timelines, and I see 2021 as the beginning of a revenue upward cycle being driven by enterprise upgrades to meet 5G data and M2M usage demands. Between now and then, the macro winds will blow … a great buying opp in 2020 may surface, and if that happens, I will increase my % of CSCO to 7-10% from current 4.5% (long time kernel holding – cost basis <$15)
This 3 phase 5G implementation / roll out is the heart of the thesis mentioned.
A recent post at SA got me going … i own a small slice of this company and had missed this in my financial analysis due diligence. I made a mistake (was stupid), and now need to correct it. I will exit the postion quickly. Here is my comment to the author
Thank you for this analysis … I have a small portion of LAND and will discard quickly based on this as I had missed it. Seems way out of whack and with the games FPI management played back a bit, one would think the farm REITs would come to a ‘squeaky clean’ view. Not there.Also, I tried to reconcile this w/ www.investing.com/… … – no go even at the ‘roll up’ number unless the two sources are using different time periods (would be bizarre)Sad, as I too thought this was a plausible play on a real asset in limited supply … Good work on your part and reminder to all that financial due diligence takes effort.`
Hats off to the author for doing the needed grunt work, and ‘not to self’ do you due diligence better!
Cisco is a kernel element in my equity portfolio. The company released earnings this week and held the ritualistic earnings conference call. I will write more about this in the next week or so … it has big implications to the 5G timing.
Regardless, I will not be immediately adding to my position (which is minimal right now ~4.0% of equity portfolio). Patience is merited here. I am also sure that an army of analysts will provide their insights (mostly to take capital from your account). I will be adding more to CSCO but like in comedy, timing is everything.
This week ERIC released quarterly earnings and held the requisite conference call. Mostly it was good news and the stock popped somewhat. I actually trimmed my position 50% with this move, as I believe lower entries will surface over next ~6 months.
With that said, however, there was a great line in the call that I am not sure people fully understand and it completely reminds me of Andy Grove’s insightful “Software Sprial” – basically the concept is that new technology surfaces new usages and those new usages continue to drive new technology – riding that sprial as INTC did with software and compute capabilities can make folks serious money. Usage models and use cases that were not before possible really drive the breakthroughs, not the technology itself (but that which it enables).
Quote (my bold emphasis):
“So the demand here is strong and when we look at early launch markets for 5G, we see a very sharp increase of data consumption among the 5G users, which indicate that 5G yet again shows that you will use your device in a different way, when you get a better service.
So if we look at — compare that for example to Europe, where we typically have weaker coverage or weaker networks as it’s more of an average compared to Northeast Asia and the U.S. And we see much lower data consumption as well. So I think the reality here is a better network drives new type of behaviors that actually also drives investment needs and drives our business. And that’s why it’s important I think that the operators also are able to charge a premium for 5G, because it will create new type of use cases.”
DOC and WELL are each ~2% of my actively traded portfolio within the income growth segment. LTC is a much, much smaller allocation mostly because their management team is excellent, but the SNF is a tough business and to be mostly avoided. I am not expecting continued stock price appreciation and have recently trimmed my DOC position, but all 3 will remain in portfolio unless business changes materially.