Tuesday, November 14, 2017

Random Stuff. Pick and Choose.

Thanksgiving is coming.  No kidding.  What bugs me about it is the choice of food.  We're supposed to eat turkey.  Why?  On account of, because.  It's what we eat.  We make no effort on any other day to cook a giant turkey - other than Thanksgiving. Mostly, people find something to complain about.  It's too dry. It's tough. It's cold (have you ever burned your mouth on Thanksgiving turkey? No). For what?  Here's an idea:  Gather your friends and family, and eat fish, or chicken, or burgers, or ... GOD ... whatever.  Be thankful.  Isn't that the idea?

Our annual company Holiday party is coming. Egad.  I've been there 26 years and have not yet attended one.  I'm not sure what that says about me, other than the idea that I don't like going to parties alone and I don't care to have someone sitting around counting my drinks.  Especially since it's in Atlantic City, and they seem to pick the furthest possible place from everyone to hold a giant dinner/drinking/dancing party.  But, that isn't the issue here.
The issue is that, when sitting around the lunch table with six co-workers, the topic comes up:  Who is going to the Holiday Party?  One person goes around the table, asking by name, if they're going.  Until they run out of names, and mine is the only one left.
Am I supposed to volunteer: "No, I'm not going." Or, is it assumed that, because I am desperately single, that I am not going because I don't have a date?  I assume the latter, and keep my mouth shut until someone changes the subject.  And then, I continue to keep my mouth shut.

We call it the "Holiday Party" because we are supposed to be Politically Correct and stop calling it the Christmas Party.  Today, there was a story on the local news about the "Holiday Tree" being set-up at the Philadelphia Art Museum.  Is it a Holiday Tree?  Which holidays have a tree as a symbol of the holiday?  Kwanza? Hanukkah? Diwali? Nope. Hint:  It's Christmas.  So, why do we insist on calling it a "Holiday Tree" when it is clearly a Christmas Tree?  Stop kidding yourselves, folks and live your life.  

I feel like I should comment on the stock market, because I have made a habit out of it recently.  OK, so here goes:
I love the underdog.  Beaten-down companies whose growth prospects are slim, and their stocks have been killed mercilessly because big-time growth stocks have captured the imagination of investors, and their share prices have escalated beyond what rational thinkers (like me) would consider approachable.  So, it's left to us to find the bottom-fish and ... well, go fishing.  I submit:

DelTaco (TACO). I know I've mentioned this before, but it's a growth stock in a crowded space (casual dining) but the share price is down to nearly a 52-week low, and if you're interested, there is an entry point right here.  As for me, I'm holding, and trying to buy more as finances allow.

Under Armour (UA) A true bottom candidate.  The stock has been clobbered over slow sales and the death of modern retail.  However, if you believe in the brand and Kevin Plank (as I do) you'll find an entry point here at the $11 level, and be patient while the company re-finds its footing and comes back.

General Electric (GE) Hoo-boy. This has been a disaster for the past year.  Buy this, close your eyes and come back in 3 years.  It might take that long to right this ship.  After all, how long does it take to turn an ocean liner?  There is so much work to do here, that it might seem overwhelming, and I suppose that there are either (a) investors who do not want to wait (b) investors who need the dividend, and since it was cut, will find other opportunities or (c) investors who don't see the potential and (a) and (b).  However, if your time horizon is longer than a year or two, I'd suggest dripping money into this, since the share price will likely be in the $16 to $18 range for a while, and you can build a nice position until the rudder manages to steer the giant ship around its obstacles.  The keyword here:  Patience.

Advance Auto Parts (AAP). They had a nice quarter, and guided roughly in line, but the share price is down from $178 to $95 over the year-to-date.  Is that an opportunity? It says here, it is.  The market has overreacted to the "Amazon Effect," in that, they fear that Amazon will do ... well ... everything, including selling auto parts online.  Ask yourself:  If you're doing a repair, and need a belt, are you going to wait a day or two for Amazon to deliver it, or are you going to go to your local AAP store and get one and finish the job?  Sometimes folks, fear takes over rational thought, and you have to be able to find a middle ground.  Amazon will not take over everything ... which leads me to this:

The Amazon Effect:  People hate Walmart.  No doubt.  I have lost Facebook "friends" because I defended Walmart.  It's true.  If you spend any time in the Deep South, you will find out that, if there isn't a Walmart in town, the people have no place to shop. Fact.  Around here, when a Walmart is proposed, people picket because we have so many places to shop, we don't think that another Walmart will help.  That's the problem.

