Dear Diary,
Yesterday, I sold WINS at $6.15 a share, an 11% gain over a 47 day holding period (85.43% annualized), from a $5.52 a share purchase price.
I opened Arbitrage #12 with more shares of ROH, bringing my previous purchase price down from $69.64 a share on 10-16-08 to $61.76 on 12-29-08.
I also bought shares on Waters Corp. (WAT) yesterday at $35.70 (10 times expected 2009 earnings) for a long position on a Consumer Monopolistic arrangement. This means that I hope never to sell this position because of its long history of excellent economics (i. e. upward trends in earnings, share holder equity, double digit return on total capital, etc.). The expected earnings per share for 2009 are $3.70 with a widening net profit margin. All calculations do not include a minimal brokerage fee.
Gene
Wednesday, December 31, 2008
Thursday, December 18, 2008
Closed FDRY
Dear Diary,
After a 17 day holding period, beginning on December 1, 2008 and ending today, December 18th, I closed the FDRY Cash on Sale Arbitrage for a 9% actual gain or a 193.24% annualized gain. The average sale price was $16.65, a slight premium to the expected merger price of $16.50. The deal was to close naturally by 12-31-08. My average purchase price was $15.23 a share. All calculations are without minimal brokerage fees being included.
I then took these proceeds and brought down my average purchase price of HUN to $4.68 a share from $8.78 a share, with an average buy price of $3.46 a share.
The retail sector continues to slash prices to move Christmas sales, beating down earnings projections for one retailer after another, so I'm holding off until maybe January or February before getting too much more committed to American Eagle Outfitters (AEO), etc. There are several great retailers available under the Holy Grail criteria, with widening Net Profit Margins, but I'm finding that it is common for a widening Net Profit Margin to turn into a narrowing Net Profit Margin without much fanfare in a bear market recession. Net Quick Assets should be the focus for now, except for something giant like Johnson & Johnson (JNJ), I'm thinking.
Gene
After a 17 day holding period, beginning on December 1, 2008 and ending today, December 18th, I closed the FDRY Cash on Sale Arbitrage for a 9% actual gain or a 193.24% annualized gain. The average sale price was $16.65, a slight premium to the expected merger price of $16.50. The deal was to close naturally by 12-31-08. My average purchase price was $15.23 a share. All calculations are without minimal brokerage fees being included.
I then took these proceeds and brought down my average purchase price of HUN to $4.68 a share from $8.78 a share, with an average buy price of $3.46 a share.
The retail sector continues to slash prices to move Christmas sales, beating down earnings projections for one retailer after another, so I'm holding off until maybe January or February before getting too much more committed to American Eagle Outfitters (AEO), etc. There are several great retailers available under the Holy Grail criteria, with widening Net Profit Margins, but I'm finding that it is common for a widening Net Profit Margin to turn into a narrowing Net Profit Margin without much fanfare in a bear market recession. Net Quick Assets should be the focus for now, except for something giant like Johnson & Johnson (JNJ), I'm thinking.
Gene
Monday, December 15, 2008
HUN Ends Effort to Be Bought
Dear Diary,
Today, Huntsman's (HUN) ended its effort to be bought out by an Apollo subsidiary for $28 a share, and the stock is now trading at about $3 a share, down from the roughly $6 a share of recent days. The Current Ratio is listed at 1.36, below my desirable numbers, but HUN is to receive a $1 Billion amount for termination costs, so I expect HUN will be ok. I plan to hang on to get my $8.78 purchase price back, and it may be that another suitor is in the wings wanting to buy. (Mr. Buffett did warn us to stay away from these 100% deals.)
I just picked up shares of ALO in Arbitrage #10 for $34.76 a share with an expected closing date of December 31, 2008. This is a projected 6% gain over a 16 day holding period, based on a stated sale price of $37 a share. This also represents a 136.88% annualized gain.
It makes one wonder, with all the banks Mr. Buffett is buying (i. e. Wells Fargo) and attempting to transform into banks (i. e. American Express, Goldman Sachs), whether he is attempting to take over the Federal Reserve Banks; thus, the entire system.
Gene
Today, Huntsman's (HUN) ended its effort to be bought out by an Apollo subsidiary for $28 a share, and the stock is now trading at about $3 a share, down from the roughly $6 a share of recent days. The Current Ratio is listed at 1.36, below my desirable numbers, but HUN is to receive a $1 Billion amount for termination costs, so I expect HUN will be ok. I plan to hang on to get my $8.78 purchase price back, and it may be that another suitor is in the wings wanting to buy. (Mr. Buffett did warn us to stay away from these 100% deals.)
I just picked up shares of ALO in Arbitrage #10 for $34.76 a share with an expected closing date of December 31, 2008. This is a projected 6% gain over a 16 day holding period, based on a stated sale price of $37 a share. This also represents a 136.88% annualized gain.
It makes one wonder, with all the banks Mr. Buffett is buying (i. e. Wells Fargo) and attempting to transform into banks (i. e. American Express, Goldman Sachs), whether he is attempting to take over the Federal Reserve Banks; thus, the entire system.
Gene
Monday, December 1, 2008
Arbitrage # 9
Dear Diary,
I just picked up shares of FDRY at $15.23 a share, providing a projected 8% gain over the remaining 30 days of 2008, as the deal is due to close in the "4th quarter." I assume this "4th quarter" is December, 2008. The closing price is stated as $16.50.
Gene
I just picked up shares of FDRY at $15.23 a share, providing a projected 8% gain over the remaining 30 days of 2008, as the deal is due to close in the "4th quarter." I assume this "4th quarter" is December, 2008. The closing price is stated as $16.50.
Gene
Tuesday, November 25, 2008
Closed PHLY Deal
Dear Diary,
I just sold out the PHLY arbitrage for a 5% gain. This represents a 32.59% annualized gain over a 56 day holding period (9-30-08 thru 11-25-08). The expected closing price is $61.50 on December 1, 2008, so I went ahead a sold out at $61.21 a share today (6 days early) to get the cash ready for another deal today or tomorrow.
Gene
I just sold out the PHLY arbitrage for a 5% gain. This represents a 32.59% annualized gain over a 56 day holding period (9-30-08 thru 11-25-08). The expected closing price is $61.50 on December 1, 2008, so I went ahead a sold out at $61.21 a share today (6 days early) to get the cash ready for another deal today or tomorrow.
Gene
Saturday, November 22, 2008
CROX Hammered
Dear Diary,
CROX, my major position over the past many months, just took a $148 million hit on earnings this quarter. Net Quick Assets was listed at $0.41 per share before the earnings announcement, so I'll be buying more if the stock drops from its current $1.04 a share price to get my average purchase price down below the current $8.31 a share to something closer to the Net Quick Asset figure.
Johnson & Johnson (JNJ) is getting into buying range, with a p/e ratio of 12 now and a widening Net Profit Margin. All the "Holy Grail" situations I'm following just refuse to drop to a p/e ratio of 10, so I can buy them. This leaves me several buys into Net Quick Assets, as the vast majority of the stocks I follow have narrowing Net Profit Margins right now.
I read an economist who studies bear markets, and he believes the bottom of this one we're in is about 6,500 on the DOW Jones Industrial Average and should last another 15 months. I don't guess bottoms of markets, but bottoms of stock prices are supposed to be something in proximity to Net Quick Assets. What I own that doesn't go belly up should provide 300% to 1000% gains over the next few years and should make up for any losses.
