B e l o w find our current holdings, really. The first three form our slightly larger positions. We invest long-term, 2 years or greater. Markets go both ways, yet some of our future can be seen clearly now. That is our target. We also realize that we are not strictly diversified. Quite clearly, we position radically for trend-driven secular shift(e-commerce, SVOD, etc.) All dividends are reinvested. Our average time horizon is now 11 years. Our holdings include 10 equity positions, call options, and cash(averaging 10%.)
FOUR OF OUR POSITIONS PAY DIVIDENDS AS FOLLOWS(2-22-18)
LMT 2.24%. HUN 1.49%. UNH 1.33%. ATVI 0.48%.
40% OF TOTAL S&P500 RETURNS WERE THE RESULT OF REINVESTED DIVIDENDS.
LAST PORTFOLIO ACTION/UPDATE: 03-04-18.
1. Amazon–(NASDAQ: AMZN) IT, Internet, Direct Marketing.
Be there with StockJaw in the end–when AMZN does everything everywhere.
Amazon remains the epic growth stock of the age. Founder/CEO Jeff Bezos is doing what the Soviets couldn’t. AMZN is taking over the world, but in such a way that they become integral to non-retail industries. Amazon doesn’t want every industry. They want to sell goods and services to every industry. “Look regulators–no monopoly.” Forget the P/E on AMZN. Buy on a 3%-8% pull-back, if not bad company news. Amazon passes on a lot of conference call questions.
StockJaw blurrin’ it to our broker for another maw-full of Amazon, before it’s too late. Few things are this simple.
On July 11th StockJaw called–“AMZN, BUY below $950.00.” AMZN opened that day at $993.00. Forty-one days later AMZN hit our buy price. Five weeks after that, on 9-26-17, it hit an intraday low of $931.75–the cheapest since our “BUY” call. Which means we called 98.2% of the discount for AMZN that the market provided. It’s now $1156.16. If purchased at our $950.00 call, it translates into a 21.5% move in eight weeks.
Amazon’s hometown. 1903 Pike Place Market over-looking Elliot Bay, Seattle.
Savvy-up with our unzipped twin takes on World Killer Amazon:
“That Smiley Amazon Show.”
or “‘Follow That Crowd?’ Amazon Prime Day Pump.”
17.1% of Total Equities Held.
Our cost basis: $758.06.
Morningstar fair value; $1600.00.
AMZN’s big tell remains Prime memberships. After revenue, they report a metric they call CSOI(consolidated segment operating income.) On calls AMZN provides mostly general info/color. Read the press releases first. Q3’s call was short, loud, glitchy, and chaotic.
Amazon Investor Relations:
StockJaw.com Conference Call Rating: 2 Stars.
AMZN–Crooked Hours Report.
1. Anti-trust regulation. Amazon’s size, increasing reach, and rail-dragster growth, make it a prime target for regulators. Regulation is often a political ploy, rather than consumer protection. Amazon is for sure the nail to be beaten down if consumer sentiment shifts.
2. Execution risk. AMZN continues to startle. No company in human history has expanded this broadly, and this far. AMZN wants the world and they’re going for it.
3. The rebirth-hard of Wal-Mart. The purchase of Jeff Lore’s Jet.com is transforming WMT’s entire online presence. It’s working–big time. Jet.com’s model rewards shoppers with both lower shipping and item costs. How? Customers save when selecting regional sellers, buy more, and are willing to wait, thus allowing sellers time to bundle orders efficiently. It works. WMT’s revenue displays as much.
2. Alibaba–(NYSE: BABA) IT, Internet Software & Services.
Alibaba is the Amazon Storm of the East, with maybe an even better business model.
Alibaba is the Jaw-dropping Chinese corollary to Amazon. Widely viewed as an eCommerce giant, Alibaba more accurately is a market creator. It creates the digital marketplace bringing together both buyers and sellers. Unlike AMZN, Alibaba does not own/sell merchandise, nor does it need a stupefying network of fulfillment centers, or a military-equivalent logistics wing, to service operations. Along with great potential, Alibaba is a Chinese company, subject to both shifting Chinese political whims, and investor information quality and quantity issues.
