Economy:
The BLS reported that the economy added 148K jobs last month. The consensus estimate was for 198K. Average hourly wages increased by $.65 or 2.5% since December 2016. The BLS trimmed its prior estimates for October and November by 9K. Employment Situation Summary
ADP reported last Thursday a 250K increase in private sector jobs last month. ADP National Employment Report | December 2017
U.S. trade deficit swells in November to largest since January 2012 at $50.5B- MarketWatch
The BLS reported that the economy added 148K jobs last month. The consensus estimate was for 198K. Average hourly wages increased by $.65 or 2.5% since December 2016. The BLS trimmed its prior estimates for October and November by 9K. Employment Situation Summary
ADP reported last Thursday a 250K increase in private sector jobs last month. ADP National Employment Report | December 2017
U.S. trade deficit swells in November to largest since January 2012 at $50.5B- MarketWatch
++++++++
Market Commentary and Markets:
For 2018, GS warns about cryptocurrencies and predicts 4 FED rate hikes, with core inflation and wages accelerating, real GDP growth of 2.6% and a decline in unemployment to 3.5%. Goldman Sees Crypto, Credit Shadowing Robust 2018 U.S. Economy - Bloomberg
Higher than expected inflation and interest rates remain an important risk to stock market valuations at current levels.
A bitcoin crash, a burst housing bubble-brace for these 30 risks, says giant bank - MarketWatch I would agree with Josh Brown who is quoted in that article as saying the key is “managing portfolios that offer an answer to multitudes of potential outcomes” rather than preparing lists of what can go right or wrong.
It is important to recognize factors that can undermine either a bull or bear case. Besides geopolitical risks that are hard to predict, my current list would be (1) trade wars; (2) higher than expected inflation and interest rates and (3) slower than expected growth this year with recession odds increasing for 2019.
Higher than expected inflation and interest rates remain an important risk to stock market valuations at current levels.
A bitcoin crash, a burst housing bubble-brace for these 30 risks, says giant bank - MarketWatch I would agree with Josh Brown who is quoted in that article as saying the key is “managing portfolios that offer an answer to multitudes of potential outcomes” rather than preparing lists of what can go right or wrong.
It is important to recognize factors that can undermine either a bull or bear case. Besides geopolitical risks that are hard to predict, my current list would be (1) trade wars; (2) higher than expected inflation and interest rates and (3) slower than expected growth this year with recession odds increasing for 2019.
As of 12/29/17, the GAAP TTM P/E for the S & P 500 was at 21.82 and 26.62 for the Nasdaq 100. The Russell 2000 index was at 131.96 using the past 12 month's GAAP earnings. It is only by excluding a large number of stocks with no earnings that the Russell 2000 P/E falls close to earth. The S & P P/E based on non-GAAP estimates for the next 12 months was then at 20.02.
When looking at an ETF for the Russell 2000, the sponsor claims a P/E of 21.44 as of 12/28/17 which sounds a lot better than 131.96.
iShares Russell 2000 ETF | IWM
I would recommend clicking the "i" letter next to the P/E ratio number which states that negative P/E ratios are excluded from that number. Here is the fun part. Almost 1/3rd of Russell 2000 companies have negative P/Es, or put another way, are losing money. Here’s the shocking truth about the Russell 2000’s P/E ratio - MarketWatch
Since 12/29/17, the P/E ratios for the major indexes have increased some. The TTM P/E for the S & P 500 was 22.09 as of last Friday with the 12 month forward P/E based on estimated non-GAAP earnings was 19.25.
The Bond Ghouls are forecasting that a .25% increase in the federal funds rate is more likely than not in March. Countdown to FOMC: CME FedWatch Tool
+++
Home Prices:
The following chart suggests that trouble may be developing in the U.S. housing market again.
Home Price to Income Ratio:
Sourced: Bracing Yourself for a Possible Near Term Melt Up.pdf by Jeremy Grantham
When I add that ratio to other actual or potential negative developments, including a rise in mortgage interest rates and the recent changes in tax laws, there is a dangerous mix of factors coalescing for new home construction and existing home prices.
When looking at an ETF for the Russell 2000, the sponsor claims a P/E of 21.44 as of 12/28/17 which sounds a lot better than 131.96.
iShares Russell 2000 ETF | IWM
I would recommend clicking the "i" letter next to the P/E ratio number which states that negative P/E ratios are excluded from that number. Here is the fun part. Almost 1/3rd of Russell 2000 companies have negative P/Es, or put another way, are losing money. Here’s the shocking truth about the Russell 2000’s P/E ratio - MarketWatch
Since 12/29/17, the P/E ratios for the major indexes have increased some. The TTM P/E for the S & P 500 was 22.09 as of last Friday with the 12 month forward P/E based on estimated non-GAAP earnings was 19.25.