Gene
CROX, my major position over the past many months, just took a $148 million hit on earnings this quarter. Net Quick Assets was listed at $0.41 per share before the earnings announcement, so I'll be buying more if the stock drops from its current $1.04 a share price to get my average purchase price down below the current $8.31 a share to something closer to the Net Quick Asset figure.
Johnson & Johnson (JNJ) is getting into buying range, with a p/e ratio of 12 now and a widening Net Profit Margin. All the "Holy Grail" situations I'm following just refuse to drop to a p/e ratio of 10, so I can buy them. This leaves me several buys into Net Quick Assets, as the vast majority of the stocks I follow have narrowing Net Profit Margins right now.
I read an economist who studies bear markets, and he believes the bottom of this one we're in is about 6,500 on the DOW Jones Industrial Average and should last another 15 months. I don't guess bottoms of markets, but bottoms of stock prices are supposed to be something in proximity to Net Quick Assets. What I own that doesn't go belly up should provide 300% to 1000% gains over the next few years and should make up for any losses.
Gene
Wednesday, November 19, 2008
BUD Deal Closes
Dear Diary,
The BUD arbitrage just closed at the stated sale price of $70 a share over a 33 day holding period, and represents a 17% actual gain before minimal expenses, or an annualized gain of 188.03%.
A dollar invested in DRS on 9-30-08 is now up 22.43%, a 190.39% annualized gain, based on the reinvestment into BUD back on 10-16-08 of that same dollar. All calculations do not include minimal brokerage fees.
With the proceeds of the BUD deal, I brought down my purchase price on the HUN deal to $8.78 a share, from the original purchase price on 8-26-08 of $13.52. This deal still has a real chance of getting done and is still stated to close at $28 a share.
Gene
The BUD arbitrage just closed at the stated sale price of $70 a share over a 33 day holding period, and represents a 17% actual gain before minimal expenses, or an annualized gain of 188.03%.
A dollar invested in DRS on 9-30-08 is now up 22.43%, a 190.39% annualized gain, based on the reinvestment into BUD back on 10-16-08 of that same dollar. All calculations do not include minimal brokerage fees.
With the proceeds of the BUD deal, I brought down my purchase price on the HUN deal to $8.78 a share, from the original purchase price on 8-26-08 of $13.52. This deal still has a real chance of getting done and is still stated to close at $28 a share.
Gene
Wednesday, November 12, 2008
Arbitrage # 7
Dear Diary,
I just picked up my 7th Cash on Sale Arbitrage. WINS is to be bought out for $6.25 a share in late 2008 to early 2009, a 13% gain over the purchase price of $5.52 a share, today.
I've noticed that the exact date of a proposed sale often does not turn out to be precise, so I'm doing this deal on more general information, concerning the closing date.
Gene
I just picked up my 7th Cash on Sale Arbitrage. WINS is to be bought out for $6.25 a share in late 2008 to early 2009, a 13% gain over the purchase price of $5.52 a share, today.
I've noticed that the exact date of a proposed sale often does not turn out to be precise, so I'm doing this deal on more general information, concerning the closing date.
Gene
Sunday, November 9, 2008
AHG
Dear Diary,
The AHG money showed up in my brokerage account 2 days after the stated closing date, just as expected.
HUN has seen the banks try to walk away from the deal they had to sell out for $28 per share, so a law suite is going forward against the banks by the buyer, Apollo Group (Hexon). Meanwhile, HUN is negotiating to try to get the closing price down to about $25.25 per share after the judge in the case ruled that the deal must go through as planned. I like the internal economics of HUN well enough to own it at $8 per share, like the "cigar butt" that Mr. Buffett often references. In a Graham styled "cigar butt" deal, you are simply buying a company so cheap that losing money becomes hard under any circumstances. I'm looking at book value here of $8.50 a share in "Value Line."
Gene
The AHG money showed up in my brokerage account 2 days after the stated closing date, just as expected.
HUN has seen the banks try to walk away from the deal they had to sell out for $28 per share, so a law suite is going forward against the banks by the buyer, Apollo Group (Hexon). Meanwhile, HUN is negotiating to try to get the closing price down to about $25.25 per share after the judge in the case ruled that the deal must go through as planned. I like the internal economics of HUN well enough to own it at $8 per share, like the "cigar butt" that Mr. Buffett often references. In a Graham styled "cigar butt" deal, you are simply buying a company so cheap that losing money becomes hard under any circumstances. I'm looking at book value here of $8.50 a share in "Value Line."
Gene
Tuesday, October 28, 2008
Buying at Net Quick Assets
Dear Diary,
I just bought shares of General Electric (GE) common at $18.7998, based on a Net Quick Asset calculation of $23.57 in my "Value Lines."
Jones Soda (JSDA) was just purchased for $0.81 per share with a Net Quick Asset calculation of $.76 per share.
Finally, Heely's Inc. (HLYS), a shoe company, was just purchased for $3.28 per share, based on a Net Quick Asset calculation of $3.76.
AHG is expected to closed today on its arbitrage sale for $21. It is currently trading for $20.99 a hour before the market close, but I want to save the commission and just let cash switch into my account for the stock naturally.
Gene
I just bought shares of General Electric (GE) common at $18.7998, based on a Net Quick Asset calculation of $23.57 in my "Value Lines."
Jones Soda (JSDA) was just purchased for $0.81 per share with a Net Quick Asset calculation of $.76 per share.
Finally, Heely's Inc. (HLYS), a shoe company, was just purchased for $3.28 per share, based on a Net Quick Asset calculation of $3.76.
AHG is expected to closed today on its arbitrage sale for $21. It is currently trading for $20.99 a hour before the market close, but I want to save the commission and just let cash switch into my account for the stock naturally.
Gene
Thursday, October 16, 2008
Arbitrage #5 and #6
Dear Diary,
In Arbitrage #5, I just bought shares of BUD for $59.89 per share with an expectation of a close on the Imbev deal by 12-31-08 for $70 a share, a 17% gain over 76 days, or an annualized gain of 81.64%.
I also picked up in Arbitrage #6 shares of ROH for $69.64 with a expectation of close by 1-1-09 for $78 a share, a 12% gain over a 77 day holding period, for an annualized gain of 56.88%.
Gene
In Arbitrage #5, I just bought shares of BUD for $59.89 per share with an expectation of a close on the Imbev deal by 12-31-08 for $70 a share, a 17% gain over 76 days, or an annualized gain of 81.64%.
I also picked up in Arbitrage #6 shares of ROH for $69.64 with a expectation of close by 1-1-09 for $78 a share, a 12% gain over a 77 day holding period, for an annualized gain of 56.88%.
Gene
Wednesday, October 15, 2008
Sold First Arbitrage
Dear Diary,
In probably the worst market conditions in the past 80 years, I sold DRS just now for $80.0305 per share, a gain of $3.5515 or a 4.64% gain over a 15 day holding period. This represents a 113.15% annualized gain.
Gene
In probably the worst market conditions in the past 80 years, I sold DRS just now for $80.0305 per share, a gain of $3.5515 or a 4.64% gain over a 15 day holding period. This represents a 113.15% annualized gain.
Gene
Tuesday, October 7, 2008
Market Jittery/ Buffett Buying
Dear Diary,
The market dropped 800 points at one point yesterday, and it closed under 10,000 for the first time in four years, say the talking heads.
