I am raising my slash and burn, buy everything in sight on NBG to $12.00. That means, anything under $12.00 is a buy. NBG recently ran as high as $12.32 - and actually got way ahead of its Athens Stock Exchange parent in terms of valuation. NBG is currently fetching $11.93/share. In the light of earnings season, it's aggressive, yet obtainable 3-year plan, and UBS price target of about $15, I would suggest buying everything in sight up to $12.00.
Of course, that is somewhat of an exaggeration based on the Gordon Gekko quote from Wall Street, but the fundamentals of the bank and the world economy remain strong.
NBG was also featured in a recent Forbes article, "The Exchange That Launched 1,000 Ships."
NBG has a lot going for it for the long-term and is postioned as perhaps the best banking play in all of eastern Europe, especially considering its expansion into Turkey and other countries in the region. NBG, long thought of only as a Greek, regional bank is slowly evolving into a European player. They are still several years off from reaching such lofty goals, but they are moving in the right direction.
I still say $14-$15 by the end of 2007. The weakening U.S. Dollar vs the Euro also adds some upside pressure to the NYSE traded ADRs.
Showing posts with label nbg. Show all posts
Showing posts with label nbg. Show all posts
Tuesday, July 10, 2007
Wednesday, May 30, 2007
National Bank of Greece (NYSE: NBG) – Buy on News Selling
A common phrase in the stock market is "buy on rumors, sell on news." Typically, this revolves around speculation on items such as a company takeover or earning results. In short, in the near-term, the price runs up on the expectation of the rumors and then once the rumor comes true, the price weakens and declines.
National Bank of Greece (NYSE: NBG) reported 1Q 2007 earnings at 10:00am on Tuesday, May 30. The rapidly expanding bank reported net income of EUR381 versus EUR250 from the same period a year ago. Analysts were expecting EUR360 of income. NBG, which are actually the American Depository Receipts for the capital stock that trades on the Athens Stock Exchange, closed at a 52-week high of $12.10 on Tuesday, May 29, one day before the earnings announcement.
Today, NBG is trading down 1.6% to $11.90 and traded as low as $11.75 on the stellar earnings report. NBG met analyst expectations for revenue, exceeded net income projections by nearly 6%, and cited strong growth in its core business and even stronger growth in its recently acquired divisions in Turkey and Eastern Europe.
So, with all of these positive, upbeat earnings report, why is the stock down nearly 2% rather than up strong?
The answer is that the market was unofficially expecting earnings to be stellar and exceed the official expectations. The rumor is that National Bank of Greece knocked the cover off the ball, which they did, but not enough. They brought the runs in, but only hit a 500 foot home run when the masses were hoping for a 600 foot bomb. Hence, a moderate sell off on average volume – the selling on the actual news of the earnings announcement has arrived. This almost predictable selling after the pre-earnings run up presents a buying opportunity on this news selling.
For long-term holders of National Bank of Greece, the future still looks bright. The company is trading at about 10.5 times projected 2008 earnings, which is slightly less than its peers. However, its peers are not showing the growth rates or the aggressive acquisition strategy like Greece's largest bank. Current price to book value of over 3.2 is a little steep, but the company has merited the temporary valuation with their growth and focus on expansion.
I forecast that NBG still has 25%-30% upside over the next 12 months, which would price the NYSE traded ADRs at around $15.00-$15.60. I am raising my slash-and-burn, get me in at a 45-degree angle price from $11 to $12 – meaning that anything under $12 is a buy. In the short term, we may see some more selling pressure, especially next week after the ex-dividend date of June 1, 2007. NBG will be paying out EUR1 per share which is about $0.27 per ADR adjusted for the Euro to Dollar exchange rate and that each ADR represents one-fifth of a full share of NBG.
I am also partial to the possibility that a larger international bank may come in and scoop up this fast growing bank – but a mere 10% at best. The management of National Bank of Greece, if anything, that getting acquired by a larger bank is not on their agenda. However, everyone has a price and within the next 12 months, if a buy out were to happen, we would see a price tag of $17-$19 for each ADR. The buy-out scenario is unlikely, but everyone has a price and it provides additional upside potential to this bank.
National Bank of Greece (NYSE: NBG) reported 1Q 2007 earnings at 10:00am on Tuesday, May 30. The rapidly expanding bank reported net income of EUR381 versus EUR250 from the same period a year ago. Analysts were expecting EUR360 of income. NBG, which are actually the American Depository Receipts for the capital stock that trades on the Athens Stock Exchange, closed at a 52-week high of $12.10 on Tuesday, May 29, one day before the earnings announcement.
Today, NBG is trading down 1.6% to $11.90 and traded as low as $11.75 on the stellar earnings report. NBG met analyst expectations for revenue, exceeded net income projections by nearly 6%, and cited strong growth in its core business and even stronger growth in its recently acquired divisions in Turkey and Eastern Europe.
So, with all of these positive, upbeat earnings report, why is the stock down nearly 2% rather than up strong?
The answer is that the market was unofficially expecting earnings to be stellar and exceed the official expectations. The rumor is that National Bank of Greece knocked the cover off the ball, which they did, but not enough. They brought the runs in, but only hit a 500 foot home run when the masses were hoping for a 600 foot bomb. Hence, a moderate sell off on average volume – the selling on the actual news of the earnings announcement has arrived. This almost predictable selling after the pre-earnings run up presents a buying opportunity on this news selling.
For long-term holders of National Bank of Greece, the future still looks bright. The company is trading at about 10.5 times projected 2008 earnings, which is slightly less than its peers. However, its peers are not showing the growth rates or the aggressive acquisition strategy like Greece's largest bank. Current price to book value of over 3.2 is a little steep, but the company has merited the temporary valuation with their growth and focus on expansion.
I forecast that NBG still has 25%-30% upside over the next 12 months, which would price the NYSE traded ADRs at around $15.00-$15.60. I am raising my slash-and-burn, get me in at a 45-degree angle price from $11 to $12 – meaning that anything under $12 is a buy. In the short term, we may see some more selling pressure, especially next week after the ex-dividend date of June 1, 2007. NBG will be paying out EUR1 per share which is about $0.27 per ADR adjusted for the Euro to Dollar exchange rate and that each ADR represents one-fifth of a full share of NBG.
I am also partial to the possibility that a larger international bank may come in and scoop up this fast growing bank – but a mere 10% at best. The management of National Bank of Greece, if anything, that getting acquired by a larger bank is not on their agenda. However, everyone has a price and within the next 12 months, if a buy out were to happen, we would see a price tag of $17-$19 for each ADR. The buy-out scenario is unlikely, but everyone has a price and it provides additional upside potential to this bank.
Monday, April 30, 2007
National Bank of Greece (NYSE: NBG) - Time To Sell? Only For the Weak Minded...
Today, NBG closed down 2.1% and finished the day at $11.42. It actually opened much lower at $11.30 and climbed back to $11.50 late in the day before some late selling brought it down to $11.42.
The cause? It was reported that Abdullah Gul of Turkey won the first round of the Turkish Presidential elections. Gul is from the Islamist Party in Turkey and that caused a great deal of political turmoil and concern, especially since Turkey has prospered primarily as a Secularist state. A good example of this is Gul's wife wears the traditional Muslim attire, which is banned in many places in Turkey. There was concern not only of this political change, but that Turkey's Army would come into play, as they have several times in the past, to maintain the Secularist control. This entire activity put the Turkish stock markets into an 8% dive and their currency into a 4% nosedive.
For NBG, this seems to be critical considering that they are counting on their acquisition in Turkey to help fuel their growth. Couple this with the NBG announcement that they will be selling up to 583,000 treasury shares of stock, and looks like an immediate sell, right?
First, let's look at the 583,000 share issuance. Dilution is never a great thing, but this issuance represents about 0.1% of the shares outstanding. This is not a big dilution at all - I bet there are more stock grants and options that are issued than that on an annual basis. Additionally, NBG said they will not sell the shares for less than 42.6 Euros, which equates to $11.67 per ADR when you take the currency exchange rate into effect. Yes, companies typically do not sell shares unless they feel they are overvalued, but I think this new issuance is not very dilutive. It may not be great news, but it certainly is not bad news.
Next, the more important event, the situation in Turkey. First, it is important to recognize that stock markets always tend to over-react to geo-political events. Take the recent 8% spike in oil prices during a 5 minute period when a rumor of a US/Iran military engagement came to light. There may be problems in Turkey, but the market has over-reacted to them. Barring some other form of geo-political disaster tomorrow, we should see an upward correction in the Turkish markets and NBG.
Also, the events in Turkey are not too surprising. The country's parliament, that directly elects the President is predominantly represented by the Islamist party. It should come as no surprise that this, at the very least, was not out of the realm of possibility when NBG decided to make a big investment in the country. In short, it may not be the best news for NBG (I am not convinced of this), but NBG likely had intelligent analysts, economists, and geo-political experts outlining various risk scenarios and possibilities. In short, it appears this event has been coming for a while, so it should not come as any surprise.
Gul has also expressed nothing but a desire for 'business as usual' in Turkey and his political career has shown that this is likely the case. Things might get more dramatic if the Turkish Army gets involved and tries to stop the transition, but that is unlikely. The Turkish Prime Minister has spoken the desire and demand to have unity during this time. Additionally, Gul is not an idiot - he knows what Turkey is and would be foolish to change things, especially since Turkey has prospered tremendously the past few years. I do not see that changing. Even if Gul does move towards something more Islamist in nature, it pleases Allah for Muslims to prosper in business and accumulate wealth.
One final element - tomorrow is a Labor Day holiday for much of the world and trading activity today for NBG and the rest of the markets was relatively thin and light. There is likely not enough downward pressure to sustain today's drop.
Long story short, the fundamentals for NBG remain strong and nothing situationally has changed and I still see NBG doubling within the next 2-3 years and reaching the mid/high teens by the end of 2007.
The cause? It was reported that Abdullah Gul of Turkey won the first round of the Turkish Presidential elections. Gul is from the Islamist Party in Turkey and that caused a great deal of political turmoil and concern, especially since Turkey has prospered primarily as a Secularist state. A good example of this is Gul's wife wears the traditional Muslim attire, which is banned in many places in Turkey. There was concern not only of this political change, but that Turkey's Army would come into play, as they have several times in the past, to maintain the Secularist control. This entire activity put the Turkish stock markets into an 8% dive and their currency into a 4% nosedive.
For NBG, this seems to be critical considering that they are counting on their acquisition in Turkey to help fuel their growth. Couple this with the NBG announcement that they will be selling up to 583,000 treasury shares of stock, and looks like an immediate sell, right?
First, let's look at the 583,000 share issuance. Dilution is never a great thing, but this issuance represents about 0.1% of the shares outstanding. This is not a big dilution at all - I bet there are more stock grants and options that are issued than that on an annual basis. Additionally, NBG said they will not sell the shares for less than 42.6 Euros, which equates to $11.67 per ADR when you take the currency exchange rate into effect. Yes, companies typically do not sell shares unless they feel they are overvalued, but I think this new issuance is not very dilutive. It may not be great news, but it certainly is not bad news.