New dynasty of commerce. Wonder how the steel tariffs will set with Xi Jinping? And the on-going subsuming of Hong Kong?
9.4% of Total Equities Held.
Our cost basis: $158.68.
Morningstar fair value; $210.00.
Alibaba Investor Relations:
BABA–Crooked Hours Report.
1. Alibaba faces the constant threat of government intervention. This is a very real threat. Never doubt the seriousness of the Chinese leadership. No one messes about in the PRC and gets away with it.
2. BABA operates in a legal grey area within Chinese law. Direct company ownership is complicated in the PRC. Thus BABA’s share ownership structure is a maze, despite its’ ADR(American Depository Receipts) status.
3. Alphabet–(NASDAQ: GOOG, GOOGL) IT, Internet, Software & S.
T h e EU’s $2.7b. anti-trust fine is the cost of doing business for Alphabet. That issue irons out over time. They have $90b. and own 90% of EU search. No competitor stands in position to threaten Alphabet. Love this oligopoly search/advertising juggernaut, and mother of Waymo. Who knows what else co-founders Page and Brin may cook up in that backyard they call Other Bets? Mash the link for our full report on Alphabet, after the arrival of “Ruthless Ruth.”
Our sweeping and nuts and bolts look at Alphabet:
“How Many Stars in Constellation Google? What are they up to in Nursery Alphabet?”
11% of Total Equities Held.
Our cost bases: GOOG $605.98, GOOGL $680.90.
Morningstar fair value: $1200.00.
A grip on digital advertising helpful–like ‘programmatic.” Google it.
Alphabet Investor Relations, such as it is:
Alphabet sports perhaps the worst Investor Relations website we work with. iTunes users might like it.
StockJaw Conference Call Rating: 3 Stars.
Alphabet–Crooked Hours Report.
1. Alphabet faces the same anti-trust concern as FB, or AMZN. Google owns search, particularly in the United States and Europe. The EU has been conducting an unending battle against Alphabet, for years. Late this summer the EU levied a $2.7 billion fine against Alphabet for unfair trade practices relating to its’ displaying of shopping results. The EU claims the company massages search results. Probably. Google could eventually be seen as a “utility” and perhaps be regulated along those lines.
2. Concern also exits around Alphabet’s “dependence on search and advertising.” We do not share this notion. Alphabet’s uniquely structured business incubator model houses Waymo(self-driving cars), Nest(groovy IOT homes), Verily(longevity/life science), Loon(balloon-borne internet delivery), Fiber(unaffordable high-speed internet), Glass(connected wearables.)
3. We have voiced concern surrounding the sheer number of ideas pursued by the company. How many is too many? How much money will they throw into yet unprofitable notions? Yet watching Amazon’s unfathomable expansion into everything has lessened our worry. The rise of Waymo is also very encouraging. Besides, Alphabet’s cash-filthy.
4. Facebook–(NASDAQ: FB) IT, Internet, Software & Services.Facebook prepares to face actual legal authority, people with collective power he won’t be able to ignore. That’s new.
UPDATE 3-27-18: STOCKjAW SELLS FACEBOOK(NASDAQ: FB) AT $161.00. We closed a long open position which we had traded shares in and out of. We removed from a troubled company a total return of 41%(NON-CAGR). FB close 3-27-18 $152.22, -4.9%.
TAKEAWAY; FB will face both political/regulatory and user/thus advertiser headwinds for the medium term. Most governmental churn is time consuming, and headline producing. Everything FB is now a potential price event. Price volatility will play a significant part in FB’s medium term future. Less trying options exist. We called some time back that sub-committee hearings were “probable.” Those begin in a couple of days.
Facebook remains a phenom. FB owns mobile connectedness. FB monetized mobile. They draw top talent. They will own mobile video messaging and chat, maybe VR. Good conference calls–a little promotional. Really like Sheryl Sandberg. Love or hate him, Mark Zuckerberg is brilliant and killing it–takin’ a party year off from Harvard.
7.5% of Total Equities Held.
Our cost basis: $108.01.
Morningstar fair value; $198.00.
Digital advertising is their business. it’s involved.
Facebook Investor Relations:
StockJaw Conference Call Rating: CCR–3 Stars.
