February 1, 2012
Comment on Model Portfolio activity
Mesirow Financial has
merged its clearing operations with RBC Clearing Corp. RBC is a wholly owned
subsidiary of Royal Bank of Canada, the fifth largest bank in North America. http://www.rbccorrespondentservices.com/index.htm As a result all of Lemley Yarling Co trades will be
cleared through RBC beginning March 2. Clients should have received a package
of forms from RBC that need to be completed and signed and returned in the
return envelope to Kathy at our Hinsdale Office. If clients have any questions
they should call Kathy at 1-800 793-3665 – 8AM to 3PM CST Monday through
Friday. The change should be seamless except for the need to set up a new
account/password to view accounts online at a new website called Investor
Select. There will be a 15 to 25 day lag for the online accounts to be viewable
and that should be the only interruption.
Royal Bank of Canada
Through Royal Bank of
Canada (RBC) — one of North America’s largest and healthiest financial
institutions — RBC Correspondent Services offers the strength and stability
you require in a financial partner. Royal Bank of Canada’s credit ratings
are among the highest of all financial institutions: S&P: AA-(positive);
Moody’s: Aa1; Fitch: AA; DBRS: AA (as of August 26, 2011). RBC is ranked
the safest bank in Canada and the safest in North America for the second
year in a row (Global Finance, October 2010 and 2011). Based on market
cap, RBC is the 11th largest bank in the world and the fifth largest in
North America. (Bloomberg as of September 8, 2011). RBC employs more than
74,000 full-and part-time employees who serve more than 15 million
personal, business, public sector and institutional clients through offices
in Canada, the U.S. and 53 other countries. RBC’s financial strength, sound
risk management policies, strong balance sheet and diversified business mix
have enabled it to withstand many of the market shocks and pressures.
We took our 30% profit in
BankAmerica and placed part of the
proceeds in the General Motors B warrant which give the right to buy GM stock
as $18.33 through July 9, 2019.
Morgan Stanley, owner of the
world’s largest brokerage, was upgraded to a “buy” rating by Goldman Sachs Group Inc. analysts
who said the firm may benefit from improvement in the trading environment.
Morgan Stanley was raised from “neutral” and placed on
the “conviction list” of top recommendations, the analysts, led by Richard Ramsden, wrote 1/29 in a note
They also said the shares may rise to $23 in 12 months,
24 percent above the closing price on Jan. 27.
Morgan Stanley posted the only increase in trading
revenue excluding accounting gains among the five largest Wall Street banks in
2011, making progress toward Chairman and Chief Executive Officer James Gorman’s goal of boosting market
share. The New York-based firm had per-share losses in two of the past three
quarters as it took charges to eliminate swap contracts purchased from MBIA Inc. (MBI)
and to convert Mitsubishi UFJ Financial Group Inc.’s preferred stake to common
Revenue from Morgan Stanley’s investment banking and
trading division will probably rise 13 percent in 2012, excluding one-time
items, to $17.4 billion as credit spreads tighten and activity levels increase
from a “cyclically depressed” second half of 2011, the analysts estimated.
Profitability in that unit may benefit from cost-cutting and lower deferred
compensation expenses, they wrote.
The “key concern” for Morgan Stanley is retaining top
talent after it reduced compensation and increased deferrals for last year, the
Goldman Sachs analysts wrote. The firm cut pay for senior bankers and traders
by an average of 20 percent to 30 percent and capped immediate cash bonuses at
$125,000, according to people briefed on the plans.
The company will also benefit from lower integration
costs at its Morgan Stanley Smith Barney retail brokerage, a joint venture with
Citigroup Inc. with more than 17,000 advisers, the analysts said. Morgan
Stanley will likely receive approval from regulators to buy an additional 14
percent stake in May, increasing ownership to 65 percent, a purchase that will
probably cost $2.7 billion, they wrote.
Morgan Stanley rose 1 cent to $18.57 at 10:10 a.m. in New
York trading. The shares have gained 23 percent this year, after dropping 44
percent in 2011.
January 27, 2012
Comment on Model Portfolio activity
reported earnings today and they were good—but not good enough for traders. The
shares dropped $1 in early trading and then recovered half. We remain convinced
the shares are cheap (eight times earnings in a lousy but recovering economy) and
will provide a great reward for the patient. GM also dropped in sympathy and we
added GM warrants to accounts.
January 26, 2012
Comment on Model Portfolio activity
sold half our Alcatel Lucent and Chico’s positions to take advantage of the move
higher since year end that moved both issues up to close to break even for us.
