Monday, February 9, 2009

Two Categories of People/NSSC, NYX, CNA/15 Grand Credit for Home Buyers

Napco Securites, one of my recently added micro, micro caps, reported earnings this morning. NAPCO Reports Second Quarter Results for Fiscal 2009: Financial News - Yahoo! Finance  I stated in my earlier post that I would be pleased with a profit. ROK/Balancing Risk & Reward on SNTA/Buy 100 NSSC at $1.02/Electronic Medical Records & the Stimulus Bill/M & DKQ
The company earned 2 cents.  Sales increased 18% to 19 million for the quarter. The market cap of this company at Friday's closing price is less than 24 million. NSSC: Summary for NAPCO Security Technologies, In - Yahoo! Finance Debt, net of cash, was reduced by 2.3 million which is important to me. EBITDA was 1.4 million and cash flow from operations was about 2.7 million.   Gross margins improved a tad to 32.6%.   I have low expectations so I am satisfied with this report. 

One of the reasons that I am feeding now on these small companies is just to stay out of trouble in this dicey market.   But there is another reason.  I may just be successful investing in my small companies as a group, and the gains may help to offset losses somewhere else.  If I lumped all the money that I have in all of them, it would not amount to a hill of beans, but hopefully I may be able to generate good percentage returns in them as a class of investments.  This group of small cap common stocks now includes NSSC, ISIS, SNTA, SLTM, GIVN, GRT, FR, CBL, ARIA, CBG, GPX, CBR, MDRX, TGB, SCMP, SBGI, STKL, HTGC, USPH NADX and TINY.  I may spend some time today and just total up my total investment but I suspect it is less than 3 grand for the lot.  I have sold Delek and Alon as mentioned in these posts and took a profit on 1/2 of Isis. I have discussed all of these positions in my blog other than TINY and SBGI which I may add to sometime this month.       It would be irrational to expect all of these positions to be successful but I am hoping for a good percentage return for them as a group,  after netting realized gains and losses over time.   The most important consideration is that they could all go to zero and it would not impact me so I stay busy and out of trouble by focusing a lot of my time finding them and then doing my research. 

NYSE Euronext, one of the stock's that I am monitoring, reported earnings of $.52 before items, less than the lowered expectations of 55 cents, and halted its stock buyback.NYSE Euronext Announces Fourth Quarter and Full Year 2008 Financial Results: Financial News - Yahoo! Finance    Reuters
The company reported a large loss on an impairment charge. 
The company is maintaining its dividend at least for now.  The company earned 65 cents in the year ago quarter.  7 cents of the decline from a year ago was due to the decline in the euro.  Importantly, NYX said trading volume declined in January, 8.3% in the U.S. and 30% in Europe.  I am going to wait and see on this one. 

I do not have a position in the common stock of CNA Financial, but have traded numerous times a TC containing one of its long term senior bonds, JZV.  Even though I currently own only 50 shares of JZV, I will still monitor the financial health of CNA.    This insurance company reported an operating loss of 15 cents this morning compared to expectations of a 45 cent profit.  When you add its investment losses, the total fourth quarter loss was 336 million or $1.31 a share-not good. Reuters
This is not sufficiently bad yet to cause me to exit my senior bond position but it is enough to keep me from adding to it.  Loews owns 90% of CNA and pumped over a billion dollars into the insurer during the 4th quarter of 2008. Nikkei Hits 26 Year Low: A Long Term Hold?

Jacqueline Doherty did recommend a Macy's bond due in 2016 with a 14% yield.  The common stock has found some support in the 9 dollar range but I think that it too early to switch out of my bond position back into the common stock of this retailer.   I currently have no common stock position in the retailers and do not anticipate initiating one this quarter.  

