Talking Ed Update

As my readers know, I follow (at times) Ed's Talking Stock
blog. He has been blogging (incredibly prolific) since July 2010.  He is primarily a day trader, but he swings for the fences.  He loves to buy 3x ETFs and is in huge into SPXU right now.  Back in December 2010 I commented on his blog that he should be more of an investor.  He said the only difference between an investor and a daytrader was their time horizon and that it was not possible to make money in the market without changing positions frequently.

I took that as a challenge and created a "spiffy 50" portfolio that I only change once a year and track against him (he regularly posts his daily and monthly results). My spiffy 50 is largely the MFI index, with perhaps 5 or 6 additions.  Frankly, my spiffy 50 struggled the first year (I had a few Chinese RTOs) and even this year is lukewarm at +2.0%.  But Ed has struggled mightily and is down (now) over 42% since December 2010 and is down double digits in 2012.

stock	Initial	Shares	Current	Daily Change	Y-day	Current Value	Total Change
AFAM	16.58	108.56	21.36	-3.0%	2,389	2,319	28.8%
AMED	10.91	164.99	11.44	-6.2%	2,011	1,887	4.9%
APOL	53.87	33.41	26.63	-2.1%	909	890	-50.6%
AMAT	10.71	168.07	10.92	0.3%	1,830	1,835	3.5%
ASTX	1.89	952.38	2.29	-7.7%	2,362	2,181	21.2%
CJES	20.93	86.00	18.53	-1.3%	1,615	1,594	-11.5%
CPLA	36.05	49.93	27.00	1.8%	1,324	1,348	-25.1%
CECO	7.97	225.85	3.69	-21.7%	1,064	833	-53.7%
CRAY	6.47	278.21	11.37	-8.5%	3,458	3,163	75.7%
CPIX	5.38	334.57	6.04	-1.0%	2,041	2,021	12.3%
DELL	14.63	123.03	11.79	-0.8%	1,462	1,451	-19.4%
DLX	22.76	79.09	27.64	-2.4%	2,240	2,186	23.6%
DLB	30.51	59.00	35.25	0.0%	2,080	2,080	15.5%
XLS	9.05	198.90	9.47	0.7%	1,870	1,884	6.9%
LNC	19.52	92.21	19.84	-1.1%	1,849	1,830	2.5%
FRX	30.26	59.48	32.97	-1.7%	1,996	1,961	9.0%
GTAT	7.24	248.62	4.91	-4.1%	1,273	1,221	-32.2%
GNW	6.55	274.81	4.48	-11.1%	1,385	1,231	-31.6%
GTIV	6.75	266.67	6.53	-2.0%	1,776	1,741	-3.3%
FCX	36.79	48.93	33.49	-0.5%	1,647	1,639	-7.6%
ESI	56.89	31.64	35.78	-7.8%	1,228	1,132	-37.1%
KLAC	48.25	37.31	50.78	-0.3%	1,899	1,894	6.7%
KLIC	9.25	194.59	10.87	-1.8%	2,154	2,115	17.5%
LRCX	37.02	48.62	34.42	0.0%	1,673	1,674	-7.0%
LPS	15.07	119.44	24.20	-1.9%	2,947	2,891	61.9%
MEDW	12.82	140.41	13.24	-4.0%	1,936	1,859	3.3%
MANT	31.24	57.62	20.94	-4.5%	1,264	1,207	-31.6%
MDF	7.47	240.96	8.24	-2.3%	2,031	1,986	10.3%
MSFT	25.96	69.34	29.41	-0.2%	2,043	2,039	14.8%
MNTA	17.39	103.51	13.94	-2.0%	1,472	1,443	-19.8%
NSU	5.53	325.50	3.38	-2.9%	1,133	1,100	-38.4%
NOC	58.48	30.78	65.84	-0.5%	2,038	2,027	14.3%
NVMI	7.37	244.23	7.82	-4.2%	1,993	1,910	6.1%
PDLI	6.20	290.32	6.64	-2.2%	1,971	1,928	11.9%
PETS	10.38	173.41	9.60	-1.2%	1,685	1,665	-5.1%
PWER	3.91	460.36	4.96	-0.8%	2,302	2,283	26.9%
RTN	48.38	37.21	54.91	-1.0%	2,064	2,043	15.6%
SAI	12.29	146.46	11.64	0.6%	1,694	1,705	-5.3%
SNDK	49.21	36.58	41.43	0.7%	1,504	1,515	-15.8%
SAVE	15.60	115.38	20.02	-6.9%	2,482	2,310	28.3%
TNAV	7.81	230.47	5.67	-1.7%	1,330	1,307	-27.4%
TER	13.63	132.06	14.49	-1.5%	1,943	1,914	6.3%
TSRA	16.75	107.46	13.92	-3.7%	1,553	1,496	-16.9%
USB	27.05	66.54	33.32	-0.5%	2,229	2,217	24.6%
USNA	30.37	59.27	43.87	-2.5%	2,666	2,600	44.5%
UIS	19.71	91.32	18.90	-2.7%	1,774	1,726	-4.1%
EGY	6.04	298.01	7.34	0.1%	2,184	2,187	21.5%
VECO	20.80	86.54	34.60	-3.1%	3,090	2,994	66.3%
VPHM	27.39	65.72	21.04	-3.1%	1,427	1,383	-23.2%
VG	2.45	734.69	2.00	11.7%	1,315	1,469	-18.4%
Totals				-2.3%	93,607	91,312	-8.2%
Ed	starting 12/3/10						-42.6%
MFI Index							-3.8%
Russell 3000							11.3%
Ed 2012							-18.3%
Spiffy 50 2012							2.0%

