Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
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Flag Day 2019
Our webhosting site dropped webhosting last week and it took several days for another hosting site to pick us up. We are back!!!
During the week we added Devon Oil, Newell Co and Abercrombie to accounts. All were repurchased at prices lower than the prices at which we last sold.
Abercrombie and Devon and Newell all reported better than but they are in industries that are particularly unloved in the present market.
And so, while Beyond Meat (losses), Uber (losing $1billion a quarter) Roku (no earnings), Crowdstrike (100-time sales) and other concept stocks and IPOs move higher, value stocks lag. The period from 1996 to 2000 was difficult for us as tech with no earnings zoomed and value wallowed. That time may be rhyming with the present.
Ascena Retail continues to move lower and is causing accounts and our psyche great pain. We have reviewed our reasons for owning it and with $6 billion in sales and an equity value of less than $200 million we can't sell to relieve our pain. It is just too cheap. The company and insiders are not buying shares at these levels (see Abercrombie below) and that is a worry. Our hope -and it is only that -is that there is no insider buying because the company will be making further moves like selling (for a modest sum- Jaffe resigned as Chairman and CEO) dressbarn to the Jaffe family or selling Lane Bryant or Justice to pay down more debt. Our fear is that the board or others will make a $1.50 bid to take the company private. Ann Taylor Loft and Justice are profitable and selling Lane Brant and or Justice would raise enough money to pay down all Ascena's debt and own Ann and Loft debt free with $2 billion plus in sales. Time will tell.
Summer is on the way.
This may be why Gap is spinning off Old Navy
Abercrombie buying shares:
Another questionable threat:
7 June 2019
Markets stabilized this week as the Trumpster left the U.S. to visit the Queen and play golf in Ireland. He also stopped for a moment to remember D Day.
Our accounts suffered as our retail value 5% yield stocks dropped further. We purchased a few more shares but hopefully we have learned that we can't beat the computer jocks when they decide to short stocks without regard to the value of the companies. The computers are much more interested in the whether the charts suggest selling pressure or buying pressure. The computers digest trends in micro seconds and execute sell or buy orders that swamp investors.
We traded AT&T this week of a $1 profit which is two quarters dividends. We placed those fund in Ford which yields the same as AT&T and is a trading bet on the Mexico tariffs not being added.
During the week United Natural Foods had a decent report but they are still digesting the Super Valu purchase with write offs and adjustments obfuscating underlying good results.
We currently own; Walgreens Boots, Marathon Oil, Ford, Bristol Myers, United Natural Foods, Abercrombie, The Gap and Ascena and CASH.
1 June 2019
We were watching CNBC this Friday morning and the three commentators were discussing The Trumpster threatening to impose tariffs on Mexico to stop immigration on the southern border (say what!) as if Trump made a rational well thought out decision. When will the thoughtful treatment of harebrained tweets cease?
It is unnerving the way the tv and print mavens – and now the markets- confer rationality to Trumps tweets and decisions. But it is what it is, and we have reacted to the Village idiot's latest tweets by raising a good deal of cash and eliminating our trading positions- at a loss.
This is the third year in a row that our accounts have rallied into February only to give back all those gains by May. One would think that we would have learned our lesson but old trading habits are difficult to break. Moreover, we expected/hoped some rationality in the tariff wars to the detriment of our accounts' values.
We are flummoxed by the incompetency of the president. We knew he was all hat but we did think his fellow Repubs would exert some influence. Instead they are scared to death of getting primaried by Trump followers if they oppose the Trumpster and so the deafening silence from the Senate.
The financial commentators are afraid to confront the stupidity of Trumps tariff tweets because most of Wall Street and of the Pooh Bah who run the networks are interested in what's in it for them. And the tax cuts and carried interest exemption coupled with the real estate write offs that mean never having to pay any taxes are their payment for silence and acquiescence.
The country has survived world wars and earthquakes and floods and tornadoes and hurricanes and so the thinking is that the country can survive Trump. The problem with that thinking is that Trump is an idiot and has really not encountered any major international incident and let's pray/hope it stays that way. With the departure of the generals and the amateur hour replacements in the cabinet we truly worry what will occur if there is a real or supposed Tonkin Gulf incident.
And now the markets are demanding interest rate cuts by the Fed to offset the ill-considered Trump tariffs. The markets are afraid of Trump and are hoping The Fed will save the day. Cutting interest rates to mitigate stupid policy is in itself stupid. The Fed should hold fast and let Trumps stupidity do what it will to the economy. Folks have to stop treating Trump as sane and, until his actions hit their pocketbooks in a big way, we don't think they will.
To raise cash and reposition we switched our failed trade in CVS to Walgreens Boots. We have followed WBA for years and years and years and it is a well-run company priced at 7 times earnings and with a 3.8% yield. We are much more comfortable holding it as a longer-term investment than we are in holding a trade that didn't work.
We also sold AT&T over $32 since that has been its high print over the past year. We plan on reentering at some point. T is down today on rumors that Amazon is going to buy Boost, Sprints prepaid no frills cell service and become a fourth competitor in the cell phone business.
We took a trading profit in Cognizant and losses in Rite Aid, 3D, Hewlett Packard, and Baker Hughes GE. We scratched+/- in Bristol Myers and Intel.
We did add Abercrombie when it dropped 30% in one day and 40% over the last week on what the Street considered bad earnings- we didn't; and also repurchased Apache $4 lower than we sold last week to replace the XOP that we sold at a loss. Apache has a higher beta and with oil down 25% from its recent high we have also been adding to or Marathon Oil position.
Abercrombie (4.5% yield) U. S. same store sales both at Abercrombie and Hollister were up 4% in the quarter and overall same sales were up 1%. That doesn't merit a 40% retrenchment:
We also added a few shares of the Gap (5.2% yield) on a drop from $30 to $18 over the last month.
A tornado ripped through Dayton, Ohio, on the night on May 27, but that wasn't the only storm Dayton residents faced. Fox 45 weatherman Jamie Simpson launched into an excoriation of his viewers during a live tornado bulletin when people started to complain on social media that the warning had interrupted show The Bachelorette. [...]
In video shared widely on social media, Simpson said: "Just checking social media. We have folks complaining already, 'just go back to the show.' No, we're not going back to the show, folks. This is a dangerous situation, okay?
He has no shame: Eddie Lampert Sues Sears Estate, Demands Trial and $130 Million
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