The Bond Ghouls are forecasting that a .25% increase in the federal funds rate is more likely than not in March. Countdown to FOMC: CME FedWatch Tool
+++
Home Prices:
The following chart suggests that trouble may be developing in the U.S. housing market again.
Home Price to Income Ratio:
Sourced: Bracing Yourself for a Possible Near Term Melt Up.pdf by Jeremy Grantham
When I add that ratio to other actual or potential negative developments, including a rise in mortgage interest rates and the recent changes in tax laws, there is a dangerous mix of factors coalescing for new home construction and existing home prices.
++++++++
Trump and the Stock Market:
Trump claims that the stock market would have fallen 50% if Crooked Hillary had won. That kind of statement will work only on the True Believers:
2017 S & P 500 Total Return Measured by the ETF SPY = 21.7%
SPY's Most Recent Total Returns in Excess of the 2017 Number:
2009 = +26.37%
2013 = +32.31%
Returns During 8 Year Term Presidents Since WWII (includes Truman at about 7 years which includes the remainder of FDR's 4th term)
Obama (D): 233.71%
Eisenhower (R): 217.25%
Truman (D): 207.98%
Reagan (R): 207.83%
Clinton (D): +163.25%
Nixon (R) -3.5%
Bush Jr. (R) -26.75%
Trump claims that the stock market would have fallen 50% if Crooked Hillary had won. That kind of statement will work only on the True Believers:
2017 S & P 500 Total Return Measured by the ETF SPY = 21.7%
SPY's Most Recent Total Returns in Excess of the 2017 Number:
2009 = +26.37%
2013 = +32.31%
Returns During 8 Year Term Presidents Since WWII (includes Truman at about 7 years which includes the remainder of FDR's 4th term)
Obama (D): 233.71%
Eisenhower (R): 217.25%
Truman (D): 207.98%
Reagan (R): 207.83%
Clinton (D): +163.25%
Nixon (R) -3.5%
Bush Jr. (R) -26.75%
If Trump ends up being a 1 term President, then the comparisons would be with the following:
Lyndon Johnson (D) 73.17% (includes remainder of Kennedy's term)
Daddy Bush (R): 73.13%
Carter (D): 59.33%
Ford (R): 42.53%
Kennedy (D): 30.42% (less than 4 years)
While Donald is taking the credit for a good year in the market, I seriously doubt that he will take any responsibility whatsoever for a bad one. That will certainly be someone else's fault. Bush Jr. had some good years too, but ended down 26.75%.
Sourced Forbes
++++++
Trump and Obstruction of Justice:
More evidence has emerged that Trump attempted to interfere with the FBI's Russian investigation. Trump had several people, including the White House counsel, try to persuade Sessions to remain in charge of that investigation. Trump wanted someone in that position who would protect him.
Obstruction Inquiry Shows Trump’s Struggle to Keep Grip on Russia Investigation - The New York Times
Trump virtually admitted as much in a recent NYT interview.
+++++
Trump's Routine Misuse of Libel Suits as a Hammer to Punish Criticism:
Donald's lawyers sent cease and desist letters to Michael Wolff and his publisher claiming that Wolff's new book, Fire and Fury defames the President and his family. I read that book over the weekend. Wolff's main source appears to be Steve Bannon.
It would be extreme folly for Donald to sue the author and open himself up for cross examination and a possible perjury charge flowing therefrom. It would also mean that a number of depositions would be taken of Administration personnel asking them questions under oath that would confirm what Wolff wrote.
Donald has a long history of misusing litigation to browbeat people into submission.
He has constantly threatened to initiate libel lawsuits as a tactic to silence criticism:
Donald J. Trump Is A Libel Bully But Also A Libel Loser;
Why Donald Trump Has Never Won a Libel Case | Vanity Fair;
Fearing Trump, Bar Association Stifles Report Calling Him a ‘Libel Bully’ - The New York Times;
Donald Trump as Litigation Bully | Cato @ Liberty;
That Time Donald Trump Tried to Sue a Tribune Architecture Critic Into Oblivion | Chicago magazine
USA TODAY Network: Dive into Donald Trump's thousands of lawsuits - USA TODAY
++++++
Trump as a Man/Child:
Several people close to Trump have referred to him as a child or child like. That is one of the underlying factual themes in Wolff's new book. Trump seen as a child by staff, says Fire and Fury author Michael Wolff - BBC News
Putting aside your ideology and views about Trump, how would you characterize his tweets, assuming that you did not know who wrote them?
I would characterize the author as barely literate, a bitter and mean spirited brat, a cyber bully, vindictive and frequently cruel, an extreme narcissist and liar (sociopath), blatantly manipulative and ignorant.
Note that I did not use the word "idiot", though many who have known Trump have described him as one.
