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Comments on activity in client accounts

30 November 2018

November has not been kind to our accounts what with the crash in Oil and GE and finally Chico's this week. But the same ting occurred last year and we had a nice recovery in December. The recovery in oil and GE and Chico's may not occur in December but it will eventually.

On Tuesday we sold half our Chico's ahead of earnings and only wished we had sold all as it dropped 38% on bad but not horrendous results. Since we had seen the same negative price action in Macy's (luckily we sold before excellent earnings but the shares still dropped 20%); and L Brands (down 30% even with a great forecast); we sold half our Abercrombie before Thursday's earnings report. Abercrombie chose to rally on the news. Such is life as Mr. & Mrs. Market keep us humble.

We underperformed the markets last year and this year we have performed in line. Hopefully the New Year will be kinder and allow us to outpace the averages.

Every time we think the selling in GE has dissipated the analyst at JP Morgan adds another two cents to his negative opinion on the shares. Our thought is that he may be the boy who cried wolf- at least we hope so. GE has problems - that is why it is priced where it is. But it has the assets to survive and we are counting on new management to right the ship.

We added some high quality large cap stocks that are down 30% to 50% from their yearly highs to accounts this week and also have added a few more aggressive issues for a year end or longer bounce. The former are IBM (5% and 8X), Caterpillar (2.5% and 11X), International Paper (4.3% and 9X), Whirlpool (3.6% and 9X), Celgene (biotech) (0% and 9X) and Bristol Myers (3% and 11X). The latter are Micron (0% and 4X), Deutsch Bank (1% and 20X), Ascena Retail (Ann Taylor) (0% and 60X) and HAIN Celestial (9% and 17X).

These additions go with our other holdings of AT&T (6.5% and 8X), GE (1% and 10X), Hewlett Packard Enterprises (3% and 10X), Abercrombie (4% and 20X), Gap (3.5% and 10X), Marathon Oil (1% and 20X), Devon (1% and 17X), Apache (2.8% and 17X), and Ford (7.7% and 7X).

Happy December.

Chico's FAS Inc. plummeted 38 percent, its biggest decline in 25 years as a public company, after third-quarter results missed analysts' expectations.

Comparable sales fell 6.8 percent compared to the year-ago period, while analysts surveyed by Consensus Metrix had projected only a 2.1 percent decline. At namesake Chico's stores, the decline was even steeper at 10.2 percent. The retailer also cut its forecast for full-year sales and said the president of the Chico's brand is departing this week as part of its goal to "reinvigorate broad-based consumer excitement and growth for the brand." More at:

https://finance.yahoo.com/news/chico-apos-plunges-most-ever-150521253.html

Abercrombie & Fitch Co. shares were up more than 23% in trading on Thursday after the teen apparel retailer's third-quarter results topped estimates on both the top and bottom line. ANF reported adjusted earnings of 33 cents a share on revenue of $861.2 million. Analysts were expecting the company to report earnings of 20 on revenue of $855 million.

"We are pleased with our third-quarter performance, our fifth consecutive quarter of positive comparable sales, with growth across both of our brands. We delivered 3% comparable sales growth on top of 4% last year, with continued gross profit rate stabilization. Our strong U.S omnichannel business, and 16% global digital sales growth, confirm that our playbooks are working," said CEO Fran Horowitz.

Shares were rising despite the company's warning of a mid-single-digits decline in net sales in the fourth quarter, though it still expects comparable-store sales to be up low single digits.

https://www.thestreet.com/investing/abercrombie-fitch-is-the-right-fit-for-investors-following-earnings-14795557?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

The fashion focused youth of America shopping on large screen iPhones is sure having a profound impact on Abercrombie & Fitch.

Abercrombie & Fitch CEO Fran Horowitz tells Yahoo Finance the retailer will do $1 billion in online sales this year. Online sales rose 16% to $243 million in the quarter. Year to date Abercrombie & Fitch has hauled in $675 million from its online business.