Mr. Buffett made a $3 billion infusion into General Electric (GE) in the $22 per share range. This stock is in my universe of stocks I follow, and it clear that Buffett is buying in relationship to Net Quick Assets (Working Capital less Inventories and Medium Term Holdings on a Balance Sheet). This calculation is very close to Working Capital per share, so I generally make no distinction. GE shows $27.08 in Working Capital and about $23 in Net Quick Assets.
There are 6 companies selling in relationship to Working Capital in my tracking universe of stocks.
My Cash on Sale Arbitrage holds 4 positions, presently. AHG was due to close on 9-30-08 and HUN was due to close on October 2, but neither has done so to date. Expectations are still for a close.
That "Kiplinger's" article was a writer attempting to extrapolate Buffett's mind onto CROX back when it was trading say at $75 per share. It was too highly priced with a growth rate that could not have kept pace with the price. Today, CROX trades at less than Working Capital, so I'm buying when I have cash available.
A friend bought me a copy of, "The Snowball," Mr. Buffett's biography. The main thing we learn for our purposes is that arbitrage is a big part of his investment life.
Gene
The market dropped 800 points at one point yesterday, and it closed under 10,000 for the first time in four years, say the talking heads.
Mr. Buffett made a $3 billion infusion into General Electric (GE) in the $22 per share range. This stock is in my universe of stocks I follow, and it clear that Buffett is buying in relationship to Net Quick Assets (Working Capital less Inventories and Medium Term Holdings on a Balance Sheet). This calculation is very close to Working Capital per share, so I generally make no distinction. GE shows $27.08 in Working Capital and about $23 in Net Quick Assets.
There are 6 companies selling in relationship to Working Capital in my tracking universe of stocks.
My Cash on Sale Arbitrage holds 4 positions, presently. AHG was due to close on 9-30-08 and HUN was due to close on October 2, but neither has done so to date. Expectations are still for a close.
That "Kiplinger's" article was a writer attempting to extrapolate Buffett's mind onto CROX back when it was trading say at $75 per share. It was too highly priced with a growth rate that could not have kept pace with the price. Today, CROX trades at less than Working Capital, so I'm buying when I have cash available.
A friend bought me a copy of, "The Snowball," Mr. Buffett's biography. The main thing we learn for our purposes is that arbitrage is a big part of his investment life.
Gene
Tuesday, September 30, 2008
Arbitrage #3 and #4 Etc.
Dear Diary,
I just picked up DRS for $76.4795, a 6% discount to the $81 per share sale price, due to close on 11-15-08. This is an annualized return of 48.67% of my #3 Cash on Sale Arbitrage.
I also just bought shares of PHLY for $58.50 a share, a 5% discount from the anticipated $61.50 sale price on 11-15-08. This represents an annualized return of 40.56% on my #4 deal.
My other two deals are dragging along, but it does appear they will both close to the prices anticipated. A court ruled today that the buyer of HUN must pay full price, not $5.99 per share, as they attempted to do after original financing failed. This should get me $28 per share once the deal closes.
The Dow Jones Industrials closed down 777 points yesterday, the biggest one day decline since 9-11-2001. This is due to the Marxist banking system we have in place that expands and contracts credit in the United States. In my view, we need no bail out for the banking and finance sector. Value Investors will buy up these companies and run them more efficiently than the speculators who ran them into the ground. A move away from Marxist Economics will keep this same problem from happening to America in a few years when its debt gets too top heavy.
It appears that Mr. Buffett was/ is an arbitrageur who does value investing on companies that show promise of long term growth after purchase.
Also, I'm informed that "Kiplinger's" quoted Mr. Buffet on liking CROX right now. Great minds think alike, I see.
Gene
I just picked up DRS for $76.4795, a 6% discount to the $81 per share sale price, due to close on 11-15-08. This is an annualized return of 48.67% of my #3 Cash on Sale Arbitrage.
I also just bought shares of PHLY for $58.50 a share, a 5% discount from the anticipated $61.50 sale price on 11-15-08. This represents an annualized return of 40.56% on my #4 deal.
My other two deals are dragging along, but it does appear they will both close to the prices anticipated. A court ruled today that the buyer of HUN must pay full price, not $5.99 per share, as they attempted to do after original financing failed. This should get me $28 per share once the deal closes.
The Dow Jones Industrials closed down 777 points yesterday, the biggest one day decline since 9-11-2001. This is due to the Marxist banking system we have in place that expands and contracts credit in the United States. In my view, we need no bail out for the banking and finance sector. Value Investors will buy up these companies and run them more efficiently than the speculators who ran them into the ground. A move away from Marxist Economics will keep this same problem from happening to America in a few years when its debt gets too top heavy.
It appears that Mr. Buffett was/ is an arbitrageur who does value investing on companies that show promise of long term growth after purchase.
Also, I'm informed that "Kiplinger's" quoted Mr. Buffet on liking CROX right now. Great minds think alike, I see.
Gene
Monday, September 8, 2008
More CROX
Dear Diary,
I bought more CROX today for $4.4695 per share, bringing my average purchase price down to $8.31 per share. This is based on the Working Capital being $3.57 per share and the probability of decent growth in the years ahead. I noticed that the Gates Foundation bought 1 million shares of CROX, as well.
Gene
I bought more CROX today for $4.4695 per share, bringing my average purchase price down to $8.31 per share. This is based on the Working Capital being $3.57 per share and the probability of decent growth in the years ahead. I noticed that the Gates Foundation bought 1 million shares of CROX, as well.
Gene
Monday, August 25, 2008
Another Arbitrage
Dear Diary,
I just picked up shares of HUN for $13.52 per share, plus a minimal brokerage fee. The sale is to close "October 2" and represents a 107% gain over 6 weeks, based on my math. The close is to be at $28.00 cash. Buffett says that these 100% deals don't always get closed because of financing, etc., but some do work out. Broad diversification in the field is the key to the most stable returns Buffett has ever known.
CROX continues to sit at about $4 per share, but "Value Line" indicates it thinks the stock has $16 per share in it over the coming few years. I agree. This is a situation where the company is sitting in the economic downturn and opening a new production facility, the latter being Buffett's favorite dynamic and the former being probably his second favorite dynamic. My average purchase price is $8.98 per share.
American Eagle Outfitters (AEO) is also sitting still at about $14 per share or 8 times earnings. It's all about the economic downturn.
Out of the 75 stocks in my long term non-arbitrage investment universe, only 16 have a widening Net Profit Margin. HANS is on target to hit $40 per share or 20 times earnings within the next several months.
Gene
I just picked up shares of HUN for $13.52 per share, plus a minimal brokerage fee. The sale is to close "October 2" and represents a 107% gain over 6 weeks, based on my math. The close is to be at $28.00 cash. Buffett says that these 100% deals don't always get closed because of financing, etc., but some do work out. Broad diversification in the field is the key to the most stable returns Buffett has ever known.
CROX continues to sit at about $4 per share, but "Value Line" indicates it thinks the stock has $16 per share in it over the coming few years. I agree. This is a situation where the company is sitting in the economic downturn and opening a new production facility, the latter being Buffett's favorite dynamic and the former being probably his second favorite dynamic. My average purchase price is $8.98 per share.
American Eagle Outfitters (AEO) is also sitting still at about $14 per share or 8 times earnings. It's all about the economic downturn.
