Well, certainly the good news is that my MFI portfolio is up an impressive 33% since my all-time low set on November 20th. That is certainly a decent "Santa Claus" rally. The bad news is that I would probably need another 3 consecutive months like that to make my feet start smiling again. Oh well, I don't suppose Rome was built in a day, at least things are starting to go in the right direction. I have been adding a few positions lately, here is my current portfolio along with some thoughts about each stock, a few are not "on the list", but I am considering to be value stocks that fit the spirit of MFI.
HBMFF - I bought Hudbay in February and it has been an unmitigated disaster. Down 87% as Zinc prices collapsed and Hudbay bought Lundin mining, a move the market didn't like. Hard to sell at this point, I'll decide what to do in February.
IAR (now IDAR) - Obviously a dog of dogs, another unmitigated disaster, down 98%... I had my share in 2008, which I will be glad to bid adieu.
CHCG - wow, I had some stinkers, down 62%. However, I think these guys have some upside. They are a Chinese retailer and trade at 68 cents despite earning 45 cents per share in past 4 quarters. As they sell in China, they are not subject (in my view) to export risks (at least directly) as the economy slows.
BID - Sotherbys was another bad stock, down 69% for me. I thought being part of a duo-opoly would protect them a bit during the downturn as their stock had already dropped 50%, but I was clearly wrong. Not on any lists right now, I may sell this Spring.
FTO - hey a winner, down only 54%! The refiners have gotten crushed. FTO seems like the best run of the independents. I will likely continue to hold. The lower price of oil has to help a bit.
VALU - this sleepy stock has been one of my best. Basically flat since May, they recently had decent earnings and bumped their dividend.
QXM - This Chinese phone manufacturer, that sells primarily in China has a ton of cash. I show them with 435m and 423m of shareholder equity. With a market cap of 105m, they are trading at 30% of book value! They have made $1.62 per share in past 12 months and trading at just $2.25.
CAST - another of my Chinese/MFI stocks. They are struggling as well. They are into education, both brick & mortar as well as onlne. They are dirt cheap and have a strong balance sheet. But until the markets unfreeze, these speculative smaller cap stocks really do not have a catalyst.
BR - a spin-off from ADP, down 36% since I bought them. They actually expect 2009 fiscal year to be better than 2008. Not many people are saying that.
BOLT - not been a good time for oil service companies, BOLT is down 63% since I bought them. Not sure what to do here.
KHD - a Hong Kong based supplier of construction materials. They also have a ton of cash and backlogs, but the market is clearly discounting what they have.
PCR - US based construction firm that has risen pretty sharply of late as people feel they may get involved in Obama spending. They were $12.50 in November and are now almost $23.
CSKI - a Chinese pharma company that is really moving on up lately. Like PCR. they have almost doubled since mid-November. They have great growth opportunities, nice pipeline of drugs and solid balance sheet.
KBR - has really battled back, like PCR. Solid balance sheet and project backlog.
TRA - I rebought Terra Industries, which was really beaten down on the theory that Obama would be helping the farmers given his Illinois roots and the help he got from Iowa. Hasn't worked yet.
TC - not a true MFI stock, but a Jubak stock. Great balance sheet and if the commodity prices move up at all, they could quickly double.
BBSI - been an MFI stock forever. Tough industry, but well run company.
LINE - I bought this oil & gas company a coupe weeks ago when Seth Klarman bought them around $18 (I bought at $12.50). They got a great feature article in Barron's this week, so I'll be interested to see if that spurs interest in them.
GSK and PFE - last week I bought a basket of pharma stocks. I was looking for stability of earnings and nice dividends (5.3% and 7.5%).
SCMP - my other pharma stock, this has recently been in top 25 list. I bought them at a great price and they are already up 27%.
FLS - I bought Flowserve last week at $47. Jubak had recommended them as one of his best ideas for 2009 and they were on the "list". Seemed like a good combo.
Well, that pretty much sums up the Good, the Bad and the Ugly. Speaking of ugly, I am watching the Cowboys/Eagles game right now... pretty ugly.
Happy New Year.
Sunday, December 28, 2008
Sunday, December 14, 2008
Update and Chat
First a quick update on several of my model portfolios
1. I started a Chinese Portfolio right after China announced their stimulus package (more than a month ago). While it certainly has not been "good", down 16%, it is "better" than having put your money in the Russell 3000, down 30% in the same stretch. 4 of the Chinese stocks are up nicely: ADY (a baby formula manufacturer that was unfairly tainted in recent recalls), TBV (a MFI stock), CSKI (an MFI stock that I own) and XIN (a real estate company I am considering buying).
2. My mechanical portfolio that I am running as a contest against Steve Alexander of Magic Diligence is beating the S&P 500 by 1.2 points (SDA is "winning" by 2.4 points. The interesting thing about my portfolio is that the 7 additions since Nov 21st are up ON AVERAGE by 32%! So there does seem to be some momentum.
Finally I will mention that although my actual real life portfolio is still generally "sucking eggs" (a financial term) I have been gaining pretty significant ground of late on the bench mark portfolios and I am up over 30% off my lows. Stay tuned... maybe someday I'll actually post a chart/table again.
I am continuing to try to dial down the riskiness of my portfolio as I still want to retire. I bought LINE this week after seeing Stock Market guru Seth Klarman bought it. What is interesting about LINE is that they are an Oil & Gas play and have been thrown out with the proverbial bathwater as oil prices have crashed in the past six month but... read this from their earnings release:
At current production levels, the Company is 100% hedged for 2009, 2010 and 2011. For 2009, the Company's natural gas production is hedged at a weighted average price of $8.32 per Mcf and oil and NGL production at $102.21 per barrel. For 2010, the Company's natural gas production is hedged at a weighted average price of $8.05 per Mcf and oil and NGL production at $99.68 per barrel. The Company's natural gas production is hedged for the next four years and oil and NGL production is hedged for the next six years. These hedge positions help ensure cash flow and are detailed in Schedule 9 in this press release.