That digital milestone appears to have been put into reach by Abercrombie & Fitch getting off to a strong start to the holiday shopping season.

"We do see a healthy consumer environment out there," Horowitz says. "We did have a record performance from Black Friday through Cyber Monday."

The company said Thursday that third quarter earnings came in at 33 cents a share, beating analyst forecasts of 21 cents a share. Same-store sales rose 3% versus Wall Street forecasts for 1.7% growth. The Abercrombie & Fitch and Hollister had 1% and 4% respective same-store sales gains for the third quarter.

Shares popped 19% in early trading.

Abercrombie isn't the only bricks-and-mortar retailer enjoying strong digital sales this holiday season. Macy's is on track to reach $1 billion in mobile sales alone this year.

A record $7.9 billion was spent on Cyber Monday, up 19.3% from the prior year. Sales from smartphones exploded 55.6% from last Cyber Monday to $2.2 billion.

https://finance.yahoo.com/news/abercrombie-fitch-will-1-billion-online-sales-2018-ceo-140732189.html

Deutsch Bank

A New York-based activist hedge fund has taken a stake in Deutsche Bank AG, betting the German lender's new chief executive can revive its sagging profits by pursuing a turnaround strategy investors so far have found unconvincing.

Hudson Executive Capital LP, led by former JPMorgan Chase & Co. finance chief Douglas Braunstein, said it has built about a 3.1% stake in Deutsche Bank common shares.

The investment, Hudson's biggest so far, was made in recent months as Deutsche Bank shares plumbed all-time lows. The roughly $620 million stake makes Hudson a top-five shareholder, and the first new one of size since the bank's latest restructuring and CEO change in April.

https://www.marketwatch.com/story/deutsche-bank-stake-bought-by-ex-jpm-cfo-2018-11-01

*****

22 November 2018

We weren't going to write this week since we are traveling but with the turmoil we decided a comment on current events was warranted.

Trump, Ugh.

Markets, Ugh.

To expand on that last thought--the stocks we own are selling off- as are most issues- and our timing could have been better. We did trade HAIN for Hewlett Packard Enterprises and we have added to GE and Chico's.

GE is now our largest holding and while we have been short term wrong we plan on maintaining our position till after year end when we will reevaluate- hopefully at higher prices -since the tax and get me out selling will be over.

Retail is in the doghouse after being the go to area a month ago. The the new meme is that this Christmas season will be the apex of earnings for this sector. The 3 issues (Gap, Chico's, and Abercrombie) we own have 4% yields at our cost and we will stick with or add to after earnings are announce in the next few weeks.

AT&T is under pressure- our guess for the reason why being that the folks who received AT&T in the Time Warner merger continue to get out as the shares haven't rallied. As we mentioned a while ago there were 1 billion shares +- issued in the merger.

Oil continues its Crash down 25% from its high 4 weeks ago. We reentered too soon but have been trading Apache and Devon and Marathon for a few years and are going to stick with them. The big boys and girls were overweight oil in October and have been caught by their miscalculation. They are probably net short now which leaves them vulnerable to an upside move.

The selling in tech is the result of folks and institutions and hedgies realizing the P/Es were unsupportable when any hint of bad news hit. All are now abandoning the ETFs that invest in those issues and which are now down 20% from highs although many are still positive for the year. The ETFs are easy to enter and easy to sell; one stop shopping at your service.

With all the angst the S&P 500 and DJIA are basically flat for the year so the several trillion plus dollars invested by individuals and institutions in the broad market ETFs still remain up 15% and more for the last two years. These ETFs haven't seen the selling that the tech and other industry specific ETFs have- in fact they have been experiencing net inflows; which suggests that greed is still outperforming fear.

Now they tell us:

https://www.bloomberg.com/news/articles/2018-11-19/stock-slump-to-extend-to-asia-as-u-s-tech-sinks-markets-wrap?srnd=premium

And so it goes. (: )

16 November 2018

There will be no post on 11/23; the next post will be 11/30.