Out of the 75 stocks in my long term non-arbitrage investment universe, only 16 have a widening Net Profit Margin. HANS is on target to hit $40 per share or 20 times earnings within the next several months.
Gene
Sunday, August 10, 2008
My 1st Arbitrage
Dear Diary,
I bought shares of AHG for $19.44 per share on August 5, 2008 for sale by September 30, 2008 at $21, an 8.01% gain in 61 days, or a 47.87% annualized gain. This is my first arbitrage ever.
HANS has been meeting all the "Holy Grail" criterion, so I should see a 100% gain from its recent selling price near $20 per share to $40 within the next 8.14 months on average. It is currently selling at $23 and change after a 30% gain in earnings announced August 8th.
Gene
I bought shares of AHG for $19.44 per share on August 5, 2008 for sale by September 30, 2008 at $21, an 8.01% gain in 61 days, or a 47.87% annualized gain. This is my first arbitrage ever.
HANS has been meeting all the "Holy Grail" criterion, so I should see a 100% gain from its recent selling price near $20 per share to $40 within the next 8.14 months on average. It is currently selling at $23 and change after a 30% gain in earnings announced August 8th.
Gene
Friday, July 25, 2008
CROX DOWN!
Deary Diary,
I just bought CROX at $4.99 per share, about $0.07 per share below listed Working Capital in "Value Line." My previous average purchase price was $9.77 per share. I'm loving this.
CROX announced a softening international market for its shoes and earnings guidance downward. If CROX were not in the shoe business, I'd be worried, but it satisfies a basic human need with no debt. Someone will buy the company for more than Working Capital, if all else goes wrong. We just don't want the CFO to suddenly resign without comment or an SEC investigation about accounting irregularities; otherwise, we're great!
Gene
I just bought CROX at $4.99 per share, about $0.07 per share below listed Working Capital in "Value Line." My previous average purchase price was $9.77 per share. I'm loving this.
CROX announced a softening international market for its shoes and earnings guidance downward. If CROX were not in the shoe business, I'd be worried, but it satisfies a basic human need with no debt. Someone will buy the company for more than Working Capital, if all else goes wrong. We just don't want the CFO to suddenly resign without comment or an SEC investigation about accounting irregularities; otherwise, we're great!
Gene
Wednesday, July 16, 2008
Arbitrage
Dear Diary,
Mr. Buffett's secret weapon in a bear market is "arbitrage." The specific kind is known as a "cash on sale or liquidation" or "workout." I've been watching the Anheuser Busch (BUD) deal for $70 a share in cash, due to be done 12-31-08, along with the AHG deal for $21 a share, due to be done 09-30-08. I'll be reading through "The New Buffettology" to get specifics on how to handle the deal. This is my first arbitrage, only because I've not found a singe company in a year with an expanding Net Profit Margin with my "Holy Grail" criterion.
Tempur-Pedic (TPX) appears to carry over 8 times its Net Profit in Long term Debt, but it is trading at just over 2 times its Working Capital of $2.97 per share. If it drops more, I'll take a nibble at it, I think, as the Long term Debt Ratio issue should resolve itself when the recession ends and earnings pick up.
Gene
Mr. Buffett's secret weapon in a bear market is "arbitrage." The specific kind is known as a "cash on sale or liquidation" or "workout." I've been watching the Anheuser Busch (BUD) deal for $70 a share in cash, due to be done 12-31-08, along with the AHG deal for $21 a share, due to be done 09-30-08. I'll be reading through "The New Buffettology" to get specifics on how to handle the deal. This is my first arbitrage, only because I've not found a singe company in a year with an expanding Net Profit Margin with my "Holy Grail" criterion.
Tempur-Pedic (TPX) appears to carry over 8 times its Net Profit in Long term Debt, but it is trading at just over 2 times its Working Capital of $2.97 per share. If it drops more, I'll take a nibble at it, I think, as the Long term Debt Ratio issue should resolve itself when the recession ends and earnings pick up.
Gene
Wednesday, July 9, 2008
CROX Near Working Capital
Dear Diary,
I just picked up more Crocs, Inc. (CROX) at $8.15 per share. My read of Mr. Buffett in "The Money Masters," indicates that he thinks the greatest business in the world should be able to be purchased at or below their Working Capital in a recession/ bear market. Crox holds about $5.06 of Working Capital per share, according to my read of "Value Line."
Tempur-Pedic International (TPX) is trading at a p/e ratio of 7, so I have their annual report on the way to me for next week's reading. They indicate $210 million in Working Capital with outstanding shares of $74 million for 2008.
My CPA informs me that the endowment has been approved by the State of Texas.
Gene
I just picked up more Crocs, Inc. (CROX) at $8.15 per share. My read of Mr. Buffett in "The Money Masters," indicates that he thinks the greatest business in the world should be able to be purchased at or below their Working Capital in a recession/ bear market. Crox holds about $5.06 of Working Capital per share, according to my read of "Value Line."
Tempur-Pedic International (TPX) is trading at a p/e ratio of 7, so I have their annual report on the way to me for next week's reading. They indicate $210 million in Working Capital with outstanding shares of $74 million for 2008.
My CPA informs me that the endowment has been approved by the State of Texas.
Gene
Tuesday, July 1, 2008
How to Know You're A Value Investor
Dear Diary,
You know you are a Value Investor when you get excited in a bear market, like we are experiencing now!
The DOW is down over 20 % since last June, and I'm lovin' it.
I bought up some Coach, Inc. (COH) yesterday at $29 and change, plus a minimal brokerage fee.
American Eagle Outfitters (AEO) is getting hammered down to $13 per share, due to the loss of top executives that resulted from a 9% loss in sales last quarter. This could be serious, but I think the brand is powerful enough to handle the upset. This is the kind of situation that made Mr. Buffett rich. It appears to me to be a natural downturn in the business between cycles during a recession, and the executives are just reacting to personal embarrassment, as they interpret it.
Croc.'s Inc. (CROX) continues downward to a p/e ratio of 5.3 or $7.50 a share, I read. I'll buy more of this to bring my average buy price below $10 per share.
Later,
Gene Chapman
You know you are a Value Investor when you get excited in a bear market, like we are experiencing now!
The DOW is down over 20 % since last June, and I'm lovin' it.
I bought up some Coach, Inc. (COH) yesterday at $29 and change, plus a minimal brokerage fee.
American Eagle Outfitters (AEO) is getting hammered down to $13 per share, due to the loss of top executives that resulted from a 9% loss in sales last quarter. This could be serious, but I think the brand is powerful enough to handle the upset. This is the kind of situation that made Mr. Buffett rich. It appears to me to be a natural downturn in the business between cycles during a recession, and the executives are just reacting to personal embarrassment, as they interpret it.
Croc.'s Inc. (CROX) continues downward to a p/e ratio of 5.3 or $7.50 a share, I read. I'll buy more of this to bring my average buy price below $10 per share.
Later,
Gene Chapman
Monday, June 16, 2008
No ANF, More CROX
Dear Diary,
After a week of studying Abercrombie & Fitch (ANF), I decided to pass on a purchase this morning at $70 per share, or about 11.5 times expected earnings per share over the next 12 months ($6.05). I don't like the 1.76 Current Ratio.
In a recession, great stocks can sell at 6 to 10 times earnings, so I've been more conservative than buying at Relative Value to the 30 Year Treasury Bond recently. Plus, I want to get back into making the money from the Holy Grail criteria that I've already discussed. All I see in the ballpark right now is American Eagle Outfitters (AEO) and Croc's Inc. (CROX), so I bought CROX this morning to catch that position up with AEO.
