I am going to tie up some loose ends in this post that occurred last week while I was busy on other matters.
The only reason for bringing back the Old Geezer photo as the profile picture had to do with an incident on Thursday in downtown Nashville, which is built on a hill. As I was walking the long block between Broadway and Church, a steep incline, I realized that the Young Stud picture from 1969 would have to be taken down from this blog. That guy could have ran up and down that incline several times without breaking into a sweat. The Old Geezer, on the other hand, felt the strain in his legs to such a degree that he almost bought a Segway that a youngster was riding on the spot, as he glided past me. In fact, I made an offer on the spot, and the Young Turd just gave me a condescending smile.
1. Campbell Soup (owned): Excluding items, Campbell reported earnings of 30 cents per share, beating the consensus forecast of 26 cents. Sales fell 11% compared to the year ago quarter due to the strong dollar and the extra week in the earlier period. Sales would have been up 2% excluding the extra week, foreign currency and the effects of acquisitions and divestitures. Campbell's forecast earnings for the current fiscal year will increase by 5 to 7% over the $2.22 earned in 2009, which would generate earnings of $2.33 to $2.38. The forecast was for $2.31. Increased pension expense is expected to nick the earnings by 6 cents. The quarter's gross margin increased to 41.6% compared to 38.7% in the prior year's quarter. This last quarter, Q/E 8/2/09, marked the end of Campbell's 2009 fiscal year.
The current price of around $33 is 14 times the fiscal 2009 estimate. I suspect that most of the move that I could have reasonably anticipated over the short or intermediate term is already reflected in the spurt from my purchase price of $25.35 in April (Bought CPB) to the current price. Maybe the shares can drift up a few more points based on an expansion of the P/E multiple to 15-16 and with the merger activity in the food space. The only reason for me to keep those shares is the dividend yield at my cost which has to be balanced against taking the profit.
2. Sold 50 SSW Lottery Ticket in IRA at $8 (see Disclaimer): I had a GTC order to sell the 50 shares of SSW at the limit price of $8, which was filled on Friday. The shares were bought at $6.39 in August: /Bought 50 SSW as Lottery Ticket in Roth IRA I am not comfortable buying shipping companies. Nonetheless, I will most likely use the proceeds to buy another one before the end of this month which appears to be cheaper based just on the numbers. The Baltic Dry Index continues to flat line at around 2400 after spiking up to 4291 in early June from a 600 to 900 range in December to February 2009: Bloomberg
3. PROCTOR & GAMBLE (OWNED): I recently bought back shares of PG. BOUGHT 100 PG AT $52.85/SOLD 100 KROGER AT $21.9/BOUGHT ACTION SEMICONDUCTOR AT $2.21-LOTTERY TICKET So far, that decision appears to be on the lucky side of the ledger. One reason for buying PG shares was its status as a multinational which should benefit from the weakening dollar. Another reason was that the price was at a historically low P/E. I did not buy based on a view that organic sales growth was about to become stronger this year, thinking that growth might return later next year. On Thursday, PG jumped over $2 in price based on its prediction of a return to organic sales growth in the 4th quarter of 2009. MarketWatch This information is summarized in an 8-K filing with the SEC: investorpressrelease The WSJ had an article focusing on the difference in tone from Proctor's management, expressing dissatisfaction with recent performance and a desire to address the issues that led to the recent decline in organic sales.
I noticed today that Cramer has bought Proctor for his charitable trust, believing that it will benefit from the weakening dollar and lower commodity costs.