I would not view the tweets as coming from a mature and well-balanced adult, but from an ill-mannered child or adolescent with serious psychological issues. If I was that child's father, I would regard myself as a parental failure.
Donald claims, however, that he is a stable genius:
Donald has been successful as a reality TV star and promoting himself as a successful businessman notwithstanding 6 bankruptcies and almost a $916 million loss taken on his 1995 tax return.
Rather than being a smart and successful businessman, Donald's real success derives from inheriting money and property from his Dad, blowing through other peoples' money, and creating a brand of being successful through repetitive braggadocio and shtick. The brand of "Trump" has allowed Donald to make a great deal of money, through licensing deals and the Apprentice reality TV program, without taking the financial risks that led to so many bankruptcies when he actually tried to operate a business.
This is How Donald Trump Actually Got Rich | Investopedia
Yep, Donald Trump's companies have declared bankruptcy...more than four times -PolitiFact
The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post (1,950 false statements in the first 347 days as President)
Why doesn't he release his tax returns? One possible reason is that the information contained therein would blow up his claim of being a billionaire ten times over. Other reasons probably include information that link him to unsavory characters, possible money laundering through real estate transactions, and a lack of charitable giving. In short, he is hiding information that would hurt him if and when it is subjected to public scrutiny.
Lyndon Johnson (D) 73.17% (includes remainder of Kennedy's term)
Daddy Bush (R): 73.13%
Carter (D): 59.33%
Ford (R): 42.53%
Kennedy (D): 30.42% (less than 4 years)
While Donald is taking the credit for a good year in the market, I seriously doubt that he will take any responsibility whatsoever for a bad one. That will certainly be someone else's fault. Bush Jr. had some good years too, but ended down 26.75%.
Sourced Forbes
++++++
Trump and Obstruction of Justice:
More evidence has emerged that Trump attempted to interfere with the FBI's Russian investigation. Trump had several people, including the White House counsel, try to persuade Sessions to remain in charge of that investigation. Trump wanted someone in that position who would protect him.
Obstruction Inquiry Shows Trump’s Struggle to Keep Grip on Russia Investigation - The New York Times
Trump virtually admitted as much in a recent NYT interview.
+++++
Trump's Routine Misuse of Libel Suits as a Hammer to Punish Criticism:
Donald's lawyers sent cease and desist letters to Michael Wolff and his publisher claiming that Wolff's new book, Fire and Fury defames the President and his family. I read that book over the weekend. Wolff's main source appears to be Steve Bannon.
It would be extreme folly for Donald to sue the author and open himself up for cross examination and a possible perjury charge flowing therefrom. It would also mean that a number of depositions would be taken of Administration personnel asking them questions under oath that would confirm what Wolff wrote.
Donald has a long history of misusing litigation to browbeat people into submission.
He has constantly threatened to initiate libel lawsuits as a tactic to silence criticism:
Donald J. Trump Is A Libel Bully But Also A Libel Loser;
Why Donald Trump Has Never Won a Libel Case | Vanity Fair;
Fearing Trump, Bar Association Stifles Report Calling Him a ‘Libel Bully’ - The New York Times;
Donald Trump as Litigation Bully | Cato @ Liberty;
That Time Donald Trump Tried to Sue a Tribune Architecture Critic Into Oblivion | Chicago magazine
USA TODAY Network: Dive into Donald Trump's thousands of lawsuits - USA TODAY
++++++
Trump as a Man/Child:
Several people close to Trump have referred to him as a child or child like. That is one of the underlying factual themes in Wolff's new book. Trump seen as a child by staff, says Fire and Fury author Michael Wolff - BBC News
Putting aside your ideology and views about Trump, how would you characterize his tweets, assuming that you did not know who wrote them?
I would characterize the author as barely literate, a bitter and mean spirited brat, a cyber bully, vindictive and frequently cruel, an extreme narcissist and liar (sociopath), blatantly manipulative and ignorant.
Note that I did not use the word "idiot", though many who have known Trump have described him as one.
I would not view the tweets as coming from a mature and well-balanced adult, but from an ill-mannered child or adolescent with serious psychological issues. If I was that child's father, I would regard myself as a parental failure.
Donald claims, however, that he is a stable genius:
Donald has been successful as a reality TV star and promoting himself as a successful businessman notwithstanding 6 bankruptcies and almost a $916 million loss taken on his 1995 tax return.
Rather than being a smart and successful businessman, Donald's real success derives from inheriting money and property from his Dad, blowing through other peoples' money, and creating a brand of being successful through repetitive braggadocio and shtick. The brand of "Trump" has allowed Donald to make a great deal of money, through licensing deals and the Apprentice reality TV program, without taking the financial risks that led to so many bankruptcies when he actually tried to operate a business.