Sometimes it is easy to divide a person into one of two clearly defined categories. What I am about to say is not even subject to dispute. For example, here in the SUV Capital of the World, with the highest per capita W stickers still on vehicles anywhere in the world, I have to drive down Franklin Road in Brentwood to reach my home.  Shortly before reaching the Fellowship Bible Church, a large evangelical church,  the southbound lane narrows from two lanes to one with the right lane required to merge into the left as the right lane gradually shrinks to nothing just before the entrance to the church. Fellowship Bible Church :: Directions As church was letting out, the Brentwood Police would halt traffic on Franklin Road to allow church traffic to exit onto Franklin Road.  This process might last for a minute and then the officer would stop the church traffic and allow the southbound traffic on Franklin Road to proceed.  A line would form behind the Police officer in the left lane, maybe twenty cars.  The people in that line, including me, are in one category of persons.  They know that the rude ones will soon zoom pass them on the right to get as far in front of the line as possible, using the shoulder of the road if necessary to move one additional space ahead.   Some of the left lane crowd will even let the rude ones into the line, possibly as a measure of their generosity and compassion even for the most undeserving  of our species.  I will allow them to break into the line simply to avoid damage to my vehicle.  The ones who are rude, who have to break into the front of the line to avoid a less than ten second delay in their travel plans,  who continue to  move pass the line until they are traveling on the road's shoulder and then forcing their way into the left lane, usually with an undeserved confidence in their driving abilities that is consistent with those with a heavy dose of ego and megalomania, are in the second category of persons.  They view the ones lining up in the left lane to be a bunch of saps.  Rudeness is their defining quality along with impatience  and a general belief in me first.  The line breakers would also be the kind of persons who believe they are entitled to whatever they want in life, whenever they want it.   This series of events at this choke point on Franklin Road occurs many times during the week, particularly during congested traffic periods, and what I just described happens day after day.   I would like to think that all of the line breakers moved here from up north but sadly many of them are just natives from a younger generation driving vehicles manifesting conspicuous consumption.   Sometimes I wonder how many of them will keep their head above water in this downturn.    

W had a 22% approval rating when he left office.   I may know about 1/2 of those 22% I think or close to it, but maybe I am exaggerating some.   They would certainly vote for W again, believe that W's decisions about Iraq were mostly correct, are comfortable with the trillion or so dollars that ultimately will be spent in that conflict when all of the costs are tallied, view themselves as fiscal conservatives, would do whatever was necessary to keep their sons and daughters out of any military conflict,  have yellow ribbons next to their W bumper stickers, and would vote for Sarah in 2012 even if she was running against the reincarnation of George Washington.  They listen to Rush, watch only Fox News, have never read an article in the NYT,  and view most media outlets as liberal and biased whereas Fox is, without equivocation, truly the fair and balanced network.   Only information that confirms their beliefs is sought out and everything else is discarded  or purposely avoided.   Any spending that does not directly help them is considered wasteful.  They have come to support the Democrat programs of Medicare and Social Security, but they would not support food stamps or a program like Head Start discussed in yesterday's post.  They still remember Reagan's story about that young strapping man using food stamps to buy steak so that means all or most are undeserving or gaming the system to them.   New York TimesTo answer my question from yesterday, I think the GOP that was in existence when I was a young man could evolve into an effective and intelligent counter weight to the extravagances of the Democrat party and this independent could vote for more of their candidates than I can justify to myself  now (realizing that I do vote in every election and most of the time a vote is cast for the least objectionable and most intelligent and/or open-minded candidate)    I voted for Alexander in the last Senate race and will certainly consider voting for Corker when he runs again.  I could never, however, vote for Sarah. But, alas, the GOP is incapable of evolving now to meet the challenges of this century.  One of the many reasons is simply that the base of the party will not let it.  

Since I have a historical connection to home building, and Beazer in particular, noting that Big E sold his operation to that company in 1987, I just read the earnings reports from that company in an aghast state. Beazer Homes 1Q loss narrows: Financial News - Yahoo! Finance I have no position.  I have noted that the Democrats have apparently adopted a proposal from a Georgia Republican senator to give up to a $15,000 credit to anyone buying a home. The $15,000 Home Buying Tax Credit: 6 Things to Know - The Home Front ( The previous provision was limited to $7500 and only for new first time buyers.  I am not opposed to this kind of provision even though I will not benefit from it having landed at my current abode in 1982 and most likely will not budge for at least another 20 years.   I do believe that this kind of tax provision will help a great deal to clear out the inventory of unsold homes and the buildup of foreclosed properties.  I may become more amenable to taking a gander on some home builder if this provision survives to become law, a very very small investment. 

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