I think this is an area I have been missing out so far- but no longer!
Telefonica S.A (TEF)
Yield: 5.47% 30% div growth rate 31% payout ratio
Beta: .81 PE: 10.48 PB: 3.9 (std not tang) Analysts: 2.0
Vodafone Group Plc (VOD)
Yield: 8.04%, 27% growth rate, !132% payout ratio red flag
Beta: PE: 22.43 PB: 6.2 (.81 std) Analysts: 1.6??
TU/TSE/T.To Telus *** (confusing, voting and nonvoting shares not sure I get it)
Yield: 6%, 25% growth, 56% payout ratio
Beta: .99 PE: 9.72 PB: 1.39 (std) Analysts: 2.53
BCE
Yield: 6.45% growth rate: ? cut last year makes this show negative, in reality- approx 10%? payout: 81%
Beta: .98 PE: 18.4 PB: 4.21 (1.4) Analysts: 2.55
T (AT&T)
Yield: 6.47 3% growth rate 80% payout
Beta: .66 PE:12.96 PB:1.53(std) Analysts: 2.12
VZ Verizon
Yield: 5.93 3% growth, 86% payout
Beta: .62 PB: 14.63 PE: 2.07 ANALYSTS: 2.18
FTE France Telecom S.A.
6.67%, recent cut, 90% payout
Beta: .63 PE: 11.54 PB:1.55 (std) ANALYSTS: 3
TI Telecom Italia SpA
4.22% yield, recent cut, 90% payout
Beta: .92 PE: 10.73 PB: .79 (std)ANALYSTS: 3.5
From payout and PE ratios, I am liking TU/TSE:T/T.To and TEF initial. VOD confuses me as it as a ridiculous payout ratio but a good analyst rating. AT&T seems like a stable, if somewhat boring, bet.
Now, chart time!
3mo: TEF, TU, TI and BCE outperform. VZ and T flat.
6mo: TEF outperforms. TSE under performs- TU does not do as poorly.
1yr: BCE drops like a stone, recovers some but still under performs. Most telecom companies do not fall as much as the S&P- thus not many have outperformed recently. Again TEF performs quite well. TI also outperforms, but rather jumpily.
5yr: TU/TSE outperforms initially, then slumps. TEF does the same, but recovers faster. VZ seems to under perform, as does TI.
TEF and TU seem to look rather good on the charts as well as on the ratios. T seems to trace the market for the most part- which isn't bad considering the dividend. I am not sure what the draw for VOD is- I see nothing to make me believe its 2.0 analyst rating.
I think I will add 15k TEF and TU positions, as well as a T position. However, I think I am going to look at technicals a bit and try to time it a bit better this time.
Thursday, August 13, 2009
Wednesday, August 5, 2009
Financials Again
Time to jump back into banking and the like, as this is where the real dividends are anyway. I was a bit scared to earlier, but I suppose its time to take another look. Last time there were a few names I tossed about at the end, so lets start with those.
AFL Aflac *****
2.81% yield, 20%+ growth, 41% payout ratio
Beta: 1.78 PE: 15.81 PB: 2.93 ANALYSTS: 2.29
BNS Bank of Nova Soctia
4.22% yield, 18%+ growth (recent cuts), 68% payout ratio
Beta: 1.29 PE: 16.12 PB: 2.42 ANALYSTS:3.14
Some I rejected before but I'll give another look:
BBT Financial Holding Company (div cut but yield still reasonable)
2.54% yield, 14% growth rate, 43% payout ratio
Beta: 1.55 PE: 13.16 (Google) PB: ? ANALYSTS:none
CINF Cincinnati Financial Corp ***** (no cut?)
6.24% yield, 11% growth, 50% payout ratio
Beta: .72 PE:9.09 PB:1.05 ANALYSTS:3.0 --These ratios look attractive!
MMM 3M Company *****
2.83% yield, 8.6% growth, 50% payout
Beta: .77 PE: 17.82 PB: 21.18! (to tangible- I normally use)/ 4 PB standard ANALYSTS:2.06
AXP American Express ***
2.51% yield, 14% growth, 51% payout
Beta:2.07 PE: 20.25 PB: 2.54 ANALYSTS: 3.06
add a few new ones
AEA Advance America, Cash Advance Centers
4.54% yield, -20% growth (cuts), 60% payout
Beta: 3.3 PE:8.8 PB: 6! (1.8 standard) ANALYSTS: 3 looks risky
DOM Dominion Resources Black Warrior Trust
8.72% yield, 11.45% growth (seems a bit high with cuts), 100%payout (it's a trust)
Beta: .59 PE: 5.22 PB:6! ANALYSTS:?
This thing looks more like a bond- all money out as divs.
I should check to see if any of these companies have preferred shares, as most financial companies will. Initially, I am liking the look of AFL, and I think DOM is probably good if it has some appreciation on top of its dividend. MMM's PB worries me somewhat, but the good analyst rating soothes me. BNS and AXP seem to have good dividend growth rates.
Time to bust out the charts:
3mo: MMM, AFL, AEA, BNS outperform, BBT and DOM lag.
6mo: All but DOM and CINF outperform. AEA, BNS, AXP, and AFL do the best.
1yr: MMM,AEA,BNS,CINF outperform.
5yr: BNS, MMM, AFL outperform.
Well, BNS, MMM, and AFL have accounted for themselves rather well across the board. Recently, AEA has been recovering rather well from a large hit over the last year and AXP has recovered a bit as well. CINF and DOM don't seem to preform very admirably. I think I will delve into the financials of the first 5 mentioned companies in this paragraph.
BNS: 1/4th drop in income! Again about a 3yr setback in terms of EPS. Again, large jump in assets as well as liabilities, mostly 'other' liabilities- not a huge portion of debt.
MMM: 1/6th drop in income, rise in EPS? Drop in shares outstanding? Jump in debt, and other liabilities.
AFL: Operating income down the last year due to larger increase in expenses than income. About a 3yr setback in terms of EPS. Drop in cash, jump in long term assets. Similar (large!) jump in liabilities.
AEA: 2 years of falling operating income, expenses actually dropped last year. Assets dropped while liabilities rose by about the same amount. The market has punished it alot for this, but has it punished it enough? I am a bit more hesitant now.
AXP: Operating income almost cut in half over the last year. Assets and liabilities both dropped by about the same amount. AXP has also taken alot of punishment, but was it enough?
I like AFL, BNS, and MMM. I feel that perhaps AEA and AXP have done their recovery and now will be flat for a while longer. Both had been underperformed before the crash, so maybe I will leave them alone for now. I will add 20k positions in these three companies.
Edit: I lost 4% on BNS on day one: I really need to look at technical signals before buying in, as well as buy in in steps rather than all at once.
AFL Aflac *****
2.81% yield, 20%+ growth, 41% payout ratio
Beta: 1.78 PE: 15.81 PB: 2.93 ANALYSTS: 2.29
BNS Bank of Nova Soctia
4.22% yield, 18%+ growth (recent cuts), 68% payout ratio
Beta: 1.29 PE: 16.12 PB: 2.42 ANALYSTS:3.14
Some I rejected before but I'll give another look:
BBT Financial Holding Company (div cut but yield still reasonable)
2.54% yield, 14% growth rate, 43% payout ratio
Beta: 1.55 PE: 13.16 (Google) PB: ? ANALYSTS:none
CINF Cincinnati Financial Corp ***** (no cut?)
6.24% yield, 11% growth, 50% payout ratio
Beta: .72 PE:9.09 PB:1.05 ANALYSTS:3.0 --These ratios look attractive!
MMM 3M Company *****
2.83% yield, 8.6% growth, 50% payout
Beta: .77 PE: 17.82 PB: 21.18! (to tangible- I normally use)/ 4 PB standard ANALYSTS:2.06
AXP American Express ***
2.51% yield, 14% growth, 51% payout
Beta:2.07 PE: 20.25 PB: 2.54 ANALYSTS: 3.06
add a few new ones
AEA Advance America, Cash Advance Centers
4.54% yield, -20% growth (cuts), 60% payout
Beta: 3.3 PE:8.8 PB: 6! (1.8 standard) ANALYSTS: 3 looks risky
DOM Dominion Resources Black Warrior Trust
8.72% yield, 11.45% growth (seems a bit high with cuts), 100%payout (it's a trust)
Beta: .59 PE: 5.22 PB:6! ANALYSTS:?
This thing looks more like a bond- all money out as divs.
I should check to see if any of these companies have preferred shares, as most financial companies will. Initially, I am liking the look of AFL, and I think DOM is probably good if it has some appreciation on top of its dividend. MMM's PB worries me somewhat, but the good analyst rating soothes me. BNS and AXP seem to have good dividend growth rates.
Time to bust out the charts:
3mo: MMM, AFL, AEA, BNS outperform, BBT and DOM lag.
6mo: All but DOM and CINF outperform. AEA, BNS, AXP, and AFL do the best.
1yr: MMM,AEA,BNS,CINF outperform.
5yr: BNS, MMM, AFL outperform.
Well, BNS, MMM, and AFL have accounted for themselves rather well across the board. Recently, AEA has been recovering rather well from a large hit over the last year and AXP has recovered a bit as well. CINF and DOM don't seem to preform very admirably. I think I will delve into the financials of the first 5 mentioned companies in this paragraph.
BNS: 1/4th drop in income! Again about a 3yr setback in terms of EPS. Again, large jump in assets as well as liabilities, mostly 'other' liabilities- not a huge portion of debt.
MMM: 1/6th drop in income, rise in EPS? Drop in shares outstanding? Jump in debt, and other liabilities.
AFL: Operating income down the last year due to larger increase in expenses than income. About a 3yr setback in terms of EPS. Drop in cash, jump in long term assets. Similar (large!) jump in liabilities.
AEA: 2 years of falling operating income, expenses actually dropped last year. Assets dropped while liabilities rose by about the same amount. The market has punished it alot for this, but has it punished it enough? I am a bit more hesitant now.
AXP: Operating income almost cut in half over the last year. Assets and liabilities both dropped by about the same amount. AXP has also taken alot of punishment, but was it enough?
I like AFL, BNS, and MMM. I feel that perhaps AEA and AXP have done their recovery and now will be flat for a while longer. Both had been underperformed before the crash, so maybe I will leave them alone for now. I will add 20k positions in these three companies.
Edit: I lost 4% on BNS on day one: I really need to look at technical signals before buying in, as well as buy in in steps rather than all at once.
Friday, July 3, 2009
Now, how about some raw materials/commodities/whathave you
I guess I don't really have much basic industry that, ya know, makes tangible things like metals at the moment. I started off with some oil and steel companies, and now I think I'm going to toss in some mining/ raw materials companies. I'm just going to toss out a few to start looking at:
GNI Great Northern Iron Ore
8.4% yield, 8% growth -- 80-90% payout? ;/
Beta: .43 PE:6.35 PB: 10.02 Analysts : none
WTR Aqua America Inc.
3.1% yield ****, ~5% growth rate 66% payout
Beta: .17 PE:24 PB:2.41 Analysts: 1.5
^the above info is a little old
CWCO Consolidated Water Co
1.4% yield 5% ish growth 50% payout
Beta: 1.75 PE:? PB:2.2 ANALYSTS: 2.25
DOW The Dow Chemical Company
3% yield, 7-8% growth ?90% payout
Beta: 2.26 PE:? PB:2 ANALYSTS: 3.17
MON Monsanto Company
1.3% Yield *** 20+% growth rate- but is it sustainable? 40% payout so probably
Beta:.75 PE:21.5 PB:7.3 ANALYSTS: 2.07
APD Air Products and Chemicals, Inc.
2.4% Yield *****, 10% growth rate 60% payout
Beta:1.16 PE: 23.4 PB:4 ANALYSTS: 1.82
KMB Kimberly-Clark Corporation
4.1 ***** 7% growth rate 60% payout
Beta:.47 PE: 15 PB:? ANALYSTS: 2.36
TRA Terra Industries Inc.
1.4% yield, recently reinstated dividends 10% payout??
Beta:.99 PE:6.7 PB:2.4 ANALYSTS: 2.0
DD Dupont
5.4 % yield, 3% growth Unsustainable payout ratio? 200%?
Beta:1.41 PE:43 PB:10 ANALYSTS: 2.5 Ick not great ratios
ABX Barrick Gold Corporation
1.2% yield, 10% growth, 55% payout
Beta:.59 PE:46 PB:2.9 ANALYSTS: 2.0
I think I am going to throw Dupont right out the window now, as although they yield is attractive, not much else is. Now, to chart the others.
In the short run (3 Mo), DOW has done quite well, but it was brutalized over the last year. WTR has not done too well in the short term.
Over a year, WR, KMB,CWCO have outperformed, as well as GNI (slightly). CWCO recovered from heavy losses last year.
Over 5 yrs, ABX, APD, CWCO and WTR have outperformed, and only KMB and DOW have significantly underperformed.
I feel that DOW may outperform in the short term to catch up to the market as a whole, but I do not see any evidence that it will continue to outperform in the long run. GNI seems to follow the market, but that is fine when you are also getting an 8% yield.
My initial inclination is towards GNI, CWCO, WTR, APD, and ABX. Time to look at financial statements.
I didn't see anything too glaring- general uptrend in total equity, no huge jumps in liabilities, although GNI did pick up a reasonable amount for such a small company.