Symantec announced decent earnings but disappointed going forward and we sold
the position and placed the funds in AT&T which has a $6 % yield. To some
accounts we also added General Motors A warrants that expire on our wedding
anniversary in 2016 and are exercisable at $10. They offer a more aggressive
approach to owning GM (1.5 times more volatility) and the premium is only $1
for the four plus years. We also will be adding the B warrants which run till
7/10/2019 and are exercisable at $18.33. They offer twice the volatility of the
underlying common. The premium is a seemingly rich $4 but actually for the 7
year time frame and the potential reward we think it is justified.
The markets need a rest and a
bit of a pullback.
Former President John Tyler’s
(1790-1862) grandchildren still alive:
January 20, 2012
Comment on Model Portfolio activity
Loss Smaller Than Estimated (Bloomberg)
The net loss was $250 million,
or 15 cents a share, compared with profit of $836 million, or 41 cents, a year
earlier, the New York-based company said today in a statement. The loss from
continuing operations was 14 cents, compared with the 57-cent average estimate
of 22 analysts surveyed by Bloomberg. Morgan Stanley posted the only increase
in trading revenue excluding accounting gains among the five largest Wall
Street banks in 2011, making progress toward Chairman and Chief Executive
Officer James Gorman’s goal of boosting market share.
BofA Swings to
Profit as Lender Rebuilds Capital (Bloomberg)
Net income of $1.99 billion,
or 15 cents a diluted share, compared with a loss of $1.24 billion, or 16
cents, a year earlier, according to a statement today from the Charlotte, North
Carolina-based firm. While results were boosted by one- time gains on asset
sales and reserve releases, the stock advanced 5.6 percent in early trading as
investors focused on the stronger balance sheet. Chief Executive Officer Brian
T. Moynihan, 52, is cutting holdings, expenses and staff while raising capital
to meet demands from regulators for a larger cushion against losses. So far,
$50 billion in assets are gone, and Moynihan’s Project New BAC will eliminate
at least 30,000 jobs as the firm seeks to save $5 billion annually. He’s also
aiming to quell disputes over faulty mortgages that have cost the bank about
Hartford Financial Services
Provides insurance and
financial services on a global basis. Its rating has been upgraded from neutral
to a buy rating by Goldman Sachs. More than 30% of Hartford Financial Services'
commercial business consists of the small commercial space, where better
pricing trends are expected. These trends are not adequately reflected in the
valuation of the company's stock, according to Goldman Sachs. If the company's
valuation remains constantly depressed, it may cause a split between its
property and casualty business and its life companies. This move is expected to
increase shareholder value, according to Goldman Sachs. Hartford Financial
Services has also been quite aggressive in its buyback program.
The American International
Group (AIG) is a competitor of
Hartford Financial Services. Hartford Financial Services reported a gross
margin of 28% as compared to the 13% reported by the American International
group. It also reported higher operating margins and had a price-to-earnings ratio
of 7.6x versus the 5.7x shown by the American International Group. Shares of
the company are currently trading at $17.6 per share and are expected to reach
a price target of $23, indicating a potential upside of around 31%.
Greece brouhaha is all about Hedge funds versus European governments. The
solution proposed is to write down Greek bonds on bank portfolios and exchange
for new bonds with higher interest rates longer maturities and less principal.
That has usually been how these situations have been handled especially when
Sovereign (country) debt is involved. But that was before Credit Default Swaps
(CDS). CDS only return profits to holders if the underlying bonds default. But
Hedge funds will not benefit from the Credit Default Swaps on Greek debt that
they own – to the tune of $4 billion profit – if the settlement of the Greek
situation is handled in the manner currently proposed. That is because the
settlement will not be considered a default.
so the hedge funds now want the European Human rights Court to bail them out.
Yes the free marketeers are turning to a human rights authority to get their
money. This action reminds of all the free marketeers on the floor of the
Chicago futures exchange who lost money in the MF Global debacle who now want
the government and the Exchanges to step in and make them whole.
Greek situation was discussed in the NYT yesterday:
Hedge Funds May Sue Greece
if It Tries to Force Loss
LANDON THOMAS Jr.
LONDON — Hedge funds have been
known to use hardball tactics to make money. Now they have come up with a new
one: suing Greece in a human rights court to
make good on its bond payments.
The novel approach would have
the funds arguing in the European Court of Human Rights
that Greece had violated bondholder rights, though that could be a multiyear
project with no guarantee of a payoff. And it would not be likely to produce
sympathy for these funds, which many blame for the lack of progress so far
in the negotiations over restructuring Greece’s debts.
