Wednesday, July 23, 2014

Soos Global Investors Portfolio Updates: BTN, ACN, DVA, SIX, HIMX, MCD



Soos Global Investors:  FYI….As a follow up to a post on July 10 in which I highlighted some changes that were made to our positions in both the CORE and QRP (Qualified Retirement Plan) strategies,  below are some additional portfolio moves that were made in the past few days. 

p.s.:  A Friendly and Important Disclaimer Note (in addition to legal language below):   If you’re reading this email and are not currently investing with Soos Global (which, of course, is something we should discuss!), please bear in mind that while we share details on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.  Readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.


Thanks for reading.  And as I mentioned above, please email or call w/any questions or to discuss in more detail.   Also, please visit http://stockcharts.com/public/1587236 to see our charts of each of the stocks mentioned below, as well as of other stocks on our radar screen.

Best, Ed
 (If you'd like to exchange thoughts on this post or on other subjects, please connect with me through the Private Chat tool on the right side of this page, or if you'd like to email thoughts, please do so through the Contact Form feature.  For public airings, please use the Comment feature below.  Looking forward to hearing your thoughts!)



Friday, July 11

Ballantyne Strong (BTN)…..sold the remaining shares today in order to exit the position. In a defensive mode, prefer to be out of less liquid assets.

Accenture (ACN)….had set 80 as target exit price.  The company doesn’t fit well into any of our main global macro themes at this time.  It, like IBM, has been challenged by a world where businesses and governments are still scaling back expenses and are less likely to engage big computer consulting companies like ACN or IBM.  Exited the position for now.  Will continue to follow the space, especially IBM, given its recent announcement re working w/Apple to co-develop business mobile applications.



Monday, July 21: 

DaVita Healthcare (DVA)…Raymond James downgraded DVA today from “market outperform” to “Market perform”.  The stock went down over 3%.  The fundamentals still look good. The theme remains in place.  Used the generally sour mood in the market and the apparent over reaction to the downgrade as a chance to increase the allocation from 1.9% of the portfolio to 2.5%.



Six Flags (SIX)…been watching SIX for a while as a good candidate for one of our key global macro themes:  the emergence of a middle class in many EM countries around the world.  It was resting on support and tested it several times. Today, on good earnings but disappointing sales, the stock got hammered, down over 6%.  I used that selloff to buy a starter position of 1.0%.  The company has more debt that I’d generally like to see, but the cash flow is good, the dividend is strong, and the overseas expansion plans, esp in China, are impressive (using local developers to do the heavy lifting while SIX gets royalties and mgmt fee income).



Himax Tech (HIMX)….I’ve been looking to add to the HIMX position into the selloff.  For some time now, HIMX has suffered from reports that one of its big customers had seen slower sales, and as a result, had accumulated more inventory than desired, and had to work off inventory to remove an unexpected glut.  That put enormous pressure on HIMX.  Since then, there have been questions about how fast ‘wearables’ would take hold as the next generation technology.  All of that caused HIMX stock to suffer.  Into the latest round of general market malaise largely driven by increased geopolitical risks, I added to our HIMX position. I still believe that HIMX will prosper as a semiconductor company in a space that is already popular including screens for tv’s, handheld devices, tablets, etc.  But wearables, I believe, will have their day, and I believe soon!  More and more ads are focusing on the attributes of wearable technology to do all sorts of things from counting mileage walked, to counting calories, to taking blood pressure, etc.

Our total position is now 2.6%, up 1%.

In sum, HIMX is not a ‘.com’ pipedream company with only ‘hoped for sales’!  It’s a real, product producing semiconductor mftr with broad markets and customer bases, and advanced technology that ought to do well as the tech revolution/evolution proceeds.



Wednesday, July 23:

McDonalds (MCD) has been taking it on the chin in the past couple of weeks, after hitting highs at around 103, the stock was knocked back by same-store sales numbers disappointing the markets, plus recent news of a scandalous meat supplier in China, and finally yesterday’s disappointing Q2 earnings, sales and outlook.  The stock breached the 95 level which appeared to be good valuation.  It also has a dividend at over 3.3% (going ex on 8/28).  I like the ‘staple’ type of stocks in the discretionary sector as a more defensive play with the market up at all time highs, and MCD I believe will bounce back as the global emerging middle class evolves. 

I took the position in both strategies up to 3.25% (from 2.3 in the CORE and 2.7 in the QRP).



As always, please email or call w/any questions or to discuss in more detail.

I’ll keep you posted.

Best,

Ed


Please continue to visit Soos Global Market Musings for updates.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs, DVA, SIX, HIMX, MCD.  Positions may change at any time without notice.     


Monday, July 21, 2014

CHITS: Charts In The Spotlight: Six Flags Entertainment (SIX): Support broke on disappointing sales despite inline earnings.

 
We've been watching this for a while as support was being tested.  Today, it broke on disappointing sales, though earnings were inline. 
Now what? 
Chat with us (use the "Chat" tool to the right on this blog page) and share your thoughts.