FB–Crooked Hours Report.
Increasing scrutiny of FB’s massive content is creating more difficult questions for the company. Early in FB’s history many observers felt the platform would aid in political understanding, and perhaps cooperation. Instead Zuckerberg and crew now face a pair of long-term threats. Welcome to FB’s Crooked Hours.
1. Legislation forcing FB to further police it’s content. Ideas are brewing, including the new senate bill known as the “Honest Ads Act.” Zuckerberg/FB has stated flatly that such a law would “increase costs dramatically.” In addition, the prospect of lawsuits and ugly publicity also come in this mix.
2. Anti-trust legislation. FB’s reach is unprecedented–approx. 2 billion monthly active users. Media buzz concerning the “echo chamber” continues unabated. FB Live also brings scrutiny for it’s failure to fully police or block unacceptable content, such as homicides. Politicians are drawn like roaches to anything garnering any real wide public concern. FB’s reach qualifies–big time.
5. Activision-Blizzard–(NYSE: ATVI) IT, Software.
Activision-Blizzard will replace lost revenue from declining World of Warcraft. subs.
Activision is the model for the E game industry. Enduring engagement is their mantra, and they pioneered the path. It works. All follow ATVI’s model now, and they’re getting better at it. Yet, heard of e-sports, or World of Warcraft, Call of Duty, Overwatch? TTWo and EA are also great “3rd party publishers.”
9.3% of Total Equities Held.
Our cost basis: $38.53.
Morningstar fair value; $59.00.
Annual Dividend Yield 0.48%
Fully informing, yet promotional, like Kevin Plank over at UA.
Activision-Blizzard Investor Relations;
StockJaw Conference Call Rating: 3 Stars.
6. Lockheed Martin–(NYSE: LMT) Industrial, Defense.
You want this–but you want it cheap? Really? What do you want us to leave out?
LMT 2016–37% of revenue came from government contracts for which LMT was the sole bidder. That’s like being spotted 37 points. CEO Marillyn Hewson is leading LMT toward greater strength. Conference calls are super clear, direct, non-promotional, and efficient. LMT, a stable 5%-8% grower with a low .61 beta(volatility), and a 2.61% annual dividend yield–at current share price $277.61. Trump? He likes both defense and Lockheed Martin. Look inside with our 4th of July report on Lockheed Martin, “Lockheed in Trump Land.”
Lockheed-Martin’s in the sweet-spot. We though Trump would love this stuff. He does. Who better to pimp your product than the president? Both foreign tours so far were arms sales with diplomatic grease.
Savor our report on Lockheed in Trump Land:
9.7% of Total Equities Held.
Our cost basis: $254.65.
Morningstar fair value; $310.00.
Annual Dividend Yield 2.24%
Lockheed-Martin Investor Relations:
Awesome calls. Clear, forth-coming, and inclusive.
StockJaw.com Conference Call Rating: CCR–4 Stars.
LMT–Crooked Hours Report
Lockheed Martin is in the sweet spot. The current Washington attitude toward defense in extremely bullish for all defense contractors. Yet concerns exist.
1. Sequestration. Sequestration mandates government department budget reductions without discrimination. It’s a budget deficit mechanism. It’s mechanical, and once in place must be actively counteracted to prevent its’ savage across the board program cuts.
2. The debt-ceiling vote. Within weeks Washington will be required to confront all budget items in light of the debt ceiling. For spending to continue the ceiling must be raised, again. No guarantee of passage exists, and this play clock is ticking down.
7. United Health Group–(NYSE: UNH) Healthcare, Providers.
United Health is best in class health care management, and pharmacy benefits manager(pbm). Love or hate such companies, UNH has displayed adaptability in a rapidly shifting marketplace. They probably have some of your money. Why not get some back?
On 1-16-18 United Health released a dominated performance for Q4, FY ’17, exceeding both analyst’s expectations and their own guidance. What was the best-positioned and capitalized healthcare company saying? UNH said the same thing MMM was saying–business is good and we’re growing every operating segment of the company, healthcare delivery, PBM(pharmacy Benefits management), and digital. All segments led with strong organic growth. The market loved it and shares soared on successive days.