Next, the more important event, the situation in Turkey. First, it is important to recognize that stock markets always tend to over-react to geo-political events. Take the recent 8% spike in oil prices during a 5 minute period when a rumor of a US/Iran military engagement came to light. There may be problems in Turkey, but the market has over-reacted to them. Barring some other form of geo-political disaster tomorrow, we should see an upward correction in the Turkish markets and NBG.
Also, the events in Turkey are not too surprising. The country's parliament, that directly elects the President is predominantly represented by the Islamist party. It should come as no surprise that this, at the very least, was not out of the realm of possibility when NBG decided to make a big investment in the country. In short, it may not be the best news for NBG (I am not convinced of this), but NBG likely had intelligent analysts, economists, and geo-political experts outlining various risk scenarios and possibilities. In short, it appears this event has been coming for a while, so it should not come as any surprise.
Gul has also expressed nothing but a desire for 'business as usual' in Turkey and his political career has shown that this is likely the case. Things might get more dramatic if the Turkish Army gets involved and tries to stop the transition, but that is unlikely. The Turkish Prime Minister has spoken the desire and demand to have unity during this time. Additionally, Gul is not an idiot - he knows what Turkey is and would be foolish to change things, especially since Turkey has prospered tremendously the past few years. I do not see that changing. Even if Gul does move towards something more Islamist in nature, it pleases Allah for Muslims to prosper in business and accumulate wealth.
One final element - tomorrow is a Labor Day holiday for much of the world and trading activity today for NBG and the rest of the markets was relatively thin and light. There is likely not enough downward pressure to sustain today's drop.
Long story short, the fundamentals for NBG remain strong and nothing situationally has changed and I still see NBG doubling within the next 2-3 years and reaching the mid/high teens by the end of 2007.
Sunday, March 4, 2007
2007 - The Year of the Owner - The Week Ahead & The Week Past
Last week, the stock market suffered its worst week in over 4 years. Everything was hit hard last week - and not just here in the USA, but overseas as well. The biggest loser was the Chinese stock market, losing 9% in a single day. European markets took big hits - this was especially noted by NBG declining 11%+ from its recent $11.25 high to close the week at a little over $10.00 per share.
Honestly, in short, I have not seen anything like this in years, or maybe ever. Sure, it has happened before, and long term, this will be yet another blip on the stock market's radar (knock on wood), but just about everything was down. Typically, you see general market weakness, but maybe a particular sector or industry shows strength. For instance, technology may be down, but energy or natural resources may be up. Not this time - everything was down - energy, materials, transportation, financial services, technology, etc. Greenspan coming out of the weeds to comment about a possible recessions by the end of the year did not help the cause of stocks.
Here is my take on it, for what it is worth. I think that last week's action was very health in terms of a correction. Although it would be nice if it could, the stock market cannot go up in a straight line forever. Even with last week's loss, the markets are still up 10% from a year go. If you take a look at my Marketocracy fund, even after last week's debacle, my fund is still up 0.9% YTD and while the NASDAQ, Dow Jones, and S&P 500 have not been as fortunate (down 2%, 2.8%, and 1.9% respectively). All I am saying, is that this is not the end of the world.
I think that the U.S. economic outlook does look good for 2007 as does the outlook for the entire global economy. I think that we will see growth in the stock market, but there will be an even increasingly strong focus on fundamentally sound and cash generating companies. I think this is so because even amidst last weeks problems, Merck (NYSE: MRK) and AIG (NYSE: AIG) both performed well as both reported very positive outlooks and results and MRK even got an upgrade. Simply put, the market is ready to reward companies that produce strong financial results, but those that are lagging will be susceptible to correction.
There is still a lot of value out there - even after the big run up, the stocks I am in still look cheap from a long term standpoint, especially NBG, PFE, MRK, SEB, and ASHG. I will be looking to add to all of these positions. Of course, I am in the automatic investing plans with PFE and MRK, so those are forgone conclusions. I added 15% to my NBG position last week and will look to increase some more, perhaps in the Spring, post dividend (assuming there is one), as that is when, at least historically, NBG trades a little weaker. If NBG can stick to their projections outlined in their 2007-2009 presentation, this one is worth $24-$28 in the next 2-3 years.
For 2007, I would like to increase my position in ASHG by 50%-100%, especially considering their recent stock activity, raising their dividend by 5%, and I expect strong financial improvements from this company to hit in 2008-2009 as their huge capital expenditures (e.g., Nevada plant development and Arkansas plant expansion) come online. Although it has not been a huge factor yet, I still believe that ASHG being the largest American owned Cement producer in the USA will be a very strong factor for this company - perhaps even a geo-political one. We'll see.
Seaboard Corp (AMEX: SEB) still looks very cheap from a long term perspective and I am very tempted to add more to my position at this time, but will wait until after they report their financial results (due out this week, I think, as they keep a tight lid on it). SEB still is a cash producing machine and are a very diverse entity - they still also appear to be undervalued from a fundamental standpoint - especially after being down 13% from their recent all-time high of $2,300, which just happened 2 weeks ago. SEB is still trading at less than 1x sales, less than 10x earnings, and about 6.4x Enterprise Value/EBITDA. Also, keep in mind that these ratios are based off of the trailing 12 months (ttm) financial results, and I expect when SEB posts their financial results, we will see an increase in sales, a stronger balance sheet, stronger EBITDA, stronger EPS, and stronger free cash flow. The joys about SEB is that because of lack of analyst coverage, the stock is not as subject to 'analyst estimates' and you can focus more on the financials and cash produced by SEB rather than market hype. Short-term, this fact may also prevent SEB from reaching its full-term value, but long term, this is good. It enables you to add more to your position cheaply and long term, companies with this tight share structure and strong financials tend, at least over the long-haul, tend to become 'overvalued', which is a great place to be if you are an owner.
Ok - that is my sales pitch for those stocks, but it is a perfect transition into my thoughts about Greenspan's comments. I do think that the economy is strong and that the environment is good for companies in terms of being able to produce cash flow. I do, however, that we will see some recession-type effects here in the US. I am unsure of how broad they will impact the country or the stock markets, but the impact of American's not saving, high foreclosure rates, getting in over their heads via credit cards, etc. will take a toll. I am no expert economist, but I just don't know how people live the lifestyles they do now-a-days in terms of what they make, what they have, etc. For private individuals, the behavior is not sustainable and I think we will see some fall out of that in the coming months, which will likely impact financial results of companies in late 2007 and early 2008. The impact will be especially true with businesses that serve the individual consumer, especially in businesses that serve the "middle class." Banks will do fine - businesses that service other businesses will do fine - companies that produce cash and shareholder's equity, and reward owners via dividends and stock buy backs, at good clips will be fine.
Simplistically, 2007 is the year for the owner - not the investor. Granted, there are some years where being an 'investor' would serve you better than acting as an owner - where you looked for aggressive capital appreciation based on market dynamics, momentum, etc. Of course, there will be opportunities along those lines this year, as they always are, but I don't see a broad technology rally or sector rally where you can just ride the wave.
Look for opportunities where being an owner makes sense - where you feel you are getting some value for your investment/purchase - where if you were actually going to 'own' the company (which you do, but you know what I mean), you would feel good about forking over the money to get in on it because you know you are getting a good deal. Buy backs, dividends, cash flow, shareholders equity - those are the things to look for and I believe the stock market will reward shareholders appropriately for such (e.g., higher price per share).
To quote Gordon Gekko:
"The richest one percent of this country owns half our country's wealth, five trillion dollars...You got ninety percent of the American public out there with little or no net worth. I create nothing. I own."
Honestly, in short, I have not seen anything like this in years, or maybe ever. Sure, it has happened before, and long term, this will be yet another blip on the stock market's radar (knock on wood), but just about everything was down. Typically, you see general market weakness, but maybe a particular sector or industry shows strength. For instance, technology may be down, but energy or natural resources may be up. Not this time - everything was down - energy, materials, transportation, financial services, technology, etc. Greenspan coming out of the weeds to comment about a possible recessions by the end of the year did not help the cause of stocks.
Here is my take on it, for what it is worth. I think that last week's action was very health in terms of a correction. Although it would be nice if it could, the stock market cannot go up in a straight line forever. Even with last week's loss, the markets are still up 10% from a year go. If you take a look at my Marketocracy fund, even after last week's debacle, my fund is still up 0.9% YTD and while the NASDAQ, Dow Jones, and S&P 500 have not been as fortunate (down 2%, 2.8%, and 1.9% respectively). All I am saying, is that this is not the end of the world.
I think that the U.S. economic outlook does look good for 2007 as does the outlook for the entire global economy. I think that we will see growth in the stock market, but there will be an even increasingly strong focus on fundamentally sound and cash generating companies. I think this is so because even amidst last weeks problems, Merck (NYSE: MRK) and AIG (NYSE: AIG) both performed well as both reported very positive outlooks and results and MRK even got an upgrade. Simply put, the market is ready to reward companies that produce strong financial results, but those that are lagging will be susceptible to correction.
There is still a lot of value out there - even after the big run up, the stocks I am in still look cheap from a long term standpoint, especially NBG, PFE, MRK, SEB, and ASHG. I will be looking to add to all of these positions. Of course, I am in the automatic investing plans with PFE and MRK, so those are forgone conclusions. I added 15% to my NBG position last week and will look to increase some more, perhaps in the Spring, post dividend (assuming there is one), as that is when, at least historically, NBG trades a little weaker. If NBG can stick to their projections outlined in their 2007-2009 presentation, this one is worth $24-$28 in the next 2-3 years.
For 2007, I would like to increase my position in ASHG by 50%-100%, especially considering their recent stock activity, raising their dividend by 5%, and I expect strong financial improvements from this company to hit in 2008-2009 as their huge capital expenditures (e.g., Nevada plant development and Arkansas plant expansion) come online. Although it has not been a huge factor yet, I still believe that ASHG being the largest American owned Cement producer in the USA will be a very strong factor for this company - perhaps even a geo-political one. We'll see.
Seaboard Corp (AMEX: SEB) still looks very cheap from a long term perspective and I am very tempted to add more to my position at this time, but will wait until after they report their financial results (due out this week, I think, as they keep a tight lid on it). SEB still is a cash producing machine and are a very diverse entity - they still also appear to be undervalued from a fundamental standpoint - especially after being down 13% from their recent all-time high of $2,300, which just happened 2 weeks ago. SEB is still trading at less than 1x sales, less than 10x earnings, and about 6.4x Enterprise Value/EBITDA. Also, keep in mind that these ratios are based off of the trailing 12 months (ttm) financial results, and I expect when SEB posts their financial results, we will see an increase in sales, a stronger balance sheet, stronger EBITDA, stronger EPS, and stronger free cash flow. The joys about SEB is that because of lack of analyst coverage, the stock is not as subject to 'analyst estimates' and you can focus more on the financials and cash produced by SEB rather than market hype. Short-term, this fact may also prevent SEB from reaching its full-term value, but long term, this is good. It enables you to add more to your position cheaply and long term, companies with this tight share structure and strong financials tend, at least over the long-haul, tend to become 'overvalued', which is a great place to be if you are an owner.