So, why don't those same people hate Amazon?  They might, but there is no place for them to picket. Where are they going to march?  In front of their computer?  No.  They just point and click, and order junk that they get in two days in those smiley boxes.  It sure seems better than having Walmart pay property taxes and give people jobs.  How many people do you know who work for Amazon?  I'll wait.

Meanwhile, the thing they call "Brick and Mortar Retail" is supposedly dying.  OK, maybe, but it might be because we have so many shopping centers that it's impossible to cross the street without finding a place to shop.  It's called saturation.  Sure, stores like Kmart, JC Penny's, and Sears are closing, but think about how many stores from your childhood have closed over the years.  It isn't that odd.  Stores close.  Consumers dictate.
The latest scare is in the consumer drug business. Shares of CVS and Walgreen's (WAG) have struggled because there is speculation that Amazon will go into the retail drug business.  OK, maybe they will, but will that replace the relationship that consumers have with their local pharmacy?

I can't see a day when consumers will want to "point and click" on anything without first touching it and trying it on.  You might buy a pair of shoes or a jacket online, but that's only because you know ahead of time that it will fit.
Retailers are struggling to find ways to make the shopping experience better, and it says here that they will, because people have been around longer than Amazon.  Sure, it's a great convenience to be able to point-and-click, but touching-and-feeling is a great experience, too.  The strong will survive. 

You betcha.  You just have to be able to find the ones who will survive.  Go with quality. Quality always wins.  Whether it's Under Armour, Apple, L Brands, Estee Lauder, Colgate-Palmolive, Newell Brands, Procter and Gamble, Anheuser-Busch, Hanes Brands, CVS, Trip Advisor, Allergan, Discovery ... the list goes on.  As for me, my money (literally) is on Under Armour, only because I believe in the true value aspect, and well ... I love the product.
Will these companies and brands go away, or merely re-invent themselves and keep up with the changing times?  I'm guessing that, as you read this, there is a meeting going on somewhere with the management of these companies deciding how they are going to deal with this "new millennium" of consumers and how they will adapt to their changing habits.

They are trying to figure out how to make us need them more than they need us.  That's what great companies do.

Sunday, November 12, 2017

The Chicago Experience

As a young person in the 1970s, I had a few favorites.  I was enthralled by the prog-rock movement spearheaded by Yes and Emerson, Lake, & Palmer; and my boyhood dreams of being a musician were fueled by the likes of them.  I had a few guitar heroes:  Robert Fripp, Peter Banks, Jan Akkerman among them, but there was one lurking in the background that I didn't acknowledge until later in life.  Terry Kath.

If we go back to the early 1970s (where I come from) the world of pop music was cluttered with nonsense, and even as a youth, I recognized it.  My bus rides to school were dominated by questions like, "Have you heard 'Hocus Pocus' by Focus?" and if you were listening to 92.5FM (WIFI) so that you could hear the "long version" of Yes' "America."'
You have to remember, those were the days when, if you didn't hear something live, you couldn't "YouTube it" or go back to your DVR and re-watch it.  It was a "hear it live or not at all" society.  Hence, The Beatles' epic performances on "The Ed Sullivan Show."  We didn't have reruns.

When the first Chicago Transit Authority album came out in 1969, most of us heard "Beginnings" or "Questions 67 & 68" on pop radio, but there was so much more.  Like "Free Form Guitar," which blew the mind of a 12-year-old and "Listen" and "Poem 58" that never made it to the big-time AM radio stations that we were listening to in those days.

By the time the second Chicago (they had been re-named) album came out, the big deal was the Suite on side two.  We listened to it over and over.  What we neglected were the first four songs, that were mere masterpieces, and I suspect that the band thought so, too.  Only on repeated listenings do they shine over the second side.  Hindsight.
The third album was a pure masterpiece, and the kid was dumbfounded.