The tactic has emerged in
conversations with lawyers and hedge funds as it became clear that Greece was
considering passing legislation to force all private bondholders to take
losses, while exempting the European Central Bank, which is the
largest institutional holder of Greek bonds with 50 billion euros or so.
Legal experts suggest that the
investors may have a case because if Greece changes the terms of its bonds so
that investors receive less than they are owed, that could be viewed as a
property rights violation — and in Europe, property rights are human rights.
The bond restructuring is a
critical element for Greece to receive its latest bailout from the
international community. As part of that 130 billion euro ($165.5 billion)
rescue, Greece is looking to cut its debt by 100 billion euros through 2014 by
forcing its bankers to accept a 50 percent loss on new bonds that they receive
in a debt exchange.
According to one senior
government official involved in the negotiations, Greece will present an offer
to creditors this week that includes an interest rate or coupon on new bonds
received in exchange for the old bonds that is less than the 4 percent private
creditors have been pushing for — and they will be forced to accept it whether
they like it or not.
“This is crunch time for us.
The time for niceties has expired,” said the person, who was not authorized to
talk publicly. “These guys will have to accept everything.”
The surprise collapse last
week of the talks in Athens raised the prospect that Greece might not receive a
crucial 30 billion euro payment and might miss a make-or-break 14.5 billion
euro bond payment on March 20 — throwing the country into default and
jeopardizing its membership in the euro zone.
Talks between the two sides
picked back up on Wednesday evening in Athens when Charles Dallara of the
Institute of International Finance, who represents private sector bondholders,
met with Prime Minister Lucas Papademos of Greece and his deputies.
While both sides have tried to
adopt a conciliatory tone, the threat of a disorderly default and the spread of
contagion to other vulnerable countries like Portugal remains pronounced.
“In my opinion, it is unlikely
that this is the last restructuring we go through in Europe,” said Hans Humes,
a veteran of numerous debt restructurings and the president and chief executive
of Greylock Capital, the only hedge fund on the private sector steering
committee, which is taking the lead in the Greek negotiations.
“The private sector has come a
long way. We hope that the other parties agree that it is more constructive to
reach a voluntary agreement than the alternative.”
At the root of the dispute is
a growing insistence on the part of Germany and the International Monetary Fund
that as Greece’s economy continues to collapse, its debt — now about 140
percent of its gross domestic product — needs to be reduced as rapidly as
Those two powerful actors —
which control the purse strings for current and future Greek bailouts — have
pressured Greece to adopt a more aggressive tone toward its creditors. As a
result, Greece has demanded that bondholders accept not only a 50 percent loss
on their new bonds but also a lower interest rate on them. That is a tough pill
for investors to swallow, given the already steep losses they face, and one
that would be likely to increase the cumulative haircut to between 60 and 70
The lower interest rate would
help Greece by reducing the punitive amounts of interest it pays on its debt,
making it easier to cut its budget deficit.
To increase Greece’s leverage,
the country’s negotiators have said they could attach collective action clauses
to the outstanding bonds, a step that would give them the legal right to saddle
all bondholders with a loss. This would particularly be
aimed at the so-called free riders — speculators who have said they will not
agree to a haircut and are betting that when Greece receives its aid bundle in
March, their bonds will be repaid in full.
If the collective action
clause is used — and Greek officials say it could become law next week — these
investors, who bought their bonds at around 40 cents on the dollar, are likely
to suffer a loss.
That, in turn, could prompt
suits from investors claiming in the Court of Human Rights that their property
rights had been violated.
“Because Greece is changing
the bond contract retroactively, this can become an issue in a human rights
court,” said Mathias Audit, a professor of international law at the University
of Paris Ouest.
Not all funds are pursuing
such a strategy. Such a case would take years and would have to run its course
in Greece before being heard by human rights judges in Strasbourg, France.
But with their considerable
financial resources, some funds may be willing to pursue such a route, and they
point to similar cases won by hedge funds in Latin America. While the prospect
of Greece paying an investor any time soon is slim, the country wants to avoid
a parade of lawsuits across Europe, which would restrict its ability to raise
money in international markets.
Argentina, which defaulted on
its debts in 2002, still faces legal claims from investors that have made it
nearly impossible for the country to tap global debt markets.
“It cannot be Angela Merkel
that decides who suffers losses,” said one aggrieved investor who was
considering legal action and did not want to be identified for that reason.
“What Europe is forgetting is that
there needs to be respect for contract rights.”