This is How Donald Trump Actually Got Rich | Investopedia
Yep, Donald Trump's companies have declared bankruptcy...more than four times -PolitiFact
The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post (1,950 false statements in the first 347 days as President)
Why doesn't he release his tax returns? One possible reason is that the information contained therein would blow up his claim of being a billionaire ten times over. Other reasons probably include information that link him to unsavory characters, possible money laundering through real estate transactions, and a lack of charitable giving. In short, he is hiding information that would hurt him if and when it is subjected to public scrutiny.
+++++++++
1. Small Ball: The only kind of ball that I am playing now. The securities discussed in this section do not pay dividends.
A. Bought 10 DJP at $24.11-Used Commission Free Trade:
DJP is a senior unsecured bond issued by Barclays that attempts to track before fees and expenses the Bloomberg Commodity Total Return Index.
This index had the following weightings:
iPath Exchange-Traded Notes (ETNs)
Commodities have been in a bear market, and the performance of this ETN has been horrific:
The past may not be prologue to the future.
Th prospectus describes the risks starting at page PS-13; and some of those are readily apparent from the past performance. The sponsor's website also summarizes the risks.
One risk is inherent in the term Exchange Traded Note ("ETN"). If the issuer goes bankrupt, the owner of DJP is nothing more or less than an unsecured creditor of Barclays and that is not a good place to be.
I may average down in 10 share lots but will not average up.
I have not owned this security in the past. I did flip some similar ETNs called Elements several years ago, including RJA (agricultural commodities); RJZ (metals) and RJI (broad commodity ETN).
ELEMENTS ETN Products
Links to discussions can be found in the symbol list to the right.
I chose DJP rather than the iShares S&P GSCI Commodity-Indexed Trust (GSG) since DJP has a lower weighting in energy. I just doubt that crude oil prices have much more upside from current levels.
GSG Weightings:
Some investors might prefer a commodity fund that does not utilize the ETN legal structure which adds a layer of risk.
GSG is an ETF, though not a standard one. It is organized as a Delaware statutory trust which is taxed as a partnership:
Prospectus
iShares S&P GSCI Commodity-Indexed Trust | GSG
Another alternative is the PowerShares DB Commodity Index Tracking Fund (DBC)(Top Portfolio Holdings); Sponsor's Site I do not buy DBC since it issues a K-1: PowerShares DB ETF Tax Reporting K-1 Flyer (PDF). I believe that is the case for any fund organized organized as a Delaware statutory trust which is treated as a partnership for tax reporting purposes. The ETN structure avoids that issue.
Commodity prices likely to rise further in 2018: World Bank; Copper, boosted by Chinese imports, hits 3.5-year high: CNBC; Kitco - Spot Aluminum Historical Charts and Graphs
Commodities Are on Their Longest Winning Streak in History - Bloomberg
It is too early IMO to reach a conclusion on whether commodity prices are in a sustained uptrend that will last more than a few months.
I will average down only in 10 share lots.
Quote: Oclaro Inc. (OCLR)
OCLR Analyst Estimates (NON-GAAP AT $.57 in 2017 and $.63 in 2008)
Balance Sheet: No debt and $279+M in cash and short term investments as of 9/30/17 10-Q at page 3 (risk factors discussed starting at page 31)
Recent Earnings Report:
Sourced: SEC Filed Press Release
Needham Downgrade and Negative Reaction to Guidance: A somewhat downbeat forecast made by management during the earnings call caused Needham to downgrade the stock.
How Oclaro Inc. Shares Fell 24% Today -- The Motley Fool
Oclaro Falls Off A Cliff - Oclaro, Inc. (NASDAQ:OCLR) | Seeking Alpha
When buying a lottery ticket, falling off a price cliff, described by me as a waterfall type decline, is what perks my interest.
Needham Calls Lumentum (NASDAQ:LITE) Its 'Single Best Idea' For 2018 In Optical, Networking | Benzinga
Oclaro's (OCLR) CEO Greg Dougherty on Q1 2018 Results - Earnings Call Transcript | Seeking Alpha
I am aware of this company only because I owned shares in Opnext, formerly traded under the symbol OPXT, as a Lottery Ticket; and OCLR acquired OPXT in 2012: Oclaro and Opnext Complete Merger
No one should pay any attention to what I have to say about Oclaro since I have a zero comprehension of their products. The same was true for Opnext, as I made clear several times when discussing that stock:
Sold LT Opnext at $3.1-Bought 50 OPXT at $1.91
Sold 100 OPXT at $2.47-Bought 100 OPXT at $1.89
Sold 100 of the LT OPXT @ $3.15-Bought 100 OPXT @ $1.6
Of those trades the largest gain was in 2011 at $138.29:
In my mind's eye, I am funding this purchase with the profits harvested in three OPXT trades. The total realized gains from OPXT Lotto trades was $220.69.
