As someone who lived thru a couple of credit crunch debacles …. i am sensitive to credit ratings and the risk of a company’s demise (bad credit, too much credit, stupid debt capital plans). One of my aggressive speculation companies that i have held for months at a significant loss, CX, just had their credit rating changed.
Quote: “According to Fitch, the upgrade reflects the strengthening of CEMEX’s capital structure due to US$5 billion in debt reduction in the last three years, primarily due to robust free cash flow generation and asset sales. Other considerations for the upgrade are CEMEX’s strong business positions as well as the refinancing of about US$7 billion of debt, which has lowered interest payments by about US$200 million per year. “
The key for me … “lowered interest payments by about US$200 million per year.”
This is one of the few companies that i currently hold that do not pay substantial dividends (like 4 and the other 3 are CA weed companies) . … I also have an emotional attachment to Mexico which can be an investor’s bane, but this news is welcome! Unclear if i will double down and lower my cost basis – hard to rationalize without dividends, but this makes things easier.
Reading thru this transcript gives you all the clues needed to understand their strategy, where they are facing risks / issues and where they are placing their bets for future success. Nothing was opaque, nothing was hand waving and blaming external locus of control. Refreshing.
I own a small slice and will look for lower prices (my entry point is <$12.50) over the next 3-6 months, as after reading this you can see how typical short term investors will sell this until the sweet spot of their strategy takes off once 5G edge devices start propogating … i am a fan.
I predict that the press will continue to connect this to the device declines (e.g., Apple) and the memory folks, (e.g., Micron) … but what really got my attention was this: “That’s following about 24 months of very, very aggressive growth,” he said. “So, suddenly, what’s happened is data center companies such as Amazon, Microsoft, Google … these companies suddenly have enough memory, and they stopped ordering. And that has really been one of the major stumbling blocks for these memory companies.”
So … does this mean that those same Cloud Service Providers (CPS) are slowing their purchases of CPU, Connectivity, Floor Space, etc? That would be HUGE and based on my experience, CPS don’t buy quantities of memory without someplace to install it … for me the key question is this
a) Did the CPS folks build out capacity sufficiently and are now consolidating operations?
b) or the worst case, has demand for data and CPS cloud services actually slowed down – if that is the scenario, “UH OH!”
A recent Seeking Alpha post walked through TD, RY and BNS valuation and investment thesis. I have owned RY and BMO since before 2010 and added BNS recently. My positions are less than they were as part of portfolio-wide rebalancing in early 2018. I use these stocks as one of my 4 pillars long dividend oriented portfolio (income growth).
I have followed Cypress Semi (CY) for some time. Currrently, I am long $14 calls that will probably evaporate valueless. But, CY is doing something that merits pointing out. They are in the midst of what they are calling “Cypress 3.0” – a business transformation that was probably not all voluntary.
In a recent analyst meeting the CEO talks about the strategy and their expected results. His remarks:
(Quote) “And obviously for a meaningful size revenue from that, it’s not going to move the needle in ’18 and ’19, but think about in the ’20 as those things get deployed as that connectivity happens, and when you have a software-as-a-service than that starts to be almost an annuity as you go through it and that will start diversifying our revenue stream while maintaining a big focus on because we need good connectivity on the silicon side in order to enjoy this seamless connection on the software, both of those together are what’s going to enable that power of cross-selling.”
I appreciate the fact that he is willing to talk long term outcomes of the strategy without too much visible anxiety of short term expectations. Transparency of strategy outcomes in longer term timeline is refreshing. I will keep watching and along with MRVL, CY is a top IOT narrative connectivity watch list item.
A conceptual inference struck me the other day as I was considering buying additional Apple stock for my ‘invest and almost never sell’ portfolio – there’s a 5-10 year horizon for this capital. This go around I sold PUT on Apple stock and if it gets assigned, I will be content – there is no FOMO as i can repeat this. But maybe in the inference path I used will be helpful for thinking about weighing investments leveraging competency in machine learning which I believe will be a major investment thesis over my target time horizon – 5-10 yrs.
Here are my assumptions wrt machine learning capabilities
The larger the data set available for the machine learning and correction, the more accurate the machine learning – basically the faster and better it learns and is then able to execute
The cleaner the data set the more efficient, effective and timely the same machine learning
If you buy those, then looking at Apple there a couple of like companies with such a broad and large data set that can be leveraged to provide better and better (i.e., demanded) user services and products, e.g., Apple, Amazon, Google, Microsoft are the most relevant. There are others that may have large data sets but I do not think they have the same breadth and quality, e.g., Facebook, Comcast, ATT, Verizon.
Apple’s data may not be the largest, but i think it is the most controled and hence the cleanest. Microsoft is probably the second cleanest data set but not as broad across device types, usage models and connectivity modes. While Google and Amazon probably have the largest and most diverse data sets, neither have the same control over data quality that Apple and Microsoft have.
