Saturday, August 19, 2017

TLH Weekly Review 8/19/17

Is it possible the market has awakened from it's seemingly eternal slumber?  That's what just about everyone thinks, and they are already calling for a huge market crash.

I can't say I completely agree the market will crash, but I have been saying and thinking for awhile that the market could really use a pullback. That should help set the market up for it's next uptrend. Small caps had already been struggling more than their larger peers.  That's usually a sign things aren't looking up short term. But like any indicator it's not 100% fool proof.

The S&P 500 had two out of three largest down days so far all year in August.  Is it now beware the Ides of August?  There is a solar eclipse coming on Monday. Eery coincidence.


Still I don't think this bull market is done like everyone else is claiming it should be. Stocks aren't cheap on a historical basis with the S&P 500 trading at a 12 month forward P/E of 17.4 which is above the historical average of 14.0.  That's not a huge premium screaming bubble territory.  Does it mean there's no good values on traditional metrics? For sure. 

All eyes will be on the Fed next week at Jackson Hole. The market has been going all over the place on when the Fed will raise rates next week with most betting 2018 is when we see the next one.  That's possible, but I still don't doubt the Fed will want to stray to far from it's original path. We could see one in December, but I think that would mean we might not see one at all in 2018, or at least til the tail end. 

The portfolio did not have much news. Earnings season is behind us and for the most part it was pretty good. The portfolio has been reeling from it's heavy reliance on tobacco stocks, and the now clear indication the FDA is looking to put the hurt on the industry further.  I think it's a little overblown, but when the government is after stocks in your portfolio you must keep a keen eye on the situation. Altria(MO) has taken it on the chin the most as it's business is entirely focus on the USA.  Even British American Tobacco(BTI) that recently gobbled up former portfolio member Reynolds American has struggled recently as a result.  I'll be looking very closely at the portfolios tobacco allocation for 2018.

Fora moment it looked like our Ishares Nasdaq Biotechnology ETF(IBB) was going to really start breaking out. It hit a high of $329.90 a few weeks ago, but has since floated back down. Don't you just love how the market picks those numbers? It was so close to $330 even. Still the ETF has been a 14% winner this year.  I think the next few years will do quite well. 


That's all for now.  Enjoy a nice weekend and get outdoors!

Friday, August 18, 2017

Amazon Is REALLY Crushing The Competition

Since Amazon(AMZN) went public back on May 15, 1997 it's been one of the most talked about companies nearly everywhere. It's also been surprisingly one of the most successful despite just recently posting quarterly profits.  It's one of those rare instances when traditional valuation metrics cause many investors to miss out on big gains.Even the Oracle of Omaha, Warren Buffet, has mentioned how he missed out big time with Amazon for Berkshire Hathaway(BRK.A) investors.



Visit StockCharts.com to see more great charts.




Even more mind-boggling is how strong the company's stock performance has been. Since it's IPO the stock is up over 48,851%, and that's with a $100 point drop in the stock the last few weeks. In other words $10k invested at it's IPO price would have turned into $4,885,100.  That'd be enough to throw you right into the top 5% pretty much for life.  



Amazons performance even makes Wal-Marts(WMT) respectable 603% gain during that time period look dismal, and it barely shows up as a blip on the chart.  Meanwhile Macy's(M), and JC Penney(JCP) shareholders which have been struggling mightily to compete the last few years have seen barely any, or in the case of JCP shareholders a complete destruction of their capital.



You never know when disruption is right around the corner.

Sunday, August 6, 2017

TLH Market Review - 8/5/2017

This week was extremely busy with earnings, and the usual economic reports. Because of that I'll only be recapping earnings I haven't address yet from Church & Dwight(CHD), Global Payments(GPN), Cognizant Technology(CTSH), and Universal Corp(UVV).

If you were on Twitter this week(surely following me) you most likely heard that Donald Trump is responsible for all the job growth, and equity market highs.  Ummm no.  Truth is, as many long time readers of this blog know, is that job growth, the economy, and markets have been going up for some time now. Sure equity markets jumped post-election in anticipation of better times ahead.

Wednesday, August 2, 2017

Earnings - Cummins, Emerson Electric, HCP

We received earnings from 3 companies on Tuesday - Cummins(CMI), Emerson Electric(EMR), & HCP(HCP)

Cummins(CMI) reported Q2 EPS of $2.53 per share on revenues up 12% from a year ago to $5.1 billion. The company credited the quarter to stronger demand for trucks and construction equipment in North America and China, and stronger sales to mining, and oil & gas customers.  The company also announced during the quarter the Eaton Cummins Automated Transmission Technologies joint venture. Cummin's and Eaton each own 50 percent of the global joint venture which will design, manufacture, sell and support all future medium-duty and heavy-duty automated transmissions for the commercial vehicle market.