Ok - that is my sales pitch for those stocks, but it is a perfect transition into my thoughts about Greenspan's comments. I do think that the economy is strong and that the environment is good for companies in terms of being able to produce cash flow. I do, however, that we will see some recession-type effects here in the US. I am unsure of how broad they will impact the country or the stock markets, but the impact of American's not saving, high foreclosure rates, getting in over their heads via credit cards, etc. will take a toll. I am no expert economist, but I just don't know how people live the lifestyles they do now-a-days in terms of what they make, what they have, etc. For private individuals, the behavior is not sustainable and I think we will see some fall out of that in the coming months, which will likely impact financial results of companies in late 2007 and early 2008. The impact will be especially true with businesses that serve the individual consumer, especially in businesses that serve the "middle class." Banks will do fine - businesses that service other businesses will do fine - companies that produce cash and shareholder's equity, and reward owners via dividends and stock buy backs, at good clips will be fine.
Simplistically, 2007 is the year for the owner - not the investor. Granted, there are some years where being an 'investor' would serve you better than acting as an owner - where you looked for aggressive capital appreciation based on market dynamics, momentum, etc. Of course, there will be opportunities along those lines this year, as they always are, but I don't see a broad technology rally or sector rally where you can just ride the wave.
Look for opportunities where being an owner makes sense - where you feel you are getting some value for your investment/purchase - where if you were actually going to 'own' the company (which you do, but you know what I mean), you would feel good about forking over the money to get in on it because you know you are getting a good deal. Buy backs, dividends, cash flow, shareholders equity - those are the things to look for and I believe the stock market will reward shareholders appropriately for such (e.g., higher price per share).
To quote Gordon Gekko:
"The richest one percent of this country owns half our country's wealth, five trillion dollars...You got ninety percent of the American public out there with little or no net worth. I create nothing. I own."
Tuesday, February 27, 2007
Easy Buy - National Bank of Greece (NYSE: NBG) @ $10.38
Follow a stock long enough, and when something crazy happens and the stock takes a dive, you sit back, take a breath, and as long as the fundamentals have not changed, you go all in. I only wish I could have bought more.
Recently, NBG traded as high as $11.25 on very bullish news of the company's 30% per year growth forecasts for each of the next 3 years; strong results in their new markets; and lots of positive sentiment.
Naturally, after such a huge run up, NBG took a little breather, and fell down to $11.10 or so. However, the real shock came today, this morning, when NBG traded as low at $10.30, down 7.2%. The decline was spurred by a rough day for European banks and some reports of instability and attacks in Iran and Afghanistan. The US major indicies were also down 1%-1.5%
Nothing has materiallty changed and I took the opportunity to buy more at $10.38 - too bad it is now back at $10.60 and will likely run back to $11 sooner rather than later (I actually had my order in for $10.41, but ETRADE was nice enough to get me a slightly better price). I was especially intrigued by the relatively low volume on the decline, which made me feel even more confident in my decision to buy more.
This is what I call "The Price of Greatness". It correlates to Warren Buffet's quote to be greedy when others are fearful and fearful when others are greedy. Short and sweet, it is the response to days like this - to put more money on the table when it's hard to do so or take it off and take some profits when it really has had its day in the sun, but greed likes to tell you it can't go down.
Thus far, with NBG at $10.61, my decision to buy at $10.38 looks genius. We'll see - but I think I am right.
Recently, NBG traded as high as $11.25 on very bullish news of the company's 30% per year growth forecasts for each of the next 3 years; strong results in their new markets; and lots of positive sentiment.
Naturally, after such a huge run up, NBG took a little breather, and fell down to $11.10 or so. However, the real shock came today, this morning, when NBG traded as low at $10.30, down 7.2%. The decline was spurred by a rough day for European banks and some reports of instability and attacks in Iran and Afghanistan. The US major indicies were also down 1%-1.5%
Nothing has materiallty changed and I took the opportunity to buy more at $10.38 - too bad it is now back at $10.60 and will likely run back to $11 sooner rather than later (I actually had my order in for $10.41, but ETRADE was nice enough to get me a slightly better price). I was especially intrigued by the relatively low volume on the decline, which made me feel even more confident in my decision to buy more.
This is what I call "The Price of Greatness". It correlates to Warren Buffet's quote to be greedy when others are fearful and fearful when others are greedy. Short and sweet, it is the response to days like this - to put more money on the table when it's hard to do so or take it off and take some profits when it really has had its day in the sun, but greed likes to tell you it can't go down.
Thus far, with NBG at $10.61, my decision to buy at $10.38 looks genius. We'll see - but I think I am right.
Saturday, February 24, 2007
National Bank of Greece 2007-2009 Business Plan & Buy Anywhere Up to $12
National Bank of Greece (NYSE: NBG) announced their 2007-2009 business plan. The plan outlines their strategy and projections for the next 3 years.
NBG is a huge winner and I estimate this one being $13-$15 by the end of 2007 and my 3 year price target is $24-$28. Short term, NBG may come off its recent run, especially after hitting $11.24 on Friday, up 3%+ in a single day. Regardless, I am GOING DEEP on this one and am raising my slash and burn target to $12. That's right - anything under $12 is an instant buy, from both a long term and a relatively short term standpoint.
The things I like about NBG:
1. 30% Annual Income Growth
They are forecasting 30% growth in their net income each year in 2007-2009. If we can look that far out, that would be NBG is trading at about 9.1 times 2009 full year earnings, if I did the math right.
2. 24% Return on Equity
NBG is looking to significantly bump their ROE to at least 24% during this 3 year span. This is a huge jump from its current 14% ROE. How are they going to do this? Well, lots of factors come into play here. The biggest factor is their acquisition strategy. They are now well positioned in Turkey and the Balkan States. They are also looking to expand into Ukraine. NBG's growth has been driven by the retail boom in Greece the past few years, which is still strong, but is slowing somewhat. That same boom is just starting in the Balkans and Turkey and will fuel NBG's growth in the coming years. Additionally, NBG's current market penetration in these other countries is relatively small and should make it more likely that NBG can grow their presence and penetration in these countries very aggressively over the next couple of years.
3. Lots of Cash
Apart from producing lots of cash and having their margins increase, NBG has a ton of cash on hand and is not planning a special return of capital to shareholders for 2006, payable in the Spring 2007. They will most likely pay out the regular annual dividend (2%-2.5% yield), though. Last year, in the Spring 2006, NBG paid their regular dividend plus a special return of capital payment to shareholders. NBG will be holding on to their cash and pursue more acquisitions.
4. Lots of Buying
I have watched this trend since I started getting into this position. Typically, there are no more than a few hundred shares on the bid, but I have seen big blocks of shares - 10,000-50,000+ on the ask that need to be chewed away to push the stock up. Remember, it's all supply and demand. Well, so far, it has not mattered how many shares are posted for sale on the ask or at what price, they have all been bought away. There has been no indication that this trend will stop and ultimately, I think the sellers will go away before the buyers do.
NBG is a huge winner and I estimate this one being $13-$15 by the end of 2007 and my 3 year price target is $24-$28. Short term, NBG may come off its recent run, especially after hitting $11.24 on Friday, up 3%+ in a single day. Regardless, I am GOING DEEP on this one and am raising my slash and burn target to $12. That's right - anything under $12 is an instant buy, from both a long term and a relatively short term standpoint.
The things I like about NBG:
1. 30% Annual Income Growth
They are forecasting 30% growth in their net income each year in 2007-2009. If we can look that far out, that would be NBG is trading at about 9.1 times 2009 full year earnings, if I did the math right.
2. 24% Return on Equity
NBG is looking to significantly bump their ROE to at least 24% during this 3 year span. This is a huge jump from its current 14% ROE. How are they going to do this? Well, lots of factors come into play here. The biggest factor is their acquisition strategy. They are now well positioned in Turkey and the Balkan States. They are also looking to expand into Ukraine. NBG's growth has been driven by the retail boom in Greece the past few years, which is still strong, but is slowing somewhat. That same boom is just starting in the Balkans and Turkey and will fuel NBG's growth in the coming years. Additionally, NBG's current market penetration in these other countries is relatively small and should make it more likely that NBG can grow their presence and penetration in these countries very aggressively over the next couple of years.
3. Lots of Cash
Apart from producing lots of cash and having their margins increase, NBG has a ton of cash on hand and is not planning a special return of capital to shareholders for 2006, payable in the Spring 2007. They will most likely pay out the regular annual dividend (2%-2.5% yield), though. Last year, in the Spring 2006, NBG paid their regular dividend plus a special return of capital payment to shareholders. NBG will be holding on to their cash and pursue more acquisitions.
4. Lots of Buying
I have watched this trend since I started getting into this position. Typically, there are no more than a few hundred shares on the bid, but I have seen big blocks of shares - 10,000-50,000+ on the ask that need to be chewed away to push the stock up. Remember, it's all supply and demand. Well, so far, it has not mattered how many shares are posted for sale on the ask or at what price, they have all been bought away. There has been no indication that this trend will stop and ultimately, I think the sellers will go away before the buyers do.
Wednesday, February 21, 2007
NBG - Financial Results; ASHG Acting Up; Other Notes; Lessons Learned
This morning, National Bank of Greece (NYSE: NBG) posted their 2006 financial results. Results were very impressive. Net income rose 36% from 2005 to $1.29B. Results were towards the upper end of the analyst estimate range, but fell short of the high estimate by about 1%. Hence, the stock did not blow up today, but actually did end close up by a modest 0.3% after spending most of the day in the red. This activity is not uncommon. The financial results of NBG were being watched like a hawk by the world marketplace and anticipating a very strong showing. The market then 'prices' this activity in for the most part, so if it ends up where everyone thought it was going to go, it tends to not move much or even decline, sometimes sharply. Tomorrow, on Feb. 22, NBG, will be presenting its 2007-2009 3 year outlook, which is supposed to continue to be very positive as already indicated by NBG, though we will not see full details until tomorrow. Long term, NBG is a great buy and when I say long term, I could be talking several years and I do not believe it will disappoint in 2007. While I do not see a double in 2007, I think NBG getting to $14-$16 sometime before the end of the year is possible. I am considering adding to my position.
It is officially dividend time for Ash Grove Cement (Pink Sheets: ASHG). This stock does not trade very often or at least post trades. I think that this stock trades daily behind the scenes, but the market makets will only post a trade in 100+ share blocks. So, I often think the 100 share blocks is a consolidated trade posting of many small trades. Anyway, activity always picks up around dividend time, which is the first week of March. ASHG is pretty sneaky about this - I am able to see their dividend declaration information at www.pinksheets.com, but it is not anywhere else to be seen. For 2007, dividend is $0.42 per share, a 5% increase over 2006, so that is good stuff.