I will say that I was in Wal-Mart yesterday and saw some "clogs" for sale that look a good deal like Crocs, without the little jewelery, so I don't know if CROX has a vast future before it, but I do see a recovery from its current 6 times expected earnings per share.
My CPA and I are working up the paperwork on an endowment to fund projects dear to my heart. I really have no great need for personal wealth, but I do feel we need a vehicle to do our fellow man a good turn. It makes us work harder. It will fund medication for leper cures, cancer treatment, purchasing slaves their freedom in Africa, etc.
Gene
After a week of studying Abercrombie & Fitch (ANF), I decided to pass on a purchase this morning at $70 per share, or about 11.5 times expected earnings per share over the next 12 months ($6.05). I don't like the 1.76 Current Ratio.
In a recession, great stocks can sell at 6 to 10 times earnings, so I've been more conservative than buying at Relative Value to the 30 Year Treasury Bond recently. Plus, I want to get back into making the money from the Holy Grail criteria that I've already discussed. All I see in the ballpark right now is American Eagle Outfitters (AEO) and Croc's Inc. (CROX), so I bought CROX this morning to catch that position up with AEO.
I will say that I was in Wal-Mart yesterday and saw some "clogs" for sale that look a good deal like Crocs, without the little jewelery, so I don't know if CROX has a vast future before it, but I do see a recovery from its current 6 times expected earnings per share.
My CPA and I are working up the paperwork on an endowment to fund projects dear to my heart. I really have no great need for personal wealth, but I do feel we need a vehicle to do our fellow man a good turn. It makes us work harder. It will fund medication for leper cures, cancer treatment, purchasing slaves their freedom in Africa, etc.
Gene
Monday, June 9, 2008
More CROX
Dear Diary,
I've been buying up more CROX, as the price stays below 6 times expected earning per share for 2008.
I also have a book on order to study arbitrage.
Gene
I've been buying up more CROX, as the price stays below 6 times expected earning per share for 2008.
I also have a book on order to study arbitrage.
Gene
Saturday, May 10, 2008
CROX Purchase Up Big in 24 Hours
Dear Diary,
Well, I was saying to myself the other day after buying Crocs, Inc. (CROX), "If this deal doesn't make me money, I should just throw in my stock market towel and go buy rent houses." I was pleasantly surprised the next afternoon to hear that the purchase at $9.96 went to $11.40.
Earnings are expected to be $1.70 to $1.80 per share this coming year, making the stock worth $17 per share on the lowest end and as reasonably as high as $36 per share on the top end.
Five deals like this a year, and you're rich.
Gene
Well, I was saying to myself the other day after buying Crocs, Inc. (CROX), "If this deal doesn't make me money, I should just throw in my stock market towel and go buy rent houses." I was pleasantly surprised the next afternoon to hear that the purchase at $9.96 went to $11.40.
Earnings are expected to be $1.70 to $1.80 per share this coming year, making the stock worth $17 per share on the lowest end and as reasonably as high as $36 per share on the top end.
Five deals like this a year, and you're rich.
Gene
Wednesday, May 7, 2008
Diversification
Dear Diary,
I just sold out of about 70% of my Harley Davidson (HOG) position at $38.57, due to a ratio of Total Assets to Shareholder Equity that presents more than $2 in TA for every $1 in SHE and a ratio of less than $2 in Current Assets to every $1 in Current Liabilities. I do continue to hold some HOG for a possible recovery. I did take about a $9 per share loss on those shares sold, but I see other opportunities for diversification in my old "Holy Grail" criteria that I developed 10 years ago.
I also removed Abercrombie & Fitch (ANF) from "My 20 Favorites" for having a Current Ratio problem (i.e. Current Assets to Current Liabilities).
I made a buy of Crocs, Inc. (CROX) at $9.96 per share with a p/e ratio of 5, plus a minimal brokerage fee.
I also bought Coach (COH) at $35.33 and Kinetic Concepts (KCI) at $38.31, plus a minimal brokerage fee.
Gene
I just sold out of about 70% of my Harley Davidson (HOG) position at $38.57, due to a ratio of Total Assets to Shareholder Equity that presents more than $2 in TA for every $1 in SHE and a ratio of less than $2 in Current Assets to every $1 in Current Liabilities. I do continue to hold some HOG for a possible recovery. I did take about a $9 per share loss on those shares sold, but I see other opportunities for diversification in my old "Holy Grail" criteria that I developed 10 years ago.
I also removed Abercrombie & Fitch (ANF) from "My 20 Favorites" for having a Current Ratio problem (i.e. Current Assets to Current Liabilities).
I made a buy of Crocs, Inc. (CROX) at $9.96 per share with a p/e ratio of 5, plus a minimal brokerage fee.
I also bought Coach (COH) at $35.33 and Kinetic Concepts (KCI) at $38.31, plus a minimal brokerage fee.
Gene
Wednesday, April 30, 2008
Buying HANS
Dear Diary,
I just bought some Hansen Natural (HANS) at $35.97 per share, plus a minimal commission.
Gene
I just bought some Hansen Natural (HANS) at $35.97 per share, plus a minimal commission.
Gene
Tuesday, April 22, 2008
"My 20 Favorites"
Dear Diary,
Having just received and read the Harley Davidson (HOG) 10-K report, I see that HOG plans to ship fewer bikes in 2008, worldwide, with more sales then product to sell. This is expected to make net diluted earnings rise 4% to 7% for the year, while the rest of the industry is now down 14% for the year. With the only negative a current ratio of 1.7 presently, I'll be buying HOG in time ahead.
D. J. Hirschfeld, Chairman of Buckle, Inc. (BKE) sold 100,000 shares of his company, "Value Line" reports. With 12.6 million shares held by Mr. Hirschfeld, I see no big deal going on here.
Relative Values based on the most recent 30 Year Treasury Bond Yield of 4.3%:
Name/ Symbol/ Expected '08 EPS/ Relative Value/ Current Price
1) Dental Supply/ XRAY/ $1.87/ $43.49/ $36.90
2) Stryker Corp./ SYK/ $2.90/ $67.44/ $63.83
3) Strayer Education/ STRA/ $5.00/ $116.28/ $169.97
4) Abercrombie & F/ ANF/ $6.00/ $139.53/ $70.77
5) Harley Davidson/ HOG/ $3.70/ $86.05/ $37.01
6) Medtronic/ MDT/ $3.00/ $69.77/ $49.08
7) Amer. Eagle O./ AEO/ $2.00/ $46.51/ $15.96
8) Hansen Natural/ HANS/ $2.10/ $48.84/ $32.37
9) Techne Corp./ TECH/ $2.45/ $56.98/ $65.24
10) Deckers Outdoor/ DECK/ $6.00/ $139.53/ $116.53
11) Chattem, Inc./CHTT/$3.90/$90.70/$65.78
12) Immucor, Inc./ BLUD/ $1.15/ $26.74/ $26.11
13) Kinetic Concepts/KCI/ $3.85/ $89.53/ $39.92
14) Zimmer Holdings/ ZMH/ $4.50/ $104.65/ $76.90
15) Amgen/AMGN/$3.60/$83.72/$42.27
16) Global Payments/GPN/$1.90/$44.19/$40.87
17) American Ecology Corp./ECOL/ $1.20/ $27.91/ $26.62
18) Tiffany & Co./ TIF/ $2.60/ $60.47/ $40.74
19) Buckle, Inc./ BKE/ $2.50/ $58.14/ $47.44
20) Coach, Inc./ COH/ $2.05/ $47.67/ $31.30
Gene
Having just received and read the Harley Davidson (HOG) 10-K report, I see that HOG plans to ship fewer bikes in 2008, worldwide, with more sales then product to sell. This is expected to make net diluted earnings rise 4% to 7% for the year, while the rest of the industry is now down 14% for the year. With the only negative a current ratio of 1.7 presently, I'll be buying HOG in time ahead.