Sometimes markets are too interesting. The 5% up and down movements in account values in one week periods is getting a little old. But Mr. /Mrs. Market will do what he/she will do and we must adjust accordingly.

Macy's announced excellent numbers on Wednesday morning and the share price rose 5% and then dropped 15%- all in one day.

Luckily we sold Macy's on the uptick and realized a nice profit on our third trade of the year in M. but the price action of M suggested we reduce our retail exposure and so we sold Michael's and Bed Bath for scratches. We held on to The Gap and Abercrombie and Chico's. Unfortunately all three joined the retail rout but since we have been trading these 3 stocks profitably for years we will maintain our positions. Abercrombie and Gap earnings come next week and the resulting action is anybody's guess.

The markets' action is a typical November pullback after the early October sell off and then late October rally off the lows.

During the week we sold Newell which finally recovered to our entry price after dropping 30% after we purchased it in the summer. We also eliminated 3D to improve quality and concentrate on fewer issues. We took a profit in AMD which leaves us even for the year in our trades in AMD.

We did add Ford this week and have raised a bit of cash to redeploy into our consolidated list of holdings through yearend.

Our tragicomedy – GE- continued under selling pressure this week (over 25% OF THE OUTSTANDING SHARES (2.5 BILLION) HAVE TRADED IN THE PAST MONTH. Someone was selling - but someone was also buying. And the JP Morgan bear lowered his price target to $6. We continued to add shares to accounts as the price dropped. GE has problems – that is why it is priced where it is and hedge funds and institutional investors throwing in the towel and moving on to other issues.

GE is unloved and abandoned.

Our view is that this fall back to 2009 levels is a buying opportunity as GE undergoes tax loss selling and general abandonment because the pain is too great.

The equity of GE is priced at $71million and the highest debt figure we have seen is $70 billion with $28 billion a shortfall in pension reserves (can be solved over time).

GE Health, with $20 billion per year in rising revenues, is worth $60 to $90 billion based on the market value of similar companies. Baker Hughes, GE, is 51% owned by GE after GE's recent sale of stock that raised $4 billion. The market value of BHGE is $25 billion so GE's portion is worth at least (BHGE's share price is down 30% in the last two months) $12 billion. GE Aviation will have a profit of $7 billion this year so conservatively is would be worth 10 times that or $70 billion.

Selling either of these divisions- which we certainly hope GE doesn't- would generate enough cash to pay off all debt and fully fund pension liabilities. GE's other divisions (Capital, Renewable Energy, Transportation (https://www.ge.com/reports/aboard-ge-merges-storied-locomotive-business-wabtec-deal-valued-approximately-11-1-billion/ ), and Lighting are profitable. Power is one problem and hopefully the new CEO can return it to profitability or spin it off. And hopefully Capital has revealed all its hidden losses.

We expect selling pressure will end by year end. Then it will be a matter of patience.

We currently own:

AT&T, IBM, GE, Abercrombie, Chico's, The Gap, Marathon Oil, Apache Oil, Devon Energy, Hain Celestial, Ford and Rite Aid (not for long).

General Electric Co. rose on Tuesday, Nov. 13, (drooped later in the week) after announcing a deal to reduce GE's ownership stake in Baker Hughes to just above 50%, a release from lock-up restrictions that prevented GE from shedding shares of the oilfield services company until July 2019, and a series of long-term commercial agreements with Baker Hughes.

Baker Hughes and GE agreed to "cooperate on a proposed sale by GE of part of its stake into the market and to a concurrent repurchase of another part of GE's stake by BHGE."

