Friday, July 31, 2009
It has been a wild ride, no matter how you invested. I had to laugh today, there was so much coverage of the "Cash for Clunkers" program. I laugh because the overall stimulus package was $700b and CFC was a meager $1b. Why don't they cover the programs around the other $699b? And then they actually have analysts on TV telling you how you can make money in investments regarding CFC... call me a cynic.
I will likely be buying some stocks on Monday as I try to use my mechanical portfolio for clues. It does look like it has been an active week for shake-ups on the lists, so I should have some names to pick from... I'll probably buy three or four to replace VM and ICO which were sold this week. If I ran the screen today I'd get a lot of choices. On the top 30 screen I'd get LO, BR and CBI. On the top 50 screen I'd get CBZ, CBI, DRC, JEC, and WTW.
Hmmm, some interesting names there. I'd certainly be interested in people's thoughts if I go for three or four.
LO - obviously a cigarrette company. They pay a terrific 5% dividend and just had a bang-up quarter.
BR - I owned them last year and was sorry I sold them. They seem like a very solid choice. They announce earnings on August 11th and have generally been bullish despite the financial turmoil.
CBI - I discussed them earlier this week. They look like a strong contender.
CBZ - Hmm, I have never heard of them. They look like BBSI, providing business services fro small companies. Their data is as of March 31st, but they just announced earnings this week, so I'll have to see if they are still worthy.
DRC - heck, if KBR was on, why not DRC? (these are both spin-offs from Halliburton). They just announced their earnings this week (and are part of the calc) and it looks to me like they had a surprisingly good quarter.
JEC - another of the many construction firms (like KBR and FLR) on the screen of late. I have noticed that their stock has gone nowhere in past 3 months, this is strange as KBR is up 30% and FLR is up 40%. What gives? Is JEC now undervalued or is there something wrong with them?
WTW - Finally, weight watchers, which was actually profiled in Barrons the other day as a buy. I saw where their competitor, NTRI got crushed this week. But WTW has a different model that doesn't require a large upfront cash payment. They also have a 2.7% dividend. I'll certainly give WTW some weighty consideration.
Thoughts? I'll post the official list of options on Sunday.
Thursday, July 30, 2009
This came out mid-day and I skimmed it quickly, but didn't think much of it as it basically said the investigation found no wrong-doing. Then the stock tumbled down about 15%. After that I read the release a little closer. Here is the sentence that caused the problem:
During the course of this independent internal investigation, the senior management team and certain management personnel devoted significant time and efforts to assist with the investigation, and had less time to spend on the Company's operations. The Company believes that this has contributed to a decline in the Company's sales in June 2009 and this decline has continued in July. The Company's preliminary estimate of revenues for the quarter ended June 30, 2009 is approximately Rmb210 million, subject to normal book closing and adjustment procedures. In addition, the costs of this independent internal investigation have increased the Company's general and administrative expenses substantially for the quarter ended June 30, 2009 and will also increase the general and administrative expenses for the quarter ending September 30, 2009.
I don't know what my gentle readers think, but it sounds like a serious cop-out to me. Either that was the most expensive anonymous letter ever, or things are not going as well as they expected.
Oh well, can't have good news all the time.
Had earnings in two of my stocks today, ENDP and AIRV. They were both good. In fact, I have had good earnings pretty much across the board for my stocks thus far, which is very different from the past two years, where every earnings season was nail-biting time and I commonly saw MFI stocks trounced 10 to 15%. FRX, PFE, and ICO are my other companies that have announced and I can say I don't have a clunker yet.
ENDP (Endo Pharmaceuticals Reports Strong Second Quarter 2009 Financial Results) is up 2.8% and up 25% since I bought it. They guided to the high end of their range, about $2.70 per share.