It is not just the legal
cudgel that investors are threatening to use. Some hedge funds have discussed
among themselves the possibility of demanding a side payment, as they describe
it, as a price Europe and Greece must pay if the two want the funds to
participate in the agreement.
With the stakes so high, a
compromise may well be reached. Germany and the I.M.F. may realize that if the
private sector is pushed too hard, the deal will collapse and they will have to
pay even more money to keep Greece afloat in the coming years.
Eager to put the issue behind
them, private sector creditors may accept a larger loss and exchange their
nearly worthless Greek bonds for more valuable securities that would also offer
enhanced protection if Greece had to restructure in the future.
As for the holdouts, they
could run up millions of dollars in legal bills chasing after Greece in
But beyond all the byzantine
wrangling, a crucial question is how this would benefit Greece. Even with the
deal, Greece’s debt would be no less than 120 percent of G.D.P. in 2020 — which
seems to be slight progress given the austerity and pain its citizens must
endure during this period.
“The real issue is not who
participates in the deal,” said Jeromin Zettelmeyer, the deputy chief economist
at the European Bank for Reconstruction and Development and an authority on sovereign debt. “The
question is whether there is enough debt relief for Greece, and there may not
be, because the fiscal and growth situation in Greece is quite dire.”
January 18, 2012
Comment on Model Portfolio activity
added Deutsch Telekom to some larger accounts. DT gets $4 billion from AT&T
for the failure of the merger with T Moble. Moreover they may get a leg up in
Cloud computing as referenced in this Bloomberg article.
European governments, determined not to lose another technology battle
to the U.S., are giving domestic companies a leg-up in the cloud.
France set up a venture in November with
companies including France Telecom SA (FTE)
SA (HO) to offer on-demand rental of hardware, software and
applications that are “made in France.” The German government is working on
stricter data- protection rules that would include as a criterion the location
of servers that host often confidential and sensitive user data.
State intervention has picked
up since Microsoft
Corp. (MSFT) said last June that, as an American company, it
must hand data to U.S. authorities under the Patriot Act if asked, even if its
files are stored in Europe. At
stake is a market valued at $47 billion in western Europe alone by 2015,
according to Gartner
Inc. (IT) France Telecom, Deutsche Telekom AG (DTE)
and Atos Origin are bidding against U.S. suppliers Hewlett-Packard Co. (HPQ)
Business Machines Corp. (IBM)
“It’s the beginning of a fight
between two giants,” Jean-
Francois Audenard, Paris-based France Telecom’s
cloud-security adviser, said in an interview. “It’s extremely important to have
the governments of Europe take care of this issue because if all the data of
enterprises were going to be under the control of the U.S., it’s not really
good for the future of the European people.”
Europe’s technology companies
have fallen behind Google Inc. (GOOG),
Facebook Inc. and Apple Inc. (AAPL)
in Internet search, social- media and consumer electronics. Henning Kagermann,
a former chief executive officer of Walldorf, Germany-based SAP AG (SAP),
the largest maker of management-business software, said Europe needs to avoid
the same fate in cloud computing.
“I can’t imagine that Europe
can afford to leave this field to the U.S.,” Kagermann, now president of Germany’s National Academy of Science
and Engineering, said in an interview in Berlin yesterday. “This year will show
whether we’re serious about this.”
SAP, its archrival Oracle Corp. (ORCL),
and companies such as IBM, Hewlett-Packard, Salesforce.com Inc. (CRM),
Inc. (AMZN) and Microsoft are promoting cloud computing as a
secure way to outsource services and reduce the need for pricey servers.
In Europe, Deutsche
Telekom’s T-Systems unit and France Telecom are wooing clients with the vow
to protect their data from the U.S. government. They cite legal provisions,
including the Patriot Act, that allow authorities to request data without a
court order and to force providers to keep quiet about it toward their
‘Level Playing Field’
The European Commission will
this month present tighter data-protection rules to shield individuals from
data loss on the Web while at the same time create a “level playing field for
companies” by smoothing out differences across European countries. EU Justice
Commissioner Viviane Reding
said last month that the reforms should inspire the U.S. to also strengthen its
Some governments have proposed
measures that may be seen as protectionist. In September, Dutch Security and
Justice MinisterIvo Opstelten told the parliament that U.S. companies will be
excluded from bidding for IT services by his government because of fears that
the U.S. Patriot Act may allow data to be compromised.
As more European clients may
request to have data stored locally, U.S. cloud providers may increasingly have
to divvy up contracts with local providers.