Why Oclaro, Inc. Could Be a Gold Mine for Value Investors -- The Motley Fool
I am not likely to buy more.
Closing Price Last Friday (1/5/18): OCLR $7.21 +$0.04 +0.56%
C. BOUGHT 10 Finisar at $20.38-Used Commission Free Trade: This is another hated optical stock judging from its recent price action.
Quote: Finisar Corp
Welcome to Finisar | Finisar Corporation
This company has been mentioned as a possible acquirer of Oclaro:
Should Finisar Buy Oclaro? | Light Reading (12/6/2017 article);
Jefferies Is Bullish On Opticals, Oclaro A Natural Target For Finisar | Benzinga (3/15/17 article);
The sold reason for this nibble is contained in this recent news item:
Apple awards Finisar $390 million from its Advanced Manufacturing Fund - Apple ("The award will enable Finisar to exponentially increase its R&D spending and high-volume production of vertical-cavity surface-emitting lasers (VCSELs). VCSELs power some of Apple’s most popular new features, including Face ID, Animoji and Portrait mode selfies made possible with the iPhone X TrueDepth camera, as well as the proximity-sensing capabilities of AirPods.")
Discussed at:
Finisar deal helps Apple block rivals' path to AR features: Reuters
Confusion Over Finisar And Apple Agreement Provides Buying Opportunity-Seeking Alpha
Apple-Finisar Deal: Don’t Count Out Lumentum, Says Raymond James - Barron's
Why Apple Awarded $390 Million To Finisar-Seeking Alpha
Business Overview:
Finisar SEC Filings
FNSR Analyst E.P.S. Estimates at the time of purchase: $1.13 F/Y Ending 4/30/17 and and $1.46 for next F/Y
Chart: Awful. This maker of thingamajigs was selling at close to $400, adjusted for subsequent reverse stock splits, during the Crazy Period. A one year chart reveals a price collapse starting in early March 2017 when the stock price was over $35 that bottomed near $20 per share one month later. FNSR Chart
Annual Report for the F/Y Ending 4/30/17 (risks summarized starting at page 9)
The GAAP and NON-GAAP numbers reproduced below explain, at least in some significant measure, the poor stock performance.
GAAP Net Income:
Sourced from 10-Q for the Q/E Ending 10/29/17
Non-GAAP Net Income:
Sourced: SEC Filed Press Release
Earnings Call Slides
Debt:
In December 2016, FNSR sold $575M in .5% senior convertible notes due in 2036.
Back in 2013, the company sold $258.8M in .5% senior convertible notes due in 2033.
As of 10/29/17, cash and short term investments totaled $1.23+ billion.
Finisar is top pick for 2018 by Northland Capital analyst-Seeking Alpha
2. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Sold 1 Boston Properties 3.125% SU Bond Maturing on 9/1/23:
Profit Snapshot: $18.12
FINRA Page: Bond Detail (prospectus linked)
Issuer: Wholly Owned Operating Subsidiary of Boston Properties Inc. (BXP)-a REIT
Sold at 101
YTM Then at 2.925%
Current Yield at 3.0941%
Bought at a TC of 99.088
Item # 1.F. (3/28/17 Post)
YTM at TC Then at 3.283%
Current Yield at 3.1538%
This is another bond that I will buy back at less than my previous purchase price when and if that occurs in 2019 or later.
1. Small Ball: The only kind of ball that I am playing now. The securities discussed in this section do not pay dividends.
A. Bought 10 DJP at $24.11-Used Commission Free Trade:
This index had the following weightings:
iPath Exchange-Traded Notes (ETNs)
Commodities have been in a bear market, and the performance of this ETN has been horrific:
The past may not be prologue to the future.
Th prospectus describes the risks starting at page PS-13; and some of those are readily apparent from the past performance. The sponsor's website also summarizes the risks.
One risk is inherent in the term Exchange Traded Note ("ETN"). If the issuer goes bankrupt, the owner of DJP is nothing more or less than an unsecured creditor of Barclays and that is not a good place to be.
I may average down in 10 share lots but will not average up.
I have not owned this security in the past. I did flip some similar ETNs called Elements several years ago, including RJA (agricultural commodities); RJZ (metals) and RJI (broad commodity ETN).
ELEMENTS ETN Products
Links to discussions can be found in the symbol list to the right.
I chose DJP rather than the iShares S&P GSCI Commodity-Indexed Trust (GSG) since DJP has a lower weighting in energy. I just doubt that crude oil prices have much more upside from current levels.
GSG Weightings:
Some investors might prefer a commodity fund that does not utilize the ETN legal structure which adds a layer of risk.