"Together, these transactions are expected to maintain GE's stake in BHGE above 50%," the companies said in a statement. GE currently owns 62.5% of Baker Hughes, which has a market capitalization of $26 billion.

https://www.thestreet.com/investing/stocks/general-electric-to-reduce-stake-in-baker-hughes-14779062?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

(Reuters) - Oilfield services company Baker Hughes (BHGE.N), majority owned by General Electric Co (GE.N), said a previously announced share offering was priced at a discount of 3.4 percent, sending shares of both companies lower on Wednesday.

The 92 million shares of Baker Hughes for sale by GE was priced at $23.00, below the stock's $23.81 closing price on Tuesday, and came a day earlier than planned.

GE, which is struggling to rebuild its industrial businesses, said on Tuesday it would sell a portion of its stake in Baker Hughes to repay debt.

GE will be able to raise nearly $4 billion from the sale if underwriters exercise options to buy an additional 9.2 million shares, with Baker Hughes repurchasing another 65 million shares in a private transaction at a maximum aggregate of $1.5 billion.

The sale would bring down GE's holdings in Baker Hughes to just north of a 50 percent stake, from 62.5 percent currently.

https://finance.yahoo.com/news/baker-hughes-ge-fall-offering-181417498.html

Macy's posted much stronger-than-expected third quarter earnings Wednesday, and boosted its full year profit guidance, as same-store sales growth numbers continue to point to a robust holiday shopping season for the iconic U.S. retailer. Macy's said adjusted earnings for the three months ending on November 3 came in at 27 cents a share, up 17% from the same period last year and well ahead of the Street consensus of 14 cents per share. Comparable store sales rose 3.3% on an owned-plus licensed basis, Macy's said, adding it now sees full-year sales to rising between 0.3% and 0.7% and tacked 15 cents to its prior earnings estimate of $3.95 to $4.15 a share.

https://finance.yahoo.com/m/33b4b60c-0e59-3441-b1e9-ad31e2a0830a/macy%27s-smashes-q3-earnings.html

Marathon Oil Corporation delivered strong operational and financial results in the third quarter. Not only did production come in above the high end of its guidance range, but the company blew past analysts' expectations. That strong showing came even though timing and maintenance held it back in a couple of regions. Because it easily overcame those issues, the company was able to boost its full-year growth forecast once again.

https://finance.yahoo.com/news/marathon-oil-corporation-apos-drilling-150000626.html

Oil Prices: It Took Bears Just 12 Days to Maul 12 Months of Bull Market Gains

https://finance.yahoo.com/news/oil-prices-took-bears-just-161900477.html

Devon Energy Corporation reported third-quarter 2018 adjusted earnings per share of 63 cents, which surpassed the Zacks Consensus Estimate of 43 cents by 46.5%. The bottom line was driven by strong realized prices.

In the third quarter of 2018, total production touched 522,000 barrels of oil equivalent (Boe) per day. Notably, the actual production was within the expected range of 517,000-541,000 Boe per day. U.S. production was 418,000 Boe per day, courtesy of strong contribution from the company's Delaware and Eagle Ford assets.

Devon continues to advance on its $4 billion share repurchase plan. The company has repurchased 67 million shares, or nearly 13% of outstanding shares, at a total cost of approximately $2.7 billion. By the first quarter of 2019, it expects to exhaust the share repurchase authorization.

https://finance.yahoo.com/news/oil-gas-stock-roundup-pioneer-205208769.html

Devon's sell-off last month caused several analysts to grow more bullish on the stock. JP Morgan, for example, said that the recent pullback was a time to buy, noting that the company's strong results in the U.S. outweighed the near-term challenges in Canada. Meanwhile, MUFG raised its price target on Devon's stock from $46 to $48 due to the strong improvement in natural gas liquids (NGLs) pricing, which will benefit the company's profits since it's a major NGL producer. Capital One also put out a bullish note last month, upgrading Devon from equal weight to overweight due to its low valuation.

https://finance.yahoo.com/news/why-devon-energy-corp-stock-135900352.html

***

9 November 2018

Well the expected occurred in the elections and so the markets rallied on Wednesday and gave a bit back on Thursday and Friday. Oil continued to drop and we added Devon to account's. (See earning's report below.)

