Bud's Poem Page
  Katie's Coast2Coast Blog
  Katie's West Coast Blog
Lemley Yarling Management Co
309 W Johnson Street
Apt 544
Madison, WI 53703
Bud: 312-925-5248       Kathy: 630-323-8422

March 28, 2014

Model Portfolio Value As of 28 March 2014

$ 738,719

Comment on Model Portfolio activity

We added Cree, the LED light bulb maker to a few accounts today. We are in a wait and watch mode and remain what for us is fully invited.



March 21, 2014

Model Portfolio Value As of 21 March 2014

$ 735,343

Spring 2014

Comment on Model Portfolio activity

We are client visiting so this post will be short. Markets are in a wait and see attitude and so are we.



March 14, 2014

Model Portfolio Value As of 14 March 2014

$ 722,501

Pi Day and Ides of March 2014

Comment on Model Portfolio activity

GM has a market cap of $50 billion and will sell over 9 million cars.

GM is under pressure because of potential lawsuits over faulty ignition switches and will remain under pressure for a few more months but we maintain our belief that the shares are severely undervalued in the marketplace.

Tesla ( an investor darling) has a market cap of $30 billion and will sell less than 40,000 cars this year. Its market is the luxury car market even when it gets a cheaper (?) $45,000 model and it is taking share from BMW, Mercedes etc not the GM/Ford/Toyota consumer market.

We added Fresh Markets this week to accounts.

The correction this week has the bears enthralled and more pressure is likely. We like what we own.

Crimea, Sevastopol…the events in that part of the world that few Americans know offer the opportunity to sadly remember the folly of conflict and war. Revisiting the past:

Crimean War

Crimean War (krĪmēˈən) [key], 1853–56, war between Russia on the one hand and the Ottoman Empire, Great Britain, France, and Sardinia on the other. The causes of the conflict were inherent in the unsolved Eastern Question. The more immediate occasion was a dispute between Russia and France over the Palestinian holy places. Challenging the claim of Russia to guardianship of the holy places, France in 1852 secured from Sultan Abd al-Majid certain privileges for the Latin churches. Russian counterdemands were turned down (1853) by the Ottoman government.

In July, 1853, Russia retorted by occupying the Ottoman vassal states of Moldavia and Walachia, and in October, after futile negotiations, the Ottomans declared war. In Mar., 1854, Britain and France, having already dispatched fleets to the Black Sea, declared war on Russia; Sardinia followed suit in Jan., 1855. Austria remained neutral, but by threatening to enter the war on the Ottoman side forced Russia to evacuate Moldavia and Walachia, which were occupied (Aug., 1854) by Austrian troops.

In Sept., 1854, allied troops landed in the Crimea, with the object of capturing Sevastopol. The Russian fortress, defended by Totleben, resisted heroically until Sept., 1855. Allied commanders were Lord Raglan for the British and Marshal Saint-Arnaud, succeeded later by Marshal Canrobert, for the French. Military operations, which were marked on both sides by great stubbornness, gallantry, and disregard for casualties, remained localized. Famous episodes were the battles of Balaklava and Inkerman (1854) and the allied capture (1855) of Malakhov and Redan, which preceded the fall of Sevastopol. On the Asian front the Russians gained advantages and occupied Kars.

The accession (1855) of Czar Alexander II and the capture of Sevastopol led to peace negotiations that resulted (Feb., 1856) in the Treaty of Paris (see Paris, Congress of). The Crimean War ended the dominant role of Russia in SE Europe; the cooling of Austro-Russian relations was an important factor in subsequent European history. The scandalous treatment of the troops, particularly the wounded, depicted by war correspondents, prompted the work of Florence Nightingale, which was perhaps the most positive result of the war.

Read more: Crimean War | Infoplease.com http://www.infoplease.com/encyclopedia/history/crimean-war.html#ixzz2vweAeAR5

Another  Siege of Sevastopol took place on the Eastern Front of the Second World War. The campaign was fought by the Axis powers of Germany, Romania, and Italy against the Soviet Union for control of Sevastopol, a port in the Crimea on the Black Sea. On 22 June 1941 the Axis invaded the Soviet Union during Operation Barbarossa. Axis land forces reached the Crimea in the autumn of 1941 and overran most of the area. The only objective not in Axis hands was Sevastopol. Several attempts were made to secure the city in October and November 1941. A major attack was planned for late November, but heavy rains delayed the Axis attack until 17 December 1941. Under the command of Erich von Manstein, Axis forces were unable to capture Sevastopol during this first operation. Soviet forces launched an amphibious landing on the Crimean peninsula at Kerch in December 1941 to relieve the siege and force the Axis to divert forces to defend their gains. The operation saved Sevastopol for the time being, but the bridgehead in the eastern Crimea was eliminated in May 1942.