So they have locked in high oil and natural gas prices for at least the next 2 years! Why are they down 50% off their highs? They pay a high dividend and are the only Oil & Gas firm I can find that projects making more money in 2009 than 2008. SK owns about 8% of the company, so I am comfortable that he has done gthe homework that the balance sheet isn't too levered. And he was buying at $16-$19 while I got in under $13.
The final move on my portfolio (not MFI) is that I am moving some funds to follow "the moose". This was an interesting website pointed out by Randy on the MFI yahoo boards (Moosecalls).
1. I started a Chinese Portfolio right after China announced their stimulus package (more than a month ago). While it certainly has not been "good", down 16%, it is "better" than having put your money in the Russell 3000, down 30% in the same stretch. 4 of the Chinese stocks are up nicely: ADY (a baby formula manufacturer that was unfairly tainted in recent recalls), TBV (a MFI stock), CSKI (an MFI stock that I own) and XIN (a real estate company I am considering buying).
2. My mechanical portfolio that I am running as a contest against Steve Alexander of Magic Diligence is beating the S&P 500 by 1.2 points (SDA is "winning" by 2.4 points. The interesting thing about my portfolio is that the 7 additions since Nov 21st are up ON AVERAGE by 32%! So there does seem to be some momentum.
| Symbol | Date | Original | Current | Dividend | S&P O | S&P D | Stock Chg | S&P Chg | Diff |
| DTPI | 2/2/08 | 4.75 | 3.97 | 0.35 | 139.58 | 2.00 | -9.1% | -34.8% | 25.8% |
| AIRV | 2/13/08 | 5.08 | 5.00 | - | 136.37 | 2.00 | -1.6% | -33.3% | 31.7% |
| CITP | 2/16/08 | 9.98 | 2.14 | - | 135.14 | 2.00 | -78.6% | -32.7% | -45.9% |
| PRXI | 2/16/08 | 4.29 | 1.50 | - | 135.14 | 2.00 | -65.0% | -32.7% | -32.4% |
| CAST | 2/23/08 | 5.06 | 2.25 | - | 135.62 | 2.00 | -55.5% | -32.9% | -22.6% |
| GSB | 3/12/08 | 2.08 | 0.95 | - | 131.36 | 2.00 | -54.3% | -30.7% | -23.6% |
| IGC | 3/12/08 | 3.70 | 1.03 | - | 131.36 | 2.00 | -72.2% | -30.7% | -41.4% |
| LGTY | 3/12/08 | 6.70 | 4.28 | - | 131.36 | 2.00 | -36.1% | -30.7% | -5.4% |
| MRX | 3/12/08 | 19.45 | 13.84 | 0.08 | 131.36 | 1.36 | -28.4% | -31.2% | 2.8% |
| DEPO | 3/22/08 | 2.74 | 1.58 | - | 132.08 | 1.36 | -42.3% | -31.6% | -10.7% |
| NVTL | 3/22/08 | 8.98 | 3.11 | - | 132.08 | 1.36 | -65.4% | -31.6% | -33.8% |
| VRGY | 3/22/08 | 17.42 | 10.40 | - | 132.08 | 1.36 | -40.3% | -31.6% | -8.7% |
| DLX | 4/6/08 | 19.58 | 11.57 | 0.75 | 136.89 | 1.36 | -37.1% | -34.0% | -3.1% |
| NTRI | 4/6/08 | 14.94 | 13.23 | 0.54 | 136.89 | 1.36 | -7.8% | -34.0% | 26.2% |
| IUSA | 4/6/08 | 5.28 | 3.41 | - | 136.89 | 1.36 | -35.4% | -34.0% | -1.4% |
| LRCX | 4/11/08 | 41.08 | 23.02 | - | 133.38 | 1.36 | -44.0% | -32.3% | -11.7% |
| SLXP | 4/11/08 | 6.47 | 7.53 | - | 133.38 | 1.36 | 16.4% | -32.3% | 48.6% |
| CHRD | 4/19/08 | 5.03 | 2.45 | - | 138.48 | 1.36 | -51.3% | -34.8% | -16.5% |
| QXM | 4/26/08 | 6.26 | 2.83 | - | 139.60 | 1.36 | -54.8% | -35.3% | -19.5% |
| MDP | 5/9/08 | 33.79 | 15.80 | 0.65 | 138.90 | 1.36 | -51.3% | -35.0% | -16.4% |
| OMPI | 5/9/08 | 7.11 | 7.04 | - | 138.90 | 1.36 | -1.0% | -35.0% | 34.0% |
| PPD | 5/9/08 | 43.45 | 39.71 | - | 138.90 | 1.36 | -8.6% | -35.0% | 26.3% |
| ELNK | 5/25/08 | 9.21 | 6.66 | - | 137.64 | 1.36 | -27.7% | -34.4% | 6.7% |
| FTAR.ob | 5/25/08 | 4.37 | 3.05 | - | 137.64 | 1.36 | -30.2% | -34.4% | 4.2% |
| CHKE | 5/31/08 | 27.25 | 16.40 | 1.00 | 140.35 | 1.36 | -36.1% | -35.6% | -0.5% |
| APKT | 7/5/08 | 4.62 | 3.20 | - | 126.31 | 0.69 | -30.7% | -29.0% | -1.7% |
| CSKI | 7/5/08 | 11.06 | 13.14 | - | 126.31 | 0.69 | 18.8% | -29.0% | 47.8% |
| VALU | 7/5/08 | 32.00 | 35.50 | 0.80 | 126.31 | 0.69 | 13.4% | -29.0% | 42.4% |
| QCOR | 7/26/08 | 4.84 | 8.00 | - | 125.48 | 0.69 | 65.3% | -28.5% | 93.8% |
| MSTR | 8/1/08 | 60.56 | 33.19 | - | 126.16 | 0.69 | -45.2% | -28.9% | -16.3% |
| NVDA | 8/8/08 | 11.00 | 8.60 | - | 129.37 | 0.69 | -21.8% | -30.7% | 8.9% |
| SWIR | 8/8/08 | 12.41 | 5.44 | - | 129.37 | 0.69 | -56.2% | -30.7% | -25.5% |
