Investment "Logic"

On Monday, I closed out my position on Raytheon at a price of $169.50 as I mentioned looking to do in my earnings recap, here.  This close out may have been a bit premature, given the stock is another $6 higher than my sell point, but there was no way knowing that and I wanted to close out the position quickly to avoid any further losses, given the truly sad outlook the company provided for 2019.  In an effort to put money back to work that I have collected from my sales, I have purchased a 25% position in BP PLC, an oil stock yielding over 6% at the time of purchase.  I've been wanting to buy this stock for a little while now, but with earnings so close, I decided it best to wait, plus I wanted to get rid of something before I added more.  As a result, BP posted impressive numbers on Tuesday morning and the stock took off.  My purchase price was $42.75 and while I'd like to get the stock priced more at $40, I'm not sure that will be possible any more with...

On Thursday, Raytheon reported their fourth quarter 2018 earnings results.  While I am spending some time looking into this overall, this recap will not be as exhaustive as most of my efforts because I'm in progress of liquidating my holding.  This stock is currently less than 3% of my overall portfolio and is generally a non-factor - especially since I am looking to it for additional funds.  The results were somewhat mixed, as revenues missed expectations of $7.45B by $9M, coming in at $7.36B.  Earnings, on the other hand, were able to beat expectations of $2.89 by coming in at $2.93.  These results and the general explanations that go with them probably would've been given a pass, considering how hard the stock was sold off into the end of the year and what the stock was priced at a quarter ago.  However, the guidance provided really put a damper on the stock as they failed to significantly miss already subdued expectations. Worries coming into the ...

Apple announced revenues of $84.3B, which was below the adjusted consensus of $83.97B and earnings just beat expectations of $4.17 by coming in at $4.18.  It's important to note that these estimates were adjusted down based upon the earnings miss notification that was provided at the beginning of the month.  However, it's equally important to note that it's not as bad as analysts were expecting.  When you get a preannouncement, the key certainly won't be the past numbers, as they've already set expectations there.  The key information is going to be more about the deeper details as well as the forward guidance and readthrough on the current quarter performance to date.  We'll get to all of that in this recap, but let's start with the deeper numbers on the Quarter. To start with, the cause of the poor performance in the quarter was related to iPhone sales - particularly in China.  As such, it's no surprise to hear that iPhone revenues were down 15% ...

Citigroup announced fourth quarter and fiscal year 2018 annual results back on January 14.  Results for the quarter were a little mixed, as earnings of $1.61 beat estimates of $1.55, but revenues of $17.1B missed expectations of $17.59B.  While the results weren't what the street was looking for and the initial numbers provided a hit to the stock's price, management's subsequent commentary provided a significant change in sentiment and we've watch the stock price raise closer to its tangible book value in the two weeks since.  Looking a little deeper into the numbers themselves, revenues were mostly hit due to an under performing fixed income market in addition to assets that were sold off as the company continues to shed its remaining legacy businesses that doesn't fit overall goals.  The fixed income issue is something that has been seen across all money center banks and Citigroup is one of the largest players in this space, so it is not a result that is fully ...

On January 9, I pulled the trigger and purchased another one-sixth of a full position in Canopy Growth Company at a price of $32.80.  This wasn't at a lower price or below $30 as my last purchase, which was a bit disappointing, but the stock had started to build a trend that it wasn't going to sell off again, so I bought in - despite the stock being up over 5% at the time.  This also followed what was interpreted as a disappointing fourth quarter earnings result from Constellation Brands, who has provided a significant investment into Canopy.  It was clear that commentary around the cannabis investment were strong and that more positive results were expected as we hear more from the industry.  Since the announcement and the purchase, the stock has continued to climb unabated, closing the week at a price of $38.25 - a 16% increase from my purchase price.  I don not  expect this climb to continue like this, given the stock has risen over 30% on the week a...

On Jan 7, I sold another third of my position in Raytheon at a price of $154.90.  As I said in my last trade , I've decided that while the company itself is strong, that I don't feel it is in a sector that has favorable outlooks at this time.  There is too much uncertainty around the FY20 budget with the new Democrat-led congress.  Given that prices have been on a rebounding jump, I felt the price increase warranted lightening up on my holding at increasing my cash position so it would be available to go after better options, should the market take a turn down again. Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Nothing on this site should be taken as advice, research, or an invitatio...

Yesterday I made the move to do some stock trades.  I bought back the shares I sold a long time ago to put my money back to work (instead of just playing with the house's) at $173.80 and I sold a third of my position of Raytheon at 153.38.  These moves were made after we got a very strong jobs report and Federal Reserve President Jerome Powell finally softened his stance on the economy, inflation, and the need to raise rates. Home Depot While I certainly didn't get this stock as low as I would've liked to, it was harder to pull the trigger then because I had less favorable scenarios to work with.  With less pressure of rising rates, ongoing positivity for job and wage growth that isn't growing wildly, and 10-year rates now back down around 2.67% we have an environment that can be helpful to home building, buying, and remodeling again.  With spring around the corner and a consumer that has proven to be strong through the holiday season, I expect to see further ...