GSG is an ETF, though not a standard one. It is organized as a Delaware statutory trust which is taxed as a partnership:
iShares S&P GSCI Commodity-Indexed Trust | GSG
Another alternative is the PowerShares DB Commodity Index Tracking Fund (DBC)(Top Portfolio Holdings); Sponsor's Site I do not buy DBC since it issues a K-1: PowerShares DB ETF Tax Reporting K-1 Flyer (PDF). I believe that is the case for any fund organized organized as a Delaware statutory trust which is treated as a partnership for tax reporting purposes. The ETN structure avoids that issue.
Commodity prices likely to rise further in 2018: World Bank; Copper, boosted by Chinese imports, hits 3.5-year high: CNBC; Kitco - Spot Aluminum Historical Charts and Graphs
Commodities Are on Their Longest Winning Streak in History - Bloomberg
It is too early IMO to reach a conclusion on whether commodity prices are in a sustained uptrend that will last more than a few months.
I will average down only in 10 share lots.
B. Bought 30 OCLR at $6.88-Used Commission Free Trade:
Quote: Oclaro Inc. (OCLR)
OCLR Analyst Estimates (NON-GAAP AT $.57 in 2017 and $.63 in 2008)
Balance Sheet: No debt and $279+M in cash and short term investments as of 9/30/17 10-Q at page 3 (risk factors discussed starting at page 31)
Recent Earnings Report:
Sourced: SEC Filed Press Release
Needham Downgrade and Negative Reaction to Guidance: A somewhat downbeat forecast made by management during the earnings call caused Needham to downgrade the stock.
How Oclaro Inc. Shares Fell 24% Today -- The Motley Fool
Oclaro Falls Off A Cliff - Oclaro, Inc. (NASDAQ:OCLR) | Seeking Alpha
When buying a lottery ticket, falling off a price cliff, described by me as a waterfall type decline, is what perks my interest.
Needham Calls Lumentum (NASDAQ:LITE) Its 'Single Best Idea' For 2018 In Optical, Networking | Benzinga
Oclaro's (OCLR) CEO Greg Dougherty on Q1 2018 Results - Earnings Call Transcript | Seeking Alpha
I am aware of this company only because I owned shares in Opnext, formerly traded under the symbol OPXT, as a Lottery Ticket; and OCLR acquired OPXT in 2012: Oclaro and Opnext Complete Merger
No one should pay any attention to what I have to say about Oclaro since I have a zero comprehension of their products. The same was true for Opnext, as I made clear several times when discussing that stock:
Sold LT Opnext at $3.1-Bought 50 OPXT at $1.91
Sold 100 OPXT at $2.47-Bought 100 OPXT at $1.89
Sold 100 of the LT OPXT @ $3.15-Bought 100 OPXT @ $1.6
Of those trades the largest gain was in 2011 at $138.29:
In my mind's eye, I am funding this purchase with the profits harvested in three OPXT trades. The total realized gains from OPXT Lotto trades was $220.69.
Why Oclaro, Inc. Could Be a Gold Mine for Value Investors -- The Motley Fool
I am not likely to buy more.
Closing Price Last Friday (1/5/18): OCLR $7.21 +$0.04 +0.56%
C. BOUGHT 10 Finisar at $20.38-Used Commission Free Trade: This is another hated optical stock judging from its recent price action.
Quote: Finisar Corp
Welcome to Finisar | Finisar Corporation
This company has been mentioned as a possible acquirer of Oclaro:
Should Finisar Buy Oclaro? | Light Reading (12/6/2017 article);
Jefferies Is Bullish On Opticals, Oclaro A Natural Target For Finisar | Benzinga (3/15/17 article);
The sold reason for this nibble is contained in this recent news item:
Apple awards Finisar $390 million from its Advanced Manufacturing Fund - Apple ("The award will enable Finisar to exponentially increase its R&D spending and high-volume production of vertical-cavity surface-emitting lasers (VCSELs). VCSELs power some of Apple’s most popular new features, including Face ID, Animoji and Portrait mode selfies made possible with the iPhone X TrueDepth camera, as well as the proximity-sensing capabilities of AirPods.")
Discussed at:
Finisar deal helps Apple block rivals' path to AR features: Reuters
Confusion Over Finisar And Apple Agreement Provides Buying Opportunity-Seeking Alpha
Apple-Finisar Deal: Don’t Count Out Lumentum, Says Raymond James - Barron's
Why Apple Awarded $390 Million To Finisar-Seeking Alpha
Business Overview:
Finisar SEC Filings
FNSR Analyst E.P.S. Estimates at the time of purchase: $1.13 F/Y Ending 4/30/17 and and $1.46 for next F/Y
Chart: Awful. This maker of thingamajigs was selling at close to $400, adjusted for subsequent reverse stock splits, during the Crazy Period. A one year chart reveals a price collapse starting in early March 2017 when the stock price was over $35 that bottomed near $20 per share one month later. FNSR Chart
Annual Report for the F/Y Ending 4/30/17 (risks summarized starting at page 9)
The GAAP and NON-GAAP numbers reproduced below explain, at least in some significant measure, the poor stock performance.