 

 
 
 

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"! And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs. Positions may change at any time without notice. 

Tuesday, July 15, 2014

CHITS: Charts In The Spotlight: CNK, GMF, DD, SIX

Fyi….Position update…..In addition to periodic global-macro posts to this blog, we occasionally share position updates that are routinely shared with our investors.  These comments are absolutely not meant to be investment advice and readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  While we will be sharing some detail on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.
With that in mind, we hope you find our comments of interest, and we'd be delighted to hear feedback!


(If you'd like to exchange thoughts on this post or on other subjects, please connect with me through the Private Chat tool on the right side of this page, or if you'd like to email thoughts, please do so through the Contact Form feature.  For public airings, please use the Comment feature below.  Looking forward to hearing your thoughts!)

Under the banner of "a picture tells a thousand words", here are a few things that we have under the hot lights.  



Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs, CNK.  Positions may change at any time without notice.   

Thursday, July 10, 2014

Soos Global Investor Portfolio Updates: AEO, DE, CAT, BTN

Fyi….Position update…..In addition to periodic global-macro posts to this blog, we occasionally share position updates that are routinely shared with our investors.  These comments are absolutely not meant to be investment advice and readers are reminded that all comments posted here are for information and entertainment purposes only!  Any commentary, especially those that include specific mentions of 'buying' or 'selling' or 'positions', is made solely for those limited informational and entertainment purposes, and NOT as advice.  While we will be sharing some detail on changes made to our portfolios, it's important to consider that our portfolio decisions are taken in a much broader context of our overall portfolio strategies and our assessment of each of our investor's unique financial profiles.  As such, what we do, and when we do it, is specific to our investor portfolios and is NOT intended, in any way, as advice for use by others.
With that in mind, we hope you find our comments of interest, and we'd be delighted to hear feedback!


(If you'd like to exchange thoughts on this post or on other subjects, please connect with me through the Private Chat tool on the right side of this page, or if you'd like to email thoughts, please do so through the Contact Form feature.  For public airings, please use the Comment feature below.  Looking forward to hearing your thoughts!)



Soos Global Investors:   Fyi…As I’ve indicated in recent missives, a number of factors, including sluggish economic growth, higher geopolitical risks, and markets’ beliefs that central bank rate hikes are coming soon, have made me increasingly defensive.  Today, we added another factor to the list by dusting off the European banking crisis issue “of old” (or more accurately, of “lurking beneath the surface”), as a Portuguese bank missed a debt payment and raised fears of a broader based banking problem.

The US markets responded as expected, selling off 180 points in early trading, but calm was seemingly restored later in the day, with the Dow closing down just 70 pts.  I’ll be watching closely to see how the Portuguese banking issue evolves in coming days and assessing how it will impact markets and asset valuations. 

In the meantime, below is a summary of some changes that I made to our portfolios today. 


1)      American Eagle Outfitters (AEO)….I exited from AEO today after the stock continued to trade poorly and on the heels of talk w/in the retail industry that “times remain tough”.  (Most notably, The Container Store chief yesterday noted that ‘the retail sector is in a funk’!).  The original investment premise on AEO was that the stock had already suffered due to the fickle teen  segment who had focused on discount/value buying from places like H&M rather than more upscale stores like AEO, but that AEO was adjusting its product offerings to win back that market share.  In addition, AEO was expanding overseas using a partner strategy in which the local partner would endure the heavy-lifting of the real-estate sites, and AEO would benefit from the licensing and product sales.  Along the way, however, the CEO left the firm, creating uncertainly which the market understandably didn’t like!  In addition, the teen segment continued to slow spending and to focus on discounters.  In a generally weak market, with an economy that is meandering along at roughly 2-2.5% GDP pace, I decided to step aside from AEO, cut our losses, and will continue to monitor its progress for possible re-entry down the road.  The enticing 4.4% dividend went ‘ex’ back on June 30, so we captured that payment.  Will revisit ahead of the next ex-date (and most likely after 30 days from today for the CORE taxable strategy, so that we book the tax loss).

2)      Deere (DE)….I had lightened up on DE a while ago in the mid-90’s, and exited the remaining position today at 88.54.  Following the June 30 Department of Agriculture Report which was quite bearish for agricultural commodity prices (having indicated far higher amounts of crop supply than had been anticipated), DE has struggled.  I still like Deere and would re-enter, but  I’m concerned that the recent pressure on farm equipment makers may persist.  In addition, I’ve continued to look for opportunities to shift the focus of one of our investment themes more towards the potential spending habits of the emerging middle class around the world, and to lighten up on the global emerging market infrastructure build.

3)      Caterpillar (CAT)….CAT has had a very strong run.  At current high levels, and with my defensive overall view on the economy, I exited CAT.  This is also in sync w/the shifting theme within the portfolios away from infrastructure and more toward emerging consumer middle class spending.  CAT faces increased competition around the world, and lots of the low hanging fruit that they were able to grab in recent years especially as Emerging Market countries were developing their infrastructures, is becoming more challenging to get at this time.  CAT does, however, remain a re-entry candidate at lower valuation levels.

