Insomniac Hedge Fund Guy

It’s good to see someone playing the long game with America’s trodden down energy MLP’s. Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, plans to expand investment in U.S. shale gas projects through joint ventures, according to acting Chief Executive Officer Yousef al Benyan. Sabic, as the company is known, signed an agreement with Houston, Texas-based Enterprise Products Partners L.P. to get shale gas, al-Benyan said in an interview in Riyadh. The company may use the feedstock in the U.S. or export it to other countries such as the U.K., he said. Sabic has converted crackers at U.K. plants … Read more

History Shows Iran Could Surprise the Oil MarketMost analysts are far too pessimistic about Iran’s ability to bounce back, International Energy Agency Saysby Javier BlasJuly 19, 2015 — 5:00 PM MDTSEx Iran could restore oil production halted by sanctions faster than anyone anticipates if the history of previous shutdowns is any guide. Source: History Shows Iran Could Surprise the Oil Market – Bloomberg Business Our comments: Short S&P Oil and Gas Exploration (XOP) It’s hard to see anything positive about the oil and gas exploration sector from an investor’s perspective. The advent of shale drilling technologies in the U.S. is … Read more

As stocks’ returns dry up, some people take more risks. It could be time to save more. Source: Investors Brace for Fewer Winners Not likely we will have a big sell-off when there are bearish headlines like this.  I’m still in the camp of positive S&P returns for 2015 but negative return year in 2016.

  Even with higher interest rates likely, a Wells Fargo analyst is bullish on shares of ‘quality’ names. Source: Will Energy MLPs Remain Stuck in Down Market? Many if not all of my clients and prospects have been attracted to this asset class in recent years.  Why not?  The tax advantaged income is high, the prospects of growth in America’s newly minted energy renaissance have been good, and they have been consistent good performers until last summer when the price of oil collapsed. Therefore I wanted to share some observations on this asset class. Not all MLPs are created equally.  In … Read more

China May Tip World Into Recession: Morgan Stanleyby Ye XieGavin SerkinJuly 13, 2015 — 5:13 PM China may soon have another thing to offer the world: a recession.That is the prediction from Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, who says a continuation of China’s slowdown in the next years may drag global economic growth below 2 percent, a threshold he views as equivalent to a world recession. It would be the first global slump over the past 50 years without the U.S. contracting. Source: China May Tip World Into Recession: Morgan Stanley – Bloomberg Business

China’s Tsinghua Unigroup has submitted a bid to buy out U.S. memory chip maker Micron Technology for $23 billion, people familiar with the matter said. Source: State-Owned Chinese Chip Maker Tsinghua Unigroup Makes $23 Billion Bid for Micron The Wall Street Journal almost never gets this kind of story wrong. I’d be surprised if the US Government lets this go through when they are voicing opposition to the Staples Office Depot merger.  Besides the price is ludicrous.  But then again the Obama administration seems content to lift the sanctions on Iran for a dubious nuclear deal.  Iran’s President, Hassan Rouhani, … Read more

1.Valuations are stretched on easy money. Barring some unforeseen geopolitical shock, the Fed will likely have hiked rates 2-4 times by mid 2016 in their efforts to bring monetary policy back in line with historic norms. Valuations are lofty based on abnormally low-interest rates.  A reversal of the zero interest monetary policy will create a higher hurdle for equity valuations. 2. Rising rates will be a financial headwind to profits.  According to JP Morgan ,” The low-interest-rate policy has had a material impact on S&P 500 EPS, with interest expense declining from $55/share in 2007 to around $18 in recent years… … Read more

Bond funds tend to hold their value—unless rates are rising. Is it time to dump yours? A look at the pros and cons, as well as alternatives that include market-neutral funds, laddering, and munis. Source: A New Approach to Bonds

Utilities have fallen sharply on fears of rising rates. If the Fed moves slowly, the stocks could rebound. Also, a backlash against buybacks. Source: Utility Stocks Are Undervalued I would not be a blanket buyer of utility stocks like Barron’s suggests but we do have a large position in Dominion Resources which I look at like a blue chip dividend paying stock with a very strong balance sheet.  If Dominion should drop to $65 (current price Thursday July 2nd $67.90) it would yield 4%.  The Company has repeatedly said it intends to grow its dividend at 8% per annum.  That … Read more

I believe most technical analysis is dubious.  I heard a saying on Fast Money, the other day, that the ships at the bottom of the sea are full of  charts.  None the less, I do believe divergence to be a reliable short term indicator.  There are some notable divergences showing up on my weekend screen before the latest Greek Drama and bank closings.  They are as follows: Dow Jones Transports Index has been getting pummeled.  This probably has more to do with the collapse in crude oil and the weakened prospects of moving it by train than a general economic … Read more

We recently purchased Dupont, sub $70, as stock is flirting at the lowest level all year.  The sell off is ironic because it was due to activist Nelson Peltz’s failed board seat proxy.  Peltz insisted he was keeping his stake and a couple of insiders added to theirs yet the stock moved lower.  The company is spinning of a performance chemical unit July 1. and investors will own a piece of this as well.  In last week’s Barron’s Round Table, famed investor Brian Rogers wrote “You never want to make bold statements, but based on what happened at DuPont [DD], I can’t imagine it underperforms … Read more