AIRV has to have one of the most convoluted press releases on earnings I have ever seen. They have weird revenue streams, so they use "billings" as a proxy. Then they're owed about 14m from a bankrupt Nortel, so all numbers are stated with them in and out. I do think they'll get most of that money,which would certainly boost the stock (Airvana Reports Second Quarter 2009 Financial Results). AIRV is also up about 3% today and 5% since I bought them. I like the space AIRV is in and here is a quote from their release:
“Airvana’s second quarter results exceeded our expectations as Billings grew 44 percent year-over-year,” said President and Chief Executive Officer, Randy Battat. “Both our EV-DO and fixed-mobile convergence (“FMC”) product lines continued to perform well, and the business continued to generate solid profitability and healthy levels of operating cash flow. This enabled us to repurchase an additional $3.7 million of our common stock during the quarter while adding $12.6 million in cash and investments to our balance sheet, raising our total cash and investments to $211.0 million.”
“Our Billings in the second quarter reflected a significant increase in EV-DO product shipments,” Battat said. “Driven in large part by the popularity of smart phones, PDAs and other devices, mobile data traffic at major operators continues to be the fastest-growing segment of the telecommunications market. This is generating strong demand for Airvana’s EV-DO products as operators strengthen and expand their 3G networks. The growth in second quarter Billings reflected new coverage deployments and expansion of existing deployments – particularly in the North American market – as well as growing demand for our radio network controllers and new channel cards for second and even third EV-DO carriers as operators expand the capacity of their existing EV-DO networks.”
“Airvana made significant strides in FMC product and partnership development in the second quarter,” said Battat. “FMC Billings growth in the second quarter reflected shipments of prototype and trial equipment to operators with active femtocell programs worldwide, as well as engineering services to develop femtocell features requested by key operators.”I think they have pretty good upside once the NT deal is behind them and they start working with Ericsson.
Wednesday, July 29, 2009
They have a 908m market cap, they have 121m in excess cash and i calculate a 13% earnings yield and 145% return on capital. One thing I found intriguing was that when they announced their earnings in May, the stock dropped from $14.55 to $12.32. Why? I think it was their revenues, which dropped YoY from $63m to $56m. But if you did a little digging, you'd find out that was virtually all exchange rate driven. On a constant currency basis, they were up a very snappy 19%.
I don't have the exact numbers, but back around April 1st the exchange rate was about 9 South African Rands to a dollar. It is currently around 7.9. which is about 5% worse than June 2008 (to put it in perspective, April 1st 2009 was a 34% decline over April 1st 2008!).
What does all of this mean? Well, while in USD they were down over 10% in q1, it would seem that in q2 (assuming they maintain the 19% constant currency rate) they will show 13 to 15% growth is USD.
How many companies are showing 13 to 15% top line (and bottom line) growth YoY? I expect to see their income grow from 14m in q1 to $26 to $28m in q2... driven by more favorable exchange rates and real growth.
They are trading at $16.45 down from a 52 week high over $27. I think there is a lot of upside here. Stay tuned.
CBI hit the charts. This is a strange company, probably as poorly named as American Dairy, which sells infant formula in China. CBI is Chicago Bridge and Iron. So where is home for CBI? Well, if you look at their profile, it says the Netherlands! If you look at their recent quarterly results (CB&I Reports Second Quarter 2009 Results) byline, it says The Woodlands, Texas (which I think is outside of Houston).
Well, no sign of Chicago anywhere, how about the Bridge and Iron? Here is their Yahoo Business summary, you decide!