Royal Dutch Shell Plc (RDSA),
Europe’s largest oil company and one of Microsoft’s biggest clients in the
region, last year decided to store its data in Germany with T-Systems while
leaving Microsoft to run software applications. Jonathan
French, a Shell spokesman, won’t discuss why the company
chose German servers.
This month, Google won its
biggest enterprise contract to date, helping 110,000 employees at Spain’s Banco Bilbao Vizcaya Argentaria
SA (BBVA) access its Apps suite, which includes e-mail,
calendar, data and Website creation tools.
That deal doesn’t include
storing “more confidential” data about clients and the bank’s business as the
lender prefers keeping such files under its own control, said Carmen Lopez,
director for BBVA’s Innovation Observatory.
Sebastien Marotte, a vice
president at Google Enterprise, said that the company would need “strong
justification” from U.S. authorities, like alleged crimes, before handing over
In the longer term, European
companies won’t be able to win global clients with business models based on
local regulations, said Gartner analyst Frank
“You always have to keep in
mind that you’re participating in a model that’s geared toward global
application,” he said. “Governments need to understand that if they want to
promote cloud computing they have to open up rather than dig in.”
As Big as the Web?
Europe is still a relatively
small slice of the global cloud market, which may expand to $241 billion in
2020 from $40.7 billion last year, according to Forrester Research Inc. North
American and Asian
telecommunications companies last year outspent European peers on cloud assets,
with the latter accounting for only 7 percent of the $13.5 billion investments
globally, according to researcher Informa Plc. (INF)
The cloud will become as
important as the Internet in maintaining U.S. competitiveness, according to a
report that 71 of the nation’s largest technology companies submitted in July
to the Obama administration.
Edlund, a Hewlett-Packard spokesman, said the company’s cloud
products are certified to meet various levels of data protection. “We welcome
any initiatives to standardize rules and make them more transparent because
that actually helps all parties do business.”
IBM spokesman Joseph
Hanley said the company makes sure it “works with customers
to architect solutions appropriate for their privacy and security needs.”
For now, the U.S. laws are
helping Deutsche Telekom, in which the German government owns 32
percent, win cloud business, said Reinhard Clemens, CEO of the T-Systems unit.
T-Systems last month added contracts from customers including Promotora de Informaciones
SA, Spain’s largest media
company, Brazilian insurer Intermedica Sistema de Saude SA, and South African
glass manufacturer Consol Ltd.
“The Americans say that no
matter what happens, I’ll release the data to the government if I’m forced to
do so, from anywhere in the world,” Clemens told reporters on Sept. 12. “That’s
why we’re well-positioned if we can say we’re a European provider in a European
legal sphere and no American can get to them.”
January 13, 2012
Comment on Model Portfolio activity
major market measures had a nice rally this week until JP Morgan missed its
revenue number this morning and that caused profit taking in the markets. The
economic numbers remain positive and we expect higher markets.
last we wrote we sold a portion of our Ford warrants (our position was
overweighed) and spent the proceeds on Huntington Bank. We reduced BankAmerica
in some larger accounts where we too aggressive buying in the last week. We
also purchased a small amount of Urban Outfitters when it dropped 18% on news
it fired its CEO. Founder Richard Haynes took over and obviously fourth quarter
revenues and earnings are going to be bad so we will await further info before
adding much more. We had a nice trade in the shares last year and hope for the
same this year although hope in not an investment metric.
January 10, 2012
Comment on Model Portfolio activity
pre-announced negative news last night but this morning and analyst recommended
the shares and the stock jumped but then backed off. We made a nice trading
profit in Juniper in the 4th quarter 2011 and we sold today for another nice
but not as much profit. The major market measures are at 4 month highs and
there may be a consolidating pullback the next few days. With that in mind we
took the gain and switched the funds to Cisco. Cisco is down on an up day
because of the Juniper news but Cisco may be taking market share from Juniper
and also Cisco’s sales are more broad-based that Juniper’s telecoms focus.
also swapped the American Eagle we purchased yesterday for GM. We decided that
the Sears money should be in GM and we are taking a 25 pennies loss per share
to make the switch.
January 9, 2012
Comment on Model Portfolio activity
buy of Sears Holding at year end for a quick pop in the New Year failed and we
are taking our lumps today and placing the funds in American Eagle which also
dropped in the New Year although not as much. We also sold Alcoa for a loss
ahead of earnings after the company announced it was closing smelter capacity.
We bought more BankAmerica and reinitiated a position in Huntington Banks with
economic news has been mostly positive and we continue to believe the markets
are heading higher.