Anyway, although trades may not occur, the inside market, or bid vs. ask spread, will sometimes change during the day. This is indicative of someone stepping in to buy or perhaps some trades took place behind the scenes and are not yet posted. There are very, very few shares out there, so 5-10 share trades, that seem to be invisible to the market, can effect the spread. I know this because I have personally experienced and seen this first hand. So, yesterday, Feb 20, ASHG opened up the morning at $217 x $220. During a meeting at work, I noticed the spread ticked up as high as $250 x $350!!! I almost lost it and took every ounce of sanity to keep my clothes on and to restrain from humping the desk.
Today, the stock closed as $280 per share, up 24.4% to an all time high. The closing spread was $240 x $272.50 (the bid ticked up from $230 to $240 in some small increments through the day) and the only trade that posted was 125 shares at $295. Now, I have seen the inside market change with some rigor during dividend times, but NEVER like this in the nearly 2 years I have owned and followed this security.
I think this one will pull back some post March dividend, but we will see. I still plan to add to my position, regardless, and somewhat regret not adding more than I did along the way, but again, it's always better to wish you bought more than wish you bought less! I am not sure what is in store for ASHG tomorrow or even for the rest of the year - I thought reaching $240 would take all year - I was wrong. Next year? Who knows....5 years? $700 per share. This is a fantastic retirement investment.
Seaboard Corporatiion (AMEX: SEB) had a very strong day. Up 2.6% to an all-time closing high of $2,154 and touched on an all time high of $2,190 today. Volume today was very strong - double than usual. I am not sure of the activity, but in 7-10 years, do not be surprised to see this one at $6,000-$8,000 per share. There is certainly long term value here and I am considering adding more to my position, but it's tough, because 1 share at this stage chews up $2,154 of capital, which is well, a lot. If I were to buy more, it would be for the real long haul. At some point, the appreciation on this one will have to take a breath and slow down, at least short term. I am trying to figure out what the deal is with this one in terms of the short-term activity and what is means long-term for the stock. Perhaps it is institutions loading up for the long haul as dry bulk shipping, one of SEB's divisions, was very hot today thanks to a mention on CNBC. There is no question SEB is going higher, but under what terms? Timeframe? Retracement? Short and sweet, I like the shareholders equity and cash this beast produces.
On other notes, I added to my positions in INFT at $3.57 and WNC at $16.99. INFT has disappointed me thus far, but it just has to go somewhere. I know, famous last words, but the last time I had that feeling, I was buying up shares of CECE at $3.75-$4.25. It took many years, and I was fortunate to start adding shares just in time, but the metrics said CECE absolutely had to go higher. It did...and ran to $12 last spring and today closed at an all time high of $17. I sold out last spring on the way up to $12.
Watching CECE today - I ALMOST jumped back in at $8-$9 several weeks ago, but I didn't. I wish I did, but honestly, the money I took out of CECE (and others that maybe I sold too soon) I put into other winners:
SVVS: in at $10, out at $17; now at $48.
ASTE: in at $23, out at $34; now at $39.
Thinking about this, did I miss the boat? Well, yes and no, but not really. I took the bulk of my CECE, SVVS, and ASTE proceeds and invested in big winners like ASHG, NBG, SEB and what will hopefully become big winners, like INFT and WNC. My patiences for investments has grown tremendously. I am amazed that I have held and accumulated ASHG for 20 months now, which is a world record for me. It is tough at a young age to have a huge time horizon mentality. Plus, with the in your face of 'gotta have it now' and my need to fend off my other situation, well, as much as I would have loved to have waited the extra year for CECE to turnaround, but honestly, last spring, I didn't have a year.
Going forward, it is important to look at the scope of your investments. Of course, you can never predict the market, but sometimes, bigger gains are out there if you can open your mindset to maybe waiting 3-5 years. I have somehow been able to do that with ASHG. I think part of that has to do with the lack of activity the stock has. Unlike other issues that move up and down, I am better able to keep the fear and greed out of my decision more than the others. Regardless, it is important to set your own price targets and goals - but more importantly, how long you are willing or might have to wait. Are you willing to wait 1 1/2 years for a 75% return? That is what it would have taken for ASHG. A 300% gain requires 18 months? Well, that is SVVS for you.
Opportunities for huge gains are out there, so look for them, and if you have to wait it out, then wait it out. Of course, never underestimate the power of taking profits and successfully re-investing the proceeds in other big winners. Plus, there is only so much capital to go around. If I would have kept my hands on CECE and didn't bother buying more ASHG or SEB, I'd be feeling just as silly, but, I'd really be in the same place I am now from a numbers standpoint.
Simplistically, if you take money out of an investment, make sure you have a solid purpose for it - specifically, another investment that you feel will perform well. If you sell, that's fine, just don't piss it away, because that is when seeing the stock 100% higher than you sold it at will get to you.
It is officially dividend time for Ash Grove Cement (Pink Sheets: ASHG). This stock does not trade very often or at least post trades. I think that this stock trades daily behind the scenes, but the market makets will only post a trade in 100+ share blocks. So, I often think the 100 share blocks is a consolidated trade posting of many small trades. Anyway, activity always picks up around dividend time, which is the first week of March. ASHG is pretty sneaky about this - I am able to see their dividend declaration information at www.pinksheets.com, but it is not anywhere else to be seen. For 2007, dividend is $0.42 per share, a 5% increase over 2006, so that is good stuff.
Anyway, although trades may not occur, the inside market, or bid vs. ask spread, will sometimes change during the day. This is indicative of someone stepping in to buy or perhaps some trades took place behind the scenes and are not yet posted. There are very, very few shares out there, so 5-10 share trades, that seem to be invisible to the market, can effect the spread. I know this because I have personally experienced and seen this first hand. So, yesterday, Feb 20, ASHG opened up the morning at $217 x $220. During a meeting at work, I noticed the spread ticked up as high as $250 x $350!!! I almost lost it and took every ounce of sanity to keep my clothes on and to restrain from humping the desk.
Today, the stock closed as $280 per share, up 24.4% to an all time high. The closing spread was $240 x $272.50 (the bid ticked up from $230 to $240 in some small increments through the day) and the only trade that posted was 125 shares at $295. Now, I have seen the inside market change with some rigor during dividend times, but NEVER like this in the nearly 2 years I have owned and followed this security.
I think this one will pull back some post March dividend, but we will see. I still plan to add to my position, regardless, and somewhat regret not adding more than I did along the way, but again, it's always better to wish you bought more than wish you bought less! I am not sure what is in store for ASHG tomorrow or even for the rest of the year - I thought reaching $240 would take all year - I was wrong. Next year? Who knows....5 years? $700 per share. This is a fantastic retirement investment.
Seaboard Corporatiion (AMEX: SEB) had a very strong day. Up 2.6% to an all-time closing high of $2,154 and touched on an all time high of $2,190 today. Volume today was very strong - double than usual. I am not sure of the activity, but in 7-10 years, do not be surprised to see this one at $6,000-$8,000 per share. There is certainly long term value here and I am considering adding more to my position, but it's tough, because 1 share at this stage chews up $2,154 of capital, which is well, a lot. If I were to buy more, it would be for the real long haul. At some point, the appreciation on this one will have to take a breath and slow down, at least short term. I am trying to figure out what the deal is with this one in terms of the short-term activity and what is means long-term for the stock. Perhaps it is institutions loading up for the long haul as dry bulk shipping, one of SEB's divisions, was very hot today thanks to a mention on CNBC. There is no question SEB is going higher, but under what terms? Timeframe? Retracement? Short and sweet, I like the shareholders equity and cash this beast produces.
On other notes, I added to my positions in INFT at $3.57 and WNC at $16.99. INFT has disappointed me thus far, but it just has to go somewhere. I know, famous last words, but the last time I had that feeling, I was buying up shares of CECE at $3.75-$4.25. It took many years, and I was fortunate to start adding shares just in time, but the metrics said CECE absolutely had to go higher. It did...and ran to $12 last spring and today closed at an all time high of $17. I sold out last spring on the way up to $12.
Watching CECE today - I ALMOST jumped back in at $8-$9 several weeks ago, but I didn't. I wish I did, but honestly, the money I took out of CECE (and others that maybe I sold too soon) I put into other winners:
SVVS: in at $10, out at $17; now at $48.
ASTE: in at $23, out at $34; now at $39.
Thinking about this, did I miss the boat? Well, yes and no, but not really. I took the bulk of my CECE, SVVS, and ASTE proceeds and invested in big winners like ASHG, NBG, SEB and what will hopefully become big winners, like INFT and WNC. My patiences for investments has grown tremendously. I am amazed that I have held and accumulated ASHG for 20 months now, which is a world record for me. It is tough at a young age to have a huge time horizon mentality. Plus, with the in your face of 'gotta have it now' and my need to fend off my other situation, well, as much as I would have loved to have waited the extra year for CECE to turnaround, but honestly, last spring, I didn't have a year.
Going forward, it is important to look at the scope of your investments. Of course, you can never predict the market, but sometimes, bigger gains are out there if you can open your mindset to maybe waiting 3-5 years. I have somehow been able to do that with ASHG. I think part of that has to do with the lack of activity the stock has. Unlike other issues that move up and down, I am better able to keep the fear and greed out of my decision more than the others. Regardless, it is important to set your own price targets and goals - but more importantly, how long you are willing or might have to wait. Are you willing to wait 1 1/2 years for a 75% return? That is what it would have taken for ASHG. A 300% gain requires 18 months? Well, that is SVVS for you.
Opportunities for huge gains are out there, so look for them, and if you have to wait it out, then wait it out. Of course, never underestimate the power of taking profits and successfully re-investing the proceeds in other big winners. Plus, there is only so much capital to go around. If I would have kept my hands on CECE and didn't bother buying more ASHG or SEB, I'd be feeling just as silly, but, I'd really be in the same place I am now from a numbers standpoint.
Simplistically, if you take money out of an investment, make sure you have a solid purpose for it - specifically, another investment that you feel will perform well. If you sell, that's fine, just don't piss it away, because that is when seeing the stock 100% higher than you sold it at will get to you.
Wednesday, February 14, 2007
SEB, DVY (New), IIBK (New), ASHG, NBG, et. al.
Man, today was just freaking huge. The markets opened up quiet and waited on the comments from the Federal Reserve about the state of the economy. It is incredible how the words of one person, federal chairman Bernanke, can impact the market so sharply. The biggest discussion was Bernanke saying the economy is 'ok' and interest rates are not going anywhere anytime soon. What this means is that interest rates will not increase, as many feared or even expected.
The impacts of this are the treasury yields staying about the same mean that for the time being, we live in a world where yields of dividend paying stocks are very close to what you would get if you invested in a U.S. treasury bond. When I stock about dividend paying stocks, I am not talking about the egregiously high yielding stocks, like oil royalty trusts - I am talking about blue chips. PFE sports a 4.4% yield, Altria (NYSE: MO) is at 4%, and Washington Mutual (NYSE: WM) is at 4.9%. My point is, if you get 4.8% from a U.S. Bond, why wouldn't you just buy WM, collect the 4.9% return on your investment via dividend and then own the stock? Exactly - you wouldn't - the 'guaranteed' return is about the same and you have a chance for stock ownership.
