Speaking of "Mo" it can have a double meaning, and tonight I am thinking about USMO, which reported another very solid quarter this morning (USA Mobility Reports Third Quarter Operating Results; Board Declares Regular Quarterly and Special Cash Distribution). Now USA Mobility is perhaps the most boring company in the world. They are in the Pager business. Yes I know, Pagers are so "yesterday". Does anyone even use them any more? That has been my fear, not exactly a growth business, so I have never owned USMO, despite them being on the list since about the beginning. And I am not the only fearful one. MagicDiligence wrote them up about 22 months ago and said to "avoid", for precisely the same reason. Guess what? They're up 62% since then! Not a knock on Steve, I certainly felt the same way.
You may ask, "how can a company with minimal future prospects return 62% in 22 months?"
Cash Flow Baby! USMO has cut their expenses to the bone and then I suspect the attrition has been slower than expected. With a ton of cash on the books and a Earnings yield around 24% they can and do pay a hefty dividend as they don't need to grow their capital to fund growth. I think there is a lesson to be learned here. Our human bias is to discount a stock as it has limit growth opportunities. But if it is a high ROIC business, requiring little to no capital and has a high earnings yield, it can still be a "good" company. The chart below shows USMO's returns at various purchase dates (for one year holding periods):
|Date||Stock||Initial Price||End Price||Percent Change|
|1/26/2007||USMO||$ 16.84||$ 11.82||-30%|
|2/27/2007||USMO||$ 16.37||$ 10.63||-35%|
|3/26/2007||USMO||$ 16.08||$ 7.16||-55%|
|4/27/2007||USMO||$ 17.49||$ 6.80||-61%|
|7/3/2007||USMO||$ 22.48||$ 7.49||-67%|
|7/30/2007||USMO||$ 21.33||$ 8.14||-62%|
|8/30/2007||USMO||$ 15.89||$ 11.27||-29%|
|9/27/2007||USMO||$ 14.58||$ 11.19||-23%|
|11/2/2007||USMO||$ 14.00||$ 9.65||-31%|
|11/28/2007||USMO||$ 12.14||$ 10.43||-14%|
|12/28/2007||USMO||$ 13.00||$ 10.59||-19%|
|1/25/2008||USMO||$ 10.33||$ 10.81||5%|
|2/26/2008||USMO||$ 9.83||$ 10.32||5%|
|4/25/2008||USMO||$ 5.56||$ 9.80||76%|
|5/28/2008||USMO||$ 6.43||$ 11.18||74%|
|7/2/2008||USMO||$ 6.18||$ 12.76||106%|
|7/29/2008||USMO||$ 6.72||$ 13.10||95%|
|8/29/2008||USMO||$ 9.51||$ 13.04||37%|
|9/26/2008||USMO||$ 9.27||$ 12.66||37%|
|10/31/2008||USMO||$ 7.99||$ 10.90||36%|
|11/26/2008||USMO||$ 8.86||$ 10.22||15%|
|12/26/2008||USMO||$ 8.79||$ 11.01||25%|
|1/23/2009||USMO||$ 8.97||$ 10.88||21%|
|2/27/2009||USMO||$ 7.58||$ 11.26||49%|
|4/24/2009||USMO||$ 9.01||$ 14.02||56%|
|5/29/2009||USMO||$ 10.51||$ 14.08||34%|
|6/29/2009||USMO||$ 11.95||$ 13.28||11%|
|8/28/2009||USMO||$ 12.07||$ 15.22||26%|
|9/25/2009||USMO||$ 11.72||$ 16.15||38%|
|10/30/2009||USMO||$ 10.09||$ 16.91||68%|
|11/27/2009||USMO||$ 9.68||$ 16.91||75%|
|12/31/2009||USMO||$ 10.43||$ 16.91||62%|
|1/22/2010||USMO||$ 10.31||$ 16.91||64%|
|2/26/2010||USMO||$ 10.67||$ 16.91||58%|
|3/25/2010||USMO||$ 12.35||$ 16.91||37%|
|4/23/2010||USMO||$ 13.55||$ 16.91||25%|
|5/28/2010||USMO||$ 13.83||$ 16.91||22%|
|6/29/2010||USMO||$ 12.87||$ 16.91||31%|
|7/29/2010||USMO||$ 14.40||$ 16.91||17%|
|9/2/2010||USMO||$ 14.96||$ 16.91||13%|
|9/24/2010||USMO||$ 16.15||$ 16.91||5%|
Overall, 19% per year on average. Not sexy, but respectable. It was overpriced in the early days.
Overview of Strayer Education
Strayer announced their earnings this morning, and as I sucked down my cup of joe, I thought, "this isn't so bad, it is amazing the stock is down over 50% from their highs." Here is the press release: (Strayer Education, Inc. Reports Third Quarter 2010 Revenues and Earnings; and Fall Term 2010 Enrollments).
Some highlights include:
- Revenues +29%
- EPS +42% at $1.72
- Fall enrollment +12%
- Increasing dividend by 33% from $3.00 to $4.00
- $150m share repurchase
- 2011 guidance between $11.30 and 11.50 a share vs $9.65 this year
Well, I was right. The stock did not crash and burn. It ended up slightly on the day.
I did a little buying and selling today. I sold my VALU for a nice gain (24%). Actually one reason I sold them was because I could. The volume is typically so light on VALU that even a small fish like me has trouble making a sale.
I split my money then between SNDK and STRA, my two newest stocks as I felt they had both had decent earnings that the market did not fully appreciate. That keeps my total # of stocks at 20, which seems to me to be a nice number.