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Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
Bud: 608-624-5777       Kathy: 630-323-8422

Comments on activity in client accounts

29 April 2016

We awakened Sunday morning realizing that our own account had been down 40% in February- our worse drop ever in 50 years- and had recovered to be up 10% on the year. Most of our client accounts did not suffer — or recover — as much since we are most aggressive in our own account. But all of our accounts are back to even to up 7% with the S&P 500 up 2% on the year after being up 2% for all of last year.

We aren't that dumb (down) or that smart (up) and we and our clients have been lucky with a dash of our expertise in this latest market turmoil.

With the above in mind we decided to return to cash since May (sell in May and go away) is just around the corner. Oil has rallied 70% from its February low and in any market maven's book that suggests a correction should be in order.

We are on the sidelines with only a small holding in Whole Foods which reports next week.

We are contentedly watching for now and may trade a few value stock blowups on negative earning/revenue reports.

*****

22 April 2016

We repurchased Whole Foods ahead of earnings near the same price we sold it in February ahead of earnings. With the markets in a better frame of mind we decide to own WFM before this quarter's report. We also repurchased Micron lower than last sale; Deutsch Bank a bit higher than last sale and added to Marathon by selling British Petroleum to take a more aggressive stance on our oil positions.

The markets are acting well. Earnings season is in full swing and even the disappointing stocks only sell off for a day or so before holding.

The outlook is clear at least till the 'Sell in May and go away' mantra begins.

*****

With Oil Prices Stabilizing, Morgan Stanley Upgrades Devon Energy

Monica Gerson , Benzinga Staff Writer

Recent stabilization of the oil prices benefits companies like Devon Energy Corp upgraded the rating for the company from Equal-weight to Overweight, while raising the price target by 40 percent to $36.

Oil Price Stabilization

Read more: http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7855660/with-oil-prices-stabilizing-morgan-stanley-upgrades-devo#ixzz46HSSjhSO

*****

Tax Day 2016

During the week we took a short profit in Deutsch Bank, added Gap, United Natural Foods and Juniper to accounts when they dropped 10% and greater on negative news and added to our Twitter position in some accounts. We also repurchased Devon higher than last we sold and added British Petroleum. OPEC is meeting on Sunday to determine output quota and we would rather be in than out.

Markets seem to have stabilized and we are looking for trading opportunities while maintaining a large cash position which is our usual modus operandi.

*****

United Natural Foods Downgraded To Underweight at Morgan Stanley

United Natural Foods, Inc. faces top-line headwinds across its business, and its outlook is more challenged than the market appreciates, Morgan Stanley's Vincent Sinisi said while downgrading the organic retailer to Underweight from Equal Weight. "UNFI faces top line headwinds across its business that we believe are unlikely to abate," Sinisi wrote in a note to clients. "UNFI's core natural/organic packaged food distribution business faces pressure as segment growth shifts more to 'fresh' offerings.

Read more: http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7824229/united-natural-foods-downgraded-to-underweight-at-morgan#ixzz45WrHMIJT

*****

FinCEN Enforcement Director Departs For greener pastures on the other side: the regulators cash in while the public- not so much.

Stephanie Brooker, enforcement director of the U.S. Department of Treasury's Financial Crimes Enforcement Network, is leaving the agency for law firm Gibson, Dunn & Crutcher LLP as a partner.

Ms. Brooker, who was the first director of FinCEN's enforcement division, will focus on financial services-related criminal and regulatory enforcement, compliance and litigation.

"I'm excited to work with institution clients, and to bring them my compliance insight," she said in an interview.

In her role as enforcement director, Ms. Brooker oversaw all of FinCEN's enforcement of the Bank Secrecy Act, which has included the recent expansion into areas new to the agency such as card clubs. She also oversaw rule-making actions under the Patriot Act that have come under recent legal challenge and the imposition of geographic targeting orders on some real estate purchases in Miami and Manhattan.

At a March panel hosted by The Wall Street Journal, Ms. Brooker called the orders part of the agency's "incremental approach" to tackling money laundering through real estate.

Prior to serving as FinCEN's enforcement director, Ms. Brooker was its chief of staff and senior adviser to the director. Before that, she was an assistant U.S. attorney in Washington, D.C., where she spent her final two years as the first chief of a newly created squad targeting asset forfeiture and money laundering.

*****

Welfare exists in many forms:

The agriculture slump is getting so bad in the U.S. that farmers are about to get more government aid than at any time in the past decade, signaling the rising public cost of crop surpluses and cheap food.

About $13.9 billion of net farm income this year will be federal payments, or about 25 percent of total profit estimated at $54.8 billion, according to estimates by the U.S. Department of Agriculture. That's the biggest payout and highest ratio since 2006, as programs authorized by Congress two years ago cost more than originally forecast.

Farmers will earn less than half what they did just three years ago, before global surpluses sent commodity prices plunging. Corn and soybeans, the biggest U.S. crops, are so cheap that farmers are expecting to lose money on every acre they plant this season. That's putting a bigger strain on government safety nets for agriculture.

"This is a sign of a weak farm economy that is much weaker than even a couple years ago," said Patrick Westhoff, director of the Food & Agricultural Policy Research Institute at the University of Missouri in Columbia.

Surplus Crops

Since corn and soybeans touched record highs in 2012, global output has increased faster than demand and prices tumbled. Income for U.S. farmers is headed to a 14-year low, the USDA estimated in February. A new subsidies law approved in 2014 scrapped an aid program that wasn't tied to prices. The replacements were payments tied to market swings, which raises expenses in less-profitable years.

In a different measure of government farm payments, a report from the Congressional Budget Office last month said the cost of price-support programs will peak at $10.2 billion in the year that starts Oct. 1. That was 13 percent more than the agency estimated for the same period a year earlier.

Subsidies should decline as oversupply abates and prices recover, the CBO said. Payments will bottom out at $5.2 billion in the 2024 fiscal year, though that's still a deeper trough than anticipated a year earlier and still more expensive than the old direct-payment program, which sent checks to producers regardless of price, the office said in its report.

*****

8 April 2016

We were delighted to welcome a new grandson, Sebastian Christopher Lemley-Wood on Monday April 4.

During the week we took profits in our remaining Fitbit (thank you Abby-total profits for clients from her two suggestions for the 1st quarter $500,000); placed that money in Deutsch Bank; bought a half position in Twitter and sold Marathon Petroleum for a scratch.

We are enjoying our new family member and the spring weather that changes by the minute. We are also reveling in a super large cash position and watching the tulips grow.

*****

 



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15624 Lemley Drive Soldiers Grove, Wi 54655 608-624-5777
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