Lemley Yarling Management Co
309 W Johnson Street
Madison, WI 53703
Comments on activity in client accounts
21 July 2019
Markets continue to mark time as they await a Fed rate cut that isn't needed. July 31 is the target date.
New and recently issued stocks (IPOs) continue to hog the news as they double and triple- and more- in price after their initial offerings. We ae struck by the talking heads mention of these companies and other more mature companies as must own with no mention of p/e ratios, dividend yield or debt ratios. Been there (1972,1987,2000,2008); seen that.
Meanwhile our value issues wallow in the unloved column of the daily market reports. Such is the life of value investors in these markets.
We added Wintrust Financial, the Chicago banking conglomerate after it dropped 10% this week on less than but still positive earnings. We repurchased Apache Oil and also picked up shares of the XOP the Domestic Oil ETF as both made new multi-year lows this week. We know electric cars are here to stay as is solar and wind power but we are not ready to predict the end of fossil fuel consumption in the near future.
We currently own AT&T, Abercrombie, Apache Oil, Bed Bath, Bristol Myers, Box, Marathon Oil., Sprouts Food Markets, United Natural Foods, Walgreen Boots, Wintrust Financial and XOP.
Ans so, it goes
America's bottom 50% are slowly recovering from the Great Recession
12 July 2019
During the week we added Sprouts at $18.80 to accounts in which we sold at $23 plus in May.
We also repurchased Walgreens Boots in our tax-free accounts when it moved up a bit on news that the Govt is not going to place controls on Pharmacy Benefit Managers rebate programs with drug companies. That's a good positive for the PBMs but bad news for those who buy drugs. We have been uncomfortable not owning some WBA. We will repurchase WBA in taxable accounts when the 31-day wash sale period expires.
Finally, we repurchased Bristol Myers at a new 6 year low.
Some Gurus are not enamored of the Celgene takeover and also there is an arbitrage situation which may hold the stock down until year end. But we do think there is at least a trading opportunity from this level.
To keep cash levels high, we eliminated The Gap for a scratch to concentrate on Abercrombie as our retail exposure.
With the Trumpster holding his own and expectations of a Fed rate cut next week the markets continue to make new highs.
And so, it goes.
Bed Bath earnings were blah, as is this review. The good and the bad:
Sprouts vs. Whole Foods https://www.grocerydive.com/news/sprouts-is-holding-its-own-against-whole-foods/533672/
5 July 2019
Markets await the Fed meeting in July to see whether it will cut interest rates. Supposedly everything is fine with over 200,000 jobs added in June but the mavens want a rate cut and if they don't get it----. The lunatics are managing the asylum.
Awaiting the June employment number this morning of the 1980s reminds (we written this before) when the monthly balance of payments report was the vehicle that traders look for in the olden days (1980s) to move markets. Now there is a report every 5 minutes and there are also the Trumpster tweets, and China, and Europe and soon Boris Johnson in England to help traders' computers move stocks.
We added to Wisdom Tree- which is yielding more than the 10-year treasury (inverted yield curve signals recession) this week and also picked up a relatively small amount of Bed Bath and Beyond which is price at $1.3 billion with $12 billion in sales and debt equaling cash on hand. We traded BBB at year end for a 10% profit. We are looking for more this time with a longer holding horizon unless it pops on earrings next week as it did last quarter.
And so, it goes.
This Market Indicator Has Predicted the Past 7 Recessions
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