So, today, with rates staying the same, and that gap between dividend yields of blue chips and treasury yields remaining relatively small, money flowed into stocks today - especially blue chips as the Dow Jones closed at an all time high. It seems that this trend will continue as long as the environment is the same. Eventually, the yields of these stocks will go from say 4% for MO to maybe 3.2%-3.5% yield. Then, people see that difference between a treasury and a dividend yield and are less inclined to buy stock. But, that slowdown won't take place for a bit and stocks will continue to rise, especially blue chip stocks, creating a larger gap between the yields.
In light of that, I'd like to introduce you to NYSE: DVY. The symbol is fitting as this is an 'exchange traded fund' (ETF) and is the Dow Jones iShares Dividend Index. This 'fund' trades like a stock and invests in blue chip companies that have histories of strong dividends and consistent dividend growth over 25+ years. I like this one a great deal for my IRA and I took a position in this one in my IRA account. I think the ETF will perform well from a capital appreciation standpoint and yield about 3% in dividends. This fund supports my discussion above regarding the interest rate environment and I think is perfect for an IRA account.
I am a little more aggressive in my main portfolio, but oddly enough, I am very conservative in my IRA. Why? I mean, can't you get tax deferred growth in your IRA? Well, sure. But, I remain conservative. The key to the IRA, especially at a young age like me, is the time value of money. It is more important for me to have years generating 10%-12% returns, year after year, without exception. When stocks struggle, the dividends will help support. Over time, and with maxxing out my annual contributions, this is what will make the thing big. Taking big risks in the IRA? Well, what if a big risk doesn't grow or suffers serious depreciation? You are literally wiping out what could take you years to recover. I will stick to aggressive in my portfolio, where I can move the money, stomach a loss if it happens, and take gains out to use for my own lifestyle if need be. As long as I can get a nice, steady return in my IRA year after year, I will be fine when I can actually use the thing. Short and simple, implicit in the strategy and purpose of the IRA is to get that residual time value of money - very slow and steady. In my day to day stuff, I'll take bigger whacks at things looking for 50%+ gains in a 12 month period.
Speaking of monster gains, Seaboard Corp (AMEX: SEB) was my best performer today, up 6.2% to $2,107 per share. I started buying at $1,289. I expected it to crack $2,000 today, after yesterday's strong close, but today, in the last 30 mins. of trading, it just blew up and traded as high as $2,135. SEB is still worth $3,000+ per share - it continues to produce lots of cash and shareholders equity. Plus, their business model, especially their marine chartering business, will benefit from the opening up of Cuba. SEB has a great conglomerate going, but SEB risks never reaching full valuation because lack of coverage by the big institutions. In the mean time, remember, there seem to be no shares out there available for sale and there are buyers - supply and demand - demand is high, supply is low, and price goes up. SEB is not done yet, but it might take a breather over the next couple of days, but short term, heading to $2,300 is not out of the question. SEB will shortly be releasing its earnings report, so we will see what comes to pass in terms of EBITDA, Cash Flow, Shareholders Equity, etc. I think we will see another uptick in all of those categories for SEB and the market may be anticipating that.
National Bank of Greece (NYSE: NBG) performed strongly today, too. 2 days ago, it fell down to $10.01 (from $10.40) on the news they lost the bid for a Ukrainian bank and were looking at a bank in Russia. I almost pulled the trigger and bought more, but my adding threshold was $9.90. I wish I got more, as it is now back up to $10.51 and less than a nickel off of its 52-week high of $10.55. From a chart standpoint, this appears to be good news, especially if it can break through its old high. It broke through $10.40, the past recent high it hit before falling to $10.01 and it is higher than it was at this time last year. NBG pays its dividend annually, so there tends to be some selling come dividend time, since I guess people do not like to wait all year, so once they get it, they sell out and get back in later I guess. I do not think we will see a 20% decline post-dividend like we did last year.
Ash Grove Cement (Pink Sheet: ASHG) hit an all-time high today of $215 and is currently offered at $220. I added more in my IRA the other day and ASHG will shortly announce its dividend, payable around the first or 2nd week of March. We will see if they raise the dividend from $0.40 per quarter to something higher, as they have done the past few years. I like ASHG long-term, mostly because of market dynamics and their unique position as largest American owned cement company in the country. Their capital expenditures in 2006-2007 should start to yield some serious results starting in 2008, so the future looks bright for this cement producer. At the very least, this is a very solid long-term holding.
Finally, let me also introduce you to Idaho Independent Bank (OTCBB: IIBK) - it is trading at $34.55. I found this bank because they are my finalist for the new direct stock purchase plan for my girls and I as the program has no fees to participate. IIBK pays an annual 7% stock dividend - no cash dividend. Interestingly enough, although you can count on this 7% dilution every year come November, the additional shares has not hindered their EPS growth or hurt the supply/demand dynamics of IIBK's market. IIBK is a relatively small bank with only 10 branches and their focus is businesses, rather than consumer. Their ratios are stellar, boasting a 2%+ return on assets and very well positioned from a cash/debt standpoint. My only fear is that they may be richly valued already, trading at 3+ times book value, which is high for a bank. However, the x-factor here is the situation and the stock dynamics.
IIBK reminds me a little bit of Ft. Pierce privately held bank, Riverside National Bank, which has provided tremendous returns to shareholders and pays an annual stock dividend. Riverside's internal stock price has climbed year after year as it is governed by the financial results of the bank and the fact that there are not many 'sellers' of the stock. Sure, there is an active market, but there are more buyers than sellers. IIBK appears to have the same situation - closely held, strong growth in EPS and financial health, limited institutional holdings, and not a whole lot of people dumping shares. Only trades about 2,000 shares each day, so not a ton of liquidity or volume. The November 2006 2-1 stock split might loosen up the marketplace some, but IIBK is going up. I say $40-$42 by the end of 2007 and $50+ by end of 2008. Not a huge mover, by any means, but a great play from the direct stock purchase standpoint, especially with the 7% stock dividend and history of the additional shares not impacting the company's per share performance.
The impacts of this are the treasury yields staying about the same mean that for the time being, we live in a world where yields of dividend paying stocks are very close to what you would get if you invested in a U.S. treasury bond. When I stock about dividend paying stocks, I am not talking about the egregiously high yielding stocks, like oil royalty trusts - I am talking about blue chips. PFE sports a 4.4% yield, Altria (NYSE: MO) is at 4%, and Washington Mutual (NYSE: WM) is at 4.9%. My point is, if you get 4.8% from a U.S. Bond, why wouldn't you just buy WM, collect the 4.9% return on your investment via dividend and then own the stock? Exactly - you wouldn't - the 'guaranteed' return is about the same and you have a chance for stock ownership.
So, today, with rates staying the same, and that gap between dividend yields of blue chips and treasury yields remaining relatively small, money flowed into stocks today - especially blue chips as the Dow Jones closed at an all time high. It seems that this trend will continue as long as the environment is the same. Eventually, the yields of these stocks will go from say 4% for MO to maybe 3.2%-3.5% yield. Then, people see that difference between a treasury and a dividend yield and are less inclined to buy stock. But, that slowdown won't take place for a bit and stocks will continue to rise, especially blue chip stocks, creating a larger gap between the yields.
In light of that, I'd like to introduce you to NYSE: DVY. The symbol is fitting as this is an 'exchange traded fund' (ETF) and is the Dow Jones iShares Dividend Index. This 'fund' trades like a stock and invests in blue chip companies that have histories of strong dividends and consistent dividend growth over 25+ years. I like this one a great deal for my IRA and I took a position in this one in my IRA account. I think the ETF will perform well from a capital appreciation standpoint and yield about 3% in dividends. This fund supports my discussion above regarding the interest rate environment and I think is perfect for an IRA account.
I am a little more aggressive in my main portfolio, but oddly enough, I am very conservative in my IRA. Why? I mean, can't you get tax deferred growth in your IRA? Well, sure. But, I remain conservative. The key to the IRA, especially at a young age like me, is the time value of money. It is more important for me to have years generating 10%-12% returns, year after year, without exception. When stocks struggle, the dividends will help support. Over time, and with maxxing out my annual contributions, this is what will make the thing big. Taking big risks in the IRA? Well, what if a big risk doesn't grow or suffers serious depreciation? You are literally wiping out what could take you years to recover. I will stick to aggressive in my portfolio, where I can move the money, stomach a loss if it happens, and take gains out to use for my own lifestyle if need be. As long as I can get a nice, steady return in my IRA year after year, I will be fine when I can actually use the thing. Short and simple, implicit in the strategy and purpose of the IRA is to get that residual time value of money - very slow and steady. In my day to day stuff, I'll take bigger whacks at things looking for 50%+ gains in a 12 month period.
Speaking of monster gains, Seaboard Corp (AMEX: SEB) was my best performer today, up 6.2% to $2,107 per share. I started buying at $1,289. I expected it to crack $2,000 today, after yesterday's strong close, but today, in the last 30 mins. of trading, it just blew up and traded as high as $2,135. SEB is still worth $3,000+ per share - it continues to produce lots of cash and shareholders equity. Plus, their business model, especially their marine chartering business, will benefit from the opening up of Cuba. SEB has a great conglomerate going, but SEB risks never reaching full valuation because lack of coverage by the big institutions. In the mean time, remember, there seem to be no shares out there available for sale and there are buyers - supply and demand - demand is high, supply is low, and price goes up. SEB is not done yet, but it might take a breather over the next couple of days, but short term, heading to $2,300 is not out of the question. SEB will shortly be releasing its earnings report, so we will see what comes to pass in terms of EBITDA, Cash Flow, Shareholders Equity, etc. I think we will see another uptick in all of those categories for SEB and the market may be anticipating that.
National Bank of Greece (NYSE: NBG) performed strongly today, too. 2 days ago, it fell down to $10.01 (from $10.40) on the news they lost the bid for a Ukrainian bank and were looking at a bank in Russia. I almost pulled the trigger and bought more, but my adding threshold was $9.90. I wish I got more, as it is now back up to $10.51 and less than a nickel off of its 52-week high of $10.55. From a chart standpoint, this appears to be good news, especially if it can break through its old high. It broke through $10.40, the past recent high it hit before falling to $10.01 and it is higher than it was at this time last year. NBG pays its dividend annually, so there tends to be some selling come dividend time, since I guess people do not like to wait all year, so once they get it, they sell out and get back in later I guess. I do not think we will see a 20% decline post-dividend like we did last year.
Ash Grove Cement (Pink Sheet: ASHG) hit an all-time high today of $215 and is currently offered at $220. I added more in my IRA the other day and ASHG will shortly announce its dividend, payable around the first or 2nd week of March. We will see if they raise the dividend from $0.40 per quarter to something higher, as they have done the past few years. I like ASHG long-term, mostly because of market dynamics and their unique position as largest American owned cement company in the country. Their capital expenditures in 2006-2007 should start to yield some serious results starting in 2008, so the future looks bright for this cement producer. At the very least, this is a very solid long-term holding.
