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)

Visit to see more great charts.

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.

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.