January 6, 2012
January 5, 2012
Comment on Model Portfolio activity
switched Oracle at a plus scratch to the Money Center Bank ETF (KBE). American
Eagle reported same store sales up 10% but cut earnings 10 pennies and the
shares tanked 15%. We had reduced our position last month but since we are
fully invested we are not adding shares but still like the stock. BankAmerica
popped and we don’t know why. It is cheap.
January 3, 2012
Comment on Model Portfolio activity
We ended the year down about
15% with the S&P 500 down 1%. To say we are disappointed doesn’t tell the
story. But last year is spilled milk.
We think our performance this
year will be positive and if the markets cooperate we hope to outperform.
Luckily past performance is not an indication of future performance as the SEC
wants us to continually remind folks.
agree with most of Krugman’s views in that the stimulus package was too small
and that talk of balancing the budget is election year rhetoric. Media hype
aside there is no comparison between now and the 1930s. Times are now tough
for 15% of Americans (50% in the Depression) but we are sure that our parents
would consider present conditions a cakewalk compared to what they and their
parents faced in the Great Depression. Social security, Medicare, Pensions, and
unemployment insurance provide stimulus to our economy. No such payments
existed in the 1930s. Nor was the Defense budget 50% of government spending.
Even reduced state and local government spending is a much greater percentage
of the economy than back then. The dust bowl wiped out farmers while the
vibrant farm economy of the last three years is a greatly ignored story.
We have posited that the
European crisis is overblown. And while we don’t like High Frequency Trading-
when markets become more bullish HFT will exacerbate the move to the upside
just as it did to the downside. HFT exaggerates trends- it doesn’t create
we begin the year fully invested we wish to review what we own and why we own.
Lucent is a multinational company that makes telephone equipment. To
understand the stock’s valuation we suggest multiplying by ten. Last year ALU
ranged between a high of $7 and a Low of $1.50. (Multiply by ten and the range
is $70 to $15) and gives some concept of how oversold is a company that will
earn $.20 ($2) and have sales of $20 Billion ($200 Billion). It is priced at
book for the first time in history and with a valuation of $4 billion it sells
at 25% of total revenues.
One investor’s take: http://seekingalpha.com/article/316014-6-stocks-under-10-to-double-in-2012?source=yahoo
Alcatel-Lucent is a technology
company with a significant presence in Europe, and it has fallen by 47% during
the last year. The company's global presence is substantial, and many fear that
its presence may be a hindrance rather than a luxury, to consistent growth.
Therefore, the loss is more speculative than fundamentally driven, because
fundamentally the company's had a breakout year in 2011. ALU is trading with
its best margins in several years, and the company's first year of net income
in more than four years. Yet despite this fact, the stock continues to trade
lower and investors fear that because the company lowered guidance, as a
precaution, in Europe for the upcoming quarter, that it could be a sign of
things to come. I'm expecting very large gains from ALU during 2012: The
company's invested a large sum of time and money into its mobile networks and
bandwidth services in some of the most underdeveloped, yet most populated,
areas of the world.
partnerships with two very large telecom companies in both the European and
Asian-Pacific regions of the world; and in these regions, the company is
developing its 4G LTE technology, and is currently in its "test run"
phase in Madrid and Barcelona before offering the service throughout Spain and
other countries. The 4G LTE technology may not sound exciting to us in the
U.S., but in other highly populated countries with less communication
technology, this service is exciting. I believe that Alcatel's strategic plan
is both working and will prove to be affective, because while other companies
struggle for market share in the U.S, ALU is playing on a much larger field
throughout the globe. I expect that as the company's services expand, and it
lowers its dependency on the U.S, its revenue, earnings and margins will all
engages in the production and management of aluminum, fabricated aluminum, and
alumina and is a DJIA component. Priced at ten times estimated earnings
revenues grew 24% last quarter. Pricing pressure is affecting the short term
Eagle Outfitters expects to earn $1.20 this year. Same store sales
have been positive in a tough teen market.
American Eagle Outfitters upgraded at Piper Jaffray from Neutral to Overweight. $19 price
target. Business trends have remained strong in Q4. American Eagle Outfitters upgraded at Jefferies to Buy from
Hold. $21 price target. Normalizing cotton costs now a tailwind.
has problems. Everyone knows that. BAC is not going away and is cheap at $5.50.
Warren the Buffet invested $5 billion in BAC at $7 a share in August.