Saturday, July 29, 2017

TLH Market Review & Earnings From Facebook, Altria, Procter & Gamble, MasterCard, Boston Beer, & Praxair

This post will second as my weekly TLH Market Review, and earnings recap for a busy week in our portfolio.

The Federal Reserve had a two day meeting that went pretty much as expected. Interest rates were kept in the 100-125 bps range while the Fed kept it's options open for another rate hike this year.  The market didn't completely buy it. After the meeting participants decided the next meeting with the highest probability of a rate hike switched from December 2017 to March 2018 with 47.5% odds.  That doesn't mean the market is oblivious to it happening this year. Participants are saying there is still a 46.8% chance of a hike before 2017 is in the books.

Thursday, July 27, 2017

Earnings - Wabtec, Hershey's, Paypal, Diageo, AB Inbev

The portfolio has seen a lot of companies report earnings the last few days, and I've been short on time in getting my summary out.  In total 11 of our picks will report this week.

I'll have an update tomorrow with earnings from Facebook, Procter & Gamble, MasterCard, Altria, Praxair, & Boston Beer.

I'll start with the biggest miss first.

Saturday, July 22, 2017

TLH Market Review 7/22/17

"Profits always take care of themselves but losses never do." Jesse L. Livermore

Equity markets have continued to post new highs this year. The S&P 500 has posted 3 weeks in a row of gains.  Meanwhile the Nasdaq had registered 10 days in a row of gains, with a slew of new all time highs this week. The Nasdaq continues to pace this years rally as it's up 18.7% YTD. Over the last year the Nasdaq has put in a 25.25% gain. Impressive! In fact every index is showing solid gains over the last year. That makes it easy to do well in a bull market like this. 

Friday, July 21, 2017

McCormick Buys Reckitt Benckiser Food Unit For $4.2 Billion

There was big news earlier this week when portfolio member McCormick(MKC) purchased the food division from Reckitt Benckiser, a British conglomerate. That means some very well known brands including French's mustard, and Franks Red Hot Sauce will now fall under the company umbrella.  The purchase price was not small at $4.2 billion when you factor in McCormicks total market cap is just shy of $11 billion.

Thursday, July 20, 2017

Earnings - IBM, Phillip Morris, & Visa

Here is my earnings recap for IBM(IBM), Phillip Morris(PM), and Visa(V)

IBM reported 2017 Q2 EPS of $2.48 on revenues of $19.3 billion.  Revenues continue to decline overall at Big Blue, but the company is still seeing growth in it's strategic imperatives, although that growth rate is really coming down. The company is expecting GAAP EPS for 2017 to come in at $11.95. I also don't like how the company has been benefiting from a tax benefit recently.  That would have knocked $0.18/share off EPS this quarter.  I'm also starting to become uncomfortable with the company's rising debt levels considering revenues are still falling. We aren't near danger levels, but with total debt clocking in around $45 billion it's quite a large amount overall. Shares have not fared the best since earnings as they trade lower from $153 to around $147 today

Saturday, July 15, 2017

TLH Market Review - 7/15/17

It's the summer doldrums in equity markets as volumes thin out while traders at big institutions take summer vacations.  That's normal every year across the globe.  Yet it hasn't stopped the indexes from continuing to new highs. This week we saw the Dow Jones, and S&P 500 hit new record highs, up 9.5% & 9.9% respectively. Meanwhile the Nasdaq trades just 9 points off it's record high. What's more impressive is the Nasdaq has been lapping the other indexes in terms of performance this year as it trades 17.3% in the plus column.

Thursday, July 13, 2017

Facebook At New Highs

Well Facebook(FB) has hit an all new time high today as it rallies with the market.  It's now just $27 billion shy of being worth $500 billion, or a a roughly 5% move.  I'll take a wild guess here and say the stock eclipses that mark this year.  It might not be next week, but there's still a lot of time left in 2017. 



Visit StockCharts.com to see more great charts.

Thursday, July 6, 2017

It Only Takes A Snap Of The Finger To Lose Money

It's been a just a little over 4 months since Snap Inc(SNAP) went public with much hoopla. On their first trading day shares opened at $24, and the next day hit a high of $29.44 which valued the company right around $30 billion.  Well things can change pretty quickly.


