General Mills/ISM Report/MS Raises Estimate for Intel's 2009 Earnings/ Bought 50 SEA

1. General Mills-Better than Expected Earnings and Guidance for Fiscal 2010:  GIS, which is owned, reported a better than expected quarter and provided upbeat guidance for the fiscal year ending May 2010. Excluding items, GIS reported earnings of 86 cents a share compared to the 80 cents consensus estimate.  GIS forecasted earnings  for fiscal 2010 of between $4.2 to $4.25 per share. The consensus estimate for next year by the analysts was $4.18. GIS: Analyst Estimates  I think that this really comforting that a company can comfortably make an estimate for the next fiscal year with a five cent range or about a 1% variation of the total estimate. Foreign currency exchange reduced sales by about 3% during the last quarter.  I mentioned in an earlier post that GIS just raised its quarterly dividend by 9% (item # 4: Sold ABT in IRA/ FBR Downgrade of AA/Advantages & Disadvantage of Dividend Paying Common Stocks Vs. Bonds/)

I bought my shares at $48.52 after the last earnings report, which caused institutions with their usual myopic vision to sell the shares.  I was also critical of some of the points made by the Barclays' analyst, who then reduced the target for GIS to $56 from $74. Freedom from Regulations and Irresponsibility/ Sold KXI and Bought GIS   I also highlighted a favorable Barron's article on GIS in an earlier post:  CB & L Properties/GIS/McCain on Waterboarding/

At the time I bought the shares there was apparently no focus on what caused the earnings miss, and there was an emphasis on matters of no importance while ignoring some of positive trends noted in the Barron's article.  I would never assume even a modest degree of competence by institutional investors and mutual fund managers. 

2. Mortgage Applications at a 7 Month Low:  With a small rise in the average 30 year mortgage rate to around 5.34%, rising from historically abnormally low rates of below 5% a few weeks earlier, there has been a fall off in new mortgage applications. Mortgage Applications Decrease in Latest MBA Weekly Survey  The average 15 year mortgage rate is just 4.81%.  Both the 15 and 30 year rates declined from a week ago. 

 I built my house in 1982 without any financing.  Mortgage rates were then around 13% for a fifteen year.  If anyone told me that I could have a 5.3% 30 year mortgage in 1982, I would have jumped at the opportunity, without a moment's hesitation.  While unemployment and concerns about job security are also weighting down home sales now, the substantial fall in home prices, coupled with the still abnormally low mortgage rates, will hopefully spur more activity in the months to come.   This is a golden time for first time home buyers with good incomes (substantial fall in prices+abnormally low mortgage rates+ tax credit for first time buyers).   There is a tendency, however, for a lot of people to buy more home than they can afford, which should never happen in a more perfect world. 

3. ISM Report on Manufacturing:  The ISM June report for manufacturing came in at 44.8, up from 42.8 in May.     June 2009   New orders declined slightly to 49.2 from 51.1, but the Production Index has increased 12. percentage points in the last two months. Moreover,  seven of the 18 industries reported growth in June.  

4. Zions:  I noticed that Fitch downgraded Zions debt.  The senior unsecured debt was downgraded to BBB and the junior debt is BBB-.  The preferred stock is rated as junk at BB+. Fitch Corporate  I own 100 shares of ZBPRA, a floating rate preferred stock that I bought at $7.8, and this downgrade will not cause me to jettison those shares.  The equity preferred from a bank will always be rated lower than the debt.  ZBPRA's dividend  is not cumulative and it is a perpetual security.  Those features are more like equity than debt.   (The Aegon preferred issues are still rated BBB+ as of today by Fitch: Fitch Corporate)

5. Intel/ CB & L Properties:  INTC, which is owned, had its estimates raised by Morgan Stanley, based on expectations of higher revenues and margins.   Street The increase was to 79 cents from 70 cents for 2009.  BloomBarclays upgraded CB & L Properties to equal weight.  Market 

6. Bought 50 of the ETF SEA:  With surplus cash flow received today, I bought 50 shares of the Claymore Global Shipping Index ETF, SEA, at $11.99.  Normally, I do not buy shipping companies.  I have owned in the past Alexander & Baldwin, not so much for its Matson shipping operation, but for its real estate. /Alexander & Baldwin/Stock Rallies and Quantitative Easing The only other shipper that I have owned is Diana Shipping which makes up less than 3% of this index. I do not have a current position in any shipper prior to buying this ETF.   

This is a link to the sponsor's web page: SEA - Claymore/Delta Global Shipping Index ETF - Summary

The expense ratio is high at .65%. 

If we are starting a sustainable worldwide economic recovery, and this is still a debatable point, then it follows that the business for these companies will improve.  This ETF has fallen on hard times, even though it was launched well into the bear market in early September 2008, just in time for the meltdown which started in earnest after the Lehman Brothers failure.  The price for SEA was  over 20 in early September 2008, so it has almost been cut in half since it first day's close of $22.66 on 9/8/2008 to now. It has recovered from its March lows of near $8.  I believe that it has slightly exceeded its 200 day moving average at the current price.  

The Baltic Dry Index is a relevant indicator to use for those interested in investing in this area. This is a link to the Bloomberg chart.  Bloomb While the current reading looks good compared to the January numbers, it is important to bring up a multi-year chart to show where this index was in June 2008 compared to now. 

DISCLAIMER

  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing readers of these posts with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments   NOT A RESEARCH SERVICE/Add of PWE Last Week   These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.   Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post.  Everyone is responsible for their own investment decisions, and no one should ever make any decision unless they are willing to accept full personal responsibility for it.