(Chico’s FAS, Inc., together with its subsidiaries, operates as a
specialty retailer of casual-to-dressy clothing, intimates, complementary
accessories, and other non-clothing gift items. The company offers its products
under the Chico’s, White House|Black Market (WH|BM), and Soma Intimates brand
names. The Chico’s brand sells primarily private branded clothing focusing on
women 35 and over) is priced at 90% of revenues and in the past wherever
the shares trade below one times revenues that shares have been a buy.
is the primo networking company and seems to be back in favor among conservative
tech investors. Analysts suggest earnings of $1.77 in 2010 and $1.97 in 2013.
CEO Chalmers is under pressure to improve performance and he seems to be
meeting the challenge.
is the computer maker that we can’t stand owning (computers are dead- iPads are in) and can’t stand not owing (we only buy
Dell computers). We are back in it for now. Earnings are expected to exceed $2
this year and with $5 billion net cash and priced at 40% of revenues these
shares are compelling- until they aren’t. Michael Dell has been turning the
company around after he returned to the helm and our guess is that this year
big boy and girls will finally begin to return to the shares.
(common and warrants) is priced at $9 times earnings. Market share is 15%
and Ford is earning money is slow economy. Negative opinion mentions Europe as
a drag. When-If- the economy recovers Ford can earn $2.50 per share and sell at
$20 plus. We own the common and warrants. Warrants expire January 2013 so we
will have to take action this year. The warrants give us leverage-both ways.
Electric is involved in all the future growth right areas of the
economy -Solar, wind and nuclear power, water desalinization, a financial arm
that weathered the crisis and media communications. With a 3.8% yield form and
increasing dividend we expect GE to hit $30 in the next two years.
Motors is cheap cheaper cheap.
Financial Services Group, Inc., through its subsidiaries,
provides insurance and financial services in the United States and
internationally. The company’s Property and Casualty Commercial segment
provides workers compensation, property, automobile, marine,
livestock, liability, and umbrella coverages, as well as customized insurance
products and risk management services, including professional liability,
fidelity, surety, specialty casualty coverages, and third-party administrator
services. Its Group Benefits segment offers employers, associations, affinity
groups, and financial institutions with group life, accident and disability
coverage, voluntary benefits, and group retiree health products and services.
The company’s Consumer Markets segment provides standard automobile,
homeowners, and home-based business coverages to individuals, as well as a
special program designed exclusively for members of AARP. This segment also
operates a member contact center for health insurance products offered through
the AARP Health program. Its Global Annuity segment offers individual variable,
fixed market value adjusted, and single premium immediate annuities; stable
value contracts; and retirement savings, as well as administers investments.
The company’s Life Insurance segment sells life insurance products,
including variable universal life, universal life, and term life, as well as
variable PPLI owned by corporations and high net worth individuals. Its
Retirement Plans segment provides government plans to corporations,
municipalities, and not-for-profit organizations. The company’s Mutual
Funds segment offers retail mutual funds, investment-only mutual funds, and
college savings plans; and proprietary mutual fund supporting insurance
products. The Hartford Financial Services Group, Inc. was founded in 1810 and
is headquartered in Hartford, Connecticut. ITT Hartford Group, Inc. operates
independently of ITT Corporation as of December 19, 1995. http://finance.yahoo.com/q/pr?s=HIG+Profile
Arne Alsin-- http://seekingalpha.com/article/315908-my-top-picks-for-the-coming-decade-of-stocks-part-v?source=yahoo
This is a stock (and a book
value) that almost nobody believes in. With a book value of $46.72 and a stock
quote around $16, this is a story that begins and ends with one word:
Most investors are already
familiar with Hartford, the company. Hartford sells individual annuities,
mutual funds, and multiple insurance lines, including life, disability,
property and casualty. Confidence in the insurance industry – and in Hartford,
in particular - cratered during the credit crisis. In 2009, the company
borrowed $3.4 billion in TARP monies, paying it back in full in 2010. Just
because TARP was quickly repaid, though, doesn’t mean investors have faith in
It’ll happen in due course.
The stock will trade at around one times book someday soon, after investors get
comfortable with the quality of book equity and with management’s new taste for
risk aversion. The company needs a few quarters of consistent operating
performance to turn skeptics into believers.
Funny thing is, much of the
worry and angst over the books of financial companies like Hartford is
unnecessary. As I’ve said in columns on Citigroup (C)
and Bank of America (BAC), financial companies
have been thoroughly vetted by regulators, and subjected to all sorts of stress
tests (e.g., what happens if unemployment goes to 13%). This is a time when
investors should be confident in the accuracy of financials – the time to be
nervous was pre-credit crisis, when risk-taking was the norm, when oversight by
regulators was sloppy.
If anything, this is the sort
of company nervous investors should seek out in the current market environment.