Christmas of 1971, this 14-year-old gets "Live at Carnegie Hall" (Chicago IV) as a gift and goes nuts.  I was way too young to have attended a concert, so this was the best I could do. It was many years later that I got to go to Carnegie Hall to see Marc Maron and thought, "So, this is where Chicago played that show?" I was awestruck, and a little goofy I guess.  I pictured the band on that big stage, recording that album and my mind wandered.

By the time Chicago V came out, I was full-on fanboy.  I remember coming home from the record store with the album, and showing it to a gas station attendant who was (obviously) much older and as big a fan.  The album had an insert with a giant poster of each band member, and we looked at it together.  I had the album before he did! As usual, it was amazing. "Saturday in the Park" and "Dialogue" were my favorites, but the entire album was still up to their standards, I thought.

I stayed with them through Chicago VI and VII, but my fandom was beginning to wane.  As with the prog-rock era, the tempo was changing, and my love of the band was still there, but the music was losing touch with me.  We were growing apart.

I don't know how many they are up to now - 35?  It's questionable, and with the loss of Terry, my mind and taste has wandered.
Recently, I watched "The Terry Kath Experience," a beautiful documentary put together by his daughter Michele - expertly, I might add.  The film has re-invigorated my interest in the band and Terry's work, in-particular.

Watching videos of the band has alerted me as to Terry's influence, and his "band leader" experience. As a young person, I never realized.  To a young teenager, it was all about the horns and the overall experience.  To us, Danny Seraphine was a God, and may still be - but the focus of the band was the horns and drums.  Little did we know that the true heart of the outfit was Terry.

Obviously, it's sad that his life ended the way it did, but I have come to realize that he would not have  continued with the band as it evolved.  Perhaps he saw that, and I'd like to think that he did.
The sad part is that we never realized what his music would have been without the horns, as it appears that he would have wanted.  It's interesting to me that the big part of Chicago was the horns, but the lesser part of it to Terry was - no horns.  If you go back and listen to "Poem 58" and "Listen" you can hear what Terry envisioned the band being without the horns.

We can only speculate.  Over what John Lennon would have done, what Jim Morrison would have done.  Jimi Hendrix.  Janis Joplin. Michael Hedges - certainly.  Freddie Mercury. Chris Cornell.  The list goes on ...

Certainly, Terry Kath had much more music in him, and while it's sad that we did not get to hear it, it is joyful that we got to hear what he had in his heart.

Because it lives in our hearts.

Thursday, November 9, 2017

Beat and Raise

“Beat and raise.” Those are the two best words a shareholder can hear out of an earnings report.  That is exactly what Square (SQ) did this week. They beat analyst’s estimates and raised guidance for 2018. For some reason, the stock fell a bit after the report, but once investors heard the conference call, SQ rose another 1.5% to another 52-week high near the $38 mark.

The “payment space,” as Wall Street would call it, is hot.  Paypal (PYPL), Visa (V), and MasterCard (MA) are leaders in the industry, but Square is gaining market share, and working on their banking side, making loans to small businesses and building a customer base that will either make the company a strong independent processor or make it an attractive take-out candidate.  Either way, investors (like me) win.  So far, it’s been a nice ride.

Meanwhile, Pfizer (PFE) struggles along as almost dead money, and while it’s a nice dividend play, at 3.6%, young-at-heart investors (like me) would like to see some growth in addition to the attractive dividend.  I like to refer to “growth and income” as my favorite phrase, and the “income” part speaks to the “growth” part when it comes time to sell - which appears to be closer with Pfizer.  My legendary patience is wearing thin.  Are we a drug stock, an income stock, or a growth company?  My guess is the first two, and that does not feed my desire to speed-up my retirement date.  A 3.6% dividend is nice, but if the share price doesn’t move (which it hasn’t much) then the dividend isn’t as attractive as it would be if the company grew and increased the dividend.  That’s how it is supposed to work.  A dividend yield isn’t supposed to increase due to a share price decrease.  Get it? I do.  It’s time to sell Pfizer.

But what to do with the cash?  Buy more Square? One of my favorites, Del Taco (TACO) is moving toward it’s 52-week low of $11-and-change. Cisco Systems (CSCO) reports in a week. That’s a possibility.  So many choices.

I’ll keep you in the loop.

Thursday, November 2, 2017

Vinyl, Schmynal.

I try to stay modern.