D. J. Hirschfeld, Chairman of Buckle, Inc. (BKE) sold 100,000 shares of his company, "Value Line" reports. With 12.6 million shares held by Mr. Hirschfeld, I see no big deal going on here.
Relative Values based on the most recent 30 Year Treasury Bond Yield of 4.3%:
Name/ Symbol/ Expected '08 EPS/ Relative Value/ Current Price
1) Dental Supply/ XRAY/ $1.87/ $43.49/ $36.90
2) Stryker Corp./ SYK/ $2.90/ $67.44/ $63.83
3) Strayer Education/ STRA/ $5.00/ $116.28/ $169.97
4) Abercrombie & F/ ANF/ $6.00/ $139.53/ $70.77
5) Harley Davidson/ HOG/ $3.70/ $86.05/ $37.01
6) Medtronic/ MDT/ $3.00/ $69.77/ $49.08
7) Amer. Eagle O./ AEO/ $2.00/ $46.51/ $15.96
8) Hansen Natural/ HANS/ $2.10/ $48.84/ $32.37
9) Techne Corp./ TECH/ $2.45/ $56.98/ $65.24
10) Deckers Outdoor/ DECK/ $6.00/ $139.53/ $116.53
11) Chattem, Inc./CHTT/$3.90/$90.70/$65.78
12) Immucor, Inc./ BLUD/ $1.15/ $26.74/ $26.11
13) Kinetic Concepts/KCI/ $3.85/ $89.53/ $39.92
14) Zimmer Holdings/ ZMH/ $4.50/ $104.65/ $76.90
15) Amgen/AMGN/$3.60/$83.72/$42.27
16) Global Payments/GPN/$1.90/$44.19/$40.87
17) American Ecology Corp./ECOL/ $1.20/ $27.91/ $26.62
18) Tiffany & Co./ TIF/ $2.60/ $60.47/ $40.74
19) Buckle, Inc./ BKE/ $2.50/ $58.14/ $47.44
20) Coach, Inc./ COH/ $2.05/ $47.67/ $31.30
Gene
Tuesday, April 15, 2008
Dropping GE and ENDP
Dear Diary,
"My 20 Favorites" list is maturing, as I've decided to drop General Electric (GE) and Endo Pharmaceuticals (ENDP) from the list, replacing them with Chattem, Inc. (CHTT) and Amgen (AMGN) for my Buffett reasons.
General Electric (GE) has a problem with Return on Total Capital at 6% and Long term Debt at 10 times its Net Profit Margin.
Endo Pharmaceuticals ( ENDP) will need to replace substantial revenues in the near term, as Lidoderm is going into a generic version, I read.
Gene
"My 20 Favorites" list is maturing, as I've decided to drop General Electric (GE) and Endo Pharmaceuticals (ENDP) from the list, replacing them with Chattem, Inc. (CHTT) and Amgen (AMGN) for my Buffett reasons.
General Electric (GE) has a problem with Return on Total Capital at 6% and Long term Debt at 10 times its Net Profit Margin.
Endo Pharmaceuticals ( ENDP) will need to replace substantial revenues in the near term, as Lidoderm is going into a generic version, I read.
Gene
Thursday, March 13, 2008
Deere & Co.
Dear Diary,
It has been suggested that Deere & Co. (DE) might be worthy of my study.
In examination of Deere & Co. (DE), I find in the January 25, 2008 "Value Line" a Net Profit Margin under 10.0%, indicating no serious competitive advantage in products. This means that volume of sales and low cost of production are its strengths, much in the way Wal-Mart operates as the low cost operation to maintain market dominance.
Because DE is so large an operation, with overseas sales at 36% of revenues, the company appears protected from the low U. S. Dollar problems of late and can sustain a current ratio of less than 2, as it seems to know its fixed costs over its many decades of operation.
With a Net Profit of $2.1 billion projected in 2008 against Long term Debt of $1.9 billion, this ratio is in good order.
Both Return on Shareholder Equity and Return on Total Capital remain far above the 12% minimums, now in the mid 20% range.
Expected Earnings Per Share for 2008 are $4.75 and at the tail of an upward trend in earnings since 2001. With a 4.6% 30 Year Treasury Bond Yield, the Relative Value per share is $103.26, making the issue only slightly undervalued at the current $85 sale range. And with a P/E ratio at the high end of its average for the past several years, DE is a relative momentum play and not suitable for conservative investors seeking an entrance point into the issue. However, DE does appear to be in the middle of a long term sales growth period, with growing commodity prices in wheat, corn and the like driving earnings, due to the emerging bio fuel industry around the world.
I have no information on the ratio of Total Assets to Shareholder Equity, as yet.
Gene
It has been suggested that Deere & Co. (DE) might be worthy of my study.
In examination of Deere & Co. (DE), I find in the January 25, 2008 "Value Line" a Net Profit Margin under 10.0%, indicating no serious competitive advantage in products. This means that volume of sales and low cost of production are its strengths, much in the way Wal-Mart operates as the low cost operation to maintain market dominance.
Because DE is so large an operation, with overseas sales at 36% of revenues, the company appears protected from the low U. S. Dollar problems of late and can sustain a current ratio of less than 2, as it seems to know its fixed costs over its many decades of operation.
With a Net Profit of $2.1 billion projected in 2008 against Long term Debt of $1.9 billion, this ratio is in good order.
Both Return on Shareholder Equity and Return on Total Capital remain far above the 12% minimums, now in the mid 20% range.
Expected Earnings Per Share for 2008 are $4.75 and at the tail of an upward trend in earnings since 2001. With a 4.6% 30 Year Treasury Bond Yield, the Relative Value per share is $103.26, making the issue only slightly undervalued at the current $85 sale range. And with a P/E ratio at the high end of its average for the past several years, DE is a relative momentum play and not suitable for conservative investors seeking an entrance point into the issue. However, DE does appear to be in the middle of a long term sales growth period, with growing commodity prices in wheat, corn and the like driving earnings, due to the emerging bio fuel industry around the world.
I have no information on the ratio of Total Assets to Shareholder Equity, as yet.
Gene
My 20 Favorites
Dear Diary,
The February 29, 2008 30 Year Treasury Bond Yield is reported by "Value Line" to be 4.6%.
After more research, I've removed Forest Labs (FRX) and Biomet (BMET) from "My Favorite 20" because of their heavy reliance upon drug patents which wear out.
I also removed Patterson Companies (PDCO) due to a Net Profit Margin below 10.0%.
I added to "My 20 Favorites" Kinetic Concepts (KCI), Immucore, Inc. (BLUD) and Techne Corp. (TECH) to round out the list.