Chicago Bridge & Iron Company N.V., together with its subsidiaries, operates as an engineering, procurement, and construction company. It provides liquefaction and regasification facilities consisting of terminals, tanks, and associated systems, as well as liquefied natural gas (LNG) tanks on a stand-alone basis to the LNG sector. The company also serves energy processes sector specializing in offshore structures, refinery process units, petrochemical process units, gas processing facilities, power plants, pipelines, hydrogen/synthesis gas plants, and sulfur removal and recovery. In addition, Chicago Bridge provides steel structures comprising above ground storage tanks, elevated storage tanks, pressure vessels, and other specialty structures, such as processing facilities and nuclear containment vessels for the steel plate structures market sector. Further, it offers licensed technology for customers in the petrochemical, refining, and gas processing industries, as well as heat transfer equipment and performance catalysts. Chicago Bridge has operations in North America, Europe, Africa, the Middle East, the Asia Pacific, and Central and South America. The company was founded in 1889 and is based in The Hague, the Netherlands
I didn't see Bridge or Iron mentioned once! So are they a buy? If you just follow my Mechanical rules, the answer is "yes"! And I'd do well, just to follow the rules. They look cheap from a valuation standpoint, but they seem to pay more in Taxes than most firms. I will likely stick a toe in the water. Here are my calcs:
|+||Operating Income After Depreciation||308.57|
|-||Minority Interest - Income Account||5.59|
|=||Income for Calculation||302.98|
|Diluted Shares Outstanding||96.211|
|+||Market Cap Calc||1,291.15|
|+||Debt in Current Liabilities||40.17|
|Cash and Short-Term Investments||89.23|
|+||Property Plant and Equipment - Net||340.74|
|+||Other Current Assests||198.51|
|-||Current Liabilities - Other||1,119.61|
Not too shabby.
The other new company is Weight Watchers: WTW. Hmm, I don't see them. Never mind.
Not much else to add. UEPS had a terrific day today (up about 10%) and allowed me to manage a decent day in a down market. I was glad I sold VM at the announcement of the merger yesterday. Today they dropped 6%, I assume because Sprint dropped, though I didn't dig into it. VPHM, which has been on the screen since the beginning of time had a solid quarter. Ok, I am off to eat dinner.
Tuesday, July 28, 2009
Not following the rules: I will admit that I have not followed the rules much in MFI. The one I break the most has been not holding for a year. I went back to see if that has hurt me. It was hard to measure, but I decided the best way was to take all the stocks I have sold early and figure out how they would have done had I held them the full year. What did I find? If I had held all the stocks I sold early a full year, they would have averaged being down 8%. As it was, they were down on average 5%... albeit over a period less than a year. I suspect if you annualize the 5% loss, it is probably very close to the 8% annual loss. So it has been a wash in my opinion... the big winner is Fidelity. I am committing to being better as I move my portfolio back to pure MFI. Here is my current portfolio, UTA was up over 20% today on high volume (note ICO and VM are gone):
I am actually 13% in cash, but I expect to start seeing a lot of stocks pop up in the Mechanical portfolios as earnings season plows on. Early August last year had huge turnover on the lists.
I will also note that the Decision Moose (DecisionMoose) just made the first move I have seen in the 8 months I have been watching it to stocks. What did it buy? EPP - that is the ETF for Asia excluding Japan. Look at my MFI portfolio: KHD, CHCG, GRVY, CMED, GIGM, WH, CDII, CSKI, QXM and UTA all fit into that bucket.
Finally, my Mechanical Portfolios continue to steamroll the opposition. Even stocks that I panned like QLTI, ONTY and INFI are all up sharply. Shows what I know.
|Symbol||Date||Original||Current||Dividend||S&P O||S&P D||Stock Chg||S&P Chg||Diff|
|70.5% of stocks beat the S&P 500 Benchmark||Closed||-19.5%||-35.1%||15.6%|
As I mentioned, I did buy RTN and GIGM on Monday. I also got some most excellent news this morning that Sprint was buying out VM (Sprint Nextel To Acquire Virgin Mobile USA). There must have been rumors on Monday as the stock went from $3.88 to $4.21. Today it moved up to $5.19. I sold my shares today (a 20% gain for me), there doesn't seem to be much reason to get into the arbitrage game. I also sold my ICO yesterday, as they also had good earnings (International Coal Group Reports Second Quarter 2009 Results). The sale of ICO continues my push to get back to pure MFI investing. ICO was an excellent investment, ending up 54% for me.
More this evening.
Saturday, July 25, 2009
|Symbol||Date||Original||Current||Dividend||S&P O||S&P D||Stock Chg||S&P Chg||Diff|
|54.6% of stocks beat the S&P 500 Benchmark||Closed||-27.1%||-35.5%||8.3%|