Lemley Yarling Management Co
309 W Johnson Street
Madison, WI 53703
Comments on activity in client accounts
28 July 2018
The Markets slumbered through the week in typical vacation action. Even with a good GDP number of up 4.1% on Friday the big boys and girls weren't interested in creating any action. Maybe the slamming of Facebook-which is over owned by the momentum folks- on Thursday morning (it dropped over $100 billion in market value), took some wind out of the big boys and girls sails.
During the week we added to Ford when it dropped to a 6% yield and 7 times earnings on not surprising results. We also added Viacom B, Skechers, Dish, and IBM to accounts as all approached or hit 12 month lows. Kathy used to trade Whirlpool and so when it dropped 10% in one day and off 50% on the year we initiated a position. We traded MMM in accounts for a nice one day profit and repurchased Western Digital down 10% on the day and 35% on the year when the gurus decided they didn't like the earnings report.
We are reacting to news as trading opportunities present and will continue to do so while maintaining a comfortable cash position.
The big Prince turns 21 on the 31st; the princess begins her final year of high school; and the little prince is coming to visit poppy for a week; so life is good. ☺
Western Digital earnings:
Win some- lose some- it's all about the journey.
Negotiating with the Trumpster:
European Commission President Jean-Claude Juncker reportedly used colorful cue cards to explain global-trade policy to President Donald Trump.
13 July 2018
The markets have snoozed into mid-July with a 7 day rally that followed an 8 day decline. Trumpster tweets and NATO/Great Britain bashing and cabinet secretary comments have been the main market movers this week. The overall markets have recovered to where they were at the end of January. Leadership remains narrow mostly concentrated in the tech/concept stocks that have led the rally for the last year.
AT&T is again in the Justice Department sights as a miscreant that has destroyed American business by merging with Time Warner. The imbroglio is going to continue for a while.
We do think the appeal of the merger by the Justice Department will hasten the unwinding of the overhang of AT&T shares (that Time Warner shareholders have been waiting to sell). Because of the DOJ appeal we sold ½ to ¾ of our position in AT&T at a small loss (if the 50 cent per share dividend we will receive on August 2 is included) to reduce an oversize position that is going to be dead money for a while. https://www.cnbc.com/2018/07/13/raymond-james-doj-can-follow-the-coyote-off-a-cliff-in-att-appeal.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C&par=yahoo&yptr=yahoo
We sold Hewlett Packard Enterprises for a plus scratch on Friday.
We currently own AT&T, Chico's, Ford and GE and the Goldman Sachs 1 year Treasury ETF and the IShares March 2020 Corporate bond ETF.
6 July 2018
Markets remain somnolent with the big boys and girls not willing to place any large bets on direction. The economic numbers are excellent but the Tariff contretemps and the flattening of the yield curve (http://money.cnn.com/2018/03/28/investing/bond-market-yield-curve-wall-street/index.html ) are causing some market mavens to suggest caution going forward.
On Monday we eliminated Hain for an overall minus scratch in our trading of the shares this year. It took oversized position trading to eliminate the large loss we had in these shares in the spring.
Hain will probably be acquired within the next year but next quarter earnings may arrive before that occurs and with a 30% downside market risk from the $30 level we would rather step aside and revisit in the fall.
We also sold Michael's Stores for our second small profit of the quarter and we continued adding to our AT&T position as Time Warner shareholders at the hedge funds continue to eliminate that holdings of AT&T received on the merger. There were 300 million shares of AT&T sold short on June 15, most of which were probably covered by Time Warner shareholders on the merger. But that leaves another 700 million of the billion issues by AT&T on the merger to be accounted for. It should be another month or so before all who want to sell are out. Then the selling overhang will be eliminated- or so we surmise- and normal trading action based on financial prospects will resume.
We have been adding a short term bond fund ETF that matures in March 2020 to large accounts to improve the return on cash since RBC is only paying 25 basis points on the C/Ds held in accounts. The fund is the ISHARES March 2020 term Corporate ETF. It holds AA to BBB bonds in relatively equal amounts maturing in 2019- March 2020 so the risk is minimal and it is yielding 2.10% paying 4.5 cents a share owned at $25.85 monthly to yield 2.1%.
In a few large accounts we have also added the Goldman Sachs Treasury ACCESS 0-1year ETF yielding 1.1%. no Treaury maturity is longer than 1 year and the average maturity is currently 30 days. Again, there is very little risk and the ETF yields 1.1% from a monthly 9.9 cents per share dividend.
Our current holds are: AT&T (a 20% to 30% position in most accounts for its 6% yield and 25% gain prospects)), Chico's (anchovy) , Ford, Hewlett Packard Enterprises (anchovy) and GE.
We begin haying next week - which is late - since we delay every year to let the bobolinks and redwing blackbirds broods to fledge before we cut. So we will be in and out but always only a cell phone away at 312-925-5248. ☺
Comments on activity archives
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