Name/ Symbol/ Expected '08 EPS/ Relative Value/ Current Price
1) Dental Supply/ XRAY/ $1.87/ $40.65/ $37.84
2) Stryker Corp./ SYK/ $2.90/ $63.04/ $61.96
3) Strayer Education/ STRA/ $5.00/ $108.70/ $156.87
4) Abercrombie & F/ ANF/ $6.00/ $130.43/ $74.57
5) Harley Davidson/ HOG/ $3.70/ $80.43/ $36.64
6) Medtronic/ MDT/ $3.00/ $65.22/ $48.61
7) Amer. Eagle O./ AEO/ $2.00/ $43.48/ $18.07
8) Hansen Natural/ HANS/ $2.10/ $45.65/ $41.99
9) Techne Corp./ TECH/ $2.45/ $53.26/ $67.14
10) Deckers Outdoor/ DECK/ $6.00/ $130.43/ $99.22
11) General Electric/ GE/ $2.50/ $54.35/ $34.16
12) Immucor, Inc./ BLUD/ $1.15/ $25.00/ $20.99
13) Kinetic Concepts/KCI/ $3.85/ $83.70/ $49.68
14) Zimmer Holdings/ ZMH/ $4.50/ $97.83/ $76.64
15) Endo Pharm./ ENDP/ $2.10/ $45.65/ $24.87
16) Global Payments/ GPN/ $1.90/ $41.30/ $39.37
17) American Ecology Corp./ECOL/ $1.20/ $26.09/ $24.87
18) Tiffany & Co./ TIF/ $2.60/ $56.52/ $37.77
19) Buckle, Inc./ BKE/ $2.50/ $54.37/ $45.44
20) Coach, Inc./ COH/ $2.05/ $44.57/ $28.44
The February 29, 2008 30 Year Treasury Bond Yield is reported by "Value Line" to be 4.6%.
After more research, I've removed Forest Labs (FRX) and Biomet (BMET) from "My Favorite 20" because of their heavy reliance upon drug patents which wear out.
I also removed Patterson Companies (PDCO) due to a Net Profit Margin below 10.0%.
I added to "My 20 Favorites" Kinetic Concepts (KCI), Immucore, Inc. (BLUD) and Techne Corp. (TECH) to round out the list.
Name/ Symbol/ Expected '08 EPS/ Relative Value/ Current Price
1) Dental Supply/ XRAY/ $1.87/ $40.65/ $37.84
2) Stryker Corp./ SYK/ $2.90/ $63.04/ $61.96
3) Strayer Education/ STRA/ $5.00/ $108.70/ $156.87
4) Abercrombie & F/ ANF/ $6.00/ $130.43/ $74.57
5) Harley Davidson/ HOG/ $3.70/ $80.43/ $36.64
6) Medtronic/ MDT/ $3.00/ $65.22/ $48.61
7) Amer. Eagle O./ AEO/ $2.00/ $43.48/ $18.07
8) Hansen Natural/ HANS/ $2.10/ $45.65/ $41.99
9) Techne Corp./ TECH/ $2.45/ $53.26/ $67.14
10) Deckers Outdoor/ DECK/ $6.00/ $130.43/ $99.22
11) General Electric/ GE/ $2.50/ $54.35/ $34.16
12) Immucor, Inc./ BLUD/ $1.15/ $25.00/ $20.99
13) Kinetic Concepts/KCI/ $3.85/ $83.70/ $49.68
14) Zimmer Holdings/ ZMH/ $4.50/ $97.83/ $76.64
15) Endo Pharm./ ENDP/ $2.10/ $45.65/ $24.87
16) Global Payments/ GPN/ $1.90/ $41.30/ $39.37
17) American Ecology Corp./ECOL/ $1.20/ $26.09/ $24.87
18) Tiffany & Co./ TIF/ $2.60/ $56.52/ $37.77
19) Buckle, Inc./ BKE/ $2.50/ $54.37/ $45.44
20) Coach, Inc./ COH/ $2.05/ $44.57/ $28.44
Monday, March 3, 2008
"Strong Buy" on AEO
Dear Diary,
I just read on the news that "S&P" has a "strong buy" on AEO (American Eagle Outfitters) as Spring approaches. This is one of two of my major holdings.
Gene
I just read on the news that "S&P" has a "strong buy" on AEO (American Eagle Outfitters) as Spring approaches. This is one of two of my major holdings.
Gene
Friday, February 29, 2008
My 20 Favorites
American Eagle Outfitters | aeo | $22.03 | |
| Medtronic | mdt | $49.63 | |
| Harley Davidson | hog | $39.00 | |
| Tiffany & Co. | tif | $39.20 | |
| Abercrombie & Fitch | anf | $69.90 | |
| Hansen Natural | hans | $41.94 | |
| Dental Supply International | xray | $39.02 | |
| Stryker Corp. | syk | $65.54 | |
| Strayer Education | stra | $156.82 | |
| Biomet | bmet | $45.75 | |
| Patterson Companies | pdco | $35.52 | |
| Deckers Outdoor | deck | $117.01 | |
| General Electric | ge | $33.4482 | |
| Forest Labs | frx | $40.29 | |
| Zimmer Holdings | zmh | $76.16 | |
| Endo Pharm. | endp | $26.46 | |
| Global Payments | gpn | $40.30 | |
| American Ecology Corp. | ecol | $24.78 | |
| Buckle, Inc. | bke | $46.40 | |
| Coach, Inc. | coh | $30.91 |
Sunday, February 24, 2008
Medtronic
Dear Diary,
Medtronic (MDT) is reported to have a current ratio of 1.89. While I'd like to see this ratio at 2 or higher, I can live with it until it drops to below 1.
"Value Line" reports the Lond Bond Yield at 4.4% this week.
Gene
Medtronic (MDT) is reported to have a current ratio of 1.89. While I'd like to see this ratio at 2 or higher, I can live with it until it drops to below 1.
"Value Line" reports the Lond Bond Yield at 4.4% this week.
Gene
Wednesday, February 20, 2008
Long Bond Yield
Dear Diary,
"Value Line" presents the 30 Year Treasury Bond Yield to be 4.28%.
I've narrowed my interest to 20 stocks out of about 2000 covered in "Value Line," for my Buffett purposes. I may list them in a few days. Per share earnings for the 20 is just a bit over 16% per annum on average, so we might expect as much as 40% compounded growth from the group, if I don't bother them too much. I've not yet invested in them, as a group.
Gene
"Value Line" presents the 30 Year Treasury Bond Yield to be 4.28%.
I've narrowed my interest to 20 stocks out of about 2000 covered in "Value Line," for my Buffett purposes. I may list them in a few days. Per share earnings for the 20 is just a bit over 16% per annum on average, so we might expect as much as 40% compounded growth from the group, if I don't bother them too much. I've not yet invested in them, as a group.
Gene
Sunday, February 10, 2008
Minor Conflict of Information
Dear Diary,
I am reading in my "Value Line Investment Survery" materials that the long bond (30 year treasury bond) appears to be trading at 4.12%, while the Federal Funds Rate is at 3%. This 1.12% difference in numbers is not anything that will cause any panic in my investment calculations, but it does give me pause that neither Warren Buffett nor David Clark, both of whom examined and commented on my work in the past, has ever drawn my attention to this difference. Hum.