Lets just toss 10k into each. What the heck. Next time hopefully I will add some more financial assets, as I am a bit less skittish about them now.
GNI Great Northern Iron Ore
8.4% yield, 8% growth -- 80-90% payout? ;/
Beta: .43 PE:6.35 PB: 10.02 Analysts : none
WTR Aqua America Inc.
3.1% yield ****, ~5% growth rate 66% payout
Beta: .17 PE:24 PB:2.41 Analysts: 1.5
^the above info is a little old
CWCO Consolidated Water Co
1.4% yield 5% ish growth 50% payout
Beta: 1.75 PE:? PB:2.2 ANALYSTS: 2.25
DOW The Dow Chemical Company
3% yield, 7-8% growth ?90% payout
Beta: 2.26 PE:? PB:2 ANALYSTS: 3.17
MON Monsanto Company
1.3% Yield *** 20+% growth rate- but is it sustainable? 40% payout so probably
Beta:.75 PE:21.5 PB:7.3 ANALYSTS: 2.07
APD Air Products and Chemicals, Inc.
2.4% Yield *****, 10% growth rate 60% payout
Beta:1.16 PE: 23.4 PB:4 ANALYSTS: 1.82
KMB Kimberly-Clark Corporation
4.1 ***** 7% growth rate 60% payout
Beta:.47 PE: 15 PB:? ANALYSTS: 2.36
TRA Terra Industries Inc.
1.4% yield, recently reinstated dividends 10% payout??
Beta:.99 PE:6.7 PB:2.4 ANALYSTS: 2.0
DD Dupont
5.4 % yield, 3% growth Unsustainable payout ratio? 200%?
Beta:1.41 PE:43 PB:10 ANALYSTS: 2.5 Ick not great ratios
ABX Barrick Gold Corporation
1.2% yield, 10% growth, 55% payout
Beta:.59 PE:46 PB:2.9 ANALYSTS: 2.0
I think I am going to throw Dupont right out the window now, as although they yield is attractive, not much else is. Now, to chart the others.
In the short run (3 Mo), DOW has done quite well, but it was brutalized over the last year. WTR has not done too well in the short term.
Over a year, WR, KMB,CWCO have outperformed, as well as GNI (slightly). CWCO recovered from heavy losses last year.
Over 5 yrs, ABX, APD, CWCO and WTR have outperformed, and only KMB and DOW have significantly underperformed.
I feel that DOW may outperform in the short term to catch up to the market as a whole, but I do not see any evidence that it will continue to outperform in the long run. GNI seems to follow the market, but that is fine when you are also getting an 8% yield.
My initial inclination is towards GNI, CWCO, WTR, APD, and ABX. Time to look at financial statements.
I didn't see anything too glaring- general uptrend in total equity, no huge jumps in liabilities, although GNI did pick up a reasonable amount for such a small company.
Lets just toss 10k into each. What the heck. Next time hopefully I will add some more financial assets, as I am a bit less skittish about them now.
Friday, March 6, 2009
Time to Balance Out the Crazyness
Okay, so maybe I should add something sane to the portfolio, like say, consumer staples. The speculative plays turned out to be a good exercise in market timing, and the portfolio is back in the green, and the market is perhaps a bit high on a bear market rally, so I should add something that is stable and won't kill me if the market heads back down. Some of this data is a few days old now, but oh well, I don't want to go back and look up the ratios again.
WMT walmart 2.19% ***** hi div growth PE 14.46 PB 3.8 Beta: .21 ANALYSTS:1.83 mod buy
CL colgate 3.08% ***** growth PE 16.02 PB ?16 Beta .6 ANALYSTS: 2.07 outperform
PG proctor/gamble 3.45 ***** growth PE 12.84 PB ?2.27 Beta .63 ANALYSTS:2.53
KFT kraft 5.24 *** growth PE 18.12 PB 1.45 Beta .66 ANALYSTS: 2.47
CAG con-agra 5.21 3 yrs ago cut PE 13.55 PB 14.43 Beta .68 ANALYSTS: 3
DD Dupont 7.64 slow growth PE 8.29 PB 7.21 Beta 1.19 ANALYSTS: 2.5
PEP pepsi 3.48 *****
16/20 3/5yr div growth, 50% payout ratio, 39% ave 5 yr
PE 14.86 PB 14.46 Beta .58 ANALYSTS:2 outperform
KO Coca-Cola 3.9 *****
10.6/11.1 div growth rate 3/5 yr 60% payout ratio average 5 yr 55%
PE 16.76 PB 12.1 Beta .57 ANALYSTS: 1.92 outpreform
CVS caremark 1.15 growth recently PE 12.07 PB 1.15 Beta .81 ANALYSTS: 1.62 mod buy
GIS *** 3.65 steady growth PE 14.73 PB 3.32 Beta .35 ANALYSTS: 1.82 mod buy
7.1/8.04 3/5 yr div growth, 45% payout ratio average 5yr 43% 5yr ave yield 2.5%
K 3.72 growth PE 12.41 PB 9.76 Beta .45 ANALYSTS: 1.8 mod buy
14/7.8 3/5 yr growth, 54% payout ratio, average 5 yr 47% 5yr ave yield 2.6%
At some point I started using PB instead of Tangible PB, which has skewed these numbers a bit. I decided that since some did not list a tangible PB I would just use the PB value... but some of these are tangible values (the high ones) and I am too lazy to go back and change them... so there. I stated out PEP, KO, GIS, and K a bit more than normal because I wanted to be able to compare them, i only want one cereal company and one cola company.
Oh, and on a side note I would like to add a position in MMM if it looks viable. I had been looking at MMM and GE as two large conglomerates, and MMM certainly looks more appealing than GE at the moment (no dividend cut!).
MMM 4.1% yield ***** 6% 3yr div growth rate
PE 10.07 PB 3.45 Beta .63 ANALYSTS: 2.6 hold
So, most of these companies above are rather big names, and that is good! Hopefully I won't have to worry too much about shooting myself in the foot here.
Okay, so, 1yr chart. Everyone outperforms, especially WMT and KFT. There is one exception: DD gets the stuffing kicked out of it. I should probably look into that.
6months: ditto, KO better than kraft, closer grouping (less time to spread).
5yr chart: a bit more interesting, only GIS, PEP, and K seem to outperform consistently.
I looked into DD's financial statements: I bet the fact that they had a rather negative EPS last quarter accounts for the large stock price pummeling. Also, large jump in other liabilities and large drop in other equity- I think I'll stay away from that one as I'm not sure whats going on.
I think I will take GIS and PEP based on payout ratios, long term div growth, and the 5 yr chart. I also like KFT and WMT. PG and CL also seem to have preformed well. I have mixed feelings about CAG, as it has high yields but it seems to track the market, not beat it. With a 5% yield however, I guess that may be acceptable.
This is the first list I made where I didn't immediatly see lots of problems to throw out! I think just start small 10k positions in PEP,GIS,KFT,WMT,PG, and CL. That should provide some stability to compensate for the shipping and real estate segments of the portfolio.
Oh... what about MMM? It's chart doesn't look very impressive over the last few years, although it preformed well several years back, making the ten year chart look good. It has been paying dividends forever however... but it doesn't grow them very fast or normally have a very high yield. I guess I just don't see much motivation for out performance, it will probably recover with the market as a whole.
Okay, next time maybe I will make an update on what positions are held and their profit status. Or maybe not. I dunno.
Remember: I don't know jack about investing don't base any decisions on my nonsense!
WMT walmart 2.19% ***** hi div growth PE 14.46 PB 3.8 Beta: .21 ANALYSTS:1.83 mod buy
CL colgate 3.08% ***** growth PE 16.02 PB ?16 Beta .6 ANALYSTS: 2.07 outperform
PG proctor/gamble 3.45 ***** growth PE 12.84 PB ?2.27 Beta .63 ANALYSTS:2.53
KFT kraft 5.24 *** growth PE 18.12 PB 1.45 Beta .66 ANALYSTS: 2.47
CAG con-agra 5.21 3 yrs ago cut PE 13.55 PB 14.43 Beta .68 ANALYSTS: 3
DD Dupont 7.64 slow growth PE 8.29 PB 7.21 Beta 1.19 ANALYSTS: 2.5
PEP pepsi 3.48 *****
16/20 3/5yr div growth, 50% payout ratio, 39% ave 5 yr
PE 14.86 PB 14.46 Beta .58 ANALYSTS:2 outperform
KO Coca-Cola 3.9 *****
10.6/11.1 div growth rate 3/5 yr 60% payout ratio average 5 yr 55%
PE 16.76 PB 12.1 Beta .57 ANALYSTS: 1.92 outpreform
CVS caremark 1.15 growth recently PE 12.07 PB 1.15 Beta .81 ANALYSTS: 1.62 mod buy
GIS *** 3.65 steady growth PE 14.73 PB 3.32 Beta .35 ANALYSTS: 1.82 mod buy
7.1/8.04 3/5 yr div growth, 45% payout ratio average 5yr 43% 5yr ave yield 2.5%
K 3.72 growth PE 12.41 PB 9.76 Beta .45 ANALYSTS: 1.8 mod buy
14/7.8 3/5 yr growth, 54% payout ratio, average 5 yr 47% 5yr ave yield 2.6%
At some point I started using PB instead of Tangible PB, which has skewed these numbers a bit. I decided that since some did not list a tangible PB I would just use the PB value... but some of these are tangible values (the high ones) and I am too lazy to go back and change them... so there. I stated out PEP, KO, GIS, and K a bit more than normal because I wanted to be able to compare them, i only want one cereal company and one cola company.
Oh, and on a side note I would like to add a position in MMM if it looks viable. I had been looking at MMM and GE as two large conglomerates, and MMM certainly looks more appealing than GE at the moment (no dividend cut!).
MMM 4.1% yield ***** 6% 3yr div growth rate
PE 10.07 PB 3.45 Beta .63 ANALYSTS: 2.6 hold
So, most of these companies above are rather big names, and that is good! Hopefully I won't have to worry too much about shooting myself in the foot here.
Okay, so, 1yr chart. Everyone outperforms, especially WMT and KFT. There is one exception: DD gets the stuffing kicked out of it. I should probably look into that.
6months: ditto, KO better than kraft, closer grouping (less time to spread).
5yr chart: a bit more interesting, only GIS, PEP, and K seem to outperform consistently.
I looked into DD's financial statements: I bet the fact that they had a rather negative EPS last quarter accounts for the large stock price pummeling. Also, large jump in other liabilities and large drop in other equity- I think I'll stay away from that one as I'm not sure whats going on.
I think I will take GIS and PEP based on payout ratios, long term div growth, and the 5 yr chart. I also like KFT and WMT. PG and CL also seem to have preformed well. I have mixed feelings about CAG, as it has high yields but it seems to track the market, not beat it. With a 5% yield however, I guess that may be acceptable.
This is the first list I made where I didn't immediatly see lots of problems to throw out! I think just start small 10k positions in PEP,GIS,KFT,WMT,PG, and CL. That should provide some stability to compensate for the shipping and real estate segments of the portfolio.
Oh... what about MMM? It's chart doesn't look very impressive over the last few years, although it preformed well several years back, making the ten year chart look good. It has been paying dividends forever however... but it doesn't grow them very fast or normally have a very high yield. I guess I just don't see much motivation for out performance, it will probably recover with the market as a whole.
Okay, next time maybe I will make an update on what positions are held and their profit status. Or maybe not. I dunno.
Remember: I don't know jack about investing don't base any decisions on my nonsense!
Thursday, March 5, 2009
Even More Speculation
Okay, might as well buy some REIT's while I'm buying things that have had the crap beaten out of them.
HPT 33% - div higher than EPS expect cut to about 5% yield
PE 8.66 PB .35 Beta 1.5 ANALYSTS: 2 Outperform Market Cap:853M
NRF 72%! Expect cut!? Looks like they sold something big off to pay down debt? Abnormally large EPS and drop in liabilities?...
PE .11!! PB .05!! Beta 1.85 ANALYSTS: 2.57 hold Market Cap: 87M
UHT 9.54% (saneish- still probably will be halved... low EPS)
PE 19.98! PB 2.16 Beta .72! ANALYSTS: none Market Cap: 307M
O 10.88% (again div above EPS-halved?)PE 18.27 PB 1.15 Beta .97
ANALYSTS:2.58 hold Market Cap: 1.6B
IRC 16% again div>EPS expect drop to 5%ish PE 13.75 PB 1.4 Beta 1.28
ANALYSTS: 2.75 hold Market Cap:406M
My initial impulse is to take the stocks that have managed to retain a reasonable PE ratio, as the market knows more than I do about RIETS. Prehaps I should just look into an ETF for this... but why do that when it's not real money anyhow!
Charts!
6months: O and UHT outperformed. NRF was beasted.
2yr: Again O and UHT outperform. NRF and HPT get decimated.
Well, the charts and the ratios give me a good feeling about O and UHT. HPT has a good analyst recommendation and is not exactly a lightweight with its 800M market cap, so I'm tempted to say its too big to fail- but I haven't actually looked into that at all so I can't! They did recently beat expectations and post a rise in 4th quarter profits however. I suppose I don't really have any better ideas for RIETs and am too lazy to look around. I'll toss 10k at each of these and I can fill out the rest of my RIET position later. I just want to get a toehold in while the market is going to heck.