4)      Ballantyne Strong (BTN)….I’ve started to lighten up on our position in this digital projector, lighting and computer display and servicing company.  It’s a very small company that I initially bought due to their growing business in digital theater projectors and screens.  Lots of theaters at this point, however, have already migrated to that new technology.  Even though BTN has worked hard to diversify their businesses, and I like their new focus, given my general concerns about the broader market facing headwinds which, as we saw today, could increase volatility that generally hits smaller cap companies more heavily, I’m looking to exit from the position and redeploy the capital elsewhere, while maintaining a foot in the theater play through our position in Cinemark.

As always, please email or call w/any questions or to discuss in more detail.
I’ll keep you posted.
Best,
Ed

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs and BTN.  Positions may change at any time without notice.     

 

Wednesday, July 9, 2014

Are Rate Hikes Going to Pop the Equity Market (not yet a) Bubble?



(If you'd like to exchange thoughts on this post or on other subjects, please connect with me through the Private Chat tool on the right side of this page, or if you'd like to email thoughts, please do so through the Contact Form feature.  For public airings, please use the Comment feature below.  Looking forward to hearing your thoughts!)
 

FYI…I thought I’d share a few bigger-picture thoughts on issues that are serving as a backdrop to some portfolio shifts that I have under consideration. 



Fixed Income is not something that you’ve heard me talk much about for some time.  I have not had any in the strategies since yields had gotten too low to argue for a  good risk/return payoff.  Cash appeared to be the better option, leaving ‘powder’ dry to take advantage of equity market selloffs, either broad-based, or on selective issues.



Recently, especially with the improving US employment data, there’s increasing talk about the Fed’s targets on employment and inflation getting closer to being realized, and in turn, expectations are growing for a sooner-than-had-been-thought rate hike by the Fed.  As you can see in the following chart of 2yr Tsy yields, the rates have nearly doubled in recent weeks to approximately 0.50%.  One key issue worth considering is whether this is the beginning of a meltdown in the fixed income markets, which have been at historically low yields and tight spreads (especially high-yield) for quite a while, or whether the sell-off in fixed income and in turn the rise in rates will be limited by the automatic-stabilizer impact that higher rates will have on slowing the economy and taming inflation (if any).  Financial market literature and research is riddled with various versions of this debate.  Most notably, in my mind, is the recent introduction of a new term into the financial markets speak:  MACRO PRUDENTIAL POLICIES.  To be fair, it’s not entirely new in the academic literature, but for main-street-Wall-Streeters to be throwing around the term with seeming fluency, one has to take note.  In essence, Yellen, and Draghi, both went out of their way in speeches last week to counter the criticism laid upon them by the BIS who said that the overly easy monetary policies of central banks are setting the stage for another financial crisis as asset prices rise and bubbles ensue.  Yellen and Draghi countered by saying that rate hikes were too much of a ‘shotgun’ approach, and that in order to mitigate systemic risk of financial instability, central banks have to use targeted, rifle-shot macro prudential policies (code for regulations, supervision, stress tests, capital levels, etc). 

(Cont’d below….)



The focus at this point has to be on just how far Yellen and Draghi go into turning the rhetorical battle into actual practice.  To be sure (or as sure as one can be) continuation of the Fed’s tapering is widely anticipated and, as I mentioned, the timing of the Fed’s first rate hike has also been brought forward.  But the Fed is well aware of the impact that higher rates has on the economy, witnessing the slowdown in the housing sector that we saw since last year when long rates and mortgage rates climbed.  That, in and of itself, may be the limiting factor in keep the Fed from raising rates too far too fast.  Likewise, on the long-end of the curve, higher long-term rates wouldn’t be surprising, but just how far long rates climb is likely to be tempered by an environment of relatively slow economic growth (for ’14, trend growth in the US of roughly 2.0-2.5% is still a wished-for outcome!) and minimal signs of inflation (though rising oil, food and other commodity prices have to be watched closely).



We started this year with 10yr yields closer to 3.0%, and as they’ve fallen, equities have continued their rise to historic highs (see first chart below).  We also have a situation where, from a valuation perspective, equities are not quite yet in nose-bleed territory, but they’re not far from it! (see second chart below from DecisionPoint on StockCharts.com which shows where the S&P would be priced based on trailing 12-mth earnings at various P/E ratios.  It shows current actual S&P levels at near 20x, which has historically been considered the ‘overvalued’ zone).









From a strategies perspective, I’m remaining defensive on equities, taking profits on some positions that appear to have overstretched, but continuing to look for seemingly oversold opportunities in the market to add to our positions.  If the markets continue to take short rates higher, I will be looking to add short term investment grade corporate bonds if they appear to be oversold. 

In coming days, I’ll be updating more specifics on individual assets and on other portfolio considerations.  Stay tuned….

Best,

Ed

Please continue to visit Soos Global Market Musings for updates.

(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.