| CF | 8/8/08 | 134.65 | 49.13 | - | 129.37 | 0.69 | -63.5% | -30.7% | -32.8% |
| SIGM | 8/8/08 | 15.93 | 9.15 | - | 129.37 | 0.69 | -42.6% | -30.7% | -11.9% |
| EGMI.OB | 9/5/08 | 0.69 | 0.36 | - | 124.42 | 0.69 | -47.8% | -27.9% | -19.9% |
| KHD | 9/15/08 | 20.68 | 9.63 | - | 126.09 | 0.69 | -53.4% | -28.9% | -24.6% |
| TTWO | 9/22/08 | 16.57 | 12.35 | - | 124.12 | 0.69 | -25.5% | -27.7% | 2.3% |
| SCMP | 9/29/08 | 8.29 | 3.20 | - | 120.85 | - | -61.4% | -26.4% | -35.0% |
| DTLK | 9/29/08 | 4.34 | 2.77 | - | 120.85 | - | -36.2% | -26.4% | -9.8% |
| TRA | 9/29/08 | 28.42 | 15.42 | - | 120.85 | - | -45.7% | -26.4% | -19.4% |
| MSB | 10/10/08 | 11.37 | 9.70 | 1.25 | 88.50 | - | -3.7% | 0.6% | -4.2% |
| UEPS | 10/10/08 | 14.58 | 11.35 | - | 88.50 | - | -22.2% | 0.6% | -22.7% |
| TSCM | 10/17/08 | 3.67 | 3.39 | - | 93.21 | - | -7.6% | -4.5% | -3.1% |
| EME | 10/31/08 | 17.77 | 21.10 | - | 96.83 | - | 18.7% | -8.1% | 26.8% |
| CTCM | 10/31/08 | 7.40 | 4.69 | - | 96.83 | - | -36.6% | -8.1% | -28.5% |
| PRGX | 10/31/08 | 4.24 | 3.50 | - | 96.83 | - | -17.5% | -8.1% | -9.4% |
| HLF | 11/7/08 | 20.17 | 17.27 | - | 93.86 | - | -14.4% | -5.2% | -9.2% |
| GHM | 11/7/08 | 13.60 | 9.84 | - | 93.86 | - | -27.6% | -5.2% | -22.5% |
| BIDZ | 11/21/08 | 2.39 | 5.03 | - | 79.52 | - | 110.5% | 11.9% | 98.6% |
| KBR | 11/21/08 | 10.45 | 15.31 | - | 79.52 | - | 46.5% | 11.9% | 34.6% |
| OPTV | 11/21/08 | 0.94 | 1.27 | - | 79.52 | - | 35.1% | 11.9% | 23.2% |
| IBAS | 11/21/08 | 1.21 | 1.44 | - | 79.52 | - | 19.0% | 11.9% | 7.1% |
| VCLK | 11/28/08 | 6.17 | 7.15 | - | 90.09 | - | 15.9% | -1.2% | 17.1% |
| DIVX | 12/7/08 | 4.37 | 5.01 | - | 87.93 | - | 14.6% | 1.2% | 13.4% |
| MAXY | 12/7/08 | 5.80 | 7.82 | - | 87.93 | - | 34.8% | 1.2% | 33.6% |
| Totals | -21.5% | -22.7% | 1.2% | ||||||
| 44.% of stocks beat the S&P 500 Benchmark | |||||||||
Finally I will mention that although my actual real life portfolio is still generally "sucking eggs" (a financial term) I have been gaining pretty significant ground of late on the bench mark portfolios and I am up over 30% off my lows. Stay tuned... maybe someday I'll actually post a chart/table again.
I am continuing to try to dial down the riskiness of my portfolio as I still want to retire. I bought LINE this week after seeing Stock Market guru Seth Klarman bought it. What is interesting about LINE is that they are an Oil & Gas play and have been thrown out with the proverbial bathwater as oil prices have crashed in the past six month but... read this from their earnings release:
At current production levels, the Company is 100% hedged for 2009, 2010 and 2011. For 2009, the Company's natural gas production is hedged at a weighted average price of $8.32 per Mcf and oil and NGL production at $102.21 per barrel. For 2010, the Company's natural gas production is hedged at a weighted average price of $8.05 per Mcf and oil and NGL production at $99.68 per barrel. The Company's natural gas production is hedged for the next four years and oil and NGL production is hedged for the next six years. These hedge positions help ensure cash flow and are detailed in Schedule 9 in this press release.
So they have locked in high oil and natural gas prices for at least the next 2 years! Why are they down 50% off their highs? They pay a high dividend and are the only Oil & Gas firm I can find that projects making more money in 2009 than 2008. SK owns about 8% of the company, so I am comfortable that he has done gthe homework that the balance sheet isn't too levered. And he was buying at $16-$19 while I got in under $13.
The final move on my portfolio (not MFI) is that I am moving some funds to follow "the moose". This was an interesting website pointed out by Randy on the MFI yahoo boards (Moosecalls).
Saturday, December 06, 2008
Stepping Back
Well, here is the ultimate bull signal... I am pulling back a bit. I have sold several stocks and have not re-invested the funds. Actually had a couple with very good gains (VR and EGY) and one not so good (PRLS).