Stock Update

I had two stocks report earnings last night, LNC and GTAT (not in my dividend portfolio).

Lincoln Financial Group Reports Second Quarter 2012 Results

I thought the LNC numbers were very promising.  I do believe that when the Federal reserves takes off the artiificial cap on interest rates (aka "jelly doughnuts" David Einhorn: The Fed's Jelly Donut Policy  )  that the LNC's of the world will shoot upwards... I can wait. I think the table below explains why I think that:

diluted share, in the second quarter of 2011. 

	As of or For the		As of or For the
	Quarter Ended		Six Months Ended
(millions of dollars except per share data)	2012	2011	2012	2011
Net Income (Loss)	$         324	$           304	$           569	$           617
Net Income (Loss) Available to Common Stockholders	320	303	571	617
Net Income (Loss) Per Diluted Share Available to Common Stockholders	1.10	0.95	1.94	1.92
Income (Loss) from Operations	322	326	617	648
Income (Loss) from Operations Per Diluted Share Available to Common Stockholders	1.09	1.01	2.11	2.01
Average Diluted Shares	290.0	319.9	293.5	321.8
ROE (Income from Operations)	12.0%	11.6%	11.6%	11.6%
ROE (Net Income)	12.1%	10.8%	10.7%	11.1%
Book Value per Share, Including AOCI	$50.77	$40.70	$50.77	$40.70

For those of you a bit rusty on accounting acronyms, AOCI stands for Accumulated Other Comprehensive Income, which is essentially unrealized gains of investments they do not actively trade. So their book value is over $50. Even if you pull out the AOCI, they are pushing $39.  Many companies have moved away from the AOCI concept and carry the majority of their investments at market.  So we have a company, that is profitable, trading for under $20 a share and has a book value of $50. That is called a "Margin of Safety". As I said, I can wait.

GTAT is (of course) a company that has been on the MFI lists for the past 30 years (exaggeration). They have a market cap of 560m, with $350m of cash. They are trading at under 4x ttm earnings. If they do anything at all, they should double.  Of course people believe Solar is dependent on Govt subsidies, which are likely drying up.  But if there is a shakeout in the solar space, GTAT will likely be a survivor with their balance sheet. Again, I can wait.  They have earned 85 cents per share in 1/2st half 2012 and affirmed guidance to make between $1.30 and 1.40 for the year.  This is a stock trading under $5.

GT Advanced Technologies' 2nd-qtr beats Street estimates