Finally, let me also introduce you to Idaho Independent Bank (OTCBB: IIBK) - it is trading at $34.55. I found this bank because they are my finalist for the new direct stock purchase plan for my girls and I as the program has no fees to participate. IIBK pays an annual 7% stock dividend - no cash dividend. Interestingly enough, although you can count on this 7% dilution every year come November, the additional shares has not hindered their EPS growth or hurt the supply/demand dynamics of IIBK's market. IIBK is a relatively small bank with only 10 branches and their focus is businesses, rather than consumer. Their ratios are stellar, boasting a 2%+ return on assets and very well positioned from a cash/debt standpoint. My only fear is that they may be richly valued already, trading at 3+ times book value, which is high for a bank. However, the x-factor here is the situation and the stock dynamics.
IIBK reminds me a little bit of Ft. Pierce privately held bank, Riverside National Bank, which has provided tremendous returns to shareholders and pays an annual stock dividend. Riverside's internal stock price has climbed year after year as it is governed by the financial results of the bank and the fact that there are not many 'sellers' of the stock. Sure, there is an active market, but there are more buyers than sellers. IIBK appears to have the same situation - closely held, strong growth in EPS and financial health, limited institutional holdings, and not a whole lot of people dumping shares. Only trades about 2,000 shares each day, so not a ton of liquidity or volume. The November 2006 2-1 stock split might loosen up the marketplace some, but IIBK is going up. I say $40-$42 by the end of 2007 and $50+ by end of 2008. Not a huge mover, by any means, but a great play from the direct stock purchase standpoint, especially with the 7% stock dividend and history of the additional shares not impacting the company's per share performance.
Wednesday, January 24, 2007
Updates - NBG and INFT
National Bank of Greece (NYSE: NBG)
This one has been fun and I hope people took my advice - the buy anything under $9.50 price threshold. I did - though not as much as I'd like to, but always better to wish you bought more than wish you bought less. NBG is trading at $10.24 today, up on the news of an upgrade from an analyst saying it's Athens Stock Exchange counterpart has a target of 48 Euros (currently, it is around 42 Euros). The ADR (see prior blogs) represents 1/5 of an actual share of NBG in Athens. So, to basically get the price per share of an ADR, take the price in Euros, divide it by 5, and take the quotient (the answer) and multiply by the exchange rate (e.g., # of dollars per 1 euro; currently, US$1.296 = 1 Euro). So, if 48 Euros is where it's heading, NBG will be trading at around $12.40-$12.50. I think NBG is headed to $15 in 2007 and has the potential to be $60-$70 in the next several years. We'll see - in the mean time, I am enjoying the upgrade and am raising by slash and burn target - anything under $9.90 is a buy.
Inforte (NASDAQ: INFT)
One of my more frustrating holdings, but I feel has the best chance to be a double or triple in 2007 - most likely related to some form of a going private offer or just pure value. I added to my position at $3.58-$3.59 the other day (it's currently at $3.67 - not a huge gain, but I sure love stacking nickels). The biggest development is that one of their larger institutional holders, Royce & Associates, purchased an additional 50,000 shares during the past 3 months, bringing their total holdings to 1,090,600 and on January 31, they will be announcing their financial numbers and having a conference call at 4:30pm. I will be certain to be listening in on that and see if any developments happen, but I think we are going to have to wait until the Summer or Fall of 2007.
This one has been fun and I hope people took my advice - the buy anything under $9.50 price threshold. I did - though not as much as I'd like to, but always better to wish you bought more than wish you bought less. NBG is trading at $10.24 today, up on the news of an upgrade from an analyst saying it's Athens Stock Exchange counterpart has a target of 48 Euros (currently, it is around 42 Euros). The ADR (see prior blogs) represents 1/5 of an actual share of NBG in Athens. So, to basically get the price per share of an ADR, take the price in Euros, divide it by 5, and take the quotient (the answer) and multiply by the exchange rate (e.g., # of dollars per 1 euro; currently, US$1.296 = 1 Euro). So, if 48 Euros is where it's heading, NBG will be trading at around $12.40-$12.50. I think NBG is headed to $15 in 2007 and has the potential to be $60-$70 in the next several years. We'll see - in the mean time, I am enjoying the upgrade and am raising by slash and burn target - anything under $9.90 is a buy.
Inforte (NASDAQ: INFT)
One of my more frustrating holdings, but I feel has the best chance to be a double or triple in 2007 - most likely related to some form of a going private offer or just pure value. I added to my position at $3.58-$3.59 the other day (it's currently at $3.67 - not a huge gain, but I sure love stacking nickels). The biggest development is that one of their larger institutional holders, Royce & Associates, purchased an additional 50,000 shares during the past 3 months, bringing their total holdings to 1,090,600 and on January 31, they will be announcing their financial numbers and having a conference call at 4:30pm. I will be certain to be listening in on that and see if any developments happen, but I think we are going to have to wait until the Summer or Fall of 2007.
Monday, December 4, 2006
Pfizer (NYSE: PFE) - Buy @ $24.80 & Other Updates
Today's big story in the stock market was the 11% decline of Pfizer (NYSE: PFE). On Saturday, PFE announced that it was ceasing development of its new cholesterol drug. This was a huge development because it has been said that this new drug was going to be a huge homerun for PFE and was going to be key in replacing lost revenue from Lipitor once the patent protection expires in 2010. So, with all of this being said, let the panic begin.
In the company's press release, the CEO of PFE was cognizant of the impact of the lost revenues that this event would have on PFE and the stock price. The CEO emphasized strong revenue growth to return in 2009, returning shareholder value through raising dividend & repurchasing shares, and noted the deep product line that is in the PFE pipeline (though admittedly, none had the alleged potential that the new PFE cholesterol drug would have). So, despite this set back, things do not look too bad, right?
Well, the media jumped all over this story all weekend - analysts and stock brokers were hyping the 'end of Pfizer' and the potential for an up to 25% fall in the stock price today. The stock did open low - yes - down 15% at around $23.50, but at that price, the buyers were ready in mass. Funny how EVERYONE says the stock is finished and going to collapse on the heels of this news, yet the buying at the open was huge. In fact, despite a couple of blips down to this price of $23+, you would have to go back to 1997 or thereabouts to when PFE actually first hit this price.
I think PFE is a long-term buy at these levels, but probably best through its direct stock purchase plan as there are absolutely no fees and the key to this one is long term focus. Close to a 4% dividend yield, less than 11x next year's earnings, $1.75/cash on hand (some say to more aggressively purchase shares and to potentially raise the dividend), and over $17B in operating free cash flow.
Of course, with this, I feel even better about my decision to buy MRK over PFE, although the experts said PFE was the better buy. You can see my blog on this from October 13, 2006 (when I went up 1-0) and the original blog on September 5, 2006 (when the article came out and my discussion points).
Regardless, I see this dip as an opportunity to enter into PFE and start accumulating a stake for myself and my daughters. This is certainly a long term one that you want to put a chunk of money in every month or even once a year (Dogs of the Dow Theory), re-invest the dividends, and then just commit to fund your position every year.
Regardless, look for PFE to return to $28 within 6 months - on to other updates.
INFT - At Last We Will Reveal Ourselves to the Jedi
Well, I can see nobody jumped on the announcement and bought any INFT before I bought today. I know this because my trade was the first of the day. I picked some up at $3.69 and $3.70 and it closed at $3.72. I suppose it didn't really bounce up all that much as I thought it had the chance to, but that is a good thing. This provides more time to acquire shares at these levels. In all honesty, it probably will not move up much until 2007 sometime - we may even seen it decline some as we plow through the usual December tax selling. I will strategically and incrementally add to my position during this time.
SEB - Breaking $1,700 - We're Gonna Need a Bigger Boat
Another banner day for SEB - closing at $1,715, up 2.7%. Of course, I wish I bought more at $1,290 when I first blogged on it and I really wish I first bought when it was at $1,200 when I first started looking at it - but, better to wish you bought more than wish you bought less. So, with that being said, I grabbed the sack and picked up a little more today at $1,703.89. The fundamentals for SEB are making it look outrageously cheap from a long term standpoint and there continues to be heavy buying of shares out in the marketplace. Of course, there are shares for sale, but someone is buying them away. Rumor has it that it is the company that is doing so or value investors. I still think SEB is a $2,000+ stock by the end of 2007 and possibly as much as $3,000-$3,500 per share over the next 3-5 years. So, if it gets there, I'll wish I bought more, of course, but I'll feel better knowing I could have had even less than if I didn't pull the trigger at these levels. It probably was not the wisest move to buy near the upper end of the day's range on a very strong day, but I think in the end, I'll be glad I bought some more.
NBG - More Value at $9.20 - BORK! BORK! BORK!
NBG had a tough day down 1.8% to $9.15. I purchased some more last week between $9.26-$9.32, which was well off from its $9.60 highs. The pull back was not at all unexpected following the earnings announcement (buy on rumors, sell on news) and a welcome one. I might look to pick up a little more tomorrow. From a present day value, with the stock at $9.60, analysts said it was 'inline' with its peer group. So, that fact alone should make it a screaming buy at $9.15. Plus, NBG is assembling a massive growth strategy like no other bank in their region. It will be a couple of years before we see the real value from their acquisitions take hold - perhaps even longer - but this is still a $15-$20 stock or has a very viable chance to be within the next 12-24 months.
In the company's press release, the CEO of PFE was cognizant of the impact of the lost revenues that this event would have on PFE and the stock price. The CEO emphasized strong revenue growth to return in 2009, returning shareholder value through raising dividend & repurchasing shares, and noted the deep product line that is in the PFE pipeline (though admittedly, none had the alleged potential that the new PFE cholesterol drug would have). So, despite this set back, things do not look too bad, right?
Well, the media jumped all over this story all weekend - analysts and stock brokers were hyping the 'end of Pfizer' and the potential for an up to 25% fall in the stock price today. The stock did open low - yes - down 15% at around $23.50, but at that price, the buyers were ready in mass. Funny how EVERYONE says the stock is finished and going to collapse on the heels of this news, yet the buying at the open was huge. In fact, despite a couple of blips down to this price of $23+, you would have to go back to 1997 or thereabouts to when PFE actually first hit this price.
I think PFE is a long-term buy at these levels, but probably best through its direct stock purchase plan as there are absolutely no fees and the key to this one is long term focus. Close to a 4% dividend yield, less than 11x next year's earnings, $1.75/cash on hand (some say to more aggressively purchase shares and to potentially raise the dividend), and over $17B in operating free cash flow.
Of course, with this, I feel even better about my decision to buy MRK over PFE, although the experts said PFE was the better buy. You can see my blog on this from October 13, 2006 (when I went up 1-0) and the original blog on September 5, 2006 (when the article came out and my discussion points).