I guess I feel we're still in a simple bear market rally and that there will be more blood on the streets at least through January with more forced hedge fund selling. Also, I am kicking around the idea of buying a house in the Spring and wanted to pull some $ out for a downpayment. Might as well buy something tangible.
It was interesting that the market went up on Friday despite the dismal jobs number. I suppose some people are becoming convinced that between the lower gas prices and govt stimulus that things will turn around more quickly. But I am not so sure.
My thesis that the Chinese stocks will hold up better is bearing some fruit. They had gone down a lot, they have stronger balance sheets and China is still growing at 7%+. The group of 12 Chinese stocks I began following in the fall are down 17%, while the Russell 3000 is down 31% in the same stretch.
One signal I may begin watching on when to get fully invested is (Decision Moose). It was mentioned on the Yahoo groups site and has had a tremendous record in timing the market. Obviously I am not doing a very good job on my own.
I did think it was extremely positive this week when JNJ announced they were buying Mentor at a 100% premium. If these S&P 500 firms begin to loosen up on the purse strings and go shopping amongst the sales in the Russell 3000, it could really provide a much-needed lift.
I guess I feel we're still in a simple bear market rally and that there will be more blood on the streets at least through January with more forced hedge fund selling. Also, I am kicking around the idea of buying a house in the Spring and wanted to pull some $ out for a downpayment. Might as well buy something tangible.
It was interesting that the market went up on Friday despite the dismal jobs number. I suppose some people are becoming convinced that between the lower gas prices and govt stimulus that things will turn around more quickly. But I am not so sure.
My thesis that the Chinese stocks will hold up better is bearing some fruit. They had gone down a lot, they have stronger balance sheets and China is still growing at 7%+. The group of 12 Chinese stocks I began following in the fall are down 17%, while the Russell 3000 is down 31% in the same stretch.
One signal I may begin watching on when to get fully invested is (Decision Moose). It was mentioned on the Yahoo groups site and has had a tremendous record in timing the market. Obviously I am not doing a very good job on my own.
I did think it was extremely positive this week when JNJ announced they were buying Mentor at a 100% premium. If these S&P 500 firms begin to loosen up on the purse strings and go shopping amongst the sales in the Russell 3000, it could really provide a much-needed lift.
Thursday, November 27, 2008
Most Recent Tranche
As I have mentioned several times on these pages, I keep a mechanical portfolio that simply takes new stocks to the top 25 that appear over the weekend. I then track this portfolio against the S&P 500 and (for fun) Steve Alexander's Magic Diligence portfolio.
So far, my portfolio has not exactly been great shakes, I trail the S&P by about 2 points. However, I added 4 stocks over the weekend and they have been pocket rockets in the first three trading days this week:
BIDZ from $2.39 to $4.19
KBR from $10.45 to $13.72
OPTV from 0.94 to $1.20 and
IBAS from $1.21 to $1.38.
I don't have my calculator handy, but I think the 4 stocks are up an AVERAGE of 36%. I thought the action on EGY on Wednesday was very positive. On what should be a light volume day, they traded 72% more shares than normal and the stock was up 24%. I wondered whether there was some rumor about some oil being found through their exploration wells. They keep hyping in their press releases about the potential for discoveries. I'd feel better about that if there was some inside buying going on... but perhaps the trading windows have been closed for insiders of late as they have material non-public info.
My big non-MFI buys of late were a split decision - STP (my Chinese Solar company) warned of lower upcoming production and they crashed one day, but have moved up some since. Then VR has gone from $18 to pushing $23... which was a very profitable move for me, and I collected a 20 cent dividend to boot. Wednesday I bought a ton of FSUMF, which was selling for a paltry $1.25. Again, this is a basic resource play, but they have a huge competitive advantage with their proximity to China, which saves them a ton in shipping costs compared with their South American rivals. Jim Jubak is big on this company, as is Ian Cumming.
So far, my portfolio has not exactly been great shakes, I trail the S&P by about 2 points. However, I added 4 stocks over the weekend and they have been pocket rockets in the first three trading days this week:
BIDZ from $2.39 to $4.19
KBR from $10.45 to $13.72
OPTV from 0.94 to $1.20 and
IBAS from $1.21 to $1.38.
I don't have my calculator handy, but I think the 4 stocks are up an AVERAGE of 36%. I thought the action on EGY on Wednesday was very positive. On what should be a light volume day, they traded 72% more shares than normal and the stock was up 24%. I wondered whether there was some rumor about some oil being found through their exploration wells. They keep hyping in their press releases about the potential for discoveries. I'd feel better about that if there was some inside buying going on... but perhaps the trading windows have been closed for insiders of late as they have material non-public info.
My big non-MFI buys of late were a split decision - STP (my Chinese Solar company) warned of lower upcoming production and they crashed one day, but have moved up some since. Then VR has gone from $18 to pushing $23... which was a very profitable move for me, and I collected a 20 cent dividend to boot. Wednesday I bought a ton of FSUMF, which was selling for a paltry $1.25. Again, this is a basic resource play, but they have a huge competitive advantage with their proximity to China, which saves them a ton in shipping costs compared with their South American rivals. Jim Jubak is big on this company, as is Ian Cumming.
Wednesday, November 26, 2008
Biggest Day?
I think today may have been my best day ever as a percentage, if not on an absolute basis on a relative basis compared to market averages. I was up 8.8% as I had about 10% stocks up more than 10%, led by QXM and EGY, both up over 20%.
Sadly, I am still far in the hole... I don't even think the past week (in which I have gained about 20%) has gotten me to where I was on November 1st... which wasn't exactly a stellar number. I do think the Chinese rate cut was a big impetus, as it seemed to push oil and basic resources up along with construction stocks like PCR, KBR and KHD.