Like Citigroup, many of Hartford’s low-return, high-volatility businesses
(comprising 30% of operations) have been separated from the core company and
are in run-off mode. What is left are high-quality businesses that are healthy
For 2012, earnings from
Hartford’s core businesses (ex-run-off businesses) should be about $3.40 per
share, for a PE multiple of less than five. Capital is already being returned
to shareholders, a sign that the company is on solid financial ground. Add the
dividend yield of 2.7% to the current stock buyback (the company is retiring
over 7% of outstanding shares), and the implied yield to shareholders is nearly
10%. It’s just the beginning of good things to come for buyers of Hartford
Packard is the tech soap opera of 2010 to 2012. Hopefully this year
investor confidence will return. Too much value to abandon.
competes with Cisco. Juniper Networks, Inc. designs, develops, and sells
products and services that provide network infrastructure to create
environments for the deployment of services and applications over a single
a complete positive analysis see:
Stanley is a financial holding company, and provides various
financial products and services to corporations, governments, financial
institutions, and individuals worldwide. It operates in three segments:
Institutional Securities, Global Wealth Management Group, and Asset Management.
Priced at $16 with a book value
of $30 and projected earnings of $2 the shares are priced for catastrophe.
There isn’t going to be catastrophe.
has been a good trade for us over the past year and we hope that luck
continues. NVIDIA Corporation provides visual computing, high performance
computing, and mobile computing solutions that generate interactive graphics on
various devices ranging from tablets and smart phones to notebooks and
workstations. It operates in three segments: Graphic Processing Unit (GPU),
Professional Solutions Business (PSB), and Consumer Products Business (CPB).
The GPU segment offers GeForce discrete and chipset products, which support
desktop and notebook personal computers plus memory products. The PSB segment
provides its Quadro professional workstation products and other professional
graphics products, including its NVIDIA Tesla high-performance computing
products used in the manufacturing, entertainment, medical, science, and
aerospace industries. The CPB segment offers Tegra mobile products, which
support tablets, smartphones, personal media players, Internet television,
automotive navigation, and other similar devices. This segment also licenses
video game consoles and other digital consumer electronics devices. The company
sells its products to original equipment manufacturers, original design
manufacturers, add-in-card manufacturers, consumer electronics companies, and
system builders worldwide that utilize its processors as a core component of their
entertainment, business, and professional solutions. NVIDIA Corporation was
founded in 1993 and is headquartered in Santa Clara, California.
It is a Raymond James pick for
Company Profile: Nvidia is a
visual computing technologies company and the inventor of the graphics
Share Price: $13.71 (Dec. 14)
Potential Upside: 104 percent
based on a price target of $28
Investment Thesis: Analyst
Hans Mosesmann says that the bear case for Nvidia has been overstated and that
headwinds won't materialize in the company's fiscal 2013.
"Investors have been
increasingly concerned about Nvidia's applications processor, Tegra, and its
ability to compete given new dynamics in the tablet and smartphone
market," Mosesmann notes.
"In essence, we believe Qualcomm
will be successful in targeting the lower end of the market, but Nvidia's early
lead at quad core will allow the company to have meaningful traction for Tegra
is the primo software company. ORCL missed earnings in the last quarter and
took a 20% hit to its share price. We bought for a recovery trade.
Holding is Sears and Kmart. Business stinks for them and the
shares dropped $15 (30%) in the last two weeks of trading. The share price is
volatile because of the small float and lower than it was in the 2009 Crash. We
bought small amount of hold//trade.
is Norton internet security for personal computers also big in company security
business. Share price at $16 is down from $26 when tech was hot in early 2011.
is a stock that is cheap with a 2.56% yield. Share price was down 25% last year
because it dropped filling prescriptions for Express Scripts. Share price will
warrants are in accounts to remind us that we are human.
We plan on being in business for at least the next twenty years
and with this in mind we are changing the frequency and content of our internet posts. We will maintain our
concentration on market activity while we simplify our business day. We have been writing about the markets
for 27 years - on a daily basis for 12 years - and giving investment advice for 45 years. Our guess is that
while we haven’t seen and said it all we are pretty close to having exhausted any new words of wisdom
we might wish to convey. Markets don’t repeat but they do rhyme. By not posting dally we will be
freed up to do some summer/winter activities such as gardening/snowshoeing, riding our horses,
walking the dogs and spending a bit more time with the prince and princess when they visit. And
so we are going to end our lengthy daily comments but we will continue to post periodically when
market events warrant and/or when there is activity in the Model Portfolio.
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Summary of Business Continuity Plan