By KAREN HUBEJune 20, 2015Fixed-income annuities have never paid out so little, and yet had so much appeal. These annuities, which provide a lifetime of guaranteed income, are paying out 12% less, on average, than in 2011, and 25% less than in 2007. And yet sales jumped 17% last year, to their highest level in five years. Source: The Best Annuities – Barron’s The writer’s perspective: “It’s no wonder that with interest rates at such miserly levels, the enthusiasm for annuities has been rising.  I’ve had a  client and even some prospects mention them to me lately asking my opinion.  Candidly … Read more

It is likely that further gains in the market will be muted or even unlikely based on multiple valuation measures.  We look at several in this post.  As a matter of reference these observations are discussed in detail at our latest Investment Survival Workshops. If you have never been to one, they are worthwhile( no one has ever rated them less than good or excellent) and if you have attended a workshop in the past, we update these events with current and timely topics so please join us for the next one.  We keep a schedule of the upcoming workshops at workshops.saxangle.com Based on … Read more

Buybacks and Dividends All That’s Left in S&P 500, Goldman Saysby Joseph CiolliMay 19, 2015 — 10:00 PM MDT The $1 trillion that U.S. companies are on track to return to shareholders this year will constitute the market’s entire return in 2015, according to Goldman Sachs Group Inc.Dividends and buybacks will be responsible for supporting a market where the median stock in the Standard & Poor’s 500 Index is trading at 18.2 times earnings, putting it in the 99th percentile of historical valuation, the firm said in a note to clients. Goldman Sachs forecasts that the S&P 500 will rise … Read more

EU Prepares for Worst as Greece Drives Finances to Brinkby Radoslav TomekPatrick DonahueJune 12, 2015 — 5:13 AM MDT Updated on June 12, 2015 — 10:17 AM MDTShare on FacebookShare on Twitter Greek Debt: Will EU Pressure Bring Deal or Default? Don’t Miss Out — Follow Bloomberg OnFacebook Twitter Instagram YouTubeRecommendedSalvation to Catastrophe: What Might Happen to GreeceGreece Counts Cost of One Man’s GambleElizabeth Warren Says Dimon’s Irked Because She Knows His Tricks Greek Debt: Will EU Pressure Bring Deal or Default?Share on FacebookShare on TwitterEuropean officials are preparing for the worst as Prime Minister Alexis Tsipras’s brinkmanship pushes Greece’s … Read more

Mark Frissora, incoming CEO at Caesar just bought $1 million worth of his company’s stock. Frissora bought 101,900 shares between 5-20-15 and 5-21-15 at an average price of $10.04 Posted: Sunday, March 8, 2015 2:00 pm By REUBEN KRAMER, Staff Writer Incoming Caesars Entertainment CEO Mark Frissora is the anti-Gary Loveman, who leaves the post in June but will remain the company’s chairman. When Loveman went from Harvard to Harrah’s, Caesars’ predecessor, in 1998, the associate professor was respected for his wonky productivity theories but had virtually no experience running a company. Frissora comes to Caesars battle-tested — a self-described “Midwestern guy” from … Read more

Park City! Now is your chance to meet and have lunch with one of the country’s best performing equity managers! He has outperformed the S&P 500 by over 470% since 2001. The luncheon will be hosted on Wednesday, May 20th from Noon until 1PM at 1887 Gold Dust Lane, Suite 203A Park City, UT 84060. To save your seat now you can register by calling (435) 658-1934 or signing up online at workshops.saxangle.com.

I suppose like many readers, I am fascinated and somewhat perplexed by the unpredictable and outsized importance of events in the Middle East.  Is it because oil is the single most important commodity in the world, the Middle East is the birthplace of much of the world’s theocratic beliefs, or the collective guilt regarding the extermination of Jews during WWII.  Whatever the reasons, this article does an admirable job explaining the tension between the two most important factors in the turmoil today. Sunni-Shiite Conflict Reflects Modern Power Struggle, Not Theological SchismThe ancient divide has become the biggest fault line in the … Read more

Option calendar spreads on such “faith-based” stocks can pay off nicely. I like to highlight ideas that I think will work. In a market that’s fully valued or more by just about all matrices, the calendar spread looks like an attractive risk reward trade-off Source: How to Play Amazon, Netflix, and Tesla in Earnings Season – Barrons

I should have known better than to plan a pilgrimage to Omaha for the Berkshire Hathaway shareholder meeting at the last minute. Last minute for most travelers means a few days before but Buffett cognoscenti know last minute means something short of a year in advance. The annual shareholder meeting has transformed the sleepy town of Omaha into a frenzy of price gouging and inconvenience when Warren Buffett and Charlie Munger hold court. Omaha hotels are all sold out even with rates tripled or more and all modes of transportation to Omaha become twice the normal rates if available at … Read more