Lemley Yarling Management Co
309 W Johnson St
Madison, WI 53703
Comments on activity in client accounts
25 June 2021
Markets rallied this week from last Thursday and Friday's Quadruple Witching selloff. We used the rally to get back to a much more comfortable cash position as accounts recovered to be up 5% to 10% on the year.
We currently own (after realizing some trading profits): Verizon, Intel, Walgreens Boots, NiSource (utility), Huntington Bank, Hewlett Packard Enterprises, Apache Oil, Cleveland Cliffs, Bed Bath, Ford and GE.
Most accounts are 50% or more cash.
And just, because:
by Lewis Carroll
'Twas brillig, and the slithy toves
Did gyre and gimble in the wabe:
All mimsy were the borogoves,
And the mome raths outgrabe.
"Beware the Jabberwock, my son!
The jaws that bite, the claws that catch!
Beware the Jubjub bird, and shun
The frumious Bandersnatch!"
He took his vorpal sword in hand;
Long time the manxome foe he sought—
So rested he by the Tumtum tree
And stood awhile in thought.
And, as in uffish thought he stood,
The Jabberwock, with eyes of flame,
Came whiffling through the tulgey wood,
And burbled as it came!
One, two! One, two! And through and through
The vorpal blade went snicker-snack!
He left it dead, and with its head
He went galumphing back.
"And hast thou slain the Jabberwock?
Come to my arms, my beamish boy!
O frabjous day! Callooh! Callay!"
He chortled in his joy.
'Twas brillig, and the slithy toves
Did gyre and gimble in the wabe:
All mimsy were the borogoves,
And the mome raths outgrabe.
18 June 2021
Tomorrow is Juneteenth. It marks the day when slaves in Texas were finally informed that they had been emancipated 2 years earlier. For the last year we have been reading the Civil War and Reconstruction. Truly the history of that period was horrendous for recently freed folks and hopefully the country will redress the wrongs committed then and continuing into the present day.
The market moving news this week was the Wednesday Fed meeting and the market's reaction to that meeting and Chairman Powell's after meeting remarks. The Guru entrails reading of the statement and remarks is that the Fed may taper beginning at the end of 2022- yes 2022 -or maybe not. They may taper earlier and if they do that would be bad or good for stocks and bad for bonds according to some gurus. Others say it would be bad for bonds and stocks. But bond prices rallied and yields on the ten-year dropped on Powell's remarks which really doesn't make sense since tapering i.e., the Fed taking money out of the system should raise bond yields (lower prices). Bank stocks crashed on the early (if 18 months from now is early) taper news which doesn't make sense since higher yields are good for banks as they paying next to nothing on deposits while rising rates would allow them to earn more.
Conclusion- everyone, as usual, are talking their book and nobody really knows. The economy continues to recover; inflation is back but for how long is the question; and Mr. Market is doing his best to confuse everyone.
Markets dropped on Friday- which was a quadruple witching day- and with all the options trading that is occurring the true market trend won't be obvious till Tuesday. We have committed cash reserves to value to stocks that are down 20% from highs that will have better earnings and are at reasonable P/E ratios with many having 3% and more yields.
We own dividend payers IBM, Gilead, Pfizer, Verizon, AT&T, Intel, Walgreens Boots, Huntington Bank and Hewlett Packard Enterprises.
We own retailers Nordstrom, Bed Bath, Macy's, The Gap and we are back in The Container Store. We have one oil stock- Apache, and recovery stocks- Wells Fargo, Ford and GE and several stocks we have been trading Micron and Western Digital.
The NY Times on Amazon ( Bezos- What a guy):
Amazon intentionally limited upward mobility for hourly workers, said Mr. Niekerk, the former H.R. vice president who retired in 2016 after nearly 17 years at the company. Dave Clark, then head of operations, had shot down his proposal around 2014 to create more leadership roles for hourly employees, similar to noncommissioned officers in the military, he recalled.
Instead, Mr. Clark, who is now chief executive of Amazon's consumer business, wanted to double down on hiring "wicked smart" frontline managers straight out of college, Mr. Niekerk said. By contrast, more than 75 percent of managers in Walmart's U.S. stores started as hourly employees. Following a pattern across Amazon, JFK8 promoted 220 people last year among its more than 5,000 employees, a rate that is less than half of Walmart's.
Amazon's founder didn't want hourly workers to stick around for long, viewing "a large, disgruntled" work force as a threat, Mr. Niekerk recalled. Company data showed that most employees became less eager over time, he said, and Mr. Bezos believed that people were inherently lazy. "What he would say is that our nature as humans is to expend as little energy as possible to get what we want or need." That conviction was embedded throughout the business, from the ease of instant ordering to the pervasive use of data to get the most out of employees.
So guaranteed wage increases stopped after three years, and Amazon provided incentives for low-skilled employees to leave. Every year, Mr. Palmer saw signs go up offering associates thousands of dollars to resign, and as he entered JFK8 each morning, he passed a classroom for free courses to train them in other fields.
Whole article well worth the read: https://www.nytimes.com/interactive/2021/06/15/us/amazon-workers.html?action=click&module=Top%20Stories&pgtype=Homepage
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)
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.
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
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.
The Highest-Paid Chief Executives Last Year
||Amir Dan Rubin
|Norwegian Cruise Line
||Frank Del Rio
|Vivint Smart Home
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
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.
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.
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/
We know accurately only when we know little; with knowledge doubt increases.
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309 W Johnson Street Apt 544 Madison, WI 53703 312-925-5248
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