On November 1, Apple announced it's fourth quarter results for fiscal year 2018.  Revenue rose twenty percent to $62.9B and earnings rose forty-one percent to $2.91.  Most important in the transforming Apple story is the continued growth of the services sector, which grew twenty-seven percent YoY.  This is important, because it's this services story which I believe will change how the stock is looked at and valued more as a consumer products company than a tech provider.  Services provides an ongoing revenue stream even if phone sales are choppy or peaking out.  That said, phone sales are still looking good on the revenue front as the company reported a 29% increase YoY and per-unit prices were higher than expected at $793, meaning the higher end phones were wildly sought after.  All of these numbers beat analyst expectations, but the headline numbers aren't what has driven the stock's action since the announcement. Forward guidance was pretty much in...

Back on Tuesday, Cedar Fair announced the results of their third quarter operations.  Results were pleasantly pleasing as revenues came in at $664M, which is about 1% better YoY.  Earnings came in at $3.76 which was well in excess of analyst expectations of $3.25.  Results were bolstered by an increase of both attendance and spend coupled with cost management within the organization.  July was seen as a volatile month for the company, weather-wise, resulting in lower than expected visitation during a key portion of the year.  However, in the following two months of the quarter, attendance and spending rebounded and exceeded expectations as season pass holders returned to the facilities with better overall weather patterns.  This trend continues into October with the various Fall festivals which they hold and 2019 season pass purchases are off to a strong start - to show ongoing strength for the next year.  As a result of these patterns and how it f...

Back on October 25, Raytheon announced strong operational results for their third quarter of 2018.  Sales were up 8.3% YoY and earnings were up 14.2%.  These results were stronger than wall street expected with revenues of $6.81B beating estimates of $6.69B and earnings of $2.25 killing expectations of $1.97 per share.  Backlogs also grew to new record levels of $41.6B, increasing by almost $5B YoY.  This resulted in a guidance update for 2018 bookings to increase by $1B.  Additionally, the company provided a preview to 2019 guidance.  Within this guidance, the book to bill ratio is expected to be over 1 (more orders than output), which is bullish.  They also guided sales growth of 6%-8%, operating margins to be in line with 2018 results, a tax rate of 17%-19%, and operating cash flow of $3.8B-$4.0B. Looking for negatives to note, operating margin results were down some and guided down some on the year mainly due to Missiles, which is seeing a nu...

After watching the stock drop to the low 30s and start jumping back up with what appears to be a turn in the overall market, I have decided to purchase one ninth of a position of Canopy at a price of $36.50.  This is a very small position to take advantage of prices significanctly below my cost basis while also leaving me room for the stock to go back down further - given that I am making this purchase at a time the stock is up over 8% on the day.  I continue to belive that Canopy is the best - potentially the only direct pot play and I play it as a speculation for long-term gains as the company continues to gain footing and take market share of failed companies in countries where cannabis is legal as well as being a leader into the next countries that legalize it.  Additionally, I am not convinced the stock is done going down.  I still believe prices in the 20s are possible, and as such this is why I'm taking a more concerted effort to buy smaller positions....

On October 19, Honeywell announced their third quarter earnings results and they were fantastic.  Earnings came in at $2.03, beating out the $1.99 estimates while revenues came in at $10.76B which just edged expectations of $10.75B.  Organic sales came in at 7% which was the very high end of the anticipated range while margin expansion exceeded their range by 20 basis points on a 50 basis point high end.  On top of that, the company exceeded the guided amount of capital returned to shareholders via buybacks by $1.5B on a $3B guidance.  Hopefully, the company was buying back shares towards the end of the quarter when the stock was getting hit its hardest, but if it was, we certainly haven't seen it in the stock prices since - outside of the fact that they may not be in a window in which they can buy back shares now, resulting in less of a floor of protection for the stock.   All segments performed well for the company with SPS and Aero leading the way ...

Yesterday, I received a small number of shares of Honeywell spinoff Rezidio as a part of the spin-off process.  I have decided to sell the entire position at a price of $25.51.  While I expect the company to perform well long-term, in the short-term this is a declining sector given the slowdown we've seen in home building and company investments.  I anticipate the company to have to deal with this pressure over the next several quarters as a result and do not expect the stock to perform well.  One thing that I do see as an interesting opportunity for this company is what happens with the United Technologies/Rockwell Collins merger.  Should China decide to let this deal happen, United Technologies will likely split itself into 3 companies which will also include a home/HVAC space that I can see merging or being bought by Rezidio in the future.  That said, I don't think the homework effort is worth the small number of shares I will have in the company as ...

