Saturday, February 18, 2017

TLH Market Review - 2/18/17

This week's highlight was from Janet Yellen's semiannual testimony in front of Congress. When asked why the Fed didn't update their growth projections at the December meeting like other organizations did. Yellen said the Fed decided to refrain from updating it's economic forecasts until they had greater clarity on on any fiscal stimulus measures that are going to be taken.  In other words now that it appears fiscal stimulus is on the way it seems the Fed maybe raising rates more than the markets expect them too.

That caused some jumping around in the expectations for rate hikes the rest of the year. Expectations for a hike before May jumped up, but have come down a bit.  I think we can still expect two hikes this year.  CPI was released and we saw a really good number. In fact it was the strongest since March 2012. With a 2.5% YoY increase in inflation I think the case for rate hike is being made on it's own.

Additionally we had a good showing with Retail Sales ex-auto up 0.8%, but some downside with Industrial Production slipping -0.3% when expectations were coming in for a flat reading.

Markets

The markets just continue to go up which is astounding quite a few people.  Sounds like music to the ears! With 5/7 weeks so far this year showing gains it's quite the difference from the beginning of 2016. We'll let the pundits keep calling for a correction. Totally fine here at The Long Haul. We can potentially use the pullback to add some mis-priced amazing stocks, and then we will continue doing what we do.  Which is not much besides holding onto great companies so they can make us plenty of money.

This week we saw earnings from  two portfolio members HCP Inc(HCP), and WhiteWave Foods(WWAV)

I'm not going to dive into WhiteWave's numbers to much since their merger with Danone should be completed soon.  I will say it looks much more obvious now the big growth in the healthy food space is behind us. WWAV showed 3% revenue growth for the quarter. That's down from the heady days of 10% plus growth on a regular basis.  Hain Celestial(HAIN) also had some bad news recently as they announced they would be filing their latest 10-K late.  That sent shares falling to the $33.50's. The company is still reeling from their accounting issues announced last year. 

HCP has been working to reposition it's portfolio into the life sciences, and other higher end medical properties. that's apparent as the company continues to adjust it's portfolio. This year was no exception as the company completed over $700 million worth of acquisitions and dispositions. The company also repaid $1.7 billion worth of debt for the year with the proceeds from the QCP spinoff.  The company continues to be a steady dividend payer. It's not a growth stock rocket, but that's fine.  I think the stability of it's business will serve us well over the long haul. 

That's all for now. Have a great weekend.

Thursday, February 16, 2017

Belated Valentine For Twitter

Let's say 3 years ago you had the choice of buying for a Valentines Day gift either Twitter(TWTR), or portfolio member Facebook(FB) stock.  If you were lucky you bought Facebook stock as you likely posted your date night on the social sharing site with for all your friends to see and comment on.  Clearly the performance of the two stocks agrees.


Twitter is down 70% while Facebook is up over 98%. Of course Facebook has had strong user growth while Twitter has stalled. Looks like Twitter could use a belated Valentine. Or maybe you should have bought the roses and chocolates too!



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Earnings - HCP, WWAV

My apologies for not getting HCP's latest report out as personal matters took front and center the last few days.  So here it is.

On Monday February 13th HCP Inc (HCP) reported Q4 and FYE'16 results. Q4 results came in with EPS of $0.12, FFO of $0.35, and revenues of $539.9 million. FYE'16 results came in with EPS of $1.34, FFO $2.39, and revenues of $2.12 billion. During the year the company completed it's previously announced spinoff of QCP. For the whole year the company entered into agreements to sell 64 communities to Brookdale Senior Living, and an additional $723 million in acquisitions along with $770 million in dispositions. The company also repaid $1.7 billion worth of debt in Q4. The company also gave guidance for 2017 that is inline with prior guidance released on 11/1/16.

  • EPS: $1.32-$1.38
  • FFO: $1.88-$1.94
  • SPP Cash NOI: 2.5%-3/5% 
WhiteWave(WWAV) reported Q4 and FYE'16 results after the close today.  Q4 EPS came in at $0.34 on revenues of $1.05 billion. FYE'16 results came in with EPS of $1.18 on revenues of $4.2 billion.  The company continues to struggle with with its fresh food segment.  Overall these are ok results. i think if the company didn't have the merger pending we would have seen the stock drop on this news.  The company still expects to see it's merger with Danone to be completed this year.  I'll have to figure out another company to replace this pick with.  