I'm holding onto the Internet, online stuff, and my iPhone with all 8 fingernails in an effort to keep up with those goddamned kids who find this stuff so simple that they can walk, text, drive, and talk on their phone at the same time.  By the way, if you think you can ... you cannot.

I'm with you on a lot of this junk.  The whole "text instead of call" thing is right up my alley.  When my phone rings, I dread picking it up. "Just text me, or send an e-mail," is my usual response.  And this comes from a person who grew up on rotary dial phones and looking for change to use the phone when I was away from home. How quickly I learned your ways, Millennials.

The one thing I cannot join you in is this movement back to vinyl records.  I don't remember what year it was, but at some point, somebody (probably Sony) invented the Compact Disc player.  I was so excited.  No longer would I have to store giant 12-inch recordings and care for them like an elderly parent - constantly cleaning them and looking after them to insure that there wasn't too much dust around, lest they lost their qualities.  What a giant pain in the ass it was.

Along came the CD.   A small, plastic disc that only required placing it back in the case that it came in.  It would sound the same today as it sounded 50 years from now - if it survived the trip.  
My favorite music was the sort of thing that had quiet passages and subtle changes in mood that we could not hear on vinyl because the record would pop and scratch.  

When I heard of this magical thing called the CD player, the first thing I did was go out and buy CDs.  Kate Bush's "The Dreaming" and King Crimson's "Lark's Tongues in Aspic" were my first purchases.  I had a half-dozen CDs before I had a CD player.  That's how excited I was.

My wish of noiseless music was granted. I didn't have to worry if the record I brought home was warped and/or it would skip, and I had to clean it endlessly or place a penny on the tone arm to make it play.  What a relief!  I bought Beethoven's 5th Symphony and a few other classical music CDs before I finally sprung for the $129 (in 1980s money) for a CD player. I reveled in the purity of the sound.  It was beautiful.  Quiet passages were quiet, and there was nothing that sounded like you were listening to music around a campfire.
I listen to stuff on CD and mp3 that I heard originally on vinyl and WISH that I could have had this format in the 1970s.  Egad, no maintenance, no care.  What a life.

These bloody Millennials figured out that, for some reason, vinyl sounded ... I don't know ... pure to them, or some damned thing.  They were too young to remember the toils of record buying and maintenance.  To them, the vinyl experience was akin to riding a Penny-farthing and thinking, "This is how cycling is supposed to be." No, it fucking isn't.  We found a better way.

The sad thing is that the marketing pressure is so deep that vinyl pressing factories have been re-staffed, and there is a resurgence of the crap.  New bands are releasing stuff on vinyl to appease this group of nincompoops who think that vinyl has some magic.  No, it fucking doesn't.
I love my Apple Music and my mp3s.  Quality loss? I don't think so.  Not compared to the scratch-scratch-skip of those fucking vinyl albums.  I'll keep my entire music collection on an SD card, thank you.

I can't wait for them to want to go back to rotary-dial telephones, bathing on Saturdays, cooking food in conventional ovens, starting cars with a crank, ... well, you get the picture.  There is a better way, and it's sad that some people are too young to appreciate the efforts that their ancestors went through just to be able to listen to music
I'm on my 4th incarnation: Vinyl, CD, cassette, (8-track - if you count that disaster) and now, mp3. I'm done, and it gets better because it gets ... well, better.

Perhaps they would like to go back to standing in line for concert tickets on Saturday mornings, too?  Well, no. That would cut into their sitting around time.

Get a grip, gang. It's way better now.

Wednesday, November 1, 2017

So ... How are Ya Doing?

It's Earnings Season again.  And as such, it's a little daunting to keep track of it all, but I'll give it a shot.  So, how am I doing?  I write a lot about my investments, and I'll quickly tell you if I fail, but this last quarter and the last six months have been mostly positive.
While I still eschew big-time growth names that I find over-valued, I tend to stick with stocks with one of two potential issues:
1 - There is a growth story, and we are at or near the beginning of it.
2 - There is value in a mature company.
As in life, I don't like to over-pay for anything.  If I think a stock has run-up into a valuation that is either "priced for perfection" or just plain over-priced, I'll pass - and I'd advise you to do so, too.  It's not that I don't appreciate the risk, but I don't necessarily want to pay for it.  Tesla, Facebook, Nvidia, Google - are some of the names that, if I had a 5-year-old, I would happily invest in. At my age ... eh.
I would say that every one of my investments fits one of those two categories.  And so ...