Articles on two stocks we now own:


American Eagle Outfitters' Profits Fall But It Still Looks Good For The Long Run

http://blogs.forbes.com/people/trefis/ Shares of teen apparel retailer American Eagle Outfitters fell by more than 5% after its Q4 fiscal 2013 earnings per share missed the consensus estimates and it issued a conservative guidance for the first quarter. The retailer’s earnings per share for the fourth quarter remained low at 5 cents, which was well below the expected figure of 26 cents. Also, its revenues declined by almost 7% to $1.04 billion due to weak consumer spending and low store traffic on account of extreme cold. For the entire year, American Eagle’s revenues fell by 5% and its operating income stumbled by 47%. Throughout fiscal 2013, the company struggled for growth due to the sluggish economic environment, low brand loyalty, weak mall traffic, missed fashion calls and fierce competition from fast fashion brands such as Forever 21 and H&M.

While American Eagle expects to continue facing challenges in the first quarter due to extreme weather, we believe that its growth can pick up gradually. The retailer’s efforts to improve its brand image can yield fruitful results as it has been one of the most popular teen apparel brands in the past. As the company is strengthening its omni-channel platform to provide a seamless shopping experience, its store and web traffic should improve going forward.

A while back, American Eagle’s CEO Robert Hanson made a surprising exit from the company. Although the reason for his departure is not clear, interim CEO Jay Schottenstein stated that the company is searching for a new CEO.

Our price estimate for American Eagle Outfitters stands at $18.88, implying a premium of about 45% to the market price. However, we are in the process of updating our model in light of the recent earnings release.

American Eagle Is Looking To Revamp Its Brand Image

Over the past year, American Eagle has seen its brand falter in the U.S.,burdened by its over-emphasis on basic products, its missed fashion calls and limited fashion variety. As a result, teenage buyers have developed a perception that American Eagle brand is no longer “cool.” Even the company recognized that its merchandise assortments and the overall customer shopping experience were not well received during the holiday quarter. Therefore, American Eagle had to use heavy markdowns to attract customers and clear its holiday inventory.

However, the company is working very hard to rejuvenate its brand image by specifically focusing on product design and marketing. Despite its weak connection with the customers, some of American Eagle’s products such as denim still remain very popular. Recently, music icon Shakira wore American Eagle jeans in Women’s Health magazine, which somewhat defines its popularity. We believe that the company has an opportunity to leverage such products to better drive its topline growth.

American Eagle is looking to strengthen its product assortments with more innovation in distinct finishes, fabrics and washes. Moreover, the inclusion of Chad Kessler (new chief merchandising and design officer) in the designing system is expected to bring some fresh and relevant changes to the brand’s merchandise. The retailer is also looking to enhance its focus on accessories and outerwear, which were de-emphasized last year. Additionally, American Eagle is organizing certain marketing events such as AE Real People and Aerie’s Real campaign to engage its customers in an appealing manner. We expect these efforts to have a positive impact on American Eagle’s brand image going forward. However, the retailer will have to show consistency in delivering season- and trend-relevant products.


The Fresh Market Is in Better Shape Than You Think

Is The Fresh Market (NASDAQ: TFM  ) ripe for investment? The company is a major player in one of the hottest spaces within the food industry—natural and organic retailing. In its recent earnings, the company didn't post very appealing metrics and discouraged investors with news that a store expansion strategy wasn't working, but are these conditions indicative of long-term, fundamental issues, or just a misstep? If it's the latter, investors may have an interesting opportunity to buy into a well-run company at its most appealing valuation in some time. Here's what investors need to consider regarding The Fresh Market.

Sales woes

In The Fresh Market's fourth quarter, both top- and bottom-line figures came in below analyst expectations, largely due to some of the worst same-store sales growth in years. Same-store sales grew just 3.1%, which in isolation isn't a terrible number, but when compared to peers in the industry is quite weak. Even the industry behemoth Whole Foods Market posted 5.4% growth. The Fresh Market management pointed toward a 1% hit due to extreme weather, but that was not an issue unique to the company.

Revenue did increase -- up 15.1% to $425.8 million, but these gains did not carry down through the income statement as net earnings declined 9% year over year to $0.39 per share. Analysts had expected $430 million in sales with an average of $0.42 per share in earnings.

Topping off the negative report, management announced some restructuring efforts -- closing underperforming stores in Texas and California and halting its new market expansion efforts.

In the current year, The Fresh Market anticipates 11%-19% earnings growth, with 23-25 new store openings and same-store sales growth of 1.5%-3.5% -- a still-anemic figure by most counts.

