Friday, December 28, 2012

Cliff Notes

Cliff Notes - Dec 28th 2012

Wow,  can people believe the representatives we elected?  All I see is positioning by the parties so they will not get blamed when we go over the cliff.  I see no real progress. I see no compromise, even though Simpson-Bowles printed the road map two years ago when asked by leaders of both parties to do that.  I try not to get political on my blog, but this isn't even about the election, it is about doing what is best for the long term health of our country.

And then the stock market is stunning as well.  Did people see the Rick Santelli rant yesterday (Santelli Goes On Mega Rant)?  I usually think he goes too far, but for some reason, this one struck a chord with me.  I have heard ZeroHedge state "that the market is pricing in the fiscal cliff being averted and the market doesn't realize it must crash for that to happen."

Our country is broken and needs to be fixed.  And all we get is1 peacocking from Washington politicians. And then I read someone say that the problem with our economy in the inequality of income.  I do not think that is the ultimate cause.  Why do we have inequality of income? That is the real question.  Do people think this might be a partial cause?

Education Week: U.S. Graduation Rate Continues Decline

Think about that. In our 50 largest cities, only 53% of children graduate from high school!  That is frightening. What hope can these kids have regarding the American dream?  Don't get me wrong, I am very moderate politically and socially quite liberal.

While the "fiscal cliff" looms, there is a much bigger problem. We are going broke as a country.  Tim Geithner just said we are about to hit the debt ceiling (U.S. will hit debt limit on Dec. 31, Treasury Department says).  Unless the politicians actually do SOMETHING, that isn't going to change.

Ok, I guess I have had my rant.  Next time, I should probably not post until I have had my coffee.
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Thursday, December 27, 2012

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:


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

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


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%
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