EDIT: I found one more nice looking candidate.
ESS 7.47% raised dividend, dividend achiever, still a bit low EPS however
PE 26 PB 1.5 Beta 1.08 Analysts 2.2 outperform
On the chart it outperformed until recently, where it took a beating. Ratios seem strong and dividend increase is a good sign. I think I will buy in a 10k position here as well.
HPT 33% - div higher than EPS expect cut to about 5% yield
PE 8.66 PB .35 Beta 1.5 ANALYSTS: 2 Outperform Market Cap:853M
NRF 72%! Expect cut!? Looks like they sold something big off to pay down debt? Abnormally large EPS and drop in liabilities?...
PE .11!! PB .05!! Beta 1.85 ANALYSTS: 2.57 hold Market Cap: 87M
UHT 9.54% (saneish- still probably will be halved... low EPS)
PE 19.98! PB 2.16 Beta .72! ANALYSTS: none Market Cap: 307M
O 10.88% (again div above EPS-halved?)PE 18.27 PB 1.15 Beta .97
ANALYSTS:2.58 hold Market Cap: 1.6B
IRC 16% again div>EPS expect drop to 5%ish PE 13.75 PB 1.4 Beta 1.28
ANALYSTS: 2.75 hold Market Cap:406M
My initial impulse is to take the stocks that have managed to retain a reasonable PE ratio, as the market knows more than I do about RIETS. Prehaps I should just look into an ETF for this... but why do that when it's not real money anyhow!
Charts!
6months: O and UHT outperformed. NRF was beasted.
2yr: Again O and UHT outperform. NRF and HPT get decimated.
Well, the charts and the ratios give me a good feeling about O and UHT. HPT has a good analyst recommendation and is not exactly a lightweight with its 800M market cap, so I'm tempted to say its too big to fail- but I haven't actually looked into that at all so I can't! They did recently beat expectations and post a rise in 4th quarter profits however. I suppose I don't really have any better ideas for RIETs and am too lazy to look around. I'll toss 10k at each of these and I can fill out the rest of my RIET position later. I just want to get a toehold in while the market is going to heck.
EDIT: I found one more nice looking candidate.
ESS 7.47% raised dividend, dividend achiever, still a bit low EPS however
PE 26 PB 1.5 Beta 1.08 Analysts 2.2 outperform
On the chart it outperformed until recently, where it took a beating. Ratios seem strong and dividend increase is a good sign. I think I will buy in a 10k position here as well.
More Speculation
So, the market is abysmal at the moment. That of course means a huge buy signal to me, as I am not even using real money. I might as well pick some really beaten down speculative areas while I am at it: how about shipping companies?
Shipping first for starters:
GMR 28%!, PE 10.29 PB -- Beta 1.19 Market Cap: 447M
2 yrs at 50c/quarter - high payout ratio? ANALYSTS 2.57
KSP 20%! PE 13.07 PB 1.08 Beta .5! Market Cap: 222M ANALYSTS: 1.43 mod buy!
4 year dividend history with no major cuts
NAT 22%! PE 6.89 PB 1.13 Beta .95 Market Cap: 891M ANALYSTS:3.3 hold/underpref
History of reasonable but changing dividends
SFL 9.23% PE 13.15 PB 1.02 Beta 1.62! Market Cap:7.8B! ANALYSTS:2.5 outpref/hold
reasonable history of dividend payouts- ship financing company for FRO I believe
DAC 58%! PE 1.53 PB .37 Beta .6! Market Cap: 210M
ANALYSTS:2.5 outpref/hold debt/assets about 1:1
PRGN 65%! PE 1.38 PB .3 Beta .46! Market Cap: 93M ANALYSTS:2 outperform
1yr of constant dividend
DHT 23%! PE 4.03 PB 1.2 Beta .85 Market Cap: 163M ANALYSTS: 1.67 mod buy!
3yrs fluctuating dividend
ESEA 10.64% PE 5.34 PB .48 Beta: .02? impossible! Market Cap: 126M
ANALYSTS:1.67 mod buy! recent cut but still reasonable yield- no more cuts?
VLCCF 9.02% PE 4.29 PB .93 Beta:1.35 Market Cap: 206M ANALYSTS: 3 hold
recent cuts, still reasonable yield - worrysome dividend shrinkage
So, lots of very low PE and PB's. Either these are steal opportunity values, or the market doesn't see them making much growth in the future. Also, lots of absurdly high dividend yields that we can probably expect to be cut- at the same time however, I doubt the earnings per share have taken as large a hit as the share price has, so more dividend may be supportable than the percentage indicates. Initially, I am biased towards the lower yields and higher market caps. Also, I wonder about those stocks with betas less than one... that seems unlikely.
6month chart: NAT and KSP outpreform. DAC and PRGN get annihilated.
5yr: SLF,NAT,VLCCF outpreform GMR preforms well until recently.
KSP and NAT's low betas seem justified. SLF's high beta seems unjustified. DAC and PRGN's low betas seem preposterous.
So I'm thinking the shotgun approach is what we want in this turbulent market. How about we just grab GMR,NAT,SLF,VLCCF, and KSP. That should give us a good toehold. 10k of each? Sounds like a start. I'm feeling too lazy to look into financials tonight- if it was real money I would, but if it was real money I would research a heck of a lot harder on each.
Shipping first for starters:
GMR 28%!, PE 10.29 PB -- Beta 1.19 Market Cap: 447M
2 yrs at 50c/quarter - high payout ratio? ANALYSTS 2.57
KSP 20%! PE 13.07 PB 1.08 Beta .5! Market Cap: 222M ANALYSTS: 1.43 mod buy!
4 year dividend history with no major cuts
NAT 22%! PE 6.89 PB 1.13 Beta .95 Market Cap: 891M ANALYSTS:3.3 hold/underpref
History of reasonable but changing dividends
SFL 9.23% PE 13.15 PB 1.02 Beta 1.62! Market Cap:7.8B! ANALYSTS:2.5 outpref/hold
reasonable history of dividend payouts- ship financing company for FRO I believe
DAC 58%! PE 1.53 PB .37 Beta .6! Market Cap: 210M
ANALYSTS:2.5 outpref/hold debt/assets about 1:1
PRGN 65%! PE 1.38 PB .3 Beta .46! Market Cap: 93M ANALYSTS:2 outperform
1yr of constant dividend
DHT 23%! PE 4.03 PB 1.2 Beta .85 Market Cap: 163M ANALYSTS: 1.67 mod buy!
3yrs fluctuating dividend
ESEA 10.64% PE 5.34 PB .48 Beta: .02? impossible! Market Cap: 126M
ANALYSTS:1.67 mod buy! recent cut but still reasonable yield- no more cuts?
VLCCF 9.02% PE 4.29 PB .93 Beta:1.35 Market Cap: 206M ANALYSTS: 3 hold
recent cuts, still reasonable yield - worrysome dividend shrinkage
So, lots of very low PE and PB's. Either these are steal opportunity values, or the market doesn't see them making much growth in the future. Also, lots of absurdly high dividend yields that we can probably expect to be cut- at the same time however, I doubt the earnings per share have taken as large a hit as the share price has, so more dividend may be supportable than the percentage indicates. Initially, I am biased towards the lower yields and higher market caps. Also, I wonder about those stocks with betas less than one... that seems unlikely.
6month chart: NAT and KSP outpreform. DAC and PRGN get annihilated.
5yr: SLF,NAT,VLCCF outpreform GMR preforms well until recently.
KSP and NAT's low betas seem justified. SLF's high beta seems unjustified. DAC and PRGN's low betas seem preposterous.
So I'm thinking the shotgun approach is what we want in this turbulent market. How about we just grab GMR,NAT,SLF,VLCCF, and KSP. That should give us a good toehold. 10k of each? Sounds like a start. I'm feeling too lazy to look into financials tonight- if it was real money I would, but if it was real money I would research a heck of a lot harder on each.
Wednesday, January 21, 2009
Financials
So, first I should clear up what I spent of the fake fund's money. I spent 20k on XOM and 10k on CEO,SSL,CVX. I also added a bit (4k and 2k) of VE and NUE as they had fallen a bit underweight, and I figured it was a good time to scoop up some more. I'm starting to wonder if SSL and CEO spent too hard expanding while oil was high, but we'll see.
So, after RBS dropped hugely in share price and dragged the rest of the financial down, I decided it would be a great time to grab some bank stocks. However, I was slow and wanted to actually do some research- in retrospect it would have been great if I had just picked up some JPM and then sold it again, but this isn't a day trading fund. And it isn't for a reason: I tried a bit of day trading in another fake account, and I always seem to jump the gun and get soaked before things recover (Ex: I bought WFC & AIB! in my fake trade account a few days back to watch it drop 15%-50% oops? :( ). Anyhow, I'll try not to do that with this account.
Now they are right back down again anyhow, silly dead cat bounce. I hope I'm not jumping into a storm of falling knives with this. Heck, my finance Prof. told me I should stay away from banks for now, but hey, if I'm going to add a financial portion anyhow it might as well be when the market is beaten down... right? Maybe I'm just reassuring myself, we'll see. I probably wouldn't do this with real money. Maybe I should make a rule to only do things I would do with real money....
Okay, so financial companies. They all look scary :(. I limited myself to companies with a long term dividend growth history, and some of the companies still look a bit scary, especially with recent quarter results.
So, what companies to consider?
AFL (AFLAC) 2.8 ***** fast growth
PE 13.4 PB 2.85 Beta .8 ANALYST RATINGS: 2.55
CINF (Cincinnati Financial Corp.)6.1***** slow/mod growth
PE 9.35 PB .89 Beta .64 ANALYST RATINGS: 2.6
STT (State Street Corp.) ***** 2.64 slowish growth
PE 8.33 PB 2.36 Beta 1.12 ANALYST RATINGS: 3
CBSH (Cash America International, Inc)***** 2.55 slowish growth
PE 15.04 PB 1.94 Beta .29 ANALYST RATINGS: 3
UCBH (United Commercial Bank Holdings, Inc.)4.2% *** growth
PE 18.36 PB .62 Beta 1.51 ANALYST RATINGS: 2.73
CB (Chubb Corp.)***** 3 decent growth
PE 8.05 PB 1.19 Beta .44 ANALYST RATINGS: 2.53
TCB (TCF Financial Corp.) **** 10%slow growth
PE 7.99 PB 1.43 Beta .48 ANALYST RATINGS: 2.72
BBT (BB&T Corp.) ***** 9% slow growth
PE 7.06 PB 1.77 Beta .47 ANALYST RATINGS: 2.96
DB (Deutsche Bank AG)*** 22%? growth
PE 5.31 PB .45 Beta 2.22 ANALYST RATINGS: 3.5
USB (U.S. Bancorp) 9.28% ***** growth
PE 9.19 PB 3.03 Beta .82 ANALYST RATINGS: 2.58
AXP (American Express Co.) *** 4% good growth
PE 5.79 PB 1.58 Beta 1.37 ANALYST RATINGS: 3.35
WFC (Wells Fargo & Co.) ***** 7.28 slow growth
PE 9.21 PB 4.49 Beta .53 ANALYST RATINGS: 2.47
and what the heck, I'll add JPM even though it's not a dividend achiever. And some Canadian Corporations just to get some distance from the U.S. financial system for comparison. However, they don't actually look as stable as I had hoped judging by the betas...
JPM (JPMorgan Chase & Co.) 6.7% slow dividend growth- was held at .34 cents/quarter for 3+ yrs and rose to .38 in 2007.
PE 23.01 PB .82 Beta .87 ANALYST RATINGS: 2.29
RY Royal Bank of Canada 5.88 fast growth for 5yrs+ (changing divs but growing yearly)
PE 11.24 PB 2.31 Beta 2.31 ANALYST RATINGS: 2.62
SLF Canadian insurer 5.42 recent small cut 5yr growth
PE 11.44 PB 1.54 Beta 1.54 ANALYST RATINGS: 2.5
BNS Bank of Nova Scotia, formerly tree stars but recent (slight) dividend cut 6.8% and previous fast dividend growth
PE 9.36 PB 1.49 Beta .54 ANALYST RATINGS: 2.79
Note: I added Beta (from Reuters) to give me some idea of volatility in addition to PE and PB, as some tings that look cheap from PB will also be crazy volatile and maybe I shouldn't try to call the bottom on a falling bank stock.
Judging from the betas, CBSH, CB, TCB, BBT, BNS, and WFC should be significantly less volatile than the market.... right. I assume that this will not hold true in the most recent of months, but maybe they will be more stable than the other corporations. I am just going to pull up a chart quick and see which of these stocks has fallen and can't get up, and which are at least trying to recover.
Crap, there are too many names to fit onto one Yahoo graph at a time. I guess I'll have to think up some way to split them but I hate not being able to visually compare everything to everything else! How about I split it into Beta >1 and Beta <1 as hopefully that will break it into very crashed and not so crashed, at least in theory.
So, first chart, B>1, should be ugly.
STT, UCBH, DB, AXP, RY, SLF
First thing that jumps out at me: STT has had a great day. +20%, while the others have gone down with the market. I wonder what the news is there?