Sunday, February 12, 2017

TLH Market Review

This week we saw every major index hit a new high.  The Nasdaq led the way with a 1.2% gain for the week while continuing to lead in the new year as it's already tacked on 6.5% in 6 weeks!!!

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The week was light in economic reports so we are going to focus strictly on the earnings front with our picks.  We had a slew of reports out this week from Church & Dwight(CHD), Emerson Electric(EMR), Universal Corp(UVV), Cognizant Technology Solutions(CTSH), Reynolds American(RAI), and Cummins Inc(CMI).

Thursday, February 9, 2017

Earnings - Cummins(CMI)

Our global leader in power and engine manufacturing, Cummins(CMI), reported their Q4 and FYE'16 results this morning.  The company had Q4 EPS of $2.25(up 11.3%) on revenues of $4.5 billion(down 6%). The company had FYE'16 EPS of $8.23(up from $7.84) on revenues of $17.5 billion(down from $19.1 billion). I must say considering the challenging environment and sagging sales the company still managed to post net income that was barely unchanged from 2015 at $1.394 billion. Shares are so far up around 4% today. The company gave guidance for 2017:

Tuesday, February 7, 2017

Earnings - CHD, EMR, UVV, CTSH

Today we are receiving earnings from Church & Dwight(CHD), Emerson Electric(EMR), and later Universal Corp(UVV), and the 8th is Cognizant Technology Solutions(CTSH)

Church & Dwight(CHD) reported Q4 and FYE'16 results. Q4 EPS came in at $0.42 on revenues of $896 million.  FYE'16 results came in with EPS of $1.75 on revenus of $3.49 billion.  For the year the company increased operating cash by 8.1%, which got reflected in the 7% dividend increase to $0.19 share. Make no mistake about it they are a dividend machine as this marks the 21st consecutive year of dividend increases & 116 years of dividend payments. The company plans to continue targeting a 40% payout ratio. Shares are so far up over 2.5%

Monday, February 6, 2017

TLH Market Review - 2/4/16

First of all sorry this did not get published over the weekend. The auto-scheduler wasn't set and I overlooked it.


It was a busy week with news from the Fed, economic reports, and plenty of earnings so I won't be wasting anyone's time here today. So like a grizzly on a salmon let's get on it.

The Federal Reserve released their FOMC rate decision which you can read here. At first look it seems the Fed is pretty bullish on the economy relative to their tepid wait & see outlook for most of 2016.  The market I think actually agrees.  The economy is still growing. The clip and pace of growth isn't meteoric by any measure.  Yet it's still growth. Participants think the Fed will raise rates next at the June meeting with 60%+ odds still.  I'd say that's about right.  If not then I could easily see a September hike as the next likely target.

Thursday, February 2, 2017

Earnings - MO, FB, PM, V

We received a slew of earnings reports since yesterday from many of our biggest companies, and I'll update this post to highlight Visa after they report tonight.

Altria(MO) reported Q4 and FYE'16 results yesterday morning. Q4 EPS came in at $0.68 on revenues of $5.45 billion.  For 2016 EPS came in at $3.03 on revenues of $22.8 billion.  The company recently completed an acquisition of Sherman Group Holdings, which markets ultra premium cigarettes and cigars.  The company gave 2017 EPS guidance that ranges between $3.26-$3.32. The stock initially started the day down a bit, but moved up the rest of the day to finish up 20 cents higher than the day before. #winning. Here are the CEO's remarks:

Saturday, January 28, 2017

TLH Market Review - 1/28/2016

This week certainly is rounding out a great start to the year, and continuing what's been an impressive rally since the election. The big news was the Dow hit 20,000 for the first time ever. That's great and it's hard to believe that less than 8 years ago the index was under 6,500.  That's a return of 207% for investors that bought during those seemingly difficult times. 

Advanced 4th quarter GDP estimates also came in this week showing growth of 1.9%.  That's not an entirely exciting number, but it continues to be par for the course in what's now one of the weakest recoveries in American history.  I understand a lot of people like Barack Obama, and yes as noted above the Dow has been up 207%, but under his watch this recovery will go down as one of the worst American's have endured. No wonder why so many people are frustrated and fed up right now.  It's nothing political. Just plain old economic facts. 

Just take a look at the percentage change in GDP since 1947. Notice the percentage increase is in a long term downtrend. 

Friday, January 27, 2017

Is Tobacco On Fire?

With the recently revised merger between British American Tobacco(BTI) & Reynolds America(RAI) I thought it'd be a good idea to review the performance of our other
tobacco holdings.  Some of which have been on fire the last couple months.