Regardless, I see this dip as an opportunity to enter into PFE and start accumulating a stake for myself and my daughters. This is certainly a long term one that you want to put a chunk of money in every month or even once a year (Dogs of the Dow Theory), re-invest the dividends, and then just commit to fund your position every year.
Regardless, look for PFE to return to $28 within 6 months - on to other updates.
INFT - At Last We Will Reveal Ourselves to the Jedi
Well, I can see nobody jumped on the announcement and bought any INFT before I bought today. I know this because my trade was the first of the day. I picked some up at $3.69 and $3.70 and it closed at $3.72. I suppose it didn't really bounce up all that much as I thought it had the chance to, but that is a good thing. This provides more time to acquire shares at these levels. In all honesty, it probably will not move up much until 2007 sometime - we may even seen it decline some as we plow through the usual December tax selling. I will strategically and incrementally add to my position during this time.
SEB - Breaking $1,700 - We're Gonna Need a Bigger Boat
Another banner day for SEB - closing at $1,715, up 2.7%. Of course, I wish I bought more at $1,290 when I first blogged on it and I really wish I first bought when it was at $1,200 when I first started looking at it - but, better to wish you bought more than wish you bought less. So, with that being said, I grabbed the sack and picked up a little more today at $1,703.89. The fundamentals for SEB are making it look outrageously cheap from a long term standpoint and there continues to be heavy buying of shares out in the marketplace. Of course, there are shares for sale, but someone is buying them away. Rumor has it that it is the company that is doing so or value investors. I still think SEB is a $2,000+ stock by the end of 2007 and possibly as much as $3,000-$3,500 per share over the next 3-5 years. So, if it gets there, I'll wish I bought more, of course, but I'll feel better knowing I could have had even less than if I didn't pull the trigger at these levels. It probably was not the wisest move to buy near the upper end of the day's range on a very strong day, but I think in the end, I'll be glad I bought some more.
NBG - More Value at $9.20 - BORK! BORK! BORK!
NBG had a tough day down 1.8% to $9.15. I purchased some more last week between $9.26-$9.32, which was well off from its $9.60 highs. The pull back was not at all unexpected following the earnings announcement (buy on rumors, sell on news) and a welcome one. I might look to pick up a little more tomorrow. From a present day value, with the stock at $9.60, analysts said it was 'inline' with its peer group. So, that fact alone should make it a screaming buy at $9.15. Plus, NBG is assembling a massive growth strategy like no other bank in their region. It will be a couple of years before we see the real value from their acquisitions take hold - perhaps even longer - but this is still a $15-$20 stock or has a very viable chance to be within the next 12-24 months.
Thursday, November 30, 2006
ASTE - The End of the Road
It is a very bittersweet day - I have officially closed out my position in ASTE - exiting with approximately a 45% gain over the course of 10 weeks. It is always difficult to part with your winners - there is always the fear that they will go higher and that you will miss the boat on it. However, you have to keep your strategy in check. When I originally purchased ASTE back in September, the vision was a rebound into the mid 30s range after getting whacked down 50%+ following an excellent earnings report that did not meet Wall Street expectations. My September 5, 2006 blog highlighting ASTE at $24.71 discusses this. So, it's time to move on.
My reasoning is as follows. First, it hit my short-term target of the mid $30s. Also, although prospects for the company remain strong and ASTE could very well continue its upward trend, it appears that the current trend is running out of gas. $35+ has been challenged a couple of times, but on relatively light volume - at least compared to what brought it up to $30+.
Additionally, the downside seems to be more of a risk, especially now that the market is expecting ASTE to overperform in the 4th Quarter 2006 as that information was disclosed in the conference call regarding 3Q 2006 numbers. Basically, the bulk of the potential upside to a strong 4th Q may already be priced in.
So, now with ASTE gone, I need to find another position to fill up my day and replace ASTE in the portfolio. I will also be evaluating how I would like to use the principal and proceeds from this trade to strengthen my positions in NBG, INFT, ASHG, and possibly SEB. NBG looks very attractive right now after it reported strong earnings and is down 3.5% on the news - buy on rumors, sell on news as they say.
My reasoning is as follows. First, it hit my short-term target of the mid $30s. Also, although prospects for the company remain strong and ASTE could very well continue its upward trend, it appears that the current trend is running out of gas. $35+ has been challenged a couple of times, but on relatively light volume - at least compared to what brought it up to $30+.
Additionally, the downside seems to be more of a risk, especially now that the market is expecting ASTE to overperform in the 4th Quarter 2006 as that information was disclosed in the conference call regarding 3Q 2006 numbers. Basically, the bulk of the potential upside to a strong 4th Q may already be priced in.
So, now with ASTE gone, I need to find another position to fill up my day and replace ASTE in the portfolio. I will also be evaluating how I would like to use the principal and proceeds from this trade to strengthen my positions in NBG, INFT, ASHG, and possibly SEB. NBG looks very attractive right now after it reported strong earnings and is down 3.5% on the news - buy on rumors, sell on news as they say.
Saturday, November 4, 2006
SEB - Hits $1,540. ASTE and INFT updates.
Who bought SEB when I told everyone too when it was at $1,290? Anyone? Anyone? Bueller? Bueller? Didn't think so....biggest crickets.
I initially suggested that SEB would hit $1,500 by the end of the year...I lied. It did it Friday, Nov. 3. Today, SEB closed at $1,540 per share...up 19.3% from my mention. Well, too bad for me I bought some when I announced it :-). Anyway, solid company and reported solid financials, again. Nothing spectacular in terms of growth, but SEB is just producing a lot of cash and appears to be grossly undervalued trading at less than 7 times earnings. This really is a $3,000+ per share stock. It will take patience though - maybe 2-3 years. I hope I can buy some more.
ASTE has been relatively flat and has been somewhat soft since it's huge run up to $33.99 intraday. It has trickled down, but after a so-so trading day, it closed strong at $31.69 (up $0.18). Right now, we are seeing a natural breather following the very aggressive run up and probably some profit taking on valuation and just stock timing. 2 items to consider with ASTE: (1) the cup and handle; (2) trade shows and Don Brock's retirement.
1. CUP AND HANDLE
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has lowtrading volume. It can be as short as seven weeks and as long as 65 weeks. As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. The chart on ASTE is showing just that formation. I think we will see another strong upward move in the next 6-10 weeks and it might take it closer to $37-$38, my personal price target for it. Unfortunately, it is not a perfect U shape - the closer it is to the U shape the better, but the technicals are lining up that way. No promises.
2. ASTE INVESTOR SHOWS & DON BROCK
ASTE was founded by Dr. Don Brock, 67, who remains the company's CEO today. He is also a significant shareholder with 11% of the company. ASTE recently announced their attendance at an investor show. I would not be surprised to see ASTE pursuing suitors in light of his possible retirement. This is pure speculation, but he may be ready to diversify and have an exit strategy for his estate and 'golden' years. A fair purchase price for ASTE would probably be in the $38-$48 range; probably closer to the lower end of the spectrum. It appears that ASTE may be on the path to considering offers.
Inforte (NASDAQ: INFT) has not moved much. In fact, it has actually come down some, but there appears to be a lot of buyers ready in the $3.92-$4.02 range. I took the opportunity of INFT falling to $3.90 today and purchased a little more. I hope it makes me look like I made a good decision.
NBG, which I raised my buy everything you can price limit to $9.50 almost crossed that threshold this week by touching $9.40. NBG closed today at $9.23. It is still a good buy under $9.50 and I believe we will see $11 by the spring of 2007.
I initially suggested that SEB would hit $1,500 by the end of the year...I lied. It did it Friday, Nov. 3. Today, SEB closed at $1,540 per share...up 19.3% from my mention. Well, too bad for me I bought some when I announced it :-). Anyway, solid company and reported solid financials, again. Nothing spectacular in terms of growth, but SEB is just producing a lot of cash and appears to be grossly undervalued trading at less than 7 times earnings. This really is a $3,000+ per share stock. It will take patience though - maybe 2-3 years. I hope I can buy some more.
ASTE has been relatively flat and has been somewhat soft since it's huge run up to $33.99 intraday. It has trickled down, but after a so-so trading day, it closed strong at $31.69 (up $0.18). Right now, we are seeing a natural breather following the very aggressive run up and probably some profit taking on valuation and just stock timing. 2 items to consider with ASTE: (1) the cup and handle; (2) trade shows and Don Brock's retirement.
1. CUP AND HANDLE
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has lowtrading volume. It can be as short as seven weeks and as long as 65 weeks. As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. The chart on ASTE is showing just that formation. I think we will see another strong upward move in the next 6-10 weeks and it might take it closer to $37-$38, my personal price target for it. Unfortunately, it is not a perfect U shape - the closer it is to the U shape the better, but the technicals are lining up that way. No promises.
2. ASTE INVESTOR SHOWS & DON BROCK
ASTE was founded by Dr. Don Brock, 67, who remains the company's CEO today. He is also a significant shareholder with 11% of the company. ASTE recently announced their attendance at an investor show. I would not be surprised to see ASTE pursuing suitors in light of his possible retirement. This is pure speculation, but he may be ready to diversify and have an exit strategy for his estate and 'golden' years. A fair purchase price for ASTE would probably be in the $38-$48 range; probably closer to the lower end of the spectrum. It appears that ASTE may be on the path to considering offers.
Inforte (NASDAQ: INFT) has not moved much. In fact, it has actually come down some, but there appears to be a lot of buyers ready in the $3.92-$4.02 range. I took the opportunity of INFT falling to $3.90 today and purchased a little more. I hope it makes me look like I made a good decision.
NBG, which I raised my buy everything you can price limit to $9.50 almost crossed that threshold this week by touching $9.40. NBG closed today at $9.23. It is still a good buy under $9.50 and I believe we will see $11 by the spring of 2007.
Wednesday, October 18, 2006
The $100 Million Family Trust - Automatic Investing & Direct Stock Purchase Plans
Today, I started my first ever automatic investing plan and signed up for my direct stock purchase plan with Merck (NYSE: MRK). Of course, I have made investing an integral part of my financial strategy, but not like this.
First, thanks to SogoInvest.com, you can easily set up automatic investing plans for as little as $1.00 per trade. Regular stock trades are only $1.50-$3.00 each, which is better than anything I have ever seen. There is also no minimum balance to open an account and for the first 90 days, trades are $1. This is awesome. Even if you do not trade a lot, the cheap commissions are key. For instance, say you have $100 to invest and you want to buy a couple of shares of MRK at $44/share. Well, excluding the fact that at most brokers you have to deposit anywhere from $500 to $2,500 just to open the account, you will be paying anywhere from $7 to $15 for the trade. So, if you wanted to put aside $100 each month and buy MRK, well, at the end of the year, you would have put aside $1,200 and paid $120 in commissions...that is 10% of your investment. If you can get those trades for say $1 each, then you are only down 1% of your investment. It really makes a difference in terms of being able to have all of your money go to investing rather than commissions. I only wish I heard about these guys sooner. Sogo's automatic investing plan is pretty sweet. You can schedule your trades in advance (daily, weekly, monthly) and you can specify how much total money you want to invest and how you want to spread it around (e.g., 100% in one stock or 50% each in 2 stocks). They also enable the purchase of fractional shares in the automatic investing plan, so you can get 100% invested in your stocks. For instance, if you put aside $100 and wanted to buy MRK at $44, you would have to only buy 2 shares and have $12 left over. Now, it would let you buy 2.2727 shares of MRK. Big difference over the long term. Anyway, I would check out SogoInvest if you have not opened a trading account or you want to switch. Personally, I have chosen to automatically invest in shares and fractional shares of NBG and SEB through my automatic investment program with Sogo.