I believe this 20% increase I have had is a bear market rally... it'll be fun while it lasts but I expect more blood-letting in early January. Hope I am wrong, but I am trying to look with a longer horizon... so I'll just ride out the jolts. Not much else to say, hope everyone has a nice Thanksgiving!
Sadly, I am still far in the hole... I don't even think the past week (in which I have gained about 20%) has gotten me to where I was on November 1st... which wasn't exactly a stellar number. I do think the Chinese rate cut was a big impetus, as it seemed to push oil and basic resources up along with construction stocks like PCR, KBR and KHD.
I believe this 20% increase I have had is a bear market rally... it'll be fun while it lasts but I expect more blood-letting in early January. Hope I am wrong, but I am trying to look with a longer horizon... so I'll just ride out the jolts. Not much else to say, hope everyone has a nice Thanksgiving!
Saturday, November 22, 2008
The Ultimate MFI Stock!
I found yesterday the perfect MFI stock. Drumroll please....
MicroFinancial Incorporated. Why is this the perfect stock, you may ask? The ticker symbol is MFI! Sounds like a sign from the big guy himself, and I am not talking about Greenblatt. I looked at the ratios, and they technically don't qualify as the ROIC is too low per the formula. But that is all due to receivables, not exactly a capital-intensive part of the formula. Heck, they also pay a nice dividend.
MicroFinancial Incorporated. Why is this the perfect stock, you may ask? The ticker symbol is MFI! Sounds like a sign from the big guy himself, and I am not talking about Greenblatt. I looked at the ratios, and they technically don't qualify as the ROIC is too low per the formula. But that is all due to receivables, not exactly a capital-intensive part of the formula. Heck, they also pay a nice dividend.
| mfi | ||
| + | Operating Income After Depreciation | 10.99 |
| - | Minority Interest - Income Account | - |
| = | Income for Calculation | 10.99 |
| Market Cap Yahoo | 34,770 | |
| Share Price | 2.48 | |
| + | Market Cap Calc | 34.77 |
| + | Preferred Capital | - |
| + | Debt in Current Liabilities | - |
| + | Long-Term Debt | 41.20 |
| Cash and Short-Term Investments | 19.91 | |
| - | Excess Cash | 19.91 |
| = | Enterprise Value | 56.06 |
| + | Property Plant and Equipment - Net | 0.82 |
| + | Receivables | 89.80 |
| + | Inventories | - |
| + | Other Current Assests | - |
| + | Working Cash | - |
| - | Accounts Payable | 1.40 |
| - | Current Liabilities - Other | - |
| = | Invested Capital | 89.22 |
| Earnings Yield | 20% | |
| ROIC | 12% |
Tuesday, November 18, 2008
Brutal Stretch
wow, I thought MFI was struggling before, but it seems to be exacerbated recently. SDA's MD diligence site pretty much says it all, he is trailing the S&P 500 by 1.4 points AND only 29% of his picks (which are generally insightful and well-reserached) are beating the index.
My automated approaches are trailing by a bit more, I think between 2 and 3 points. That being said, I still have optimism about the future. Companies with strong balance sheets and a steady cash flow will surivive this downturn and likely be the stronger for it as weaker competitors are acquired or go bankrupt.
I encouage everyone to read John Hussman's post this week (The Stock Market is Not in "Uncharted Territory"). He makes a tremendous point when he discusses the impotance for investors not to confuse short-term earnings risks with long-term valuations. He empasizes the point saying when you buy a stock, you are not buying next quarter's earnings, but rather an indefinite stream of earnings into the future. We will get past the rough waters, as he mentions the economy has had problems before and to say we're in uncharted waters is to say you know nothing anout history before 1990. Good stuff.
To illustrate, I pulled a list of the top 50 companies over $2b. There are some fabulous companies out there right now, that will be giving investors that stream of earnings way, way into the future. Here are some: ACN, BA, COH, DELL, XOM, GD, HPQ, INTC, MSFT, NOV, NUE, VIA and EBAY. Wow. Remember Warren Buffet has said that he would want to buy stock in a company where he would not mind if the markets stopped trading for 5 years. The implication being that he is investing in the company.
My automated approaches are trailing by a bit more, I think between 2 and 3 points. That being said, I still have optimism about the future. Companies with strong balance sheets and a steady cash flow will surivive this downturn and likely be the stronger for it as weaker competitors are acquired or go bankrupt.
I encouage everyone to read John Hussman's post this week (The Stock Market is Not in "Uncharted Territory"). He makes a tremendous point when he discusses the impotance for investors not to confuse short-term earnings risks with long-term valuations. He empasizes the point saying when you buy a stock, you are not buying next quarter's earnings, but rather an indefinite stream of earnings into the future. We will get past the rough waters, as he mentions the economy has had problems before and to say we're in uncharted waters is to say you know nothing anout history before 1990. Good stuff.
To illustrate, I pulled a list of the top 50 companies over $2b. There are some fabulous companies out there right now, that will be giving investors that stream of earnings way, way into the future. Here are some: ACN, BA, COH, DELL, XOM, GD, HPQ, INTC, MSFT, NOV, NUE, VIA and EBAY. Wow. Remember Warren Buffet has said that he would want to buy stock in a company where he would not mind if the markets stopped trading for 5 years. The implication being that he is investing in the company.
Sunday, November 16, 2008
Last Two China Companies
My final 2 Chinese companies announced this week. It was a case of good news and bad news. First the bad news.
