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Lemley Yarling Management Co
309 W Johnson St
Apt 544
Madison, WI 53703
Bud: 312-925-5248

Comments on activity in client accounts

11 June 2021

Markets have meandered around their highs for the two weeks we have been absent. Wisconsin's string of 90-degree days has now reached 15 with no end or rain in sight. Other than that life is good.

We don't have many words of wisdom but we do have thoughts of caution. The goofy stocks and Bitcoin et al continue their shenanigans and the hedgies and Robinhood traders are having fun while the rest of us watch.

We currently own: Pfizer, Intel, Verizon, AT&T, Walgreens Boots, Wells Fargo, Ford, GE, Huntington Bank, Hewlett Packard Enterprises, Apache Oil, The Gap and Macy's. We also recently purchased a new name Organon (a spinoff from Merck https://finance.yahoo.com/quote/OGN/profile?p=OGN)

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News from The Roaring 20021s (History rhymes, do decades in centuries rhyme?)

The first new Alzheimer's drug in decades costs $56,000, probably doesn't work, and could stand in the way of better treatments.

https://www.businessinsider.com/

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Michael Saylor's business intelligence firm, MicroStrategy, announced on Monday that it will offer $400 million of senior secured notes to qualified institutional buyers.

The notes will be due in 2028 and MicroStrategy plans to use proceeds from the transaction to buy more bitcoin, according to a press release.

The announcement comes after MicroStrategy disclosed it will be forced to take an impairment charge of nearly $285 million in the second quarter due to fluctuations in bitcoin's price

https://markets.businessinsider.com/currencies/news/michael-saylor-bitcoin-microstrategy-selling-400-million-debt-acquiring-btc-2021-6-1030500471

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A Tom Brady 2000 Playoff Contenders Championship Ticket autographed rookie card is expected to become the most expensive football card ever sold at auction.

Offered at an online sale via Lelands Auctions, which runs until June 4, the card has so far drawn 10 bidders, with the highest bid standing at US$1.16 million as of Thursday. The card has a rating of 9 on a 1-10 scale by Beckett Grading Service, a card authentication and grading service company.

In April, Lelands Auctions sold another Tom Brady 2000 Playoff Contenders Championship Ticket autographed rookie card, which has an overall BGS 8.5, for a record-breaking US$2.25 million.

While some clients may want to invest in Bitcoin, Kansas City Chiefs tight end Sean Culkin is taking it a step further: He decided to convert his entire base salary, $920,000, into the cryptocurrency.

For Culkin's advisor, Matt Kilgroe of Cyndeo Wealth Partners, the move and the conversation preceding it were a bit unusual for his independent practice, which Kilgroe describes as "very plain vanilla." But the advisor and his team approached the conversation with Culkin about Bitcoin with an open mind—and an eye on the overall financial plan.

And finally:

The Highest-Paid Chief Executives Last Year

Company C.E.O. Compensation
Paycom Chad Richison $211.13 million
1Life Healthcare Amir Dan Rubin $199.05 million
T-Mobile John Legere $137.20 million
General Electric Larry Culp $73.19 million
Hilton Chris Nassetta $55.87 million
T-Mobile Mike Sievert $54.91 million
Formula 1 Gregory Maffei $47.12 million
Netflix Reed Hastings $43.23 million
Netflix Ted Sarandos $39.32 million
ViacomCBS Robert Bakish $38.97 million
Charter Communications Thomas Rutledge $38.85 million
Chipotle Brian Niccol $38.04 million
Norwegian Cruise Line Frank Del Rio $36.38 million
MGM Resorts James Murren $36.18 million
Vivint Smart Home Todd Pedersen $35.95 million
Prologis Hamid Moghadam $34.43 million
Ceridian HCM David Ossip $33.00 million
Zynga Frank Gibeau $32.00 million
JPMorgan Chase Jamie Dimon $31.66 million

Note: Compensation is tallied from proxy filings as of Friday. Includes salary, stock grants, bonuses and other benefits. John Legere, James Murren and Randall Stephenson stepped down from their chief executive roles in 2020. Netflix has co-chief executives.

Source: Equilar by The New York Times

"Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well- warmed, and well-fed."

― Herman Melville

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1 June 2021

We are heading out to the land of milk and honey for the week so our next post will be on June 11.

The markets were tame the last week of May except for Bitcoin which was up and down and the center of attention of the talking heads. Seems that everyone thinks they should own some but they never say what percent of their investable funds they have committed. We continue to view Bitcoin as an emperor's clothes situation and not an investment. Folks make big money in Las Vegas and at the track. Actually, horses make more sense because they do have records while dice and roulette are much more akin to Bitcoin.

On Friday we decided to raise cash since our accounts were up 5% to 10% for the year and the summer doldrums are approaching in tune with the sell in May and go away adage.

Markets continue to fluctuate between value reopening stocks and tech new age stocks. Many Value Stocks are now higher than they were pre- Covid and are reflecting a goldilocks economy over the next year.

And New Age stocks are a mirror of the 2000 Dot Com who cares about fundamentals era. And even though most of them are 25% to 50% off their highs they are still selling at exorbitant price to sales with no relation to earnings, if they even have any.

And so, we end the month with some dividend stocks: IBM, Gilead, Intel, Verizon, Walgreens Boots, and we are back in AT&T 10% below our last sale price.

We also own retailers; Macy's, The Gap and have been trading Nordstrom, The Container Store and Bed Bath on good earnings reports that resulted in price drops. One day the markets love retail -the next they don't- and the price action has been difficult to trade but overall, we are ahead.

We own Discovery because of the AT&T spinoff deal coming next year. We think the spinoff is positive for AT&T and Discovery but since it over 9 months off we will trade either if the opportunity arises.

We have a reduced trading stake in Apache Oil: we are trading GE in amounts suitable for the proposed 1 for 8 reverse split and have a reduced position in Ford, taking some money off the table after its 20% run-up in May.

And we have unprofitably traded QuantumScape as insider lockup selling hit the stock this week more severely than we expected. QS is a reasonable amount in accounts as a speculation down from $132 to $27.

Finally, we have a very comfortable cash position in all accounts for come what may.

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Nice work if you can get it.

Snowflake Inc., a cloud-based data-warehouse company with a market cap over $70 billion, is giving its CEO Frank Slootman over $1 billion per year in stock options based upon the current stock price, per Bloomberg. Slootman gets monthly stock options in addition to his $375,000 annual salary. As such, his pay can fluctuate greatly, assuming he cashes out on his stock options, based upon the share price of Snowflake. When the stock price is riding high, Slootman can make more than a fortune.

https://www.meidastouch.com/post/snowflake-ceo-frank-slootman-could-make-1-1-billion-in-stock-options-annually

By the way, SNOW reported a $500 million loss on a trailing 12 months basis - but the gurus say the future is bright and even Berkshire Hathaway owns stock- purchased before the public offering at a lower than market price and represents an insignificant a very small percent of the Buffet run company's investment portfolio. See https://www.fool.com/investing/2021/01/04/3-buffett-stocks-to-avoid-like-the-plague-in-2021/

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We know accurately only when we know little; with knowledge doubt increases.

Goethe

*****

 


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309 W Johnson Street Apt 544 Madison, WI 53703 312-925-5248
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