I'm studying Hansen Natural (HANS) today. It presents flawless numbers in "Value Line." I'm calling for a financial report tomorrow. With projected earning per share for 2008 at $2.10 per share, I calculate a relative value to the Federal Funds Rate (3%) at $70.00. On the other hand, the 4.12% yield on the long bond discussed above would present a relative value to be $50.97. Warren believes the average of all interest rates is 10%, which offers a relative value of $21.00. HANS is trading at $38.00 per share and growing earnings at 45% per annum.
HANS is not a giant monopoly, so the closer to the 10% calculation I can get, the better.
Gene
I am reading in my "Value Line Investment Survery" materials that the long bond (30 year treasury bond) appears to be trading at 4.12%, while the Federal Funds Rate is at 3%. This 1.12% difference in numbers is not anything that will cause any panic in my investment calculations, but it does give me pause that neither Warren Buffett nor David Clark, both of whom examined and commented on my work in the past, has ever drawn my attention to this difference. Hum.
I'm studying Hansen Natural (HANS) today. It presents flawless numbers in "Value Line." I'm calling for a financial report tomorrow. With projected earning per share for 2008 at $2.10 per share, I calculate a relative value to the Federal Funds Rate (3%) at $70.00. On the other hand, the 4.12% yield on the long bond discussed above would present a relative value to be $50.97. Warren believes the average of all interest rates is 10%, which offers a relative value of $21.00. HANS is trading at $38.00 per share and growing earnings at 45% per annum.
HANS is not a giant monopoly, so the closer to the 10% calculation I can get, the better.
Gene
Thursday, February 7, 2008
Looking At Jones Soda
Dear Diary,
I've just called for a copy of the most recent financial report of Jone Soda Company (JSDA). This company seems to be gearing up for some interesting growth. The evident founder of the company has returned to be CEO after a rough 2007 and the resignation of the past CEO. I actually offered to go to work for them, I'm so impressed with the $6 share price and current ratio of 7. I think they need to raise prices and back off enough on marketing expenditures to show a profit and a wider net profit margin than the current 1, I'm seeing. They are spending money like a teenage boy trying to get a date with the homecoming queen, and they need a mature mind to tell them to take a breath.
Harley Davidson (HOG) shows a current ratio of 1.8, and I'm not happy about that; however, I'm going to sit until I see Spring sales before I change any position in the stock. The situation may quickly right itself. If the ratio drops to below 1, I will absolutly not tollerate holding the stock, as this will show flawed internal economics.
Everything else is doing fine.
I'm gonna waite on Pfizer (PFE) to buy up some other drug companies and get back into growing the company before I invest there.
Gene
I've just called for a copy of the most recent financial report of Jone Soda Company (JSDA). This company seems to be gearing up for some interesting growth. The evident founder of the company has returned to be CEO after a rough 2007 and the resignation of the past CEO. I actually offered to go to work for them, I'm so impressed with the $6 share price and current ratio of 7. I think they need to raise prices and back off enough on marketing expenditures to show a profit and a wider net profit margin than the current 1, I'm seeing. They are spending money like a teenage boy trying to get a date with the homecoming queen, and they need a mature mind to tell them to take a breath.
Harley Davidson (HOG) shows a current ratio of 1.8, and I'm not happy about that; however, I'm going to sit until I see Spring sales before I change any position in the stock. The situation may quickly right itself. If the ratio drops to below 1, I will absolutly not tollerate holding the stock, as this will show flawed internal economics.
Everything else is doing fine.
I'm gonna waite on Pfizer (PFE) to buy up some other drug companies and get back into growing the company before I invest there.
Gene
Thursday, January 31, 2008
Fed Drops Interest Rates Another 50 Basis Points
Dear Diary,
Yesterday, the Federal Reserve Bank lowered the long bond yield to 3% from 3.5%. This drop further drives the relative value of my holdings and all stock prices upward.
Gene
Yesterday, the Federal Reserve Bank lowered the long bond yield to 3% from 3.5%. This drop further drives the relative value of my holdings and all stock prices upward.
Gene
Thursday, January 24, 2008
Long Bond Yield Drops
Dear diary,
After a night of 5% to 8% drops in world markets a couple of nights ago, the Federal Reserve lowered its yield on the 30 year Treasury bond 75 basis points to 3.5%. This changes our calculations on owned stock relative values as follows:
Symbol/ Expected 2008 Earnings/ Long Bond Yield/ Relative Value
MDT $3.00 3.5% $85.71
AEO $2.20 3.5% $62.86
HOG $3.95 3.5% $112.86
I called Pfizer (PFE) for an investor kit a couple of days ago, as well. Expectations are that the revenues by 2011 will potentially be cut in as much as half, due to patents ending on major products. However, they have a giant business that can adjust prices to inflation or loss of patents in many products and other drugs. They also stand to buy up lots of smaller drug companies between now and 2011. With the current share price about $23 a share, the relative value even of the dividend alone presents excellent price appreciation in the coming years. PFE would have to go out of business to be a risky investment, based on my Buffett training.
Concerning the markets, they are reacting to an over-extension of credit, combined with inflation in the M1 Money Supply by Congress. The 5th plank of "The Communist Manifesto" is doing what it was designed to do: rattle the property out of the hands of individuals and place it into the hands of politicians and rich people. Will we ever learn that central credit in the hands of politicians and rich people only leads to poverty for the masses?
Gene Chapman
After a night of 5% to 8% drops in world markets a couple of nights ago, the Federal Reserve lowered its yield on the 30 year Treasury bond 75 basis points to 3.5%. This changes our calculations on owned stock relative values as follows:
Symbol/ Expected 2008 Earnings/ Long Bond Yield/ Relative Value
MDT $3.00 3.5% $85.71
AEO $2.20 3.5% $62.86
HOG $3.95 3.5% $112.86
I called Pfizer (PFE) for an investor kit a couple of days ago, as well. Expectations are that the revenues by 2011 will potentially be cut in as much as half, due to patents ending on major products. However, they have a giant business that can adjust prices to inflation or loss of patents in many products and other drugs. They also stand to buy up lots of smaller drug companies between now and 2011. With the current share price about $23 a share, the relative value even of the dividend alone presents excellent price appreciation in the coming years. PFE would have to go out of business to be a risky investment, based on my Buffett training.
Concerning the markets, they are reacting to an over-extension of credit, combined with inflation in the M1 Money Supply by Congress. The 5th plank of "The Communist Manifesto" is doing what it was designed to do: rattle the property out of the hands of individuals and place it into the hands of politicians and rich people. Will we ever learn that central credit in the hands of politicians and rich people only leads to poverty for the masses?
Gene Chapman
Tuesday, January 15, 2008
Things Are Looking Good
Dear Diary,
American Eagle Outfitters (AEO) and Wal-mart are the only two retail companies in the black for the Christmas holidays, it seems, as I saw on the "Nightly Business Report" a few nights ago. AEO is at 10 times earnings.
Harley Davidson (HOG) is waiting for Spring sales to see what upside is there for them, now selling at 10 time earnings.
Medtronic (MDT) continues to putt right along at 19 times earnings.
Gene
American Eagle Outfitters (AEO) and Wal-mart are the only two retail companies in the black for the Christmas holidays, it seems, as I saw on the "Nightly Business Report" a few nights ago. AEO is at 10 times earnings.
Harley Davidson (HOG) is waiting for Spring sales to see what upside is there for them, now selling at 10 time earnings.
Medtronic (MDT) continues to putt right along at 19 times earnings.
Gene
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