KHD - this is a Hong Kong-based supplier of commercial building supplies. They announced their earnings and they were actually very, very good (KHD Humboldt Wedag International Ltd. Reports Third Quarter and Nine-Month Results). They made a blazing 80 cents a share versus analyst estimates of 55 cents. Of course the problem was their outlook. With the credit crisis, it is making it more difficult for their customers to borrow money and they are canceling orders. KHD has suspended guidance going forward until they get more visibility. Then again,
QXM, the Chinese cell phone company had what I felt was a stellar earings report on Friday (Qiao Xing Mobile Reports Third Quarter 2008 Financial Results). They made 39 cents a share (this is a $2.85 stock) for the quarter. What I found extremely positive was they think the 4th quarter will be better than 4q last year, when they made 45 cents per share.
They have $435m in cash with no LT debt. Their market is is a measley $141m, which is 36% of their market cap. Not sure why they are so cheap, and despite the strong earnings and guidance, the stock was only up 4 cents on Friday. Another one I won't be selling any time soon.
PCR announced that they would begin buying back their shares with their excess cash (Perini to buy back up to $100 million in shares). I think if some of my other cash-rich MFI stocks do the same, the stock prices will start to climb. These are companies with extremely strong balance sheets.
KHD - this is a Hong Kong-based supplier of commercial building supplies. They announced their earnings and they were actually very, very good (KHD Humboldt Wedag International Ltd. Reports Third Quarter and Nine-Month Results). They made a blazing 80 cents a share versus analyst estimates of 55 cents. Of course the problem was their outlook. With the credit crisis, it is making it more difficult for their customers to borrow money and they are canceling orders. KHD has suspended guidance going forward until they get more visibility. Then again,
- they have a $1.1b backlog (which will likely get pared back),
- they have $399m in cash (very strong balance sheet) and
- the analysts still expect them to earn over $1 per share in 2009.
QXM, the Chinese cell phone company had what I felt was a stellar earings report on Friday (Qiao Xing Mobile Reports Third Quarter 2008 Financial Results). They made 39 cents a share (this is a $2.85 stock) for the quarter. What I found extremely positive was they think the 4th quarter will be better than 4q last year, when they made 45 cents per share.
They have $435m in cash with no LT debt. Their market is is a measley $141m, which is 36% of their market cap. Not sure why they are so cheap, and despite the strong earnings and guidance, the stock was only up 4 cents on Friday. Another one I won't be selling any time soon.
PCR announced that they would begin buying back their shares with their excess cash (Perini to buy back up to $100 million in shares). I think if some of my other cash-rich MFI stocks do the same, the stock prices will start to climb. These are companies with extremely strong balance sheets.
Friday, November 14, 2008
Look Who Is Buying!
I just saw some of the purchases of Mr Greenblatt himself as of September 30th. The good news: He is buying pretty much the who's-who from his own lists. The bad news: He has lost a bunch as well. But it is heartening to see him buying. I think it was 156 stocks and he bought the same amount of each. I will say that for Mr Greenblatt that he didn't put THAT much money in: $64m. Here is the list of buys:
Also Warren Buffett bought COP as his big new buy. Probably worth a look, they pay a 4.2% dividend. He also bought Eaton, which ironically was profiled tonight on Mad Money.
Have a great weekend everyone!
Also Warren Buffett bought COP as his big new buy. Probably worth a look, they pay a 4.2% dividend. He also bought Eaton, which ironically was profiled tonight on Mad Money.
Have a great weekend everyone!
Tuesday, November 11, 2008
CHCG Earnings aka All Things Must Pass
CHCG announced their earnings in the mid(China 3C Group Reports Third Quarter 2008 Financial Results)dle of this lame trading day. They earned 12 cents a share, which is pretty good for an "off-quarter" for a $1.08 stock. Of course the price went nowhere, but that isn't bothering me any more, I accept that the markets are irrational with fear right now.Here are some of the highlights, for those of you interested in joining my foray into China.
- Sales were up 36%
- Sales split is 32% wholesale and 68% retail
- Gross profit margin was way done from 22% to 15% (likely explains no move)
- The expected gross margin going forward is 14 to 16%
- Quarterly net income was about the same a year ago ($6.5m)
- They have $32m in cash with no debt
- They expect 4q sales to be higher than last year, with a lower tax rate and that cash will continue to grow
- Their market cap is $60m
- They have a market cap of $60m.
- They have $32m of cash, so Enterprise value = $28m.
- They are making over $6m (after taxes) a quarter!
See, I am not bothered any more by the market going nuts on my stocks. That is because I am i-n-v-e-s-t-i-n-g, a concept that seems to be forgotten. The short term will not matter and the long-term will take care of itself. Stocks like this, when (if) they demonstrate that they are for real, could easily go up 400% from today's prices.
About the current malaise over the market, remember the title of George Harrison's first album: "All Things Must Pass".
Earnings Pouring In
Wow, active couple of days for my stocks. Generally very good news, and I am starting to gain some ground on the benchmarks.
EGY - they beat the estimates handily, making 38 cents per share versus 32 cent estimate (VAALCO Energy Announces Third Quarter 2008 Earnings). No real news, they commented that their exploration efforts continue.
CSKI - this Chinese drug company really had a strong quarter (China Sky One Medical, Inc. Announces Record Third Quarter 2008 Results). Revenues were up 77%. They made 60 cents a share for the quarter (this is a $9.82 stock). Then here is what the CEO said about 2009:
"we expect to see a significant increase in our top- and bottom-line performance in 2009 and beyond."
If you believe any of this data, this stock is extremely cheap. They did give guidance that they expect to earn $2 per share for 2008. Finally they have $59m in cash and equity of 95m.
CAST - this is my Chinese educational company. As readers may recall, I spoke with their IR guy this past quarter. They are also ridiculously cheap, with a share price of $2.36 and market cap of 74m despite making about 36 cents per share in 2008 (ChinaCast Education Corporation Reports Third Quarter 2008 Results). They have $72m of cash and a tangible BV of about $95m.