Here is a chart depicting the performance of Altria(MO), Phillip Morris(PM), Vector Group(VGR), and Universal Corp(UVV)


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All show strong performances, but what's noteworthy is the huge run we've seen in one of our lesser known holdings Universal Corp(UVV) with a 34% gain since December 2016. A lot of this run up is due to the increased expectations for the vaping sector. Universal is a supplier of liquid nicotine and other components for vaping liquids. The company is more of a pure play on this trend than the major tobacco companies which will have to compete amongst themselves. Also UVV has already positioned itself as a major supplier for the big tobacco companies.

Here is the performance for all tobacco holdings since December 2016

 UVV - 37.39%
 RAI - 12.15%
 MO - 11.83%
VGR - 7.48%
PM - 10.41%
BTI - 13.51%

Thursday, January 26, 2017

Earnings - PX, PYPL, DEO

Today we received earnings from 3 picks. Praxair(PX), PayPal(PYPL), & Diageo Plc(DEO).

Praxair(PX) reported Q4 and 2016 FYE results with quarterly EPS of $1.41 on sales of $2.6 billion.  FYE results saw sales of $10.5 billion and EPS of $5.21. The company had record free cash flow of $1.3 billion of which 65% of that was returned to shareholders through dividends. The company guided 2017 EPS at $5.45-$5.80. At the mid-point of that range it looks like EPS will increase 8% for 2017. Shares traded flat for the day. Here is managements remarks:

Friday, January 20, 2017

IBM & PG Earnings

International Business Machines released Q4'16 results with EPS of $4.73 on revenues of $21.8 billion.  Strategic Imperatives now represent 41% of sales at $32.6 billion for the year, and were up 13%. The company earned $12.39 for the year on revenues of $79.9 billion. The company gave 2017 EPS guidance for GAAP EPS of $11.95 & Non-GAAP $13.80. The shares are trading up around 1% today to $168

For perspective sake I'd like to take a look at IBM's historical revenue, EPS, and dividend figures for since 2011. Despite revenues falling off nearly $26 billion in the last five years, the company has managed to keep raising it's dividend payout, and keeping its EPS is only down 13% since it's 2012 high.


            EPS   Revenue(bil) Dividend
2011- $13.06   $106.90         $3.00
2012- $14.37   $102.80         $3.40
2013- $14.94   $98.30           $3.80
2014- $11.90   $92.70           $4.40
2015- $13.42   $81.70           $5.20
2016- $12.39   $79.90           $5.60

Procter & Gamble(PG) reported Q2'17 results with EPS of $2.88 on revenues of $16.9 billion. The stock is trading up 2.7% to $89/share.  You can read the press release here.http://www.pginvestor.com/file/Index?KeyFile=37611831

Sorry for the brevity today.


Wednesday, January 18, 2017

British American Tobacco Ups Reynolds Bid

Most everyone is aware by now but just in case you had no idea British American Tobacco(BTI) upped it's bid for Reynolds American(RAI) by $2 billion to $86 billion total consideration. Based on the terms of the deal each share of Reynolds is worth $59.64.  The deal still retains it's cash/stock split with shareholders receiving $29.44 in cash, and 0.5260 ordinary shares of BTI. That's adjusted from the original terms of the deal at $24.13 and 0.5502 announced in October 2015.

The deal is being funded with cash on hand and a variety of debt instruments. The company expects the transaction to close in Q3 2017, but I think that might be a bit soon. Here is an excerpt from the Press Release.

“Through this transaction, we form an industry leader that will focus on innovation and brand building,” said Susan M. Cameron, executive chairman of Reynolds American’s board of directors. “This combination will create a truly global tobacco company with multiple iconic tobacco brands, and a world-class pipeline of next generation vapor and tobacco-heating products.” 



Friday, January 13, 2017

Low Volatility VS High Beta

A favorite of mine is comparing two ETF's - SPHB & SPLV. They are the S&P High Beta, and S&P Low Volatility ETF's that track stocks with characteristics explicitly as the names state.

Sunday, January 8, 2017

2016 Portfolio Performance

Well the first full calendar year has passed for The Long Haul Portfolio.  It seems just like yesterday that I started this endeavor back in October 2015. It's been fun tracking and writing about my picks.  2016 was for sure a year to remember.  We transitioned from one of the most volatile starts ever, to one of the calmest summers ever, to one of the sharpest post election rallies ever. You definitely needed nerves of steel to ride this year out.

Of course our style of investing is meant to be very long term so all these bumps in the road are just minor blips on our screen.