GAAP Net Income:
Sourced from 10-Q for the Q/E Ending 10/29/17
Non-GAAP Net Income:
Earnings Call Slides
Debt:
In December 2016, FNSR sold $575M in .5% senior convertible notes due in 2036.
Back in 2013, the company sold $258.8M in .5% senior convertible notes due in 2033.
As of 10/29/17, cash and short term investments totaled $1.23+ billion.
Finisar is top pick for 2018 by Northland Capital analyst-Seeking Alpha
Finisar Struggling Short-Term, But Longer-Term Outlook Intact-Seeking Alpha
This Motley Fool article suggests that FNSR may be acquired at some point by a larger company like Corning or Broadcom. I would expect industry consolidation in this sector, but the timing and targets are far too indefinite to support a purchase decision IMO.
I will consider averaging down in 10 share lots until I own 30 shares. The next average down price would be below $20.
Closing Price Last Friday (1/5/18): FNSR $21.51 -$0.03 -0.14%
This Motley Fool article suggests that FNSR may be acquired at some point by a larger company like Corning or Broadcom. I would expect industry consolidation in this sector, but the timing and targets are far too indefinite to support a purchase decision IMO.
I will consider averaging down in 10 share lots until I own 30 shares. The next average down price would be below $20.
Closing Price Last Friday (1/5/18): FNSR $21.51 -$0.03 -0.14%
A. Sold 1 Boston Properties 3.125% SU Bond Maturing on 9/1/23:
Profit Snapshot: $18.12
FINRA Page: Bond Detail (prospectus linked)
Issuer: Wholly Owned Operating Subsidiary of Boston Properties Inc. (BXP)-a REIT
YTM Then at 2.925%
Current Yield at 3.0941%
Bought at a TC of 99.088
Item # 1.F. (3/28/17 Post)
YTM at TC Then at 3.283%
Current Yield at 3.1538%
This is another bond that I will buy back at less than my previous purchase price when and if that occurs in 2019 or later.
3. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 2 AstraZeneca 1.95% SU Bonds Maturing on 9/18/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: AstraZeneca PLC ADR (AZN)
Credit Ratings:
Bought at a Total Cost of 99.623 (with $2 commission)
YTM at TC = 2.168%
Current Yield at TC = 1.957%
Price Paid = 99.523
B. Bought 2 Amgen SU 1.9% Bonds Maturing on 5/10/19:
FINRA PAGE: Bond Detail (prospectus linked)
Issuer: AMGN Stock Price
Credit Ratings:
Bought at a Total Cost of 99.881
YTM at TC = 1.985%
Current Yield at TC = 1.902%
Price Paid = 99.781
I have rented the stock on occasion. My last transaction was to sell 20 shares at $170.72. AMGEN - South Gent | Seeking Alpha
I sold 2 Amgen 2.125% SU bonds maturing on 5/1/2020 at 100.568 last August: Item # 2.D. The YTM was then at 1.904% of that bond.
C. Bought 1 BP Capital 1.676% SU Bond Maturing on 5/3/19:
FINRA Page: Bond Detail (prospectus linked)
Bought at a Total Cost of 99.626 (with $1 IB Commission)
YTM Then at 1.949%
Current Yield at TC = 1.6823%
Paid 99.526
I now own 2 bonds in two separate accounts. I am particularly flushed with excess cash in my IB account so I am buying some duplicative bond positions in that account that have been previously bought in other accounts.
D. Bought Back 2 Berkshire Hathaway 1.7% SU Bonds Maturing on 3/15/19:
Finra Page: Bond Detail
Bought a TC of 99.850
YTM THEN at TC = 1.82%
Current Yield at TC = 1.703%
E. Bought Back 2 Westpac Bank 1.65% SU Bonds Maturing on 5/13/19:
FINRA PAGE: Bond Detail (prospectus linked)
Credit Ratings:
Issuer: Westpac Banking Corp. ADR (WBK)
WBK Analyst Estimates
I have bought and sold this bond previously. I last sold 2 bonds at 99.8, having bought this lot at a TC of 99.317. Item # 2.A. Sold on 5/23/17 (realized gain $7.66); Item # 2.C. Bought on 1/18/17
I am now about seven months closer to maturity and was still able to buy the bond back at about the same price as in January 2017.
When I sold this bond in May, I was moving out of 2019 maturities into 2023-2026 maturities to pick up more yield.
I have largely now reverse that process by selling the longer maturities and buying back several bond previously sold that mature in 2019.
I am more concerned now than in May about a potential pop in intermediate term rates.