While the market continues to drift downwards, the malaise will eventually pass. The depressed stock prices, in my opinion, offer investors with a long-term view tremendous protection.
EGY - they beat the estimates handily, making 38 cents per share versus 32 cent estimate (VAALCO Energy Announces Third Quarter 2008 Earnings). No real news, they commented that their exploration efforts continue.
CSKI - this Chinese drug company really had a strong quarter (China Sky One Medical, Inc. Announces Record Third Quarter 2008 Results). Revenues were up 77%. They made 60 cents a share for the quarter (this is a $9.82 stock). Then here is what the CEO said about 2009:
"we expect to see a significant increase in our top- and bottom-line performance in 2009 and beyond."
If you believe any of this data, this stock is extremely cheap. They did give guidance that they expect to earn $2 per share for 2008. Finally they have $59m in cash and equity of 95m.
CAST - this is my Chinese educational company. As readers may recall, I spoke with their IR guy this past quarter. They are also ridiculously cheap, with a share price of $2.36 and market cap of 74m despite making about 36 cents per share in 2008 (ChinaCast Education Corporation Reports Third Quarter 2008 Results). They have $72m of cash and a tangible BV of about $95m.
While the market continues to drift downwards, the malaise will eventually pass. The depressed stock prices, in my opinion, offer investors with a long-term view tremendous protection.
Sunday, November 09, 2008
All China, All theTime
Another Chinese company has craked onto the list. CDS. Aactually as I read their profile, the are not Chinese per se, but a Florida company that has a good chunk of their operations in China. Like many China-associated companies, they are cheap, cheap cheap, selling below book value. I have enough Chinese exposure with KHD, STP, CHCG, CSKI, CAST and QXM in my portfolio... not looking to add more. All of these companies are so cheap, that I feel there is a good chance of several of them popping. But I am sure that there is a lot of competition in China and perhaps not big moats for these firms.
Faithful readers may recall that 5 weeks ago I started a China-value portfolio. It is down 19% since I started it, but the Russell 3000 is down 26% in the same stretch. Aha! The best stocks have been XIN (a real estate company) and ADY (a baby formula company). They are up 12% and 25% respectively. The worst has been STP, down a whopping 66%. Thankfully I have bought them at the bottom (I hope).
Now I know some people think I am crazy for investing in these Chinese companies, and perhaps I am. But here are some thoughts: many of them are audited by big 4 accounting firms (I called CAST and verified), China is growing 8 to 10% per year, China has a fed rate of about 6.5% - so they have more levers to use to prime growth and they just passed a huge (600b) stimulus package (China moves to boost economy). While the consumer in the States is pretty much tapped out, Chinese consumers are not knee-deep in debt and consumer spending should ramp up steadily over the next decade. Jubak agrees (Global economy depends on China). So there!
Faithful readers may recall that 5 weeks ago I started a China-value portfolio. It is down 19% since I started it, but the Russell 3000 is down 26% in the same stretch. Aha! The best stocks have been XIN (a real estate company) and ADY (a baby formula company). They are up 12% and 25% respectively. The worst has been STP, down a whopping 66%. Thankfully I have bought them at the bottom (I hope).
Now I know some people think I am crazy for investing in these Chinese companies, and perhaps I am. But here are some thoughts: many of them are audited by big 4 accounting firms (I called CAST and verified), China is growing 8 to 10% per year, China has a fed rate of about 6.5% - so they have more levers to use to prime growth and they just passed a huge (600b) stimulus package (China moves to boost economy). While the consumer in the States is pretty much tapped out, Chinese consumers are not knee-deep in debt and consumer spending should ramp up steadily over the next decade. Jubak agrees (Global economy depends on China). So there!
Friday, November 07, 2008
Recession to the Mean
Wow, I looked at the MagicDiligence site today and guess what? He is less than 1% ahead of the S&P 500. I think at one time, SDA was 10% ahead. Still many years to go until we can really judge whether it is possible to beat the indices, but so far it has been a struggle all-around. It is funny (in an ironic way, not a "ha-ha" way), but my mechanical approach is also leading the S&P by the exact same margin. You will note of my three new stocks last week, PRGX had a big week. Next week it looks like we'll have at least two new entries: HLF and GHM. HLF has been cut in half (ha,ha) recently and is about $20. That seems like a pretty good deal as they now have a 4% dividend and even with lower guidance, they expect to earn $3.5 next year. GHM has had a real roller coaster ride in 2008. They were $16-$17 a share back in January and then spiked as high as $50 in the summer (I just noticed that they split as well). Now they are back to $13.60.