So, if The Fresh Market isn't competing well with its peers, why does the lower valuation even matter?

Not so fast

There needs to be some perspective here as to why The Fresh Market has had a bad run for three quarters in a row. For one thing, the company was heading into 2013 with very difficult comparable quarters and a ton of market hype. There's no denying that its sales figures in recent periods haven't been up to snuff, but the reaction was multiplied because the market had overvalued this company so steeply for so long. As happens so often in these situations, reality caught up with unreasonable expectations.

As far as the store closures, management made an expensive mistake. The company tried a new tactic of jump-starting market awareness and branding in places like Sacramento and Houston. This is sharp departure from the gradual, cautious approach it had taken to other new markets. The company put too much emphasis on a shock-and-awe market entry and neglected the requisite market and demographic research.

Still, shouldn't investors celebrate a management team that knows when a mistake has been made and can react quickly to move forward? As the company exits this failed experiment, the growing, extremely profitable core market stores will shine bright once again. The company also has a foothold in areas in the Midwest (using the traditional strategy) that it will continue to push.

At 18 times forward earnings, The Fresh Market trades at a steep discount to all of its peers. Whole Foods trades at nearly 28 times forward earnings, and Sprouts Farmers Market trades at an insane 48 times earnings. The Fresh Market can and will come out of its slump, and at today's price offers investors an appealing deal on long-term growth in the red-hot natural foods industry.



March 7, 2014

Model Portfolio Value As of 7 March 2014

$ 743,689

Comment on Model Portfolio activity

Today is the anniversary of the market low in March of 2009 when the world was ending. Despair to euphoria and market lows to market highs.

We added to Ascena Retail during the week after earnings were less than.

The employment report was better than but since the gain falls within the margin of error it may be good news or bad news. But the big boys and girls don’t care since they need a number to trade off and so the Employment Report has become the Holy Grail of monthly economic numbers just as the balance of payments was in the 1980s.

(The confidence interval for the monthly change in total nonfarm employment from the establishment survey is on the order of plus or minus 90,000. Suppose the estimate of nonfarm employment increases by 50,000 from one month to the next. The 90-percent confidence interval on the monthly change would range from -40,000 to +140,000 (50,000 +/- 90,000). These figures do not mean that the sample results are off by these magnitudes, but rather that there is about a 90-percent chance that the true over-the-month change lies within this interval. Since this range includes values of less than zero, we could not say with confidence that nonfarm employment had, in fact, increased that month. If, however, the reported nonfarm employment rise was 250,000, then all of the values within the 90- percent confidence interval would be greater than zero. In this case, it is likely (at least a 90-percent chance) that nonfarm employment had, in fact, risen that month. At an unemployment rate of around 6.0 percent, the 90-percent confidence interval for the monthly change in unemployment as measured by the household survey is about +/- 300,000, and for the monthly change in the unemployment rate it is about +/- 0.2 percentage point.)


We remain pretty fully invested.



March 1, 2014

Model Portfolio Value As of 28 February 2014

$ 740,809

Comment on Model Portfolio activity

During the week we added Chico Fas to accounts, traded First Solar for a $3 one day gain, took a loss on GM common since we had replaced our exposure with GM B warrants, sold Citrix and Abercrombie for nice gains and added to our Urban Outfitters position.

We expect market to continue to move higher into May and are acting accordingly.






























This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Website Information

For Information on RBC LLC SIPC and Excess SIPC protection http://www.rbcadvisorservices.com/partner/testimonials/cid-161786.html.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending 09/30/2002 For Quarter Ending 12/31/2002 For Quarter Ending 03/31/2003
For Quarter Ending 06/30/2003 For Quarter Ending 09/30/2003 For Quarter Ending 12/31/2003
For Quarter Ending 03/31/2004

All SEC Rule11Ac1-6 Quarterly reports up to March 2, 2012 may be found by visiting the diclosures at LY& Co Clearing Broker Mesirow Financial at: http://www.tta.thomson.com/reports/1-6/msro/.

From March 2, 2012 forward all SEC Rule11Ac1-6 Quarterly reports may be found by visiting the website http://www.rbccorrespondentservices.com/cid-112218.html.

Annual offer to present clients of Lemley Yarling Management Co. Under Rule 204-3 of the SEC Advisors Act, we are pleased to offer to send to you our updated Form ADV, Part II for your perusal. If any present client would like a copy, please don't hesitate to write, e-mail, or call us.

A list of all recommendations made by Lemley Yarling Management Co. for the preceding one-year period is available upon request.

Business Continuity Plan


309 W Johnson Street Apt 544, Madison, Wi 53703 312-925-5248
The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.