Based on this inference thread and my current position in Apple, I will continue to add to my position until the narrative changes or my allocation of Apple exceeds 10% of my managed portfolio. Microsoft will be added to my target list with an upcoming deep dive on 5-10 year investment thesis and entry.
There are two companies that I am currently invested in – I own shares in both companies, and will most likely increase holdings over the next 12 months. Both companies met w/ analysts recently and both had very clear strategy narratives, imho. They were explicit, easy to understand and map to my IOT product experiences.
I looked at some scenarios based on current prices as of Friday, Nov 2 to identify if there is a compelling covered call platform to derive medium risk income. I selected 3 companies that I would consider owning for their long term prospects, but would not cry a river if the position was taken at a profit: HBAN, CY and NOK. Other criteria included: a good dividend, predictable, sufficient option volume and stable pricing over the next 3-6 months (as the market goes so will these).
Here is the simple comparison
HBAN Price at analysis 14.29 Cost basis 500 @ 14.29 ($7145) Possible 1. $14 Call Dec 21, 2018 $0.62 a. Outcome with 500 shares (5 contracts) i. A - Calls sold but not assigned - $310 gross (4.3%) ii. B - Calls sold and assigned - $155 gross (2.1%) 2. $15 Call Dec 21, 2018 $0.25 a. Outcome with 500 shares (5 contracts) i. A - Calls sold but not assigned - $125 gross (1.7%) ii. B - Calls sold and assigned - $480 gross (6.7%) CY Price at analysis 13.51 Cost basis 500 @ 13.51 ($6755) Possible 1. $14 Call Dec 21, 2018 $0.60 a. Outcome with 500 shares (5 contracts) i. A - Calls sold but not assigned - $300 gross (4.4%) ii. B - Calls sold and assigned - $545 gross (8.0%) 2. $15 Call Dec 21, 2018 $0.27 a. Outcome with 500 shares (5 contracts) i. A - Calls sold but not assigned - $135 gross (1.9%) ii. B - Calls sold and assigned - $1424 gross (21.0%) NOK Price at analysis $5.80 Cost basis 1000 @ 5.80 ($5800) Possible 1. $5.00 Call Dec 21, 2018 $0.85 a. Outcome with 1000 shares (10 contracts) i. A - Calls sold but not assigned - $850 gross (14.6%) ii. B - Calls sold and assigned - $0 gross (0.0%) 2. $6.00 Call Dec 21, 2018 $0.17 a. Outcome with 1000 shares (5 contracts) i. A - Calls sold but not assigned - $170 gross (2.9%) ii. B - Calls sold and assigned - $320 gross (5.5%)
The CY purchase and $15 Call with these assumed prices appears the best idea. This idea fits my objectives of increasing greatest cash flow in worst case scenario (i lose the position) as well as the probability of losing the position (lower w/ CY @ $15) … not a recommendation to execute this trade, but a look at how it might be done and how I came up with the idea.
Now … I find the ‘corporate profit orientation’ above that of the customer. Would not a retailer want to provide convenient and customer choice modes of payment? I get it the op costs could be higher with different vendors, but would you rather have happy, loyal customers?
I shorted this recently and still own a couple of Oct 20 Puts
There were three SA articles on UA this week that offer contrary points – way more bullish than I.
Brian Gilmartin’s assessment i found the most valuable – he both sees a longer turn-around timeline as well as possible drop to $18-17 – that’s enough of a short for my swing objective https://seekingalpha.com/article/4190289
There were some interesting points management brought out in the earnings call and this post highlights them well
This could be a decent EOY ’18 swing trade, but i would like an entry point below $15.25 – if the current breakout above RL2 continues — too late (want a short pullback before opening additional positions)
This is a great article (the comments criticize as expected but are still worth reading). For me, i have not even tried to value weed stocks w/ any due diligence / discipline. It’s always been a speculative trading vehicle and focused on the 3 bigs: CGC, APHQF, & ACBFF. Speculative positions that by pure luck made enough profit to sit on very small positions in all w/ earned capital. If they make it big, great. If they crash, oh well … it was fun.
While the exercise of valuing those companies is something people are going to do and it will help us who will not … i think 2019 is the earliest we get anything to make investment decisions on … the big money (tobacco and alcohol have yet to really show their hands)
OHI is in trouble both, i believe, as a business and as a stock. My total position is small relative to my historical holdings at <350 shares. Two posts in the last 24-48 hours suggest that i am not the only one with this problem child.
Both of these articles are well researched and detailed about OHI and the market segment challenges and opportunities. I have NOT changed my mind, however. LTC will remain my REIT in this segment. WRT OHI, i am just trying to figure out the right exit … and how much risk i will assume to minimize the loss to the exit. The political, labor and ‘old people preferences’ headwinds even out into 2020-25 are just too strong in my opinion to carry OHI risk / reward.