Second thing I notice is: STT crashed hugely 2 days ago (-50%). That is what set up this rise. More news I should look into. I wonder if those ratio's I pulled up a few days back are even correct anymore :(.
Okay, 6 month chart: UCBH outperforms... why? Because it was beaten down a lot six months ago, says the 1 yr chart. RY stays close to the market on the 6 month chart, and SLF stays close on the 3 month chart. Otherwise, its just a sad, sad picture. RY actually outperformed for a tiny short while on the one year chart.
On the 5 yr chart: RY, SLF, and DB outperformed, and STT was up there for almost a year. However, DB was hit hard by the crisis as the 1 yr chart shows, and whatever recently hit STT sent it right down with DB at almost -80% for the year.
I feel that maybe I should be salivating at these marked down prices, but I'm not. I think I'll just move on, and maybe consider RY and SLF after seeing what the other companies look like.
Now, Beta<1
AFL,CINF,CBSH,TCB,BBT,USB,WFC,JPM, BNS
Today: AFL took a huge hit. Apparently, it had hybrid security exposure to European banks like RBS which just had the pants beat out of them. It's too bad, because Aflac has been a very solid outperformer- I probably would have bought in if I looked at it last week. I will keep my eye on it- maybe the market has punished them enough with the huge -36% hit, and maybe their portfolio isn't at as much risk as is claimed.
5day:2 days ago most everything opened lower, JPM and WFC especially. CINF seemed oddly immune.
1month: BNS leads the pack here- I note that RY and SLF the other Canadian financials in the Beta>1 group held up well here too.
3month: CINF leads the pack, AFL also beats the market, and CBSH is close.
6month:BBT and TCB were preforming better than the market in the October crash, but have since lost their luster as CBSH and CINF regained their losses. TCB made a bit of a recovery as well to outperform. BNS drags at the bottom.
1yr: Again, CBSH and CINF shine at the end. However, CINF was at the very bottom of the heap most of the year. WFC looked like it was doing well, until recently.
5yr: AFL was the only major outperforming stock of any mention during the period. Then it fell like a house of cards. Wheeee. On this time scale, DB,RY, and SLF looked better.
I think I am going to take a look at CBSH against RY and SLF.
CBSH has one thing going for it: it is imperturbable. The bottom falls off the market, and it doesn't really move. However, it hasn't really gone up at all either. Not exactly a huge reason to invest in something that under preforms, but with style. Case in point: on the 1 month chart, it is right back to under performing. Just because it didn't go down, doesn't really indicate it will go up. Also, they seem to do regular reverse splits 105:100, effectively eschewing a 5% growth of price from thin air. It would stink to get your dividend on 100 shares that lets you buy 1 or 2 more shares, only to lose 5 shares to a reverse split: yes,yes the share price goes up 5% so you don't really lose anything from the split, but that 5-10% dividend growth rate suddenly doesn't look so appealing when you also have 5% less shares to get dividends on each year, and the nonperformance of the stocks share price is just that much worse when you consider the reverse splits made it look as good as it does. I thought I had stumbled upon something good when I saw how solid the share price was in the recent markets, but apparently not.
Oh well, moving on. I don't really feel like buying much of this stuff. Maybe some RY and SLF. If it weren't for the recent drop in bank shares, I probably wouldn't be adding financial quite yet :(. And looking at the charts, I don't really see any strong reason to want to buy WFC and JPM, which seem to be the analyst favorites. Then again, maybe I am putting too much bias on past returns: looking at the 1yr chart again, WFC and JPM don't look atrocious, and SLF doesn't look as great.
Okay, so after looking at the one year chart I have changed my mind a bit. I think that RY, BNS and SLF had their run a while ago, and perhaps now JMP and WFC are the ones set to rise. Or, they will all continue their plunge, but whatever. I will keep RY in my list of options though, as it preformed the best of the three over the last year and five years.
I guess it's that time again: Financial Statements!
RY: Liabilities and assets are frighteningly close numbers. Picked up 2B Canadian dollars in debt this year. On the up side, it didn't pick up much debt last year, and it has previously picked up 2B debt in a year (2004) and wasn't that much the worse for it as far as I can tell. Cash on hand is up as well. There's probably a lot more I would only get out of a more in depth delving. Note that RY is not a small company: 32B market cap- so that 2B is nothing compared to what you will find on the next two statements from companies about 2-3x as big...
JPM: Big spending on loan loss prevention.... go figure. Makes net income drop stupendously. Nice huge 55B of debt and 20B of stock on the books for just the first 3 quarters...on top of 87B last year. Again with liabilities close to assets, but that actually seems normalish for banks, judging by the history.
WFC: Again, a big jump in loan loss prevention. Like 40B of debt in the first three quarters... on top of 50B picked up last year... yuck.
Hmm, well now what. I guess I should check if JPM and WFC have TARP money, wouldn't do to invest in something that the gov makes cut dividends.
Yep, they did. So there goes that idea, their dividends aren't even safe.
Conclusion: I'm going to run to Canada and add a small RY position (10k). I am SURE that most of these companies I ran through today will recover eventually, and I WANT to get in and catch some of the upside. However, at the moment I don't trust myself enough to pick a good entry point and the right companies. I will reevaluate these companies after we see what the TARP does to dividends... and I will probably miss a large chunk of upside. The charts looked hopeful to me, but the balance sheets didn't, as far as JPM and WFC went. Oh well. Maybe I should have picked up some AFLAC- but then again, as I said, this is not a day trade fund, even if it does bounce I shouldn't kick myself. AFLAC in the past has been a very solid outperformer, so I will keep my eye on what becomes of this concern over its Hybrid Securities investments: if it turns out that AFLAC is mostly unscathed, I will buy in, hopefully before all of the upside is gone.
I think companies like with solid histories of outperformance for on the decades charts and the recent 5 yr charts should be looked at again, such as:SLF,AFL, and BNS. However, I have no confidence at the moment, especially in ALF with its recent issues. I will look at financials again, and maybe a few that aren't dividend achievers (gasp!).
Usual disclaimer: I don't know jack about the markets and I don't own any stock- so don't take this stuff as any kind of reason to invest your own money.
Next time: probably a summary of how much money the fund has lost so far (groan) and maybe, I dunno, shipping companies. Might as well call bottom on the bulk rates as well as the financial markets, eh?
So, after RBS dropped hugely in share price and dragged the rest of the financial down, I decided it would be a great time to grab some bank stocks. However, I was slow and wanted to actually do some research- in retrospect it would have been great if I had just picked up some JPM and then sold it again, but this isn't a day trading fund. And it isn't for a reason: I tried a bit of day trading in another fake account, and I always seem to jump the gun and get soaked before things recover (Ex: I bought WFC & AIB! in my fake trade account a few days back to watch it drop 15%-50% oops? :( ). Anyhow, I'll try not to do that with this account.
Now they are right back down again anyhow, silly dead cat bounce. I hope I'm not jumping into a storm of falling knives with this. Heck, my finance Prof. told me I should stay away from banks for now, but hey, if I'm going to add a financial portion anyhow it might as well be when the market is beaten down... right? Maybe I'm just reassuring myself, we'll see. I probably wouldn't do this with real money. Maybe I should make a rule to only do things I would do with real money....
Okay, so financial companies. They all look scary :(. I limited myself to companies with a long term dividend growth history, and some of the companies still look a bit scary, especially with recent quarter results.
So, what companies to consider?
AFL (AFLAC) 2.8 ***** fast growth
PE 13.4 PB 2.85 Beta .8 ANALYST RATINGS: 2.55
CINF (Cincinnati Financial Corp.)6.1***** slow/mod growth
PE 9.35 PB .89 Beta .64 ANALYST RATINGS: 2.6
STT (State Street Corp.) ***** 2.64 slowish growth
PE 8.33 PB 2.36 Beta 1.12 ANALYST RATINGS: 3
CBSH (Cash America International, Inc)***** 2.55 slowish growth
PE 15.04 PB 1.94 Beta .29 ANALYST RATINGS: 3
UCBH (United Commercial Bank Holdings, Inc.)4.2% *** growth
PE 18.36 PB .62 Beta 1.51 ANALYST RATINGS: 2.73
CB (Chubb Corp.)***** 3 decent growth
PE 8.05 PB 1.19 Beta .44 ANALYST RATINGS: 2.53
TCB (TCF Financial Corp.) **** 10%slow growth
PE 7.99 PB 1.43 Beta .48 ANALYST RATINGS: 2.72
BBT (BB&T Corp.) ***** 9% slow growth
PE 7.06 PB 1.77 Beta .47 ANALYST RATINGS: 2.96
DB (Deutsche Bank AG)*** 22%? growth
PE 5.31 PB .45 Beta 2.22 ANALYST RATINGS: 3.5
USB (U.S. Bancorp) 9.28% ***** growth
PE 9.19 PB 3.03 Beta .82 ANALYST RATINGS: 2.58
AXP (American Express Co.) *** 4% good growth
PE 5.79 PB 1.58 Beta 1.37 ANALYST RATINGS: 3.35
WFC (Wells Fargo & Co.) ***** 7.28 slow growth
PE 9.21 PB 4.49 Beta .53 ANALYST RATINGS: 2.47
and what the heck, I'll add JPM even though it's not a dividend achiever. And some Canadian Corporations just to get some distance from the U.S. financial system for comparison. However, they don't actually look as stable as I had hoped judging by the betas...
JPM (JPMorgan Chase & Co.) 6.7% slow dividend growth- was held at .34 cents/quarter for 3+ yrs and rose to .38 in 2007.
PE 23.01 PB .82 Beta .87 ANALYST RATINGS: 2.29
RY Royal Bank of Canada 5.88 fast growth for 5yrs+ (changing divs but growing yearly)
PE 11.24 PB 2.31 Beta 2.31 ANALYST RATINGS: 2.62
SLF Canadian insurer 5.42 recent small cut 5yr growth
PE 11.44 PB 1.54 Beta 1.54 ANALYST RATINGS: 2.5
BNS Bank of Nova Scotia, formerly tree stars but recent (slight) dividend cut 6.8% and previous fast dividend growth
PE 9.36 PB 1.49 Beta .54 ANALYST RATINGS: 2.79
Note: I added Beta (from Reuters) to give me some idea of volatility in addition to PE and PB, as some tings that look cheap from PB will also be crazy volatile and maybe I shouldn't try to call the bottom on a falling bank stock.
Judging from the betas, CBSH, CB, TCB, BBT, BNS, and WFC should be significantly less volatile than the market.... right. I assume that this will not hold true in the most recent of months, but maybe they will be more stable than the other corporations. I am just going to pull up a chart quick and see which of these stocks has fallen and can't get up, and which are at least trying to recover.
Crap, there are too many names to fit onto one Yahoo graph at a time. I guess I'll have to think up some way to split them but I hate not being able to visually compare everything to everything else! How about I split it into Beta >1 and Beta <1 as hopefully that will break it into very crashed and not so crashed, at least in theory.
So, first chart, B>1, should be ugly.
STT, UCBH, DB, AXP, RY, SLF
First thing that jumps out at me: STT has had a great day. +20%, while the others have gone down with the market. I wonder what the news is there?
Second thing I notice is: STT crashed hugely 2 days ago (-50%). That is what set up this rise. More news I should look into. I wonder if those ratio's I pulled up a few days back are even correct anymore :(.
Okay, 6 month chart: UCBH outperforms... why? Because it was beaten down a lot six months ago, says the 1 yr chart. RY stays close to the market on the 6 month chart, and SLF stays close on the 3 month chart. Otherwise, its just a sad, sad picture. RY actually outperformed for a tiny short while on the one year chart.
On the 5 yr chart: RY, SLF, and DB outperformed, and STT was up there for almost a year. However, DB was hit hard by the crisis as the 1 yr chart shows, and whatever recently hit STT sent it right down with DB at almost -80% for the year.
I feel that maybe I should be salivating at these marked down prices, but I'm not. I think I'll just move on, and maybe consider RY and SLF after seeing what the other companies look like.
Now, Beta<1
AFL,CINF,CBSH,TCB,BBT,USB,WFC,JPM, BNS
Today: AFL took a huge hit. Apparently, it had hybrid security exposure to European banks like RBS which just had the pants beat out of them. It's too bad, because Aflac has been a very solid outperformer- I probably would have bought in if I looked at it last week. I will keep my eye on it- maybe the market has punished them enough with the huge -36% hit, and maybe their portfolio isn't at as much risk as is claimed.
5day:2 days ago most everything opened lower, JPM and WFC especially. CINF seemed oddly immune.
1month: BNS leads the pack here- I note that RY and SLF the other Canadian financials in the Beta>1 group held up well here too.
3month: CINF leads the pack, AFL also beats the market, and CBSH is close.
6month:BBT and TCB were preforming better than the market in the October crash, but have since lost their luster as CBSH and CINF regained their losses. TCB made a bit of a recovery as well to outperform. BNS drags at the bottom.
1yr: Again, CBSH and CINF shine at the end. However, CINF was at the very bottom of the heap most of the year. WFC looked like it was doing well, until recently.
5yr: AFL was the only major outperforming stock of any mention during the period. Then it fell like a house of cards. Wheeee. On this time scale, DB,RY, and SLF looked better.
I think I am going to take a look at CBSH against RY and SLF.
