Lemley Yarling Management Co
309 W Johnson St
Madison, WI 53703
Comments on activity in client accounts
21 May 2021
We did plan to read this week but the markets action grabbed our attention- as it has for 55 years and so we did some adjusting. The Container Store announced great earnings and sales and proceeded to drop 20%. We added shares and when we got back to even on Friday we exited and concentrate on Macy's and Bed Bath.
We have been trading Western Digital with mixed results. And so, we decided to add AMD. Micron, Western Digital and Marvel Tech is smaller amounts so that we would spread the chip commitment to go with our large position in Intel.
We currently own: Apple, IBM, Micron, AMD, Western Digital, Marvel Tech, Verizon, Wells Fargo, Bed Bath, Apache Oil, Macy's, Huntington Bank and Ford. We have one speculative stock QuantumScape which is trying to develop a solid-state battery for electric vehicles. The share price is down from $132 to $28 but still richly valued.
"Never give reasons for what you think or do until you must. Maybe after a while, a better reason will pop into your head."
― William T Sherman
Play the violins! Banks want to keep ripping off black farmers.
Banks Fight $4 Billion Debt Relief Plan for Black Farmers
Lenders are pressuring the Agriculture Department to give them more money, saying quick repayments will cut into profits.
How's that going as Bitcoin drops 20% in a day?
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.
Tesla's entire profit last quarter came from Bitcoin- and tax credits- not from selling cars.
Once upon a time, Elon Musk wondered whether Tesla could make both cars and money at the same time. Back then, it wasn't doing a very good job at either, so being able to do at least one seemed like a noble goal, albeit not necessarily for a car company, which theoretically exists to make money by making cars.
It has since become clear that Tesla can indeed make both cars and money. It's just that the two things aren't at all related.
Net income reached $438 million, a quarterly record for the company. What's more, Tesla said it expects to increase vehicle deliveries by more than 50% this year from the 2020 total…. Tesla didn't exactly earn its record profit from selling cars, however. The company said that it sold some of the $1.5 billion worth of bitcoin that it purchased in February, contributing $101 million to the bottom line. That is nearly a fourth of its total profit.
What is more, sales of regulatory credits to other auto makers to help them meet emissions mandates, which carry a 100% profit margin, reached $518 million. That accounts for nearly 100% of Tesla's $533 million in pretax income. Those two helping hands helped avert red ink.
We marvel at the earnings of CEO's who are paid enormous sums because they are so important to the companies they run. Then they retire or die and the next CEO makes even more.
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.
By The New York Times
14 May 2021
We did a lot of trading this week with slightly negative results. As we said last week, our trading is getting us nowhere and we should settle down and read a book. So next week we will.
Our basic fears are Bitcoin and to a lesser degree the wonder stocks that sell at price times sales metrics because they have no earnings. The wonder stocks (as in I wonder how someone can pay 50 times sales) at least have assets and real people running and patronizing them.
Bitcoin is a whole different animal. It has no assets behind it or no full faith and credit backing (the dollar). All it has is an emperor's clothes aura and the benefit of the speculative fever created by too many fast dollars seeking instant gratification. Last week a huge pipeline was subject to ransomware. Heaven help the markets when and if the Bitcoin holders at Coinbase or another cloud storehouse are violated- or when folks eventually realize there is no there there.
Can't happen? Think, Hunt Silver Crash, Futures induced 1987 Crash, Dot Com Crash, MBS Crash of 2008 and others.
Enough of the happy talk.
We currently own First Solar, Canadian Solar, Intel, Viacom CBS, Bed Bath, Macy's, The Container Store Huntington Bank, Apache Oil, Hewlett Packard Enterprises and Ford.
Hope, of all the ill that men endure, the only Cheap and universal cure.
Abraham Cowley, The Mistress
7 May 2021
The April Employment numbers disappointed with only 250,000 jobs added instead of 1 million expected. Markets shrugged the miss off as a one off and the major measures moved higher.
In response to the low Employment number those folks who are all heart known as The U.S Chamber of Commerce suggested suspending the $300 per week Federal unemployment benefits which expire in September. There was no call from The Chamber to pay a living wage to get the low paid workers back.
The Bit Coin-Doge Coin-Ethereum mania has not subsided and with the NFTs' (https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq ) ridiculousness we remain mystified and cautious.
Markets continue to vacillate- up one day and down the next. This week the first three days were down; the last two up. Earnings have been good for the major companies but the gurus have mostly shrugged and found fault. The reality is that the market leaders in the stay-at-home economy of last year are still overpriced even though they have corrected 20% to 50% from their highs. The markets seem to be seeking new leadership but can't decide if they really want the value/ infrastructure stocks to do that.
We have been trading core issues. The up and down-market action and 10% moves in individual issues over 2-day periods has made the trading difficult. Mr. Market is telling us to buy and sit tight, which we hope to do.
We have added a few infrastructure stocks presuming the bill will be passed in some form and currently own:
Intel, Walgreen Boots, Viacom CBS, Wells Fargo, At&t, First Solar, Canadian Solar, Bed Bath, Macy's, The Container Store, Cleveland Cliffs Steel. Goodyear Tire, Apache oil, Hewlett Packard Enterprises, Deutsch Bank and Ford.
There are two times in a man's life that he should not speculate: when he can't afford it, and when he can.
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