4. Sold 25 SL Green Realty (see Disclaimer): I had bought 50 shares of SLG in two 25 share lots. I had a GTC to sell the highest cost shares at $37.25 and that order was filled while I was gone on Thursday. Those shares were bought in 11/2008 at $23.35. LATE DAY TRADES: GCI, CBL, FR, SLG, NYT, NWSA I am keeping the lower cost shares bought at $15. Add 25 SLG/DD, VZ, GLW/PIS
5. Bought 40 Tradestation (TRAD) at $7.26-Lottery Ticket (see Disclaimer) This trade occurred last Wednesday. TradeStation Group was ranked as the #1 online broker in Barron's last annual ratings published in March 2009: Barrons.com The company earned 11 cents during the Q/E 6/09 compared to .14 in the comparable quarter in 2008. Form 10-Q TradeStation Securities had 44,922 accounts as of 6/30, a net increase of just 2% from the March quarter. Part of the earnings decrease was due to a decrease in net interest income of 4.9 million (page 22). TRAD had 94.8 million in cash of which $956,000 was restricted as of 6/30/09. I thought this sentence was interesting: "Liquidity needs relating to client trading and margin borrowing activities are met primarily through cash balances in brokerage customer accounts, which were $796.2 million at June 30, 2009. Management believes that brokerage cash balances and operating earnings will continue to be the primary source of liquidity for TradeStation Securities." (page 29). This was bought with a modest target of $10. Ultimately, the success or failure of the Lottery Ticket class of securities, now numbering 33 open positions, will depend on how well they do as a group, so I am not going to focus so much on the short term swings of individual positions compared to the percentage return of all positions taken together.
The only report that I had access to is from S & P, dated in August 2009, which just provided a description of the business, its history, and the usual data. Revenues have been increasing a good pace rising from 72.58 million in 2004 to 160.4 million in 2008. Except for an earnings decline in 2008, earnings had increased every year since 2002 (S & P data: .02 in 2002; .27 in 2003; .33 in 2004; .48 in 2005; .67 in 2006; .78 in 2007; and .70 in 2008.) The current consensus estimate is for 41 cents in 2009 and 56 in 2010. For the stock to move to my $10 target, I suspect that TRAD will need to beat those estimates for 2010. Still at the current price, the stock is at around a 13 P/E based on estimated 2010 earnings. Price to book is currently around 1.76: TRAD: Key Statistics for TradeStation Group Inc
6. Jonathan Alter on the Dark Force's Defense of Torture: When I read Jonathan Alter's column in Newsweek about Dick Cheney defending the use of torture sanctioned by the Bush administration, I realized for the first time that Alter was right, no other person who has held high office in a civilized country has actually publicly defended the use of torture before Cheney. I have no doubt that Cheney will be claiming that a failure to torture in the future was the cause of the next terrorist attack, and it will not matter to the True Believers whether or not there is any proof supporting such claims on causation. Cheney is the antithesis of a true conservative, the polar opposite of conservatism. His primary personality characteristics are authoritarian and an inbred hostility to constitutional restraints on the exercise of executive and governmental power. So, it is hardly surprising that he would advocate torture, or the arrest and imprisonment of U.S. citizens on U.S. soil without affording them a trial, or the use of the military to arrest U.S. citizens on U.S. soil and to imprison them in a military facility without trial ( NYTimes.com) , and countless other major abridgments of constitutional restraints created by the Founding Fathers on the use of governmental power to take away individual freedoms and rights guaranteed in the Bill of Rights.
7. Obama Believes Cost Savings Will Pay for a Large Part of his Health "Reform": Obama continues to maintain that savings in Medicare will pay a great deal of the cost for the health insurance plan. During his speech the President claimed that "reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan". Kansas City Star I am going to be more than a little skeptical of that claim. My simple idea is to go ahead and implement those alleged cost savings before doing anything else, give it about five years, and then see how much was really saved and whether his plan would actually raise costs by causing the loss of Medicare Advantage programs as suggested in a WSJ editorial last Friday: WSJ.com FactCheck.org contains an analysis of the statements made by Obama which is worth a read: FactCheck.org Politifact did a fact check on Joe Wilson's claim that Obama lied when he said that insurance would not be provided to illegal immigrants: PolitiFact Wilson's representation to the nation, besides being rude and childish, was characterized as false by PolitiFact. (to be fair and balanced about boorish behavior, I would also characterize the Democrats who booed Bush Junior over his comments about his Social Security plan were equally boorish and rude).
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