| Symbol | Date | Original | Current | Dividend | S&P O | S&P D | Stock Chg | S&P Chg | Diff |
| DTPI | 2/2/08 | 4.75 | 3.58 | - | 139.58 | 2.00 | -24.6% | -31.3% | 6.7% |
| AIRV | 2/13/08 | 5.08 | 4.92 | - | 136.37 | 2.00 | -3.1% | -29.7% | 26.6% |
| CITP | 2/16/08 | 9.98 | 5.09 | - | 135.14 | 2.00 | -49.0% | -29.1% | -19.9% |
| PRXI | 2/16/08 | 4.29 | 1.10 | - | 135.14 | 2.00 | -74.4% | -29.1% | -45.3% |
| CAST | 2/23/08 | 5.06 | 2.25 | - | 135.62 | 2.00 | -55.5% | -29.3% | -26.2% |
| GSB | 3/12/08 | 2.08 | 1.15 | - | 131.36 | 2.00 | -44.7% | -27.0% | -17.7% |
| IGC | 3/12/08 | 3.70 | 2.77 | - | 131.36 | 2.00 | -25.1% | -27.0% | 1.9% |
| LGTY | 3/12/08 | 6.70 | 5.05 | - | 131.36 | 2.00 | -24.6% | -27.0% | 2.4% |
| MRX | 3/12/08 | 19.45 | 13.21 | 0.08 | 131.36 | 1.36 | -31.7% | -27.5% | -4.2% |
| DEPO | 3/22/08 | 2.74 | 1.90 | - | 132.08 | 1.36 | -30.7% | -27.9% | -2.7% |
| NVTL | 3/22/08 | 8.98 | 5.32 | - | 132.08 | 1.36 | -40.8% | -27.9% | -12.8% |
| VRGY | 3/22/08 | 17.42 | 12.83 | - | 132.08 | 1.36 | -26.3% | -27.9% | 1.6% |
| DLX | 4/6/08 | 19.58 | 11.54 | 0.50 | 136.89 | 1.36 | -38.5% | -30.4% | -8.1% |
| NTRI | 4/6/08 | 14.94 | 14.78 | 0.36 | 136.89 | 1.36 | 1.3% | -30.4% | 31.8% |
| IUSA | 4/6/08 | 5.28 | 3.82 | - | 136.89 | 1.36 | -27.7% | -30.4% | 2.8% |
| LRCX | 4/11/08 | 41.08 | 21.04 | - | 133.38 | 1.36 | -48.8% | -28.6% | -20.2% |
| SLXP | 4/11/08 | 6.47 | 10.17 | - | 133.38 | 1.36 | 57.2% | -28.6% | 85.8% |
| CHRD | 4/19/08 | 5.03 | 3.47 | - | 138.48 | 1.36 | -31.0% | -31.2% | 0.2% |
| QXM | 4/26/08 | 6.26 | 2.52 | - | 139.60 | 1.36 | -59.7% | -31.8% | -28.0% |
| MDP | 5/9/08 | 33.79 | 18.43 | 0.43 | 138.90 | 1.36 | -44.2% | -31.4% | -12.7% |
| OMPI | 5/9/08 | 7.11 | 5.58 | - | 138.90 | 1.36 | -21.5% | -31.4% | 9.9% |
| PPD | 5/9/08 | 43.45 | 38.15 | - | 138.90 | 1.36 | -12.2% | -31.4% | 19.3% |
| ELNK | 5/25/08 | 9.21 | 6.70 | - | 137.64 | 1.36 | -27.3% | -30.8% | 3.6% |
| FTAR.ob | 5/25/08 | 4.37 | 3.12 | - | 137.64 | 1.36 | -28.6% | -30.8% | 2.2% |
| CHKE | 5/31/08 | 27.25 | 19.11 | 0.50 | 140.35 | 1.36 | -28.0% | -32.2% | 4.1% |
| APKT | 7/5/08 | 4.62 | 4.17 | - | 126.31 | 0.69 | -9.7% | -25.1% | 15.4% |
| CSKI | 7/5/08 | 11.06 | 9.76 | - | 126.31 | 0.69 | -11.8% | -25.1% | 13.4% |
| VALU | 7/5/08 | 32.00 | 33.50 | 0.80 | 126.31 | 0.69 | 7.2% | -25.1% | 32.3% |
| QCOR | 7/26/08 | 4.84 | 8.46 | - | 125.48 | 0.69 | 74.8% | -24.6% | 99.4% |
| MSTR | 8/1/08 | 60.56 | 37.54 | - | 126.16 | 0.69 | -38.0% | -25.1% | -13.0% |
| NVDA | 8/8/08 | 11.00 | 8.72 | - | 129.37 | 0.69 | -20.7% | -26.9% | 6.2% |
| SWIR | 8/8/08 | 12.41 | 8.30 | - | 129.37 | 0.69 | -33.1% | -26.9% | -6.2% |
| CF | 8/8/08 | 134.65 | 60.84 | - | 129.37 | 0.69 | -54.8% | -26.9% | -27.9% |
| SIGM | 8/8/08 | 15.93 | 9.86 | - | 129.37 | 0.69 | -38.1% | -26.9% | -11.2% |
| EGMI.OB | 9/5/08 | 0.69 | 0.33 | - | 124.42 | 0.69 | -52.2% | -24.0% | -28.2% |
| KHD | 9/15/08 | 20.68 | 14.71 | - | 126.09 | 0.69 | -28.9% | -25.0% | -3.9% |
| TTWO | 9/22/08 | 16.57 | 11.74 | - | 124.12 | 0.69 | -29.1% | -23.8% | -5.3% |
| SCMP | 9/29/08 | 8.29 | 7.36 | - | 120.85 | - | -11.2% | -22.3% | 11.1% |
| DTLK | 9/29/08 | 4.34 | 2.89 | - | 120.85 | - | -33.4% | -22.3% | -11.1% |
| TRA | 9/29/08 | 28.42 | 19.93 | - | 120.85 | - | -29.9% | -22.3% | -7.5% |
| MSB | 10/10/08 | 11.37 | 10.95 | 1.25 | 88.50 | - | 7.3% | 6.1% | 1.2% |
| UEPS | 10/10/08 | 14.58 | 12.25 | - | 88.50 | - | -16.0% | 6.1% | -22.0% |
| TSCM | 10/17/08 | 3.67 | 3.62 | - | 93.21 | - | -1.4% | 0.7% | -2.1% |
| EME | 10/31/08 | 17.77 | 16.27 | - | 96.83 | - | -8.4% | -3.1% | -5.4% |
| CTCM | 10/31/08 | 7.40 | 6.02 | - | 96.83 | - | -18.6% | -3.1% | -15.6% |
| PRGX | 10/31/08 | 4.24 | 4.92 | - | 96.83 | - | 16.0% | -3.1% | 19.1% |
| Totals | -23.3% | -24.1% | 0.9% | ||||||
| 53.7% of stocks beat the S&P 500 Benchmark | |||||||||
| S&P C | 93.86 | ||||||||
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