Hain Celestial had less than revenues and earnings and it dropped 15% to $22. We have been trading the stocks for years and with Hain at its 7 year low we added shares for a trade.

GE remains under year end selling pressure with daily volume 4 times normal. The JPMorgan (so far correct analyst) bear (see below) repeated his negative feelings and dropped his price target to $6. This caused the share price to drop another dollar to the $8 level. GE is currently priced at $80 billion which is what GE Medical is worth. Hopefully the pain will lead to gain.

The BAD: General Electric fell on Friday, Nov. 9, after one of its most critical analysts lowered his price target for the beleaguered industrial conglomerate to $6 a share.

JPMorgan's Stephen Tusa, who has an underweight rating on the stock, said the Boston-based company's third-quarter results were "worse than expected on almost all fronts," as he noted that forecasts for free cash flow and Ebita are moving "materially lower."

"Some sell-side bulls now point to 'liquidity concerns' as the driver of share price weakness, though this misconstrues the Real Bear Case -- namely $100 billion in liabilities and zero enterprise [free cash flow] even after a 95% dividend cut," Tusa wrote in a Nov. 9 research note. "While the stock is down approximately 70% from the peak of $30, this move still does not sufficiently reflect the fundamental facts."

Tusa expects six of eight business segments to show "zero" free cash flow by 2020.

The analysts slashed his price target to $6, the lowest on Wall Street, from $10.

Shares of GE fell 2.2% to $8.90 at 9:35 a.m. New York time, marking the first time since March 2009 that shares have fallen below $9. GE stock has fallen about 49% year to date.

https://www.thestreet.com/investing/stocks/general-electric-jpm-price-target-cut-14775453?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

The GOOD: GE Rises as UBS Says Liquidity Isn't an Issue

GE rose on Tuesday, Nov. 6, after UBS said investors don't really need to worry about the beleaguered industrial conglomerate's liquidity. Investors have become increasingly concerned about GE's leverage, especially after management disclosing the expansion of federal investigations, according to UBS analyst Steven Winoker. Recently appointed Chief Executive Officer Larry Culp said there are "no plans for an equity raise," even amid GE's slowing cash flow generation.

https://finance.yahoo.com/m/c4af98f8-3870-3ee7-9828-b71f00ceb8cb/ge-rises-as-ubs-says.html

Apache Corp. (APA) on Wednesday reported third-quarter earnings of $81 million.

The Houston-based company said it had net income of 21 cents per share. Earnings adjusted to extinguish debt and for non-recurring costs, came to 63 cents per share.

The results topped Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of 43 cents per share.

The oil and natural gas producer posted revenue of $1.98 billion in the period, also topping Street forecasts. Seven analysts surveyed by Zacks expected $1.91 billion.

https://finance.yahoo.com/news/apache-3q-earnings-snapshot-215517683.html

One of (last Friday's) biggest surprises was from Newell Brands (NWL) a company that just can't seem to catch many breaks these days.

Shares rose nearly 15% after the company released third quarter earnings before the market opened. The company reported better than expected "adjusted" earnings per share of 81 cents, which exceeded consensus estimates of 65 cents. Revenue of $2.28 billion narrowly missed the consensus forecast by $60 million.

Driving Friday's uptick was improved full year earnings guidance for 2018, as the company upped expected earnings from $2.45-$2.65 to $2.55-$2.75, better than the $2.47 consensus.

The markets and most investors (besides activist investor Carl Icahn, who has amassed an 8.1% stake in the name) have been sour on NWL, which is down more than 35% year to date, and currently trades near a six year low. The company is still trying to dig its way out of the 2015 acquisition of Jarden, and has been selling off businesses to pay down debt and right the ship.