On October 12, Citigroup announced third quarter 2018 earnings results and they were rather strong.  Earnings came in at $1.73, above estimates of $1.69.  Revenues came in at $18.38B, which was slightly below consensus for $18.45.  75 million common shares were repurchased as a part of the $6.4B in returned capital to shareholders over the quarter.  The Tangible Book Value also increased to $61.91.   Loan growth was up 3% from the same quarter a year ago and deposits were up 4%.  Revenues from investing were also up nicely as the company took advantage of the volatile markets we've been experiencing since February.  The fact that about half of the company's business comes from overseas also seemed to be a benefit, as there was less impact to their operations compared its peers who are mostly US based.  Despite the fact that revenues missed expectations, it's not as bad as it may seem, given there was a sale of a Mexican Asset Management...

Yesterday I sold approximately one third of my position in Cedar Fair (FUN) at a price of $55.25.  This price represented a net loss of around 11.1% (tax harvested).  As I stated in my Disney initation here , I wasn't pleased with the results I've been seeing from the amusement park industry and noticed there seems to be something larger than just weather driving the lower than expected results (not to mention I've taken way too long to react to what I was seeing).  As such, I'm shifting away from Cedar Fair in favor of Disney for a more broadly diversified holding that doesn't rely on just amusement parks, but entertainment more broadly.  Third quarter results are coming up towards the end of the month and should they provide solid results, I may get a price pop I can take advantage of and maybe even get a small profit from.  In the meantime, I wanted to sell this position to pay for the Disney shares I grabbed.  I am waiting for my next DIS purch...

On Thursday, I purchased approximately one third of a full position in Walt Disney Corporation (DIS), otherwise known as Disney.  This expands my portfolio into the entertainment space, given I currently hold shares of Cedar Fair (FUN).  The purpose of this purchase is to begin a transition away from Cedar Fair.  The company and the stock has not been performing up to expectations as of late.  Despite the strong dividend of over 5%, the company lost all of the capital gains I had in it and then some.  This was poor management on my part.  Regardless of what I did or didn't do right with Cedar Fair, I still have faith in the Entertainment industry.  However, I felt it would be more appropriate to diversify myself outside of just amusement parks.  I feel the timing of this switch is ideal too.  Besides the theme parks which Disney has and are doing well, they have TV via ABC channels and ESPN, which is starting to turn itself around with it...

On October 2, Pepsico announced their third quarter earnings results while saying goodbye to their CEO.  This was the last day and last earnings call to be led by Indra Nooyi, a venerable champion in the business with her strong leadership pointed towards a strong future for the company by making sure they stayed in front of and fully involved in snack and beverage trends.  I'll get more into the company's future as I close this up, though.  As for the earnings results themselves, the company generated non-GAAP earnings of $1.59 which beat consensus by two cents and delivered organic revenue growth of 4.9%.  Core constant currency growth was 9%.  This included a 2% impact from currency conversion, given the recent strength of the US Dollar.  They also guided up on their expectation for organic growth from less than 3% to at least 3%, a sign of confidence that their final quarter looks bright.   While profit was down for the North American Be...

Last week I bought an initial position in Canopy Growth Corporation at a share price of $50.  This company is an early entrant to the Canadian Pot industry as a producer of both medical and recreational marijuana, a new market that opens up the first of October, now that the country has legalized it. Pot stock have been hot - really really hot.  There's no doubt that many of them, Canopy probably included, are over valued right now.  While I was looking to speculate there's a lot of publicity in this area right now.  I would say that I felt Canopy was one of the better stocks, though we all know there's another out there that has been surging in astronomical proportions due to shortage of stock availability.  The nice thing about Canopy is that they're adequately capitalized and won't likely look to raise cash through offering more shares.  However, there are a lot of other companies out there that will need to and even more that will be looking to go p...

Today was a wild day for Ionis.  After FDA results for a competing drug failed to show signs that it was effective enough to prevent competition for FCS in the mix, IONS was up over 10% at varying points during the day.  I was contemplating selling some, given I was finally back in the green on the stock.  However, there was a PDUFA meeting coming on Thursday for the approval on Volanasorsen on the radar and I didn't want to try to sell out and hope to get back in to maximize gains (typically after a big jump, the stock sells off for a couple days).  Then after the bell, the stock was halted as the FDA issued a Complete Response Letter (CRL) notifiying their holding company Akcea that they have rejected their drug Walivra on serious concerns on safety with antisense oligonucleotide drugs.  This puts the upcoming PDUFA in some jeapordy and the future PDUFA for Inotersen in serious jeapordy (due to the fact it suffered a death related to platelet issues), sign...

In preparation of the second portion of the CCAR results that will be announced tomorrow, I refilled my position in Citigroup today, purchasing shares at $66.  Unfortunately, I didn't get shares purchased yesterday when the stock was in the $64s and then I pulled the trigger a little too early today, as the market started making a massive swing to the down side around the time of my purchase.  My reasoning for purchasing the stock was that it was near the price target area I've been hoping for since I sold up in the $72 range and we now have a catalyst which I believe will charge all bank stocks in the second half of the year.  The CCAR results have been an inflection point for bank stocks, historically, as they are then allowed to start to distribute their excess capital as per agreement with the Fed.  I believe that Citi's captial distribution plan will be well received by the Fed, enabling them to distribute approximately $20B in dividends and stock buy...