When asked about the uncertainty concerning national healthcare policy and the ACA, UNH simply repeated their consistent answer; “We’re not doing anything particularly, except waiting to see what emerges from the Hill. We’re as well positioned as anybody and we’ll just have to wait and see.” And indeed UNH appears to be precisely that–well positioned, and watching Washington, and beating all their numbers like a gong. More coming concerning the UNH digital wing.
8% of Total Equities Held.
Our cost basis: $177.76.
Morningstar fair value; $161.00.
Annual Dividend Yield 1.33%
United Health Group Investor Relations:
Stockjaw Conference Call Rating: CCR–4 Stars.
UPDATE; 1-17-18: STOCKjAW BLOWS-UP. A day from expiration we attempted to exercise our call options in Huntsman International. Things had changed for selling call options on the trading platform. We attempted to buy the shares. Human error sold the calls, rather than exercising the contract.
OUTCOME: Total Return HUN 1-19-18 call options 84.7%, or 0.80%CAGR. Perhaps the Huntsman move dies here, no really we’re back to the option chains. However, the recent share price move may have priced calls too high just now. The technicals have shifted, in that shares are now overbought, and under “distribution.” Distribution is selling and no one knows where that ends.
Huntsman International LLC.,(NYSE: HUN). Materials. Chem.
Huntsman International manufactures differentiated chemicals including polyurethanes, their largest business.
StockJaw buys; HUN 05/18/2018/31.00(strike), call options.
Premium, $2.10sh, or $210.00 per contract(100 shares).
Buying call options provides the buyer the right, but not the obligation, to purchase 100 shares of a stock, at a predetermined price–the “strike price,” within a set time frame. Our strike price here is $30.00. Each “contract,” equals 100 shares. Our contracts “expire” on January 19, 2018. The more than two month contract allows time for the share price to move. It has, from $31.00-$33.24. Our break even point is $32.15. with commission. As you see we are “in the money” on our call options, with a dab of time on the clock.
Huntsman International is a differentiated chemical company operating in five segments, based in Dallas. The MDI and components polyurethanes business is the core of the company. Current CEO Peter Huntsman, right–family, seems committed to reaching what he routinely refers to as “investment grade” metrics during ’18. It’s working.
The chemical industry is cyclical. Cyclicals require humming economies to thrive.
Over the past year HUN has reduced leverage from 3.7 x EBITDA down to 2.2 times. Including the company’s equity in Venetor–their recently spun-off pigments/additives business–current leverage would be 1 x EBITDA. CEO Huntsman stated their intention to monetize–sell–that asset “…as soon as possible.” They plan a HUN share repurchase program, and dividend increases.
Huntsman International is rapidly reducing debt, setting up to repurchase shares, and maybe boast the dividend. HUN is becoming both a very shareholder friendly company, and a “Buy.”
On the Q3 conference call CEO Peter Huntsman clearly states that goal; “We feel Huntsman is well positioned to deliver meaningful and substantial shareholder value.” Common statement. But the man sounds committed. HUN’s #s are displaying that focus.
Cost Basis $34.40.
3.26% of equities held.
Annual Dividend Yield 1.49%
StockJaw.com Conference Call Rating: 4 Stars.
Huntsman International LLC., Investor Relations:
HUN–Crooked Hours Report
1. The primary threat facing Huntsman in an economic slowdown, either globally, or domestically. Chemicals remain a cyclical industry, requiring broader sector growth. Huntsman enjoys that now, as evidenced by their rising share price.
2. Execution risk. All enterprises face execution challenges. HUN is executing well now, and has been for several quarters. We believe execution risk is not HUN’s primary concern. Wider economic growth is.
CEO Peter Huntsman states clearly the “long lead time” necessary for anyone attempting to enter the chemicals space. Four-to-five years would be required to set up any competing operation. No such development is in the works. The industry as a whole is currently operating at 95% capacity. Thus no competitor possesses the ability to meaningfully increase production. So, the industry enjoys strong demand within a market of limited supply. That means pricing power. We like HUN, and it’s been behaving extremely well.
AT&T(NYSE:T) Telecommunications.AT&T Stadium, Dallas, TX. incredible.