Shares are trading right around lows at $17.28 which represents a loss of 41.3% from the high. 



Visit StockCharts.com to see more great charts.

Tuesday, July 4, 2017

Portfolio Performance - First 6 Months

Well it took me a little longer to get this out than anticipated, but I found some time early this morning and later this afternoon to get this out just in time for the fireworks this evening.

The portfolio has beaten our SPY benchmark with a total return of 12.37% for the first 6 months of 2017.  The SPY has returned investors 9.23%, which is still a respectable gain.

I'm very proud to be leading our benchmark by 3.15%. I'm hoping that gain will continue. Proceeds from WhiteWave were consolidated into additional shares of each holding based on the April 12 closing price.  Since the buyout price was $56.25/share we received 10,117.12. Each holding was given additional shares worth $361.32(10,117.12/28).

Our two biggest gainers are in the payment space with PayPal(PYPL), and Global Payments(GPN) clocking in 38%, and near 34% gain. Our two biggest losers have been Boston Beer(SAM), and IBM with loses of 17%, and 1% respectively.



Equal Weight Performance With $10k Starting Balance

SharesShares After
WWAV Sale.
4/12/17 Closing
Price
12/31/2016BeginningPrice TodayEnding%GainDividendsTotal Return
BTI177.51182.8456.34$10,000.00$68.03$12,438.7924.39%$262.2027.01%
BUD94.8498.12105.44$10,000.00$110.42$10,834.228.34%$169.8510.04%
CHD226.30233.5244.19$10,000.00$52.02$12,147.6621.48%$87.3722.35%
CMI73.1775.63136.67$10,000.00$163.36$12,354.6323.55%$152.5225.07%
COST62.4664.58160.11$10,000.00$158.82$10,256.652.57%$512.467.69%
CTSH178.48184.6456.03$10,000.00$66.70$12,315.1823.15%$27.7023.43%
DEO96.2199.31103.94$10,000.00$119.14$11,832.3318.32%$113.7219.46%
EMR179.37185.5655.75$10,000.00$60.25$11,179.8111.80%$175.1713.55%
FB86.9289.51115.05$10,000.00$148.43$13,285.5832.86%$0.0032.86%
GPN144.07148.7369.41$10,000.00$90.05$13,393.4133.93%$3.3733.97%
HAIN256.21266.0939.03$10,000.00$38.34$10,201.812.02%$0.002.02%
HCP336.47346.3529.72$10,000.00$32.55$11,273.6512.74%$252.6415.26%
HSY96.68100.00103.43$10,000.00$106.64$10,663.696.64%$121.557.85%
IBB37.6838.93265.38$10,000.00$310.95$12,106.3921.06%$18.1521.25%
IBM60.2462.36165.99$10,000.00$155.58$9,702.25-2.98%$177.88-1.20%
MA97.05100.29103.04$10,000.00$120.78$12,113.1621.13%$43.4121.57%
MKC107.15110.7793.33$10,000.00$97.30$10,777.507.78%$102.428.80%
MO147.89152.8967.62$10,000.00$74.53$11,395.0713.95%$183.4815.79%
PG118.93122.9484.08$10,000.00$87.74$10,786.347.86%$164.399.51%
PM109.30112.4891.49$10,000.00$116.90$13,148.5831.49%$230.6533.79%
PX85.3388.39117.19$10,000.00$134.18$11,859.8518.60%$136.8919.97%
PYPL253.36261.8639.47$10,000.00$52.87$13,844.5738.45%$0.0038.45%
RAI178.44184.0756.04$10,000.00$64.80$11,927.8719.28%$184.8821.13%
SAM58.8861.47169.85$10,000.00$134.05$8,239.46-17.61%$0.00-17.61%
UVV158.18163.2463.22$10,000.00$64.30$10,496.224.96%$173.576.70%
V128.17132.2578.02$10,000.00$93.35$12,345.2323.45%$42.9723.88%
VGR439.75457.2222.74$10,000.00$21.17$9,679.29-3.21%$358.790.38%
WAB120.45124.9983.02$10,000.00$92.51$11,562.6515.63%$27.0415.90%
WWAV179.8610,117.1255.60$10,000.00$0.00$0.00






$290,000.00
$322,161.8411.09%$3,723.0612.37%

Benchmark Comparison







SPY44.74
223.53$10,000.00241.8$10,817.348.17%105.679.23%