So far in 2018 NWL has sold off The Waddington Group, consumer and commercial package manufacturing business for $2.3 billion, Rawlings Sporting Goods for an estimated $395 million, and Goody Products (undisclosed amount). These moves allowed the company to pay down debt by $900 million last quarter; it's also down about $2.5 billion over the past year. NWL ended the quarter with about $9.6 billion in debt, and there's still work to be done there.

There was speculation in September that the company's playing card business (United States Playing Cards) would be sold, and last week came reports that its Jostens class ring unit would be sold for $1.3 billion. On Friday's earnings call, the company acknowledged that both businesses are in play, in addition to the company's Pure Fishing business.

NWL intends, through all of its divestitures, to generate $10 billion in after-tax proceeds that it will combine with operating cash flow to continue paying down debt, and to buy back shares. The company did put its money where its mouth is to that end, and repurchased 19 million shares during the quarter. I hope to see more of that. A dividend increase combined with buybacks and debt pay downs might send a positive signal to markets, but that may be asking for too much, at least at this point.

NWL clearly has more work ahead of it, but remains intriguing at 8 X next year's consensus estimates, and yielding an attractive 4.8%, to those with strong stomachs that are willing to go against the mainstream.

https://realmoney.thestreet.com/investing/newell-brands-big-surprise-14769304?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

Devon Energy's drilling machine continued humming along during the third quarter. While companywide production trended toward the low end of its guidance range due to some maintenance issues in Canada, output in the U.S. came in ahead of expectations due to strong drilling results in both the Delaware Basin and Eagle Ford Shale. That growth in higher-margin U.S. output, when combined with the company's needle-moving share repurchase program, enabled Devon to report expectation-crushing earnings for the quarter while setting it up to end the year on a high note.

https://finance.yahoo.com/news/devon-energy-corp-apos-strategic-153700173.html

Jim Cramer: Keep an Eye on the Insiders Who Are Buying

Insiders buy for only one reason -- to make money.

On a day that's as whippy as I have come across, where there all sorts of year 2000 currents, when smart money bought the S&P and sold the NASDAQ, we have to search for some sort of totem that at least makes us feel that the programs are working for us and not against us….

So what can you count on…?

Insider buying, that's what,

Insider buying like we got this morning with IBM, a stock that had fallen from $153 to $115 in less than a month until Monday when we learned that five board members, including the CEO, Ginny Rometty, purchased a ton of stock.

How much?

Here goes: Ginny Rometty, purchased $3 million in IBM stock from her own money--$1 million in the open market and $2 million through an IBM retirement fund.

Four board members -- all former chairmen and CEOs -- purchased stock, Sidney Taurel from Lilly (, nearly $500,000 worth; James Owens from Caterpillar, $116,000; Rick Waddell from Northern Trust, $250,000; and Joe Swedish from Anthem, $233,000. These are all hitters.

Not only that but Martin Schroeter, a senior executive, purchased $575,000 worth. All of these buys were made by real hitters who could have bought a lot less and still have an impact. This was the first open market purchase that Rometty has made. It's a real commitment, especially when you consider than 67% of her compensation is stock based. She has a larger stock company than most company CEOS.

Now does this mean you should just blindly buy IBM? I think the move to buy Red Hat was a bold one and just because the cloud stocks have suddenly fallen out of favor is not a reason to shun the combo. I think IBM had to do something big after the last couple of quarters. I am a HUGE fan of Jim Whitehurst, who has produced a real growth company with real cash flow and a real mission to on-board to all of the different clouds out there. They could all be wrong. But IBM's balance sheet is actually a good one and its 5% yield seems pretty darned appetizing while you wait for Whitehurst to work his magic for Big Blue.

A tougher one to bet with is the CEO of General Electric, Larry Culp, who plunked down $2.2 million at $9.73 last week. Culp's the new CEO of a deeply troubled company but he was the old CEO of Danaher, one of my favorites and an actionalertsplus.com club name because of its superb management.