First, the anticipation:  One of my favorite companies (and stocks) Extreme Networks (EXTR) reports on Tuesday.  More important than their earnings report will be their outlook for 2018.  The stock is up about 200% year-to-date, so we're hoping (I hate that word) for some upbeat guidance for a company that has been grabbing market share in the network infrastructure business.  Currently, it's at 18 times future earnings, which could prove to be cheap by today's price of $11.88.  Don't be brave and buy it here. If you've owned the stock from $3.95 back in August of 2016 (as some here have) then you're ahead of the game regardless, and you should have been paying attention.

Cisco Systems (CSCO) reports on the 15th, and almost everyone is expecting big things from this networking giant. They're old-school technology trying to reinvent themselves into new-school data protection and subscription services.  It says here that they can accomplish it, and I wouldn't bet against CEO John Chambers.  Any sort of upbeat report will send the stock soaring toward the high-30s, and if you're willing to buy it here, at $34.60 it should be money well spent.

Another one of my favorites, Square (SQ) reports on the 8th.  It's a big deal, since the stock has run-up significantly over the past month on -- well, nothing really -- and I'm curious as to whether my faith will be rewarded or I'll have to take my profits and move on.  My gut tells me that there is more room to run here, but I wouldn't be adding or buying at the $36 range it's been trading in for the past week. There is a lot of speculation, and still some takeover speculation that might be driving the price up.  They should be making a nice forward-looking statement next Wednesday that should reinforce my confidence in Jack Dorsey and the gang.

Looking back:  DelTaco (TACO) reported a lackluster quarter, and the stock sold-off significantly. However, if you had faith and bought it in the $12 range that it sold down to, you're feeling pretty good about yourself here at $12.60.  But that doesn't salve your wounds from potentially getting out at $15.  If you're a long-term investor (like me) you could be looking to add to a position at this range and figure that the quarter wasn't bad - just not as good as anticipated.  They are still expanding and making money, of course.  The food service business is tough, but they have a management team that should be able to keep the growth story alive. I'm still long.

You might not know much about Acco Brands (ACCO) but if you look at those paper clips, binder clips, and other office supplies that you have (ahem) stolen from your company, you'll see Acco's name all over them. A week ago, they reported diluted earnings that beat last year's numbers by 33%. A stock that I have been looking for an excuse to sell might be a longer term hold than I had anticipated.  At 11 times forward earnings, it's still cheap, but the space is not widely recognized.  You'll (I'll) have to be patient, and even though I'm up on the trade, I'm looking for the $14 to $16 range before I get out.

Last, but not least - my favorite micro-cap Limelight Networks (LLNW) reported the classic "beat and raise" with gross margins, cost-cutting, and operating margins all coming in at the high end of what was anticipated.  They say that they are going to "take on Cisco," and I say, "Go ahead," because - well, I'm in.  I love their aggressive management and the growth story in content delivery as much as I like Square's payment space.  Sometimes, things just grow, and you can't be afraid to be at the bottom-end of the story.  Ask early Facebook and Amazon shareholders.

Summary:  While the Pfizer (PFE) quarter was nothing to write home (or here) about, I held on, and after the small sell-off post-earnings, the stock rebounded.  I'm guessing that investors liked the stability in a market where instability seems to rule the day.  Plus, the 3.65% yield and the forward P/E of 13 make it an attractive investment for people (like me) who want all the upside with almost none of the downside.  At the age of 60, I like that stability in my life.

So, where do we go from here?  Some brick and mortar retail is on life support.  JC Penney, Sears, and Macy's are breathing their dying breaths. What to do?  Run away.  It isn't that Amazon is killing modern retail, it's just that there is so much of it that the space has gotten too crowded.  The weaklings will have to be weeded-out before we can recognize the survivors.  If you feel so compelled, there is an ETF that tracks the retail space that could cushion your risk.  Symbol XRT is trading at year lows, and might be a good choice if you're looking to get in without getting burned.