CBSH has one thing going for it: it is imperturbable. The bottom falls off the market, and it doesn't really move. However, it hasn't really gone up at all either. Not exactly a huge reason to invest in something that under preforms, but with style. Case in point: on the 1 month chart, it is right back to under performing. Just because it didn't go down, doesn't really indicate it will go up. Also, they seem to do regular reverse splits 105:100, effectively eschewing a 5% growth of price from thin air. It would stink to get your dividend on 100 shares that lets you buy 1 or 2 more shares, only to lose 5 shares to a reverse split: yes,yes the share price goes up 5% so you don't really lose anything from the split, but that 5-10% dividend growth rate suddenly doesn't look so appealing when you also have 5% less shares to get dividends on each year, and the nonperformance of the stocks share price is just that much worse when you consider the reverse splits made it look as good as it does. I thought I had stumbled upon something good when I saw how solid the share price was in the recent markets, but apparently not.
Oh well, moving on. I don't really feel like buying much of this stuff. Maybe some RY and SLF. If it weren't for the recent drop in bank shares, I probably wouldn't be adding financial quite yet :(. And looking at the charts, I don't really see any strong reason to want to buy WFC and JPM, which seem to be the analyst favorites. Then again, maybe I am putting too much bias on past returns: looking at the 1yr chart again, WFC and JPM don't look atrocious, and SLF doesn't look as great.
Okay, so after looking at the one year chart I have changed my mind a bit. I think that RY, BNS and SLF had their run a while ago, and perhaps now JMP and WFC are the ones set to rise. Or, they will all continue their plunge, but whatever. I will keep RY in my list of options though, as it preformed the best of the three over the last year and five years.
I guess it's that time again: Financial Statements!
RY: Liabilities and assets are frighteningly close numbers. Picked up 2B Canadian dollars in debt this year. On the up side, it didn't pick up much debt last year, and it has previously picked up 2B debt in a year (2004) and wasn't that much the worse for it as far as I can tell. Cash on hand is up as well. There's probably a lot more I would only get out of a more in depth delving. Note that RY is not a small company: 32B market cap- so that 2B is nothing compared to what you will find on the next two statements from companies about 2-3x as big...
JPM: Big spending on loan loss prevention.... go figure. Makes net income drop stupendously. Nice huge 55B of debt and 20B of stock on the books for just the first 3 quarters...on top of 87B last year. Again with liabilities close to assets, but that actually seems normalish for banks, judging by the history.
WFC: Again, a big jump in loan loss prevention. Like 40B of debt in the first three quarters... on top of 50B picked up last year... yuck.
Hmm, well now what. I guess I should check if JPM and WFC have TARP money, wouldn't do to invest in something that the gov makes cut dividends.
Yep, they did. So there goes that idea, their dividends aren't even safe.
Conclusion: I'm going to run to Canada and add a small RY position (10k). I am SURE that most of these companies I ran through today will recover eventually, and I WANT to get in and catch some of the upside. However, at the moment I don't trust myself enough to pick a good entry point and the right companies. I will reevaluate these companies after we see what the TARP does to dividends... and I will probably miss a large chunk of upside. The charts looked hopeful to me, but the balance sheets didn't, as far as JPM and WFC went. Oh well. Maybe I should have picked up some AFLAC- but then again, as I said, this is not a day trade fund, even if it does bounce I shouldn't kick myself. AFLAC in the past has been a very solid outperformer, so I will keep my eye on what becomes of this concern over its Hybrid Securities investments: if it turns out that AFLAC is mostly unscathed, I will buy in, hopefully before all of the upside is gone.
I think companies like with solid histories of outperformance for on the decades charts and the recent 5 yr charts should be looked at again, such as:SLF,AFL, and BNS. However, I have no confidence at the moment, especially in ALF with its recent issues. I will look at financials again, and maybe a few that aren't dividend achievers (gasp!).
Usual disclaimer: I don't know jack about the markets and I don't own any stock- so don't take this stuff as any kind of reason to invest your own money.
Next time: probably a summary of how much money the fund has lost so far (groan) and maybe, I dunno, shipping companies. Might as well call bottom on the bulk rates as well as the financial markets, eh?
Thursday, January 8, 2009
Oil Time
Well, Oil didn't fall to 10$ a barrel, so I suppose now would be a good time to load up the truck and pile some in. Let's start by throwing out some stocks that have been paying out dividends for quite a while, as there are lots and lots of potential companies to choose from so we might as well look at those that have been paying out for a while.
BP *** Yield:6.85% 5yr growth rate: 12% ANALYSTS: 2.81 hold
PE 6 PS .44 PB 1.7
SSL *** Yield:5.81% 5yr growth rate: 23.68 ANALYSTS: 1.0 Strong Buy
PE 7.7 PS 1.34 PB 2.33
CEO *** Yield:4.91% 5yr growth rate: 40%!! ANALYSTS: 1.75 Buy
PE 6.2 PS 2.2 PB 1.7
STO *** Yield:4.64% 5yr growth rate: 7.69% ANALYSTS: 2.29 Outperform/hold
PE 7.42 PS .59 PB 2.77
REP *** Yield:6.68% 5yr growth rate:20.7% ANALYSTS: 2.5 Outperform/Hold
PB 1.2
XOM ***** Yield:2.02% 5yr growth rate:8.29 ANALYSTS: 1.64 moderate buy (MSN)
PE 8.67 PS .8 PB 3.26
BPL **** Yield:9.63% 5yr growth rate:6.03 ANALYSTS: 2.34 hold (MSN)
PE 11.94 PB 1.87 PS 1.18
CVX *** Yield:3.5% 5yr growth rate:10.05 ANALYSTS 2.31 outperform
PE 6.7 PB 1.91 PS .54
Note: some of these ratios may be wrong, they are not all current, some are a week old or so.
So, we have here companies with good dividend payout histories and good growth rates on their dividends, as well as some quite attractive yields. I would like to add a rather large position in companies such as these, so it is tempting to just shotgun them rather than analyze them, however I feel that if I want to outperform the market I need to go more in depth on the companies (sigh, work).
The Price/Book ratio look tempting for many of the companies, especially REP and XOM.
CVX, BP, CEO, SSL, and STO all have PE ratios in the 6/7 range, which also seems tempting. I should probably note that the sector PE is 18... so all of these companies have low ratios.
So, next I'll pull up a chart.
First, I'll look at the six month chart to get a feel for how they dealt with the recent crash, as that seems an acid test for market confidence.
The companies seem to break into two groups, one that underperformed and one that slightly outperformed the market.
BPL, XOM, CVX, and BP, the 'big name blue chips' outperformed by a bit. (XOM and BPL by ~20%!)
The others underperformed by about 10%, and STO underperformed by almost 20%.
The two year chart tells a different story. On it, I see CEO, SSL and STO with very impressive performances. CVX and XOM also consistently preformed well, and the sector as a whole outperformed (probably having to do with high oil prices).
CVX and XOM, as blue chips with good track records, seem quite tempting based on past performance. However, looking forward a recovery by CEO and SSL seems not impossible. BP and BPL don't look that tempting based on past performance.
I noted earlier that CEO, SSL, and CVX all had low PE ratios, so these probably merit further investigation.
XOM seems like it is probably in, with the good PB & PE ratios, and historical performance, although the dividend yield and growth is kind of a yawn. I'll look into it a bit more too.
So now, time to look at financial statements... bleh. Oh well, if I want to outperform the market, I have to do at least a little thinking (or be very lucky).
Starting with CVX:
Slowing increase in revenue, but growth none the less. Nothing jumped out at me, there was debt on the balance sheet but I don't really know how much to expect- it seems to have a lower debt/equity ratio than the industry.
XOM:
Again a lower debt to equity ratio. Again, income growth over the last few years, however I don't know how much to chalk up to high oil prices. Unlike CVX, it issued rather than retired debt the last two years, which is a change from previous years of retirement. Still, nothing jumps out at me.
CEO:
Lower yet debt to equity. Did pick up some more debt the last two years, but I am lead to expect companies to use a bit of leverage in order to make profits, so I can't say I'm shocked.
SSL:
Much higher debt to equity- but this is technically a chemical/basic materials company not an oil/energy company, so the industry has a bit higher debt as a whole. Fast income growth of late, and the balance sheet shows a debt number that doesn't scare the pants off me, although perhaps it should, as the company has been picking up debt the last few years (with the exception of 2006).
Eh, what the heck, I will allocate some fake $$ to all four. I will watch CEO and SSL closely though, as they may not be able to repeat their earlier performance with today's oil situation. I have a good deal of faith in Chevron and XOM however, and I feel they help balance out the others. I would add an oil hedge, except I expect oil to return to at least 60-80$ a barrel in the long term (call it 2yrs). Maybe I should hedge short term... but I'll consider that another day.
BP *** Yield:6.85% 5yr growth rate: 12% ANALYSTS: 2.81 hold
PE 6 PS .44 PB 1.7
SSL *** Yield:5.81% 5yr growth rate: 23.68 ANALYSTS: 1.0 Strong Buy
PE 7.7 PS 1.34 PB 2.33
CEO *** Yield:4.91% 5yr growth rate: 40%!! ANALYSTS: 1.75 Buy
PE 6.2 PS 2.2 PB 1.7
STO *** Yield:4.64% 5yr growth rate: 7.69% ANALYSTS: 2.29 Outperform/hold
PE 7.42 PS .59 PB 2.77
REP *** Yield:6.68% 5yr growth rate:20.7% ANALYSTS: 2.5 Outperform/Hold
PB 1.2
XOM ***** Yield:2.02% 5yr growth rate:8.29 ANALYSTS: 1.64 moderate buy (MSN)
PE 8.67 PS .8 PB 3.26
BPL **** Yield:9.63% 5yr growth rate:6.03 ANALYSTS: 2.34 hold (MSN)
PE 11.94 PB 1.87 PS 1.18
CVX *** Yield:3.5% 5yr growth rate:10.05 ANALYSTS 2.31 outperform
PE 6.7 PB 1.91 PS .54
Note: some of these ratios may be wrong, they are not all current, some are a week old or so.
So, we have here companies with good dividend payout histories and good growth rates on their dividends, as well as some quite attractive yields. I would like to add a rather large position in companies such as these, so it is tempting to just shotgun them rather than analyze them, however I feel that if I want to outperform the market I need to go more in depth on the companies (sigh, work).
The Price/Book ratio look tempting for many of the companies, especially REP and XOM.
CVX, BP, CEO, SSL, and STO all have PE ratios in the 6/7 range, which also seems tempting. I should probably note that the sector PE is 18... so all of these companies have low ratios.
So, next I'll pull up a chart.
First, I'll look at the six month chart to get a feel for how they dealt with the recent crash, as that seems an acid test for market confidence.
The companies seem to break into two groups, one that underperformed and one that slightly outperformed the market.
BPL, XOM, CVX, and BP, the 'big name blue chips' outperformed by a bit. (XOM and BPL by ~20%!)
The others underperformed by about 10%, and STO underperformed by almost 20%.
The two year chart tells a different story. On it, I see CEO, SSL and STO with very impressive performances. CVX and XOM also consistently preformed well, and the sector as a whole outperformed (probably having to do with high oil prices).
CVX and XOM, as blue chips with good track records, seem quite tempting based on past performance. However, looking forward a recovery by CEO and SSL seems not impossible. BP and BPL don't look that tempting based on past performance.
I noted earlier that CEO, SSL, and CVX all had low PE ratios, so these probably merit further investigation.
XOM seems like it is probably in, with the good PB & PE ratios, and historical performance, although the dividend yield and growth is kind of a yawn. I'll look into it a bit more too.
So now, time to look at financial statements... bleh. Oh well, if I want to outperform the market, I have to do at least a little thinking (or be very lucky).
Starting with CVX:
Slowing increase in revenue, but growth none the less. Nothing jumped out at me, there was debt on the balance sheet but I don't really know how much to expect- it seems to have a lower debt/equity ratio than the industry.
XOM:
Again a lower debt to equity ratio. Again, income growth over the last few years, however I don't know how much to chalk up to high oil prices. Unlike CVX, it issued rather than retired debt the last two years, which is a change from previous years of retirement. Still, nothing jumps out at me.
CEO:
Lower yet debt to equity. Did pick up some more debt the last two years, but I am lead to expect companies to use a bit of leverage in order to make profits, so I can't say I'm shocked.
SSL:
Much higher debt to equity- but this is technically a chemical/basic materials company not an oil/energy company, so the industry has a bit higher debt as a whole. Fast income growth of late, and the balance sheet shows a debt number that doesn't scare the pants off me, although perhaps it should, as the company has been picking up debt the last few years (with the exception of 2006).
Eh, what the heck, I will allocate some fake $$ to all four. I will watch CEO and SSL closely though, as they may not be able to repeat their earlier performance with today's oil situation. I have a good deal of faith in Chevron and XOM however, and I feel they help balance out the others. I would add an oil hedge, except I expect oil to return to at least 60-80$ a barrel in the long term (call it 2yrs). Maybe I should hedge short term... but I'll consider that another day.
Monday, December 15, 2008
Next stop: Pharma
Now, picking some Pharmaceutical companies has been a bit harder than previous picks. Why? Well, the sector is actually outperforming the S&P 500 during this slump, so its harder to throw some out as junk or find some that are super discounted.