Now there are myriad issues with General Electric: a balance sheet in need of shoring up, a dividend slashed again, which is hardly confidence inspiring, a power division which shows no real sign of turning around and a restructuring plan that I think keeps the bad and sells the good, the opposite of good portfolio management.

Plus let's not forget that two CEOs ago Jeff Immelt bought 100,000 shares at $28 in May of 2017, after buying 50,000 in November of 2016 at $29.2 and 50,000 in July of 2016 at $31.4

These purchases were, in retrospect, ill-advised and certainly not worth following.

Now Culp's purchase is certainly more informed. We know so much more about the problems at GE. The problem is that many analysts think the problems are nearly insurmountable or will take ages to fix and therefore aren't worth waiting around for.

I like Culp but it's not enough for me. Too many people have lost money bottom-fishing in GE to just say "Culp's sounding an all-clear."

But still, I can't ignore this. Why? Because there was a time back in the winter of 2016 when JPMorgan's stock was pretty hated. Not as much as GE but certainly no fan favorite. That's when Jamie Dimon swooped in and bought 50,000 shares for $26 million. The price? $53. It was almost the exact bottom. No one knew the stock better than Jamie. Ever since that time I am all over the notion that you can't be too cynical about big purchases like those of IBM and GE.

https://realmoney.thestreet.com/investing/jim-cramer-keep-an-eye-on-the-insiders-who-are-buying-14769764?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

AMD and the cloud

https://www.marketwatch.com/story/amd-stock-keeps-rising-amid-push-into-amazon-cloud-valuation-debate-2018-11-07

***

2 November 2018

Markets recovered this week with a large gain on Tuesday which to our way of thinking is the most important day of the week. Oil continues its downward spiral as the big boys and girls unwind their overly large positions assumed in advance of Iran sanctions being imposed. It is simply a case of more needy sellers than needy buyers.

Apple disappointed on Thursday night and dropped 7% on Friday as AAPL announced that it would no longer provide sales figures for its iPhone and Mac sales.

We sold Hewlett Packard Enterprises at $16 on Friday for a two week 10% gain (we have been trading HPE all year) and bought equal shares of GE which is at its 2009 recession low. GE reported a $25 billion charge to write down its turbine division (a few dollars among friends) and cut its dividend to a penny to conserve cash ($4 billion a year). The equity in the company is currently valued at $72 billion which is what a stand-alone GE Medical is worth. There has been heavy selling (4 times the average volume) in the issue all week as many funds unload and buyers are only willing at lower prices. The pain we are currently enduring will be well rewarded over the next few years.

Newell jumped $4 this week from a multi-year low as the company announce better than earnings. We lightened the overly large position we acquired as we bought the drop but still have a significant holding.

We sold Whirlpool and Caterpillar from a scratch/profit in order to raise money to fund purchases in companies that have better percentage gain potential.

We added Bed Bath and Michael's at prices lower than we sold earlier this year. We also acquired AMD down 50% from its high last month as chip stocks crashed in October; and we repurchased 3D Systems when it dropped 30 % on disappointing earnings.

Most accounts are fully invested and we plan on staying that way into year end.

Our thought is that if the Dems win the House but not the Senate that there may be one or two days of scrambling in the markets but the rally will then resume. If the Repubs win the House the markets should rally on Wednesday. If the Dems win the Senate the markets will drop.

And then the Talking Heads will be on the 2020 Presidential election and in two weeks no-one will remember this election.

We currently own

AT&T; Bristol Myers; IBM; GE; Newell Co; Abercrombie; Chico's; The Gap; Macy's; Bed Bath; Michael's Stores; Marathon Oil; Apache Oil; Devon Energy; AMD; 3d; First Solar; and Rite Aid.

*****

 


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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 https://www.rbcwm-usa.com/legal/rbc-cs/cid-360855.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

https://www.rbcwm-usa.com/legal/rbc-wm/cid-277883.html?_ga=2.135033585.173888424.1512949149-1756823932.1512949149

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.