Random Musings

Twitter, MLMs and Other Random Musings

Snowy New England morn here in the Nutmeg State (really, is that the best we could do?). Actually getting windy outside and a layer of ice is forming on top the 5 inches of snow.  Good thing I have absolutely nothing to do today!

I joined Twitter a couple of months ago.  I have to say that I really like it.  I have not yet tweeted, but following people and organizations (like NPR) is leading me to see and think about things I wasn't thinking about.  Also, I have found a few people that are truly funny (in 140 words or less).

One person I follow is called "taxgirl". I started following her as she had some good insights on the Fiscal Cliff.  Here is a "re-tweet" I saw from her recently about the US Federal Budget that really put things in perspective:

Diane Hessan ‏@CommunispaceCEO

U.S. Budget in our terms: Income: $21,000 Spent: $38,200 New Debt: $16,500 Credit Card borrowing: $142,700 Budget cuts so far: $38.

Retweeted by Kelly Phillips Erb

Then here is one of the funnier people I am following:

Josh Gondelman ‏@joshgondelman

Put on a little holiday weight. I've been eating since Groundhog Day.

MLM Thoughts

One of the stocks on my MFI "watch list" has been NUS.This is Nu Skin, a Multi-level marketing
(MLM) company that sells personal care goods (like cosmetics, anti-aging lotions etc) worldwide.  They grew revenues 22% last quarter and grew earnings 15%.  Since I put them on my watch list, they have tumbled 26% from $44 to $32.  What gives? Is this a buying opportunity?

The answer may lie with Bill Ackman. He is a high-profile investor who makes highly concentrated investments.  I saw where he invested $60m in General Growth Properties and the bottom of the market that is now worth over $1b.  Nice.  He came out a year ago very bullish on the Hong Kong dollar (not sure how that has worked.  He is a huge fan of JCP (not sure I get that, I was in a JCP twice over the holidays and it is not a great shopping experience).  His latest mark is HLF, which is a stock that has often been on MFI screens.

HLF is also a MLM firm.  These are firms where you make money by selling goods, but also by recruiting more people to sell the goods.  Think Avon, Mary-Kay or Tupperware.  It has kind of a chain letter impact in that if you recruit 7 people, who each recruit 7 people who each recruit 7 people, you have a lot of people.  Anyway, Ackman has bought  up 20% of HLF as a short position. That is a huge bet. They are currently worth about $3b, when he initiated his short position, they were much higher... perhaps $7b. So 20% of $7b is (...carry the one...), $1.4b.

Now that is short bet is in place, he has come out guns a-blazing, bashing the company.  He gave a 300+ page presentation (Bill Ackman's Full Case Against Herbalife) on why their actual value is zero (probably over-reaching). I would encourage people to read through the pdf.  I only read about 130 pages, but it is some excellent research in my mind (though clearly slanted).  I think the slide that hit home for me was how they determine their revenues, it seemed like a very make-believe number that in no way actually comes close to tracking what cash actually comes in the door.

Anyway, I would not touch HLF with the proverbial 10ft pole, but not sue what to do about NUS.  I have noted that if one company in an industry is using improper approaches (think education stocks or home care stocks) then it is not a great leap to assume others are doing it as well.  I have until February to decide, but I will have to roll up my sleeves and see if NUS uses some of the same accounting treatments.

MFI Index

Here is a quick snapshot of my MFI Index for 2012, which only has three trading days left:

Stock	Start	Last Week	Current	YTD Change	Monthly Change
AFAM	16.58	19.84	19.49	17.6%	-1.8%
AMED	10.91	10.47	11.37	4.2%	8.6%
APOL	53.87	19.19	20.42	-62.1%	6.4%
AMAT	10.71	10.99	11.74	9.6%	6.8%
ASTX	1.89	2.78	2.76	46.0%	-0.7%
CJES	20.93	19.97	21.43	2.4%	7.3%
CPLA	36.05	27.67	27.87	-22.7%	0.7%
CECO	7.97	2.99	3.30	-58.6%	10.4%
CRAY	6.47	14.22	15.80	144.2%	11.1%
CPIX	5.38	4.48	4.27	-20.6%	-4.7%
DELL	14.63	9.72	10.36	-29.2%	6.6%
DLX	22.76	29.55	33.18	45.8%	12.3%
DLB	30.51	33.37	33.29	9.1%	-0.2%
XLS	9.05	11.61	11.74	29.7%	1.1%
EXPE	29.02	62.17	58.89	102.9%	-5.3%
FRX	30.26	35.46	35.14	16.1%	-0.9%
GTAT	7.24	3.37	2.91	-59.8%	-13.6%
GME	24.13	26.80	25.79	6.9%	-3.8%
GTIV	6.75	10.30	9.97	47.7%	-3.2%
GNI	110.25	82.21	88.12	-20.1%	7.2%
ESI	56.89	18.13	17.22	-69.7%	-5.0%
KLAC	48.25	46.57	49.18	1.9%	5.6%
KLIC	9.25	11.43	11.64	25.8%	1.8%
LRCX	37.02	35.12	36.45	-1.5%	3.8%
LPS	15.07	25.15	24.90	65.2%	-1.0%
MEDW	12.82	21.98	21.98	71.5%	0.0%
MANT	31.24	25.61	27.26	-12.7%	6.4%
MDF	7.47	11.24	11.26	50.7%	0.2%
MSFT	25.96	27.22	27.69	6.7%	1.7%
MNTA	17.39	10.70	11.49	-33.9%	7.4%
NSU	5.53	4.10	4.29	-22.4%	4.6%
NOC	58.48	68.30	70.17	20.0%	2.7%
NVMI	7.37	7.72	8.00	8.5%	3.6%
PDLI	6.20	8.35	7.80	25.8%	-6.6%
PETS	10.38	12.14	11.50	10.8%	-5.3%
PWER	3.91	4.15	4.26	9.0%	2.7%
RTN	48.38	58.63	59.31	22.6%	1.2%
SAI	12.29	11.89	11.54	-6.1%	-2.9%
SNDK	49.21	39.10	43.57	-11.5%	11.4%
SAVE	15.60	16.78	17.08	9.5%	1.8%
TNAV	7.81	8.09	7.82	0.1%	-3.4%
TER	13.63	15.64	16.54	21.3%	5.8%
TSRA	16.75	16.25	16.22	-3.2%	-0.2%
USMO	13.87	12.19	12.10	-12.8%	-0.7%
USNA	30.37	41.28	30.92	1.8%	-25.1%
UIS	19.71	17.28	17.40	-11.7%	0.7%
EGY	6.04	8.47	8.58	42.1%	1.3%
VECO	20.80	28.46	29.02	39.5%	2.0%
VPHM	27.39	24.79	22.67	-17.2%	-8.6%
VG	2.45	2.43	2.31	-5.7%	-4.9%
Totals	10,631	11,481	11,553	8.7%	0.6%

Dividend Stock Performance

I put together a similar chart on my Dividend Stocks. Note that if I bought during the quarter, I show the price I bought them at, not the Oct 1st price. I guess 3.5% for the quarter is pretty decent. The Russell 3000 is down about one percent in the same stretch.

Stock	Start	Last Week	Current	QTD Change	Weekly Change
AAPL	527.94	526.31	513.00	-2.8%	-2.5%
BHK	15.52	15.18	15.62	0.7%	2.9%
CSCO	19.10	20.41	20.06	5.1%	-1.7%
CSQ	10.17	10.19	10.18	0.1%	-0.1%
FCX	32.17	33.95	33.92	5.4%	-0.1%
FSC	10.98	10.78	10.64	-3.1%	-1.3%
HFC	41.27	46.52	46.30	12.2%	-0.5%
INTC	22.66	21.33	20.88	-7.9%	-2.1%
JPM	40.48	43.83	44.26	9.3%	1.0%
JQC	9.72	9.91	9.93	2.2%	0.2%
KMF	29.33	29.05	29.29	-0.1%	0.8%
MPC	54.59	62.57	62.01	13.6%	-0.9%
MSFT	29.76	27.54	27.09	-9.0%	-1.6%
O	40.89	41.05	41.03	0.3%	0.0%
OIBAX	6.54	6.68	6.67	2.0%	-0.1%
PGR	20.74	22.39	22.22	7.1%	-0.8%
PRE	74.28	82.50	80.34	8.2%	-2.6%
PVD	91.48	105.64	102.02	11.5%	-3.4%
SAI	12.04	11.78	11.30	-6.1%	-4.1%
SLCA	14.28	17.50	16.87	18.1%	-3.6%
STO	25.79	25.08	24.81	-3.8%	-1.1%
VIVHY	19.45	22.22	22.55	15.9%	1.5%
Totals				3.5%	-1.0%