Portfolio Positions Review (Part II)
We’ll do our Weekly Live Q&A Chat this week on Thursday at 10am EST since tomorrow’s New Year’s Day and we didn’t do one at all last week as it fell on Xmas day.
Let’s continue our portfolio review. Last week, I got through about half of our portfolio and today I’ll analyze pretty much the rest of ’em for you.
IBM (Short) – The stock has not participated in this bubble blowing bull market at all this year. In fact, even as the markets are up double digits since we added this short hedge to our portfolio, the stock has fallen nearly 10%. I think the valuation here remains too high for a company that will be lucky to match the broader economy’s GDP growth this year and next. I continue to think this stock is a great short hedge against our many highflying tech long positions.
EWY (Short) – This is mainly a short bet on Samsung, as it compromises nearly 40% of this South Korean ETF. Samsung’s selling commoditized products with little competitive advantage and no real platform of their own to grow upon, using Google’s Android operating system to run the Samsung tablets, smartphones and even smartwatches. Analysts have started seeing the margin compression coming and estimates are heading lower for Samsung. Like IBM, I continue to think this stock is a great short hedge against our many highflying tech long positions.
Future Fuel – The stock has been heading straight down since early November when word that the company was going to issue a special 25 cent dividend along with the 11 cent normal dividend at the end of this quarter. That extra dividend payment gave us a yield of over 5% on the year for this stock, which helps compensate for it being one of the few stocks not near all-time highs right now. This company is still small, still young and still very risky and dependent upon Republican/Democrat Regime welfare, subsidies, tax credits and other tricks to help it sustain its current growth trajectory. Nice yield and long-term prospects for their biofuel and wood-burning fuel businesses, but risky stock.
JPM (Short) – Talk about being “dependent upon Republican/Democrat Regime welfare, subsidies, tax credits and other tricks to help it sustain its current growth trajectory” and you’re talking about every single major big banking business model out there in this post-2008-crash world. Most outrageously of late, JPM’s gotten the Treasury department to squash fraud investigations from the Department of Justice lately. JPM is recklessly gambling taxpayer and depositor money in the markets and illegally foreclosing on customers and even soldiers and working the inside of the financial system in all kinds of legal and illegal manners. It’s all right there in the headlines. This too shall pass and when it does, JPM’s commeupance will be painful for shareholders and executives who have shamefully been protected for five years now.
Amazon – Year over year Xmas season sales growth for Amazon? More than 25%. For eBay? About 15%. For online shopping in general, also about 15%. All of which is nice growth. But 25% sure compounds a lot faster for shareholders than 15%. Amazon’s cloud business is also huge and growing and totally dominant. The stock is wildly expensive at this point, but the growth keeps that price headed higher too.
Dollar Tree (Short) – Another short hedge to our mostly long portfolio that has served its purpose well. My thesis on this short from the beginning was that they’d overbuilt and saturated their markets with their competition doing the same for the last five years. The markets have stopped paying up for this poor-man’s Wal-Mart business and I think this stock might actually crack back down towards the $30s over the next year or two as sales stagnate and margins compress.
Facebook – The good news is that the stock is still very under-owned by most of the big time mutual funds and tech money managers. Also good news is how well CEO Mark Zuckerberg and his executives are managing this company’s technology, finances and growth. The bad news? I’ve had several retail investors tell me that they’ll “never sell Facebook”. At some point, this stock will drop 20-30% or more from its highs and the panic, fear and selling from those same retail investors will commence. That’s when we’ll probably want to buy back some more Facebook. For now, it remains one of my very largest positions and I’m holding what I have left steady because those highs from which it will someday drop are probably still higher than the current quote.
Lindsay – There’s a lot more water on the planet than there is gold. But we’re consuming and wasting and contaminating a lot more water than we are gold. And looking out ten years from now, it’s quite likely that the price of water will be up a good bit more than the price of gold will be up over the same time period. I own gold coins and bullion for my gold exposure. And I own Lindsay Corp for my water exposure.
Apollo (Short) – The stock has lately gotten a bounce but is still down more than 50% from where we put on our short position. Without billions of grants from the Republican/Democrat Regime being given to students who then give the money to Apollo for a second-rate education that rarely even results in getting a second-rate diploma and even more rarely getting a job with that diploma/education, this company would likely collapse in bankruptcy tomorrow. I think the stock will be a zero at some point in the next decade.
Sandisk – The purest play on flash storage which is continually becoming ever more price competitive and cheaper which continually spurs more demand and applications that use flash storage, Sandisk is still one of my favorite long-term Revolution Investing plays. You even get paid a better dividend than you get on Treasuries with Sandisk stock.
Apple – The bears’ worst nightmare? Apple heads back to $700 and above and takes the broader markets up with it. I don’t care about Icahn (or is it iCahn, hoohah!) and his demands for $50 billion in stock buybacks, as I’d rather get the money in a special dividend anyway. I don’t like how Tim Cook has managed his image and Apple’s image and the way he handles the finances, but the growth is still coming and likely too, higher stock prices for AAPL.
Google – Here’s something I’ve not seen anybody else write about – Google’s likely to start paying a dividend to shareholders in the next year or two. With $15-20 billion in cash flow per quarter and $50 billion plus in net cash on the balance sheet already, the shareholders will start to demand some return of that cash. That will likely be another leg up for Google’s stock, and with Google Glass, Android, Chrome and other ventures continuing to dominate and/or catch traction, I’m sticking with Google.