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Showing posts from 2017

Earnings Analysis: Citigroup (C)

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Thursday morning, Citigroup announced third quarter earnings results.  They topped analyst expectations by delivering earnings of $1.42 and revenues of $18.1B.  Expectations were at $1.32 and $17.89, raised slightly more from where it was at when I previewed the results in my last weekly summary.  The company returned $6.4B in capital over the course of the quarter, a majority of that represented through the repurchase of about 81 million shares of stock.  The TBV also rose 6% from a year ago, landing at $68.55 which is in line with my estimates for where that key measurement is going.  Despite the solid beat, the stock's price has fallen about 5% since the announcement.

In Global Consumer Banking (GCB) we saw revenue increases across all regions, with Latin America leading the way.  in North America, the Costco card acquisition provides much of the experienced strength, but it also brings much of the increase in Net Credit Loss (NCL) growth.  Expenses and gross margins also improv…

Stock Analysis: Honeywell (HON)

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Before the opening bell yesterday morning, Honeywell announced the results of its portfolio analysis, an analysis that was spurred by activist investor pressure.  Third Point's Dan Loeb challenged Honeywell, shortly after new CEO Darius Adamczyk took the helm, that the company isn't doing enough to capture shareholder value and that they should spin off the Aerospace division. 

After the company has done deep analysis of their portfolio of products, they agreed to do not 1, but 2 spinoffs from the company.  Neither spinoff, however, is the one that Third Point asked for.  Instead, the company is going to spin off their homes business - essentially the HVAC and fire protection products which they have (thermostats, filters, other equipment for home and businesses) as one business.  This business will be worth approximately $4.5B.  The second spinoff will be their transportation business, which is primarily rooted in their low-margin, but highly successful turbo chargers, which …

Weekly Portfolio Summary

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As we enter the final quarter of the calendar year, we prepare for third quarter earnings reports season.  Pepsico announced their results earlier this week and you can see my thoughts on that here.  The portfolio continues to perform well, but you'll notice a few things have changed since last time as well  First, I sold the remaining investment I've put into ON semiconductor.  As such, I've inserted a new icon into my blog to identify stocks where I'm playing with the house's money, which you'll see noted just before we talk about my rankings.  You'll continue to see me do some research an post on the stock, but my homework will not necessarily be as deep as it has been in the past.  .

Since I was no longer invested in a tech stock, I wanted to find the right opportunity to get reinvested there and happened to come across the stock of Apple at just the right time, seeing it drop significantly from new highs after people started worrying about iPhone 8 and …

Earnings Analysis: Pepsico (PEP)

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Today Pepsico kicked off the next wave of earnings reports in my portfolio for 2017.  Third quarter results turned out to be a bit mixed, as the company reported earnings of $1.48 and revenues of $16.24B.  This beat market consensus on the earnings side by four cents, however missed consensus on revenues by $70M.  Operating margins were up, contributing to the earnings beat, however, organic growth was a paltry 1.7%, a level that was commented to have "lagged the industry."

The management team, whom I've come to respect and trust as a shareholder, held back no punches when describing their quarter.  Seconds within opening her remarks, CEO Indra Nooyi clearly stated why they missed top line marks, stating that North American Beverages (NAB), in particular, was the sore spot and that this is a temporary issue that has already been responded to and is already showing improvement.  More on this shortly.

The call had some good news and some bad news.  First, on the good news si…

Trade: Apple (AAPL)

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On Friday, I put in a purchase for about half of my maximum potential position in the stock of Apple at $152.25.  At the time of this writing it is 5.7% of my portfolio.  While I haven't had time to discuss my shopping list of new potential buys, the sale of my position of On Semiconductors left an opening for me to pick up a new tech name.  On my list I had Alphabet (Google) and Logitech as other potential picks.  It just so happens that AAPL's stock price came down into the area where I would start accumulating a position first.  Alphabet is just too expensive for me to work with - even in options, and while Logitech was close, I don't see the growth potential nearly as strong as it is with Apple today.

The stock pulled back over $10 since the showcasing of their new phones the iPhone 8 and iPhone X.  Reception has been somewhat lukewarm and there has been a lot of rumors about bugs and delays in delivery.  The problem is that this is an ongoing story every year with ever…

Trade: On Semiconductor

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Today, after making an accidental buy trade, I sold essentially what was 12% of my stake of the stock at a price of $8.13.  At the time of the sale, my remaining stake, after previous transactions, had amassed an increase of almost 100%.  I decided this was the right time to follow discipline and remove the remaining investment I had in the stock.  The stock price was over 5% higher than my price target (and closed even higher yet). and I could use that money for new investments.  I also am concerned that the stock's price is starting to get ahead of what it's capable of earning over the next twelve to eighteen months.  After the close of today's business, the holding continues to be a 5.3% holding in my portfolio.

While I do want to caution the stock's run, I also want to note that I do see strength in the stock's future.  Their focus on automation, AI, and self-driving cars are key factors to the stock's run and its future potential right now.  The company is …

Weekly Portfolio Summary

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Another week of business is in the books.  Now that summer is unofficially over, people are getting back to work and volume should be on the rise in the markets yet again.  Markets were down slightly on the week and my portfolio was essentially flat.  

In terms of macro events, the issues with North Korea calmed down while Trump's announcement to end the DACA and put a few hundred thousand kids at risk of deportation took to the front page along with the President's surprising dealing with democratic leaders to extend the debt ceiling for 3 months coupled with an aid package for the impact of Hurricane Harvey in Houston.  

At this time, macro news like the ones mentioned and the likes of Hurricane Imra hitting Florida now impact the overall markets until early October when we start getting third quarter reports from companies.  So in short, there won't be a lot going on for now and that does leave room for the market to pull back some.
Notes: Stock Ratings: 1 = buy at current …

Market-based Portfolio Assessment

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The major market indexes took a bit of a hit today and I thought I'd take a quick review of my portfolio in co ordinance with that action and how it may affect things.  First, I feel we are seeing two major news events impact the markets right now.  The primary focus is related to North Korea and the potential that they just tested a hydrogen bomb.  While the situation and potential scenarios are certainly alarming, I currently do not see them having an impact on my portfolio looking out twelve to eighteen months.  Times like this typically draw panic and it's better to be prepared to handle that panic than it is to join in the foray.  The second event is Hurricane Irma forming into a Category 5 storm in the Atlantic.  Current path projections have the storm most likely going right up through the Caribbean and through Florida and some of the southeast coast.  Category 5 hurricanes produces mass amounts of damage and has the potential to rival that of Harvey, which we're ju…

Weekly Portfolio Summary

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So it's been since like April since I've done one of these summaries.  I'm not going to take a lot of time talking about what's been going on here this time, because of that fact and let you get caught up on where I stand since the second quarter analysis I've provided over the last number of weeks.  That said, I do want to call out that I have taken on a new position over the last few months.  I have gotten into the iShares MCI Eurozone ETF.  I am preparing for what may be a corrective period where we start to see the rest of the world grow more through recovery from the Great Recession.  The US has out performed global markets and is valued higher than much of the rest of world.  While it's not accurate to say that the rest of the world should be evenly valued, it is fair to say we've grown so much more than usual that the rest of the world is going to have to catch up some.  This means we may start seeing slower growth in the US, maybe the S&P 500 on…