-StockJaw portfolio Action-
Chop Chop Who’s Not There?
FRESH PORTFOLIO SHIFTS
What’d they grind up and ram into your buy? “You’re calling that a BUY? No GE bologna–just the Boeing thank you.”
CLOSEOUTS, BLOW-UPS, AND TECHNICAL SELLS.
EXITED AT $319.88. Current price $310.18.
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:
9.5% 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.
Savoir our insights into Lockheed-Martin. Part of our national history is due to their ingenuity and on-going innovation in aircraft. How about the U-2?
“Can You Hear Me Now?”
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: 4-30-18. FB now trades above $174sh. The technicals are strengthening. Facebook reported Q1 top and bottom line beats. EPS beat by 25%, revenue growth y/y 51.5%, cash flow up–wait for it–97%.
EPS, REV., CASH FLOW, CHARTS(CHARLES SCHWAB)
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 yet face political/regulatory risk. Restrictions of use of data will affect earnings–some say significantly. FB reports no drop-off in users or engagement. Were such to become the case, advertisers will shift ad dollars. Most regulatory action develops slowly. Clarity concerning government intervention will not emerge immediately. That’s built-in risk.
In SJ’s “Crooked Hours” report months back, we stated hat congressional sub-committee hearings were “probable.” That happened. Concern persists. Price volatility may well play a significant part in FB’s medium term future. Less challenged options exist, but few possess FB’s fundamental strength.
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.
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.
Was 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.
Was 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.
Was 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.
UPDATE: 02-11-18. STOCKjAW trimmed four of our positions prior to the decline. That’s not luck. It’s rules based prudence. We’ve seen this story, versions. We were there in ’08, and 2000. Gains are only gains once realized. We realized profits in all four of our trims and cuts. Here are the numbers:
1. Amazon(AMZN) Sold 10-5-17.
Trim–25%. Realized Gain, +66.49%.
We sold AMZN on 10-5-17, as a response to rising valuations, and subsequent portfolio allocation.
2. GOOG/GOOGL. Sold 1-17-18.
Trim–16.6%. Realized Gain, +85.61%.
3. Facebook(NYSE:FB) Sold 1-30-18.
Cut–41.3%. Realized Gain; long term +51.47%, short term +4.28%. Very short trade.
4. Alibaba(NASDAQ:BABA) Sold 1-4-18.
Cut–50%. Realized Gain 20.23%. Very short trade.
Once again, we had zero idea what was coming. We don’t attempt to predict market direction. We do take action inline with history and market behavior. We never wanted to sell any AMZN. We hated doing it and immediately regretted having done so, even yet. But our position had appreciated by more than 100% and we had realized none of that gain. Gain is only profit once you sell.
Scanning his companies’ earnings report press releases.
“Where’re the headphones?
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