Now, what companies am I looking at?
BVF- 16.57% no increases but solid yield ANALYSTS:2.67 PE 30.77 PB 4.6 (1.26)
JNJ ***** (3.18) ANALYSTS:2? 1.83 PE 13 PB 3.48 (9.26)
PFE ***** (hi) 7.7 ANALYSTS: 2 PE 10.89 PB 4.22 (1.7)
GSK 5.9% pharma growth slight cut ANALYSTS:3.13? 2.71 PE 13.81 PB 79?? (8.22)
BMY 5.51 pharma slow growth ANALYSTS: 2.19? 2.43 1 underpreform of 16 PE 24.61
PB 6.45 (3.43)
SNY 5.4 growth pharma ANALYSTS:3.2 1 underpreform of 5 PE 11.73 PB?
LLY ***** 5.32 growth pharma ANALYSTS:2.64? 2.94 2 sell 3 underpreform of 18
PE 16.51 PB 3.61 (3.01)
MRK 5.7 slow growth pharma ANALYSTS: 2.36 PE 12.86 PB 3.25 (2.92)
Stars indicate dividend achiever ranking, while the PB in ()'s is the PB listed on Reuters, as opposed to tangible PB which I prefer (intangibles are hard to value!).
When I look at the charts, a few things stand out.
Over the last three months, the sector has outperformed the S&P, and BMY is even up. PFE is second, with the rest down in a group.
SNY and GSK look okay on the 2 yr chart, but aren't outperforming the S&P.
However, we note that JNJ has been outperforming, pretty much forever. Looking at the 30+ yr chart is entertaining, you see some 3000-6000% increases. Wouldn't that be nice, to make 30x-60x your money.
Well, even though the dividend is low, I'm going to add JNJ to the list right now, for the 5 star rating, constant performance, and sane PE ratio. Well, maybe not quite so fast, I'll check the financial statements later...
Now, right off the bat I am going to eliminate some stocks, as I have too many to look at more in depth. GSK had bad ratings and a crazy PB ratio, although maybe that was bad data. The slight dividend cut is enough to push it off the list however. BVF just has too high a yield and PE ratio- I think something is off there, although maybe I should check the balance sheet. SNY on the other hand, has very attractive looking ratios and bad analyst ratings, so I suspect it may be a bit broken.
That leaves me LLY,MRK,PFE, and BMY to think about. Two of those (LLY & PFE) are 5 star dividend payers, and I suspect they will pass muster. Over the long run, these stocks have been under preforming, but they are at a discount currently.
LLY:nothing major i noticed.
PFE:income was down quite a bit last year due to increased expenses.
MRK: similar increase in expenses... I wish I knew why... -? large deferred income tax.. odd
BMY:didn't show the increased expenses trend- noting jumped out at my untrained eye.
I think I will drop BMY because it's dividend growth has been rather slow. I like LLY and PFE for the five stars, and PFE has a very high yield which to me discounts the increased expenses. MRK seems okay, and as it is rather a big name I don't think its too speculative. I might as well just pick these four and throw 10k at them to make up the first half of the pharmaceuticals in the fund. If I can't find more good companies, I may weight them more- I need to keep some cash from the 8% as a pharma hedge as well- I don't know what that would be, as yet. Or if I really need one...its not like a commodity really... well I'll consider that later.
So: I'll take 10k positions in JNJ, PFE, LLY, MRK in the fictitious fund.
Disclosure: NONE, as allways, I don't know anything about investing so please ignore me.
Now, what companies am I looking at?
BVF- 16.57% no increases but solid yield ANALYSTS:2.67 PE 30.77 PB 4.6 (1.26)
JNJ ***** (3.18) ANALYSTS:2? 1.83 PE 13 PB 3.48 (9.26)
PFE ***** (hi) 7.7 ANALYSTS: 2 PE 10.89 PB 4.22 (1.7)
GSK 5.9% pharma growth slight cut ANALYSTS:3.13? 2.71 PE 13.81 PB 79?? (8.22)
BMY 5.51 pharma slow growth ANALYSTS: 2.19? 2.43 1 underpreform of 16 PE 24.61
PB 6.45 (3.43)
SNY 5.4 growth pharma ANALYSTS:3.2 1 underpreform of 5 PE 11.73 PB?
LLY ***** 5.32 growth pharma ANALYSTS:2.64? 2.94 2 sell 3 underpreform of 18
PE 16.51 PB 3.61 (3.01)
MRK 5.7 slow growth pharma ANALYSTS: 2.36 PE 12.86 PB 3.25 (2.92)
Stars indicate dividend achiever ranking, while the PB in ()'s is the PB listed on Reuters, as opposed to tangible PB which I prefer (intangibles are hard to value!).
When I look at the charts, a few things stand out.
Over the last three months, the sector has outperformed the S&P, and BMY is even up. PFE is second, with the rest down in a group.
SNY and GSK look okay on the 2 yr chart, but aren't outperforming the S&P.
However, we note that JNJ has been outperforming, pretty much forever. Looking at the 30+ yr chart is entertaining, you see some 3000-6000% increases. Wouldn't that be nice, to make 30x-60x your money.
Well, even though the dividend is low, I'm going to add JNJ to the list right now, for the 5 star rating, constant performance, and sane PE ratio. Well, maybe not quite so fast, I'll check the financial statements later...
Now, right off the bat I am going to eliminate some stocks, as I have too many to look at more in depth. GSK had bad ratings and a crazy PB ratio, although maybe that was bad data. The slight dividend cut is enough to push it off the list however. BVF just has too high a yield and PE ratio- I think something is off there, although maybe I should check the balance sheet. SNY on the other hand, has very attractive looking ratios and bad analyst ratings, so I suspect it may be a bit broken.
That leaves me LLY,MRK,PFE, and BMY to think about. Two of those (LLY & PFE) are 5 star dividend payers, and I suspect they will pass muster. Over the long run, these stocks have been under preforming, but they are at a discount currently.
LLY:nothing major i noticed.
PFE:income was down quite a bit last year due to increased expenses.
MRK: similar increase in expenses... I wish I knew why... -? large deferred income tax.. odd
BMY:didn't show the increased expenses trend- noting jumped out at my untrained eye.
I think I will drop BMY because it's dividend growth has been rather slow. I like LLY and PFE for the five stars, and PFE has a very high yield which to me discounts the increased expenses. MRK seems okay, and as it is rather a big name I don't think its too speculative. I might as well just pick these four and throw 10k at them to make up the first half of the pharmaceuticals in the fund. If I can't find more good companies, I may weight them more- I need to keep some cash from the 8% as a pharma hedge as well- I don't know what that would be, as yet. Or if I really need one...its not like a commodity really... well I'll consider that later.
So: I'll take 10k positions in JNJ, PFE, LLY, MRK in the fictitious fund.
Disclosure: NONE, as allways, I don't know anything about investing so please ignore me.
Sunday, December 14, 2008
Utilities 2: Speculative High Yeilds
VE yield 12
CPL yield 13
CIG yield ?10-14
BIP yield 8.7
Where to start? Ratios and analyst rankings I guess.
VE
PE 9.52 PB ?1.22 Analyst recommendations: 2 buys 1 underperform... kinda inconclusive
CPL
PE 12 PB 3 Analyst recommendations: 2 underpreforms of 5.. not so hot
CIG
PE ?? PB 2.22 Analyst: 4 buys 1 no opinion... suprising
BIP
PE ?? PB ?.55 cheap? Analyst: 2.75 no sells... not too bad considering
So far I am a bit biased towards CIG and BIP, but I think I should investigate the balance sheets a bit more closely for these ones. Also, maybe I can find out what the payout ratios are for these companies, as I didn't do that earlier. I think I can pretty much drop CPL off my list at this point.
So, balance sheets- anything notable that I can understand?
Not much info on Reuters about BIP. Maybe I should try another site.
VE shows revenue growth and not too huge a percent of cash flow as dividends. No strange 2007 drop like I saw in the earlier utilities.
CIG shows revenue growth but income decreases. A hell of a lot of its cash flow goes to dividends.
It seems BIP hasn't been around long, hence the lack of data. I think I will stay away from it for now, although the yield is tempting. I'll keep it on the radar and check back after a few years maybe. Then again, if it grows hugely, I will be sad.
CIG looks good from the analysts, but I don't like the cash flow all going to dividends. I'm going to have to pass.
VE seems to still be in the running however. Time to look at the charts.
Over the last few months, CIG and CPL have fared better than the S&P, unlike VE and BIP. Hmmm, thats seems to contradict my thoughts... but Mr. Market isn't so logical.
On the 2 and 5 yr charts, CIG and CPL also look better than VE. However, at the moment VE has a PB of 1.22, suggesting it dosen't have much more downside perhaps.
To be honest, this hasn't presented me a clear solution. I'm going to go back and check CPL's books too. Seem they have revenue and income up, but also pay a good chunk of cashflow in dividends, not as crazy much as CIG however.
So, time to sum up:
BIP: too small, too new- not going to touch
CIG: analysts say buy, but it is paying alot of cashflow in dividends
CPL: analysts say sell, and it is paying alot of cashflow in dividends
VE: inconclusive analyst rankings, low PB, beaten down- but previous history isn't so great.
Today, I think I will ignore history, and add VE. Why? The balance sheet looked okay to my untrained eye, and the PB ratio is low, suggesting a lowish price. It is near its years low. And, while the dividend yield is high, its not a huge chunk of cash flow. My theory is that past performance does not determine future performance, and so I am going to buy in (a little).
Adding a 10k position of VE to the portfolio for now. It seems a bit speculative, but I think I justified it a bit.
Oh, and as always,
disclosure: I'm a poor college kid who doesn't own stock and doesn't have a clue don't take my advice sheesh!
CPL yield 13
CIG yield ?10-14
BIP yield 8.7
Where to start? Ratios and analyst rankings I guess.
VE
PE 9.52 PB ?1.22 Analyst recommendations: 2 buys 1 underperform... kinda inconclusive
CPL
PE 12 PB 3 Analyst recommendations: 2 underpreforms of 5.. not so hot
CIG
PE ?? PB 2.22 Analyst: 4 buys 1 no opinion... suprising
BIP
PE ?? PB ?.55 cheap? Analyst: 2.75 no sells... not too bad considering
So far I am a bit biased towards CIG and BIP, but I think I should investigate the balance sheets a bit more closely for these ones. Also, maybe I can find out what the payout ratios are for these companies, as I didn't do that earlier. I think I can pretty much drop CPL off my list at this point.
So, balance sheets- anything notable that I can understand?
Not much info on Reuters about BIP. Maybe I should try another site.
VE shows revenue growth and not too huge a percent of cash flow as dividends. No strange 2007 drop like I saw in the earlier utilities.
CIG shows revenue growth but income decreases. A hell of a lot of its cash flow goes to dividends.
It seems BIP hasn't been around long, hence the lack of data. I think I will stay away from it for now, although the yield is tempting. I'll keep it on the radar and check back after a few years maybe. Then again, if it grows hugely, I will be sad.
CIG looks good from the analysts, but I don't like the cash flow all going to dividends. I'm going to have to pass.
VE seems to still be in the running however. Time to look at the charts.
Over the last few months, CIG and CPL have fared better than the S&P, unlike VE and BIP. Hmmm, thats seems to contradict my thoughts... but Mr. Market isn't so logical.
On the 2 and 5 yr charts, CIG and CPL also look better than VE. However, at the moment VE has a PB of 1.22, suggesting it dosen't have much more downside perhaps.
To be honest, this hasn't presented me a clear solution. I'm going to go back and check CPL's books too. Seem they have revenue and income up, but also pay a good chunk of cashflow in dividends, not as crazy much as CIG however.
So, time to sum up:
BIP: too small, too new- not going to touch
CIG: analysts say buy, but it is paying alot of cashflow in dividends
CPL: analysts say sell, and it is paying alot of cashflow in dividends
VE: inconclusive analyst rankings, low PB, beaten down- but previous history isn't so great.
Today, I think I will ignore history, and add VE. Why? The balance sheet looked okay to my untrained eye, and the PB ratio is low, suggesting a lowish price. It is near its years low. And, while the dividend yield is high, its not a huge chunk of cash flow. My theory is that past performance does not determine future performance, and so I am going to buy in (a little).
Adding a 10k position of VE to the portfolio for now. It seems a bit speculative, but I think I justified it a bit.
Oh, and as always,
disclosure: I'm a poor college kid who doesn't own stock and doesn't have a clue don't take my advice sheesh!
Next up: Utilities
So, I'd like to add some Utilities to the mix. I have stumbled across alot of ticker symbols as I read financial blogs, etc lately. However, a few have caught my attention, either due to high yields or due to consistent dividend growth for several years.
In the consistent growth category:
CEG yield 7% w/ moderate growth of dividend for 6 years
EMR yield of 4% but consecutive increases for 50+ years!
PGN yield 6% with slow increases for 20 yrs
OTTR yield 5 with slow increases for 6 yrs
HNP yield 6 with reasonable increases for 5 yrs
All of the above stocks have analyst ratings in the low to mid 2's, somewhere between buy and hold.
and in the high yield category:
VE yield 12 with increases for 4 years, big ones in the last two
CPL yield 13 - increases in last two years but not much data to go on
CIG ?10-14 payments are erratic to say the least, but overall yield each year has increased
BIP yield 8.7 only 1 year of history i could find
These are rated from 2.5 (VE) up to 1 strong buy (CIG)
I'm going to look at each group separately and choose the two I like most, unless the high yields turn out to all be junk. First lets look at the steady dividend growth utilities. I will talk about the high yielders in another post, as this one has become enormous.