UPDATE; 04-09-18. STOCKJAW closes position in at&t. On-going market volatility means reducing risk. T’s battle with the government could turn into a morass. No one knows how long it will last or how ugly it may read in PR terms. And if they lose and no Time-Warner? T itself now says the deal’s critical to their “competitiveness.” Will the court read it the same way? Who needs additional foreseeable trouble, at a time when everyday is troubling? Sold at $35.63.
Cost Basis $37.24.
7.69% of equities held.
Annual Dividend Yield 5.47%
Morningstar Fair Value $40.00.
Purchase 2-5-18. Friday; +1.35%, $36.05. Our purchase price, $37.19. Too high. Soon we’ll tell you the 3 ways owning T even now works.
Yes we have some fun on T’s behalf in our in-depth look at media in America. T deserves the trash talk. How many times has AT&T’s been tangled with the federal government over deceptive trade and outright fraud? My god–usually it’s the bills. Remember “cramming?” But then, how many stone-reliable 5.4% dividend payers do you know? How about ones trading at 13 forward P/E, or a PEG of 2.16? Check the PEG on a utility, and the P/Es. Now look back at T. Adds two blocks in our diversification–telecom, and dividend payer. Better-n-bonds.
Our STOCkJAW Conference Call Rating:
Take-2 Interactive(NASDAQ:TTWO). Information Technology/software.Take-Two is best known for the Mega-blockbuster Grand Thief Auto, with more than 200 million units sold. NBA 4K is also a marque franchise.
UPDATE; 04-09-18. STOCKJAW closes position in Take Two at $97.01. Negative price action has left TTWO below both its’ 50d and 200d SMAs. Total technical deterioration adds to the company’s significant challenges such as increasing competition, to which TTWO is under-financed, on-going primary reliance on Grand Theft Auto. Total return -10.3%.
Cost Basis $105.66.
6.94% of equities held.
Morningstar Fair Value $79.00
Twitter(NYSE: TWTR). IT, Social Media…and not enjoying the beating thus far.
On February 8th this year out of San Francisco Twitter informed analysts about history. For the first time TWFR rocked profitable. The company beat on top and bottom lines and posted an EBITDA margin of 42%. Morningstar had been holding a $17 price target. After Q4 they raised to $24. That’s a 40% jump. Was Morningstar that far off, or is Twitter outperforming?
TWTR faces the very serious challenge of increasing long-flat monthly active users(MAUs), if they wish to remain investable. Nothing easy there. However, user engagement continues growing, as did Q4s advertising revenue–up 27%. Perhaps Jack Dorsey can run two companies simultaneously.
Cost Basis $31.74.
CASH –Let’s ask Money Fly. “9.27%, down from 27%.” You heard it here first. StockJaw is working to bring you even greater perspective. When we buy or sell you’ll find it right here.
U.S. Dollars. Preferred range 10%-25%. Cash held outside IRAs held in CDs. It counts and it’s good drill. We do not hedge or use FX markets.
CASH–Crooked Hours Report.
1. Cash is becoming more expensive. Our Fed has clearly stated it’s intention to boost the fed funds rate repeatedly this year. That will happen. Regardless, retail returns on fixed-income vehicles will not meaningfully reflect the increasing cost of the dollar, probably until 2019. You will not be paid much more this year for savings, money markets, or CD’s.
2. The U.S. Dollar has pulled back from its’ unusual strength against other world currencies; Pound, Euro, Yuan, etc. U.S. based exporters will continue to benefit from the dollar’s weakening, as our goods will cost less when translated into stronger competing currencies as listed above.
3. Threat. Any half-alert financial thinker will tell us, like Buffet did, that the U.S. Dollar is under grave threat as the world’s “reserve currency.” The reason is simple. The United States lives on credit. Our balance is growing radically. The new GOP tax “plan” adds at minimum 1.5 trillion dollars to the total, and it will fall on to the shoulders of the young to pay the debt, or lose credibility.
4. China is locked in a financial death-dance with the U.S. They own our debt. If the larger world decides our debt, not our budget deficit, is too high, we will be treated harshly. Think Greece, sort of.
Roll with volatility. Remain calm and keep your bucket upright.
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