On the other end, Mattel (MAT) and personal favorite Under Armor (UA) are struggling, and their shares are in free fall.  Both companies admit to having issues, so you're best to be bottom-fishing in the first quarter of 2018 once the Christmas shopping season has nearly killed them.  It's hard to imagine either one of them going away, but on the other hand, it's easy to imagine both of them going away.  They are at once compelling investments and risky as shit.

Facebook is selling-off after earnings, and I think I said that they were over-valued at $160.  In the $180 range today, you may get another shot at that $160 price if you're courageous enough to both wait and weigh-in. Revenue rates are declining, expenses are growing at 40% to 60% over the next year, and cap-ex will double in 2018.  Let it settle-in until at least Monday or Tuesday, and then?

Tesla is struggling to keep-up with production, and it's likely that the stock could be headed back to the $280 range.  I love Elon Musk and I love the company, but I wouldn't buy it here with your money.  It's just too big a mess, frankly.

There is more, but I feel like I've said enough, and we still have a few more weeks of reports to sift through.

Thursday, October 19, 2017

The Cold Ice

When the summer night has changed its warmer breezes to the icy cold of silent winter freezes
Will you be there?
When the cloudy skies are blocking out the Sun and suddenly your nose has begun to run
Will I see you there?
Will you stand by me beside the cold night?
Or are you afraid of the ice?

 - John Palumbo "Ice" Crack the Sky, 1975

Apparently, not.  At least that's the feeling I got from the last woman I gave my heart and time to.  She dumped me like a bag of trash left out on the sidewalk.  (sorry if that isn't as poetic as the lyric I posted)

I put myself out for people, on occasion.  In some cases, the effort is reciprocated.  In others, it is met with a stunning lack of recognition.  Mind you, it's not what I'm in it for, but the idea is that - at some point, the effort has to be recognized.  Gifts, time, effort, and companionship are expended and the time and effort are virtually (or literally in this case) not recognized or even acknowledged.  That's sad.

A person travels a great distance at great personal expense, and expects at least some form of friendly reciprocation, but instead, he is met with not only a total lack of thanks or any form of heartfelt acknowledgement.  It hurts, and it makes me wary of expending the effort for the next woman who comes along - if there is one.

Mind you, I'm not asking for anything, but one would expect a certain amount of - oh, I don't know - effort expended on the other side.  After all, I did make the effort.  Even charities send 'thank you' emails and the giver gets a tax deduction.  

While it's true that the trip was ruined in many ways, the stunning lack of communication afterward is, well - stunning.  What I did receive was a string of excuses and semi-blaming ideas that the fault lied with the giver.  So, there's that.

If this is cryptic to you in some fashion, I'm sure that the person to whom it is directed does not find it so.  And, to those of you who may have figured-out my message and know the story behind it - good on you.  To the others, I'll be happy to let you in on my latest disappointment if you are so interested.

Since I have no other outlet, let this be mine.  Whether it draws her out or buries her deeper in my life is of no consequence.  

The damage has been done, and it is clear that she is afraid of the ice.

Wednesday, October 11, 2017

Empathy vs. Sympathy

“I did not know how to reach him, how to catch up with him... The land of tears is so mysterious.” 

Yes, the land of tears is mysterious, whoever you are.  The land of tears is mysterious.  If you do not believe that ancient idea, consider one more current ...

“The only time you look in your neighbor's bowl is to make sure that they have enough. You don't look in your neighbor's bowl to see if you have as much as them.” 

Take that, millennials. That's the difference between sympathy and empathy.  Most of you probably don't know.  You can sympathize with someone with whom you have not shared similar experiences, but you can only empathize with someone with whom you have shared similar experiences with.  And, therein lies the problem - at least as it is with this.

Most of you cannot empathize with me because you have either (a) been with someone for several years or (2) had a relationship with someone over the past five years.  If neither of those circumstances apply to you, then you can only sympathize.  It's simple fact.

And so, telling me to "grin and bear it" or find some other outlet for my grief is nice, it does nothing for the overall issue at hand.  
The other one who said "how come you think that people who live in a relationship have a) found the partner of their dreams, b) are not lonely, and c) haven't given up? Go figure."

Apparently, my struggles are nothing compared to people who have supposedly found their soul mate, and I'm supposed to belive that my loneliness is nothing compared to theirs.  Go figure.
Well, yeah - so, go fuck yourself "go figure."  In plain English.