CEG PE 14 PB ~1 # of under preform/sell ratings 1 under preform of 9 ratings
EMR PE 10.7 PB ~14 # low ratings: 0 of 16
PGN PE 13.5 PB ~2 # low ratings: 0 of 18 (but mostly holds)
OTTR PE 18.9 PB ~1.4 # low ratings: 1 of 2 ... not a great sign
HNP PE ? PB ~2.7 # low ratings: 1 of 2 ... again not so great
Note that CEG is sort of a merger arbitrage as it may be bought at a higher price then it is currently trading at. (Hence the low PB makes sense) However, the company, EDF, that may buy it doesn't pay a dividend.
Based on this, I would say I am favoring CEG and EMR, for the merger arbitrage side and the stability of 50 yrs of dividend growth. Time to check the charts however.
Over the last three months, PGN beat the pants off the S&P, and EMR tracked a bit above the S&P. HNP dropped, but has recovered a lot of ground. OTTR and CEG dropped like rocks, but CEG did so before the general market mayhem for its own reasons. Looking at the two year, PGN and EMR stayed the closest to the S&P, while the others underperformed, except OTTR which was doing good, until the recent crash beat the stuffing out of it.
The five year chart shows CEG doing great until its fall from glory, HNP see-sawing, and only EMR seems to outperform consistently on the long term.
Based upon what I have seen so far, I think that only EMR and PGN merit further balance sheet study as long term dividend investments. CEG may be a good merger arbitrage play, but I am not sure it's dividend is safe- I will look at its books too just for kicks.
CEG: consistent revenue growth, not so constant income growth, recent drop in total current assets, and in cash. I don't really know much of what this implies, but nothing jumps out at me. I still haven't found exactly what made this stock tank in September, so I guess I just won't touch what I don't understand, as Buffet advises. Except, Buffet wants to buy this company.... that makes me feel a bit conflicted... heh.
EMR: All I see is an increase in revenue and a recent decrease in assets and cash on hand, as with CEG. Debt went down? I really don't know what kind of data to expect, so I am just looking for things that jump out and scare me.
PGN: Same story, drop in assets in the last year or two, general growth. Why is this a trend- besides perhaps the obvious crisis of lending? Anyone want to fill me in?
Anyhow, I didn't see anything too scary so I am going to put up some buy orders and start cost averaging into 10k positions in EMR and PGN. I will talk about the high yielding utilities later, as this post is huge.
In the consistent growth category:
CEG yield 7% w/ moderate growth of dividend for 6 years
EMR yield of 4% but consecutive increases for 50+ years!
PGN yield 6% with slow increases for 20 yrs
OTTR yield 5 with slow increases for 6 yrs
HNP yield 6 with reasonable increases for 5 yrs
All of the above stocks have analyst ratings in the low to mid 2's, somewhere between buy and hold.
and in the high yield category:
VE yield 12 with increases for 4 years, big ones in the last two
CPL yield 13 - increases in last two years but not much data to go on
CIG ?10-14 payments are erratic to say the least, but overall yield each year has increased
BIP yield 8.7 only 1 year of history i could find
These are rated from 2.5 (VE) up to 1 strong buy (CIG)
I'm going to look at each group separately and choose the two I like most, unless the high yields turn out to all be junk. First lets look at the steady dividend growth utilities. I will talk about the high yielders in another post, as this one has become enormous.
CEG PE 14 PB ~1 # of under preform/sell ratings 1 under preform of 9 ratings
EMR PE 10.7 PB ~14 # low ratings: 0 of 16
PGN PE 13.5 PB ~2 # low ratings: 0 of 18 (but mostly holds)
OTTR PE 18.9 PB ~1.4 # low ratings: 1 of 2 ... not a great sign
HNP PE ? PB ~2.7 # low ratings: 1 of 2 ... again not so great
Note that CEG is sort of a merger arbitrage as it may be bought at a higher price then it is currently trading at. (Hence the low PB makes sense) However, the company, EDF, that may buy it doesn't pay a dividend.
Based on this, I would say I am favoring CEG and EMR, for the merger arbitrage side and the stability of 50 yrs of dividend growth. Time to check the charts however.
Over the last three months, PGN beat the pants off the S&P, and EMR tracked a bit above the S&P. HNP dropped, but has recovered a lot of ground. OTTR and CEG dropped like rocks, but CEG did so before the general market mayhem for its own reasons. Looking at the two year, PGN and EMR stayed the closest to the S&P, while the others underperformed, except OTTR which was doing good, until the recent crash beat the stuffing out of it.
The five year chart shows CEG doing great until its fall from glory, HNP see-sawing, and only EMR seems to outperform consistently on the long term.
Based upon what I have seen so far, I think that only EMR and PGN merit further balance sheet study as long term dividend investments. CEG may be a good merger arbitrage play, but I am not sure it's dividend is safe- I will look at its books too just for kicks.
CEG: consistent revenue growth, not so constant income growth, recent drop in total current assets, and in cash. I don't really know much of what this implies, but nothing jumps out at me. I still haven't found exactly what made this stock tank in September, so I guess I just won't touch what I don't understand, as Buffet advises. Except, Buffet wants to buy this company.... that makes me feel a bit conflicted... heh.
EMR: All I see is an increase in revenue and a recent decrease in assets and cash on hand, as with CEG. Debt went down? I really don't know what kind of data to expect, so I am just looking for things that jump out and scare me.
PGN: Same story, drop in assets in the last year or two, general growth. Why is this a trend- besides perhaps the obvious crisis of lending? Anyone want to fill me in?
Anyhow, I didn't see anything too scary so I am going to put up some buy orders and start cost averaging into 10k positions in EMR and PGN. I will talk about the high yielding utilities later, as this post is huge.
Saturday, December 13, 2008
First Picks
Well, I figure I might as well dive in feet first, since this is fake money after all. My first few picks may be lacking in research, but hopefully I will figure things out and people will tell me why I am silly and give me advice. Feel free to comment and tell me why my picks are horrible, and feel very free not to ever ever take my picks as good investing advice.
Now, to business. I am going to start this off by saying that I think the economy will recover, and so i may invest in less stable sectors like real estate, shipping, oil, and financial in hopes they will go back up. Today, I have in mind oil and metals.
My first pick for the fund is a stock I have been eying for a while, and that I have heard mostly good about. That is Kinder Morgan Energy Partners, a gas pipeline company. Now, they get their money from volume of fuel pumped, not from selling it, so hopefully they are somewhat insulated from the price crash in oil. Furthermore, KMP has a high dividend yield that has been rising for some 11 years, at a reasonable rate, at least that is what dividendinvestor.com tells me.
As for the ratios, it has a rather high Price/Earnings of 30ish, and a Price/Book of 3ish, so it isn't exactly a steal. However, If you look at the chart, it hasn't taken nearly as much of a beating as the S&P 500 of late. I am going to chalk the fact that is price hasn't fallen to dirt cheap levels as a good thing. Like I said, I'm not much of a value investor, I'm after dividends.
Now, to make sure I'm not being a total retard, I checked analyst buy/sell/hold ratings and saw that it has a mix of strong buy, buy, and holds. Overall, seems to be a buy, so say the mighty analysts. While I wouldn't expect everything analysts say to buy to actually be worth buying, it is comforting that there aren't any sell ratings.
Now, I should probably find some sort of hedge for this, but I want the fund to be mostly long. After I add a few more energy/oil positions I will figure out some sort of oil hedge, either an ultrashort fund or just plain short selling some oil company that I think is garbage.
Next up, commodities, in specific, steel. If you are some sort of day trader, you might look at MTL, or if you have great faith in the Russian economy recovering. However, I am not going to touch that thing with a nine foot pole. So, what do I have to look at?
What I see as far as dividend yielding steel stocks is Nucor (NUE), U.S. Steel (X), and ArcelorMittal (MT). From my cursory reading, NUE and X have about 3% dividend yields and MT is beaten down and yields about 6%. NUE is a mainly North American firm, X has a European side, and MT is global. Nue does mostly recycling rather than ore processing it looks like, and I someone on Seeking Alpha claimed that keeps costs down, but I'd rather not buy something just because I read about it on SA.
First off, dividends. Who has paid them the longest and who's has grown the fastest. NUE has grown its dividend a lot, although it pulled back a bit from 2007 highs. Not a dividend achiever, but the history looks rather solid. X has raised its dividend for three or four years, and had a constant dividend before that- not bad. MT has raised its dividend a lot in the last two years, but hasn't had a high dividend for too long it looks like.
Ratios?
X PE ~2 PB ~1
NUE PE ~6 PB ~2.5
MT PE ~2.5 PB ~.8
If you look at the chart, you see that in the crash NUE came out smelling like a rose compared to X and MT, which explains the difference in ratios. On teh one year chart, X looked good until the crash, while on the 2 & 5 year charts we see that MT has done some serious growing.
So, I don't know what to make of U.S. Steel's low ratios and poor performance relative to NUE and MT during the recent crash. Since I don't, I'm going to chalk that up as Mr. Market voting against it. It might mean its a great value and the dumb money has dumped it, but I don't have any evidence to support that. But before I say anything final, I'll look at what the analysts say.
Analysts Rating: NUE 1.93 no sells X 2.07 one sell MT 1.92 no sells
Now, I am a bit scared of X and MT as they suffered a lot recently, but I'm going to take a risk with MT and add it to the portfolio because of its high yield and no sell ratings. I will also add NUE as I feel it will add some stability that MT lacks. As before, I will get to a hedge later. I don't think X is so bad as to short it for my hedge, although MTL might just be a good candidate for that.
Lastly, how much of each do I want to add? Lets say I want to end up with about 10k each of MT and NUE, and maybe 20k of KMP as I love that solid dividend. With the market how it is, I should probably cost average in over a week or a month. However, UpDown, where I am modeling the portfolio, has a 100$ trade fee, and I don't want to lose too much to fees. I'll start by placing 5k (maybe 10k on KMP) limit buy orders at a few percent below closing price and hope they come to me. If they execute I will note that in the next post, hopefully.
Notes: Most data from a combination of dividendinvestor.com (for dividend info), reuters (for the ratios), and yahoo finance (for the charts), with a bit from google finance (random history, I like to read the comments, etc).
Disclaimer/Disclosure: As always, i am a poor college student with no positions in any stocks, so don't treat this as an advice page for god sakes. Do your own research!
Edit: I just recalled something I heard somewhere, probably from Cramer- the stock is not the company. Next time when I look at company history I will try to look at balance sheets and earnings as well as stock charts, which don't indicate company performance, only company popularity with Mr. Market, who isn't always rational.
Now, to business. I am going to start this off by saying that I think the economy will recover, and so i may invest in less stable sectors like real estate, shipping, oil, and financial in hopes they will go back up. Today, I have in mind oil and metals.
My first pick for the fund is a stock I have been eying for a while, and that I have heard mostly good about. That is Kinder Morgan Energy Partners, a gas pipeline company. Now, they get their money from volume of fuel pumped, not from selling it, so hopefully they are somewhat insulated from the price crash in oil. Furthermore, KMP has a high dividend yield that has been rising for some 11 years, at a reasonable rate, at least that is what dividendinvestor.com tells me.
As for the ratios, it has a rather high Price/Earnings of 30ish, and a Price/Book of 3ish, so it isn't exactly a steal. However, If you look at the chart, it hasn't taken nearly as much of a beating as the S&P 500 of late. I am going to chalk the fact that is price hasn't fallen to dirt cheap levels as a good thing. Like I said, I'm not much of a value investor, I'm after dividends.
Now, to make sure I'm not being a total retard, I checked analyst buy/sell/hold ratings and saw that it has a mix of strong buy, buy, and holds. Overall, seems to be a buy, so say the mighty analysts. While I wouldn't expect everything analysts say to buy to actually be worth buying, it is comforting that there aren't any sell ratings.
Now, I should probably find some sort of hedge for this, but I want the fund to be mostly long. After I add a few more energy/oil positions I will figure out some sort of oil hedge, either an ultrashort fund or just plain short selling some oil company that I think is garbage.
Next up, commodities, in specific, steel. If you are some sort of day trader, you might look at MTL, or if you have great faith in the Russian economy recovering. However, I am not going to touch that thing with a nine foot pole. So, what do I have to look at?
What I see as far as dividend yielding steel stocks is Nucor (NUE), U.S. Steel (X), and ArcelorMittal (MT). From my cursory reading, NUE and X have about 3% dividend yields and MT is beaten down and yields about 6%. NUE is a mainly North American firm, X has a European side, and MT is global. Nue does mostly recycling rather than ore processing it looks like, and I someone on Seeking Alpha claimed that keeps costs down, but I'd rather not buy something just because I read about it on SA.
First off, dividends. Who has paid them the longest and who's has grown the fastest. NUE has grown its dividend a lot, although it pulled back a bit from 2007 highs. Not a dividend achiever, but the history looks rather solid. X has raised its dividend for three or four years, and had a constant dividend before that- not bad. MT has raised its dividend a lot in the last two years, but hasn't had a high dividend for too long it looks like.