Bought at a Total Cost of 99.499 (Bought at 99.399)
YTM THEN at TC = 2.009%
Current Yield at TC = 1.6853%
F. Bought 1 Parkway Bank 1.75% CD (monthly interest) Maturing on 12/21/18 (1 year CD):
G. Bought 1 First Virginia Bank 1.45% CD Maturing on 5/29/18 (5 month CD):
H. Added 2 Comerica 2.125% SU Bonds Maturing on 5/13/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Comerica Inc. (CMA)
CMA Analyst Estimates
Comerica Reports 2017 Mid-Year Company-Run Stress Test Results
Comerica Reports Third Quarter 2017 Earnings Results
Credit Ratings:
Bought at a Total Cost of 99.934
YTM Then at TC = 2.171%
Current Yield at = 2.1264%
I now own 4 bonds. The prior two bond purchase was made on 1/3/17 at about the same total cost number shown above (99.976). As a result of short term rates rising in the interim, I am almost one year closer to the 5/13/19 maturity and did not have to pay more for the bond, with both orders completed at a total cost below par value.
I. Added 2 American Express 1.55% SU Bonds Maturing on 5/22/18:
I now own 4 bonds. The first two bond lot was bought in December 2016 at about the same price, a slither under par value on a total cost basis.
FINRA Page: Bond Detail (Prospectus linked)
Issuer: American Express Co. (AXP)
AXP Analyst Estimates
American Express Reports Third Quarter EPS of $1.50, Up 25%
Credit Ratings:
Bought at a Total Cost of 99.985
YTM at Total Cost Then at 1.584%
Current Yield at TC = 1.5%
Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.
FINRA Page: Bond Detail (prospectus linked)
Bought at a Total Cost of 99.626 (with $1 IB Commission)
YTM Then at 1.949%
Current Yield at TC = 1.6823%
Paid 99.526
I now own 2 bonds in two separate accounts. I am particularly flushed with excess cash in my IB account so I am buying some duplicative bond positions in that account that have been previously bought in other accounts.
D. Bought Back 2 Berkshire Hathaway 1.7% SU Bonds Maturing on 3/15/19:
Finra Page: Bond Detail
Bought a TC of 99.850
YTM THEN at TC = 1.82%
Current Yield at TC = 1.703%
E. Bought Back 2 Westpac Bank 1.65% SU Bonds Maturing on 5/13/19:
FINRA PAGE: Bond Detail (prospectus linked)
Credit Ratings:
Issuer: Westpac Banking Corp. ADR (WBK)
WBK Analyst Estimates
I have bought and sold this bond previously. I last sold 2 bonds at 99.8, having bought this lot at a TC of 99.317. Item # 2.A. Sold on 5/23/17 (realized gain $7.66); Item # 2.C. Bought on 1/18/17
I am now about seven months closer to maturity and was still able to buy the bond back at about the same price as in January 2017.
When I sold this bond in May, I was moving out of 2019 maturities into 2023-2026 maturities to pick up more yield.
I have largely now reverse that process by selling the longer maturities and buying back several bond previously sold that mature in 2019.
I am more concerned now than in May about a potential pop in intermediate term rates.
Bought at a Total Cost of 99.499 (Bought at 99.399)
YTM THEN at TC = 2.009%
Current Yield at TC = 1.6853%
F. Bought 1 Parkway Bank 1.75% CD (monthly interest) Maturing on 12/21/18 (1 year CD):
G. Bought 1 First Virginia Bank 1.45% CD Maturing on 5/29/18 (5 month CD):
H. Added 2 Comerica 2.125% SU Bonds Maturing on 5/13/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Comerica Inc. (CMA)
CMA Analyst Estimates
Comerica Reports 2017 Mid-Year Company-Run Stress Test Results
Comerica Reports Third Quarter 2017 Earnings Results
Credit Ratings:
Bought at a Total Cost of 99.934
YTM Then at TC = 2.171%
Current Yield at = 2.1264%
I now own 4 bonds. The prior two bond purchase was made on 1/3/17 at about the same total cost number shown above (99.976). As a result of short term rates rising in the interim, I am almost one year closer to the 5/13/19 maturity and did not have to pay more for the bond, with both orders completed at a total cost below par value.
I. Added 2 American Express 1.55% SU Bonds Maturing on 5/22/18:
I now own 4 bonds. The first two bond lot was bought in December 2016 at about the same price, a slither under par value on a total cost basis.
FINRA Page: Bond Detail (Prospectus linked)
Issuer: American Express Co. (AXP)
AXP Analyst Estimates
American Express Reports Third Quarter EPS of $1.50, Up 25%
Credit Ratings:
Bought at a Total Cost of 99.985
YTM at Total Cost Then at 1.584%
Current Yield at TC = 1.5%
Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.