Ratios?
X PE ~2 PB ~1
NUE PE ~6 PB ~2.5
MT PE ~2.5 PB ~.8
If you look at the chart, you see that in the crash NUE came out smelling like a rose compared to X and MT, which explains the difference in ratios. On teh one year chart, X looked good until the crash, while on the 2 & 5 year charts we see that MT has done some serious growing.
So, I don't know what to make of U.S. Steel's low ratios and poor performance relative to NUE and MT during the recent crash. Since I don't, I'm going to chalk that up as Mr. Market voting against it. It might mean its a great value and the dumb money has dumped it, but I don't have any evidence to support that. But before I say anything final, I'll look at what the analysts say.
Analysts Rating: NUE 1.93 no sells X 2.07 one sell MT 1.92 no sells
Now, I am a bit scared of X and MT as they suffered a lot recently, but I'm going to take a risk with MT and add it to the portfolio because of its high yield and no sell ratings. I will also add NUE as I feel it will add some stability that MT lacks. As before, I will get to a hedge later. I don't think X is so bad as to short it for my hedge, although MTL might just be a good candidate for that.
Lastly, how much of each do I want to add? Lets say I want to end up with about 10k each of MT and NUE, and maybe 20k of KMP as I love that solid dividend. With the market how it is, I should probably cost average in over a week or a month. However, UpDown, where I am modeling the portfolio, has a 100$ trade fee, and I don't want to lose too much to fees. I'll start by placing 5k (maybe 10k on KMP) limit buy orders at a few percent below closing price and hope they come to me. If they execute I will note that in the next post, hopefully.
Notes: Most data from a combination of dividendinvestor.com (for dividend info), reuters (for the ratios), and yahoo finance (for the charts), with a bit from google finance (random history, I like to read the comments, etc).
Disclaimer/Disclosure: As always, i am a poor college student with no positions in any stocks, so don't treat this as an advice page for god sakes. Do your own research!
Edit: I just recalled something I heard somewhere, probably from Cramer- the stock is not the company. Next time when I look at company history I will try to look at balance sheets and earnings as well as stock charts, which don't indicate company performance, only company popularity with Mr. Market, who isn't always rational.
Sector Distribution
Now, I want a good diversity of stocks, so that no one sector bubble kills me. I also want to focus in on sectors that took a beating and I think will recover. Out of my butt, essentially, I shall pull the following initial weightings, which will probably be readjusted to something more balanced later.
16% Oil stocks: what can I say, I believe in peak oil...
8% Utilities: these seem solid and stable
8% Conglomerates: seem stable? Sometimes. GE is a bit shaky atm...
12% Real Estate: I think that the housing bubble might have popped a bit too much
14% Financial stocks: lets face it, they had the stuffing beat out of them, but lots will live, and hopeful I can pick them
16% Shipping: when the economy recovers, shipping will, and they pay good dividends (when they don't cut them :( ) I may cut this back if I can't find enough stable companies with good long contracts.
8% Pharma: Seems stable with reasonable yields
8% Raw Materials: Sort of beaten down, but since it doesn't yield much I'll weight it lower
10% Staples: Heavier weighting just because it's stable.
So, we have a million to start, and lets call each stock position about 10k-20k, so one stock per percent or two, hopefully I'll end up with 60 or 80 companies.
Did I miss an important sector? If so yell at me please.
16% Oil stocks: what can I say, I believe in peak oil...
8% Utilities: these seem solid and stable
8% Conglomerates: seem stable? Sometimes. GE is a bit shaky atm...
12% Real Estate: I think that the housing bubble might have popped a bit too much
14% Financial stocks: lets face it, they had the stuffing beat out of them, but lots will live, and hopeful I can pick them
16% Shipping: when the economy recovers, shipping will, and they pay good dividends (when they don't cut them :( ) I may cut this back if I can't find enough stable companies with good long contracts.
8% Pharma: Seems stable with reasonable yields
8% Raw Materials: Sort of beaten down, but since it doesn't yield much I'll weight it lower
10% Staples: Heavier weighting just because it's stable.
So, we have a million to start, and lets call each stock position about 10k-20k, so one stock per percent or two, hopefully I'll end up with 60 or 80 companies.
Did I miss an important sector? If so yell at me please.
Thursday, December 11, 2008
Investing Thesis
So, what will this fictitious hedge fund invest in?
Well, how about stocks for starters. And how about it actually hedges, but mostly goes long. Say, maybe it will have a hedge for each sector that it invests in, like a double down ETF. Maybe one day I will learn about bonds and add them as well.
Now, what kind of stocks. Now, I don't know much about value investing, and when I try short term trading (with fake money, of course) I generally lose as much as I gain, or more. However, I don't really understand buy and hold investing. The stock just sits there, and magically rises in value? I don't really buy it. I much prefer dividend paying stocks, as they provide an income that can be reinvested, possibly in other stocks if I so choose. Also, the word is that they are more stable, although in the current market I haven't seen that to really be the case.
Now, a large number of dividend stocks are financial companies, which have recently had, well, a bit of a shake up. However, I think I will invest in some of the more promising looking ones, as their share prices have taken a massive beating and they offer reasonable dividend yields now. Also, RIET funds (real estate investment), shipping companies, and some oil/utility companies seem to pay reasonable dividends. These are also not exactly stable right now, as real estate, shipping, and oil prices have all taken a beating. However, I will be ever the optimist and buy into some of these while they are cheap as well.
However, everything I read tells me that diversification is good. So, I will look at dividend stocks in other areas as well, such as consumer goods, telecom, commodities, medical companies, the whole nine yards. Some of these may not pay stelar dividends, but they will give me a good wide base of investments, so that when I sink I will at least have sank with a whole ship instead of just a risky plank.
Finally, how will I limit losses? I allready said I will hedge, but when will I sell the hedge? How will I rebalance if the market crashes and my hedge is suddenly a large portion of my portfolio?
Well, I think I will limit my long losses with trailing stop loss orders, but as the market is preposterously volitile I will probably set them rather low. As for the hedge- I think if it increases in value significantly (say 15%), I will sell 25% of it and reinvest that in long stocks. Depending on if I think the market is going to keep going down or go back up, what I do next may vary, but the idea is to get out of my hedge slowly as the market drops and still have some left to sell at the bottom, so that I can buy back in long. Of course, I will certainly miss the bottom but if I cost average in over the trough, it will hopefully turn out better than I would have done with no hedge. Then, ideally I will buy back a new hedge after the market gets a little healthier and the double down funds are cheaper.
Okay, so that is the extent of the Ficticious Hedge Fund's strategy thus far. More will be posted as it percilates into my brain. Expect the first few stocks to be added to the fund in the next few days.
Well, how about stocks for starters. And how about it actually hedges, but mostly goes long. Say, maybe it will have a hedge for each sector that it invests in, like a double down ETF. Maybe one day I will learn about bonds and add them as well.
Now, what kind of stocks. Now, I don't know much about value investing, and when I try short term trading (with fake money, of course) I generally lose as much as I gain, or more. However, I don't really understand buy and hold investing. The stock just sits there, and magically rises in value? I don't really buy it. I much prefer dividend paying stocks, as they provide an income that can be reinvested, possibly in other stocks if I so choose. Also, the word is that they are more stable, although in the current market I haven't seen that to really be the case.
Now, a large number of dividend stocks are financial companies, which have recently had, well, a bit of a shake up. However, I think I will invest in some of the more promising looking ones, as their share prices have taken a massive beating and they offer reasonable dividend yields now. Also, RIET funds (real estate investment), shipping companies, and some oil/utility companies seem to pay reasonable dividends. These are also not exactly stable right now, as real estate, shipping, and oil prices have all taken a beating. However, I will be ever the optimist and buy into some of these while they are cheap as well.
However, everything I read tells me that diversification is good. So, I will look at dividend stocks in other areas as well, such as consumer goods, telecom, commodities, medical companies, the whole nine yards. Some of these may not pay stelar dividends, but they will give me a good wide base of investments, so that when I sink I will at least have sank with a whole ship instead of just a risky plank.
Finally, how will I limit losses? I allready said I will hedge, but when will I sell the hedge? How will I rebalance if the market crashes and my hedge is suddenly a large portion of my portfolio?
Well, I think I will limit my long losses with trailing stop loss orders, but as the market is preposterously volitile I will probably set them rather low. As for the hedge- I think if it increases in value significantly (say 15%), I will sell 25% of it and reinvest that in long stocks. Depending on if I think the market is going to keep going down or go back up, what I do next may vary, but the idea is to get out of my hedge slowly as the market drops and still have some left to sell at the bottom, so that I can buy back in long. Of course, I will certainly miss the bottom but if I cost average in over the trough, it will hopefully turn out better than I would have done with no hedge. Then, ideally I will buy back a new hedge after the market gets a little healthier and the double down funds are cheaper.
Okay, so that is the extent of the Ficticious Hedge Fund's strategy thus far. More will be posted as it percilates into my brain. Expect the first few stocks to be added to the fund in the next few days.
The Idea
So, I was reading Seeking-Alpha, as I started doing around about the time of the recent market crash, when I stumbled along an article which amused me.
http://seekingalpha.com/article/109979-how-to-start-your-own-hedge-fund
Its topic was just how easy it is to start up a hedge fund. Now, it occurred to me that starting a hedge fund would be an interesting thing to do, but that I, being financially not so literate, were to do so it would of course result in horrible failure and lawsuits and the like. So, rather than creating a hedge fund and being sued, I decided to do the next best thing: blog about finance AS IF I were running a hedge fund, and in the result hopefully learn a thing or two about finance.
I should note, that I recently started playing an investing game called 'Up-Down' and this is where I shall keep track of the fictitious hedge fund. I should also note that most of my financial knowledge comes from the internet: bloomberg, seeking-alpha, MSN money, etc. I have taken a fancy to dividend stocks after reading some posts on DIV-NET, so that is where I shall start.
My objective is this: find interesting looking stocks and add them to the fictitious hedge fund each week, hopefully with some sort of analysis to explain why I chose it. Now, at first my picks may be rather uneducated, but I hope after losing a large amount of fake money I will begin to understand things like PE,PS,PB, various ratios, value investing, and general stock screening processes. After a while I will have built up a fund from what was originally a million fake dollars on Up-Down, although by the time I have added the last stock the value will surely have changed.
Once the fund is up and running, I will manage it on a monthly or weekly basis and make posts about what I add, get rid of, get horribly hosed on, and maybe even what pans out.
This should be an adventure, and hopefully I will learn something.
If I wasn't explicit enough above: I HAVE NO FINANCIAL EXPERIENCE AND NOTHING ON THIS BLOG SHOULD BE USED TO MAKE YOUR OWN FINANCIAL CHOICES AND IF YOU LOSE A BUCH OF MONEY, ITS NOT MY FAULT DON'T SUE ME: ITS A FICTICIOUS FUND! DO YOUR OWN RESEARCH BEFORE INVESTING!
P.S. if you are interested in Up-Down, above is a referral link- if you play the game and do good I get a penny sometimes! Or you can just Google it if you don't want to give me a penny- you meany.
That site is kinda neat too.
http://seekingalpha.com/article/109979-how-to-start-your-own-hedge-fund
Its topic was just how easy it is to start up a hedge fund. Now, it occurred to me that starting a hedge fund would be an interesting thing to do, but that I, being financially not so literate, were to do so it would of course result in horrible failure and lawsuits and the like. So, rather than creating a hedge fund and being sued, I decided to do the next best thing: blog about finance AS IF I were running a hedge fund, and in the result hopefully learn a thing or two about finance.
I should note, that I recently started playing an investing game called 'Up-Down' and this is where I shall keep track of the fictitious hedge fund. I should also note that most of my financial knowledge comes from the internet: bloomberg, seeking-alpha, MSN money, etc. I have taken a fancy to dividend stocks after reading some posts on DIV-NET, so that is where I shall start.
My objective is this: find interesting looking stocks and add them to the fictitious hedge fund each week, hopefully with some sort of analysis to explain why I chose it. Now, at first my picks may be rather uneducated, but I hope after losing a large amount of fake money I will begin to understand things like PE,PS,PB, various ratios, value investing, and general stock screening processes. After a while I will have built up a fund from what was originally a million fake dollars on Up-Down, although by the time I have added the last stock the value will surely have changed.
Once the fund is up and running, I will manage it on a monthly or weekly basis and make posts about what I add, get rid of, get horribly hosed on, and maybe even what pans out.
This should be an adventure, and hopefully I will learn something.
If I wasn't explicit enough above: I HAVE NO FINANCIAL EXPERIENCE AND NOTHING ON THIS BLOG SHOULD BE USED TO MAKE YOUR OWN FINANCIAL CHOICES AND IF YOU LOSE A BUCH OF MONEY, ITS NOT MY FAULT DON'T SUE ME: ITS A FICTICIOUS FUND! DO YOUR OWN RESEARCH BEFORE INVESTING!
P.S. if you are interested in Up-Down, above is a referral link- if you play the game and do good I get a penny sometimes! Or you can just Google it if you don't want to give me a penny- you meany.
That site is kinda neat too.
Subscribe to:
Posts (Atom)