The next thing I did was sign up for direct investment purchase plan with Merck. I set up three accounts - 1 for me and 1 for each of my 2 daughters. Basically, direct purchase plans (DPP) allow you to directly invest in the company's stock with out going through an online or regular broker. Typically, the fees are less and they make it very attractive to get involved. For instance, MRK's plan is a $5 set up fee, $2 for each deposit, and $0.01/share commission when purchasing. There is a $5-$10 fee when you want to sell stock. There is no minimum balance as long as you agree to commit $50/mo. via an automated withdrawl each month. You can also come up with $350 upfront. All funds are used for investing in the stock (even in fractional shares) and all dividends are fully reinvested (at your discretion) in more shares of the company. Fees by companies vary. For instance, Quanex (NYSE: NX) has a $15 set up fee and no fees for deposits, purchases, or reinvestments. It's totally free to buy shares, although there is a $50/mo. minimum required investment. Wells Fargo (NYSE: WFC), for instance, has some fees ($10 to set up, $1 per deposit, $0.03/share to buy), but their monthly minimum automatic investment is $25.00.
So, why the sudden motivation to start this?
Well, first, they say the best way to save and build wealth for yourself is to get into the habit of saving and maintain the discipline to put aside even if just a little bit each month. Whether it is $20 or $100 or whatever, you should just do it or find a way to do it. And, while that is not easy, the trick is, where do you put it.
Obviously, if it is 'savings', you probably want it to be in something stable and consistent, and not things that are volatile. Besides, this is for the long term or for an emergency or to buy a house one day and you want to have some confidence in the future value of these savings. Unfortunately, most people opt to put money in savings accounts or bank CDs. Not for me.
Even if you are totally risk averse and want 'guaranteed' (note that nothing is guaranteed) return, you can do a lot better putting your money into a bond fund of some sort.
Why do I say this, banks are not just necessary evils, they are thieves. I mean, not only do we all just give them our money, but then they use our money to make money for themselves....and charge us fees for doing so!!! Talk about the double dip, I mean really. Actually a triple dip...because more often than not, they do not give you anything back in return for you giving them your money. Sometimes, you get interest, but it is very small and there are minimum balances, etc. I just don't believe it.
Wait a second, Terence, you say....but, don't you own stock in a bank (e.g., National Bank of Greece, NYSE: NBG).
Actually, I am glad you brought that up. Banks are thieves and therefore can make a lot of money and can be good investments, just not the best place to park your money.
So, ok, I answered your question where not to park your money, so natuarally, where do you park it? For the automatic investment plans, I have opted to enlist in those offered by MRK, perhaps WFC, and maybe NX. I might do WFC in the next couple of months, but will start with MRK now. MRK's DPP Web Site & Information.
I chose MRK because I believe in the company's stability and ability to deliver shareholder value over the long term. I keep pretty good track of my finances via Quicken, but for these accounts, I am not going to record them as an asset. Basically, it is going to be like I spent the money and it disappears. Of course, I know I'll have them, but I won't look at them every day. I think this is part of the discipline that will make it easier to make this strategy successful. I have my contributions clearly delineated so I can track contributions to the DPP, but I will not actually see its performance day to day.
Anyway, back to the original point, "Why MRK?". Well, again, I believe in their long term ability to drive shareholder value through both price appreciations and dividend yield. Currenty yield (or payout) is about 3.5% - the dividends alone beats just about any savings or money market account you can get at a bank. If you invested $100 in MRK back in 1984-2004 and simply re-invested the dividends and did not buy any more along the way, it would be worth over $2,200 today. Compare to a 5% CD during th esame time period and your $100 would be worth $265. If you go back even further to the 1970s and earlier, the MRK return is even more impressive.
That is the goal here. Not only to just have it there 20, 30, 40 years from now - but to continually add to the position and re-invest all dividends to purchase more shares. Maybe I'll have enough shares to be on the board of MRK - that'd be cool.
The other thing that really opened my eyes to this strategy was an article I read about some of the wealthiest families in the country. Most of these people you have not heard of, but they are worth tens of millions if not hundreds of millions of dollars. How did they do it? Well, they inherited it in many cases, but these people that analyzed the holdings of these families. Large blocks of their worth was tied up in the big name stocks, blue chip stocks - GE, MRK, IBM, JNJ (Johnson & Johnson), KO (Coke), AXP (American Express). Strong histories and operations coupled with strong dividend payouts that simply got reinvested in more shares of the stock.
So, that is where I am at. I probably won't make tens of millions or hundreds of millions of dollars during my life. I might, but probably not. But, I want to see if things I do today can create that opportunity for my daughters and perhaps their children as well to be in that position. No promises, but automatically investing, re-investing dividends, & taking advantage of direct purchase plans with their lower fees & ease of effectively investing in small incremental amounts - these are all steps in the right direction to building that legacy.
First, thanks to SogoInvest.com, you can easily set up automatic investing plans for as little as $1.00 per trade. Regular stock trades are only $1.50-$3.00 each, which is better than anything I have ever seen. There is also no minimum balance to open an account and for the first 90 days, trades are $1. This is awesome. Even if you do not trade a lot, the cheap commissions are key. For instance, say you have $100 to invest and you want to buy a couple of shares of MRK at $44/share. Well, excluding the fact that at most brokers you have to deposit anywhere from $500 to $2,500 just to open the account, you will be paying anywhere from $7 to $15 for the trade. So, if you wanted to put aside $100 each month and buy MRK, well, at the end of the year, you would have put aside $1,200 and paid $120 in commissions...that is 10% of your investment. If you can get those trades for say $1 each, then you are only down 1% of your investment. It really makes a difference in terms of being able to have all of your money go to investing rather than commissions. I only wish I heard about these guys sooner. Sogo's automatic investing plan is pretty sweet. You can schedule your trades in advance (daily, weekly, monthly) and you can specify how much total money you want to invest and how you want to spread it around (e.g., 100% in one stock or 50% each in 2 stocks). They also enable the purchase of fractional shares in the automatic investing plan, so you can get 100% invested in your stocks. For instance, if you put aside $100 and wanted to buy MRK at $44, you would have to only buy 2 shares and have $12 left over. Now, it would let you buy 2.2727 shares of MRK. Big difference over the long term. Anyway, I would check out SogoInvest if you have not opened a trading account or you want to switch. Personally, I have chosen to automatically invest in shares and fractional shares of NBG and SEB through my automatic investment program with Sogo.
The next thing I did was sign up for direct investment purchase plan with Merck. I set up three accounts - 1 for me and 1 for each of my 2 daughters. Basically, direct purchase plans (DPP) allow you to directly invest in the company's stock with out going through an online or regular broker. Typically, the fees are less and they make it very attractive to get involved. For instance, MRK's plan is a $5 set up fee, $2 for each deposit, and $0.01/share commission when purchasing. There is a $5-$10 fee when you want to sell stock. There is no minimum balance as long as you agree to commit $50/mo. via an automated withdrawl each month. You can also come up with $350 upfront. All funds are used for investing in the stock (even in fractional shares) and all dividends are fully reinvested (at your discretion) in more shares of the company. Fees by companies vary. For instance, Quanex (NYSE: NX) has a $15 set up fee and no fees for deposits, purchases, or reinvestments. It's totally free to buy shares, although there is a $50/mo. minimum required investment. Wells Fargo (NYSE: WFC), for instance, has some fees ($10 to set up, $1 per deposit, $0.03/share to buy), but their monthly minimum automatic investment is $25.00.
So, why the sudden motivation to start this?
Well, first, they say the best way to save and build wealth for yourself is to get into the habit of saving and maintain the discipline to put aside even if just a little bit each month. Whether it is $20 or $100 or whatever, you should just do it or find a way to do it. And, while that is not easy, the trick is, where do you put it.
Obviously, if it is 'savings', you probably want it to be in something stable and consistent, and not things that are volatile. Besides, this is for the long term or for an emergency or to buy a house one day and you want to have some confidence in the future value of these savings. Unfortunately, most people opt to put money in savings accounts or bank CDs. Not for me.
Even if you are totally risk averse and want 'guaranteed' (note that nothing is guaranteed) return, you can do a lot better putting your money into a bond fund of some sort.
Why do I say this, banks are not just necessary evils, they are thieves. I mean, not only do we all just give them our money, but then they use our money to make money for themselves....and charge us fees for doing so!!! Talk about the double dip, I mean really. Actually a triple dip...because more often than not, they do not give you anything back in return for you giving them your money. Sometimes, you get interest, but it is very small and there are minimum balances, etc. I just don't believe it.
Wait a second, Terence, you say....but, don't you own stock in a bank (e.g., National Bank of Greece, NYSE: NBG).
Actually, I am glad you brought that up. Banks are thieves and therefore can make a lot of money and can be good investments, just not the best place to park your money.
So, ok, I answered your question where not to park your money, so natuarally, where do you park it? For the automatic investment plans, I have opted to enlist in those offered by MRK, perhaps WFC, and maybe NX. I might do WFC in the next couple of months, but will start with MRK now. MRK's DPP Web Site & Information.
I chose MRK because I believe in the company's stability and ability to deliver shareholder value over the long term. I keep pretty good track of my finances via Quicken, but for these accounts, I am not going to record them as an asset. Basically, it is going to be like I spent the money and it disappears. Of course, I know I'll have them, but I won't look at them every day. I think this is part of the discipline that will make it easier to make this strategy successful. I have my contributions clearly delineated so I can track contributions to the DPP, but I will not actually see its performance day to day.
Anyway, back to the original point, "Why MRK?". Well, again, I believe in their long term ability to drive shareholder value through both price appreciations and dividend yield. Currenty yield (or payout) is about 3.5% - the dividends alone beats just about any savings or money market account you can get at a bank. If you invested $100 in MRK back in 1984-2004 and simply re-invested the dividends and did not buy any more along the way, it would be worth over $2,200 today. Compare to a 5% CD during th esame time period and your $100 would be worth $265. If you go back even further to the 1970s and earlier, the MRK return is even more impressive.
That is the goal here. Not only to just have it there 20, 30, 40 years from now - but to continually add to the position and re-invest all dividends to purchase more shares. Maybe I'll have enough shares to be on the board of MRK - that'd be cool.
The other thing that really opened my eyes to this strategy was an article I read about some of the wealthiest families in the country. Most of these people you have not heard of, but they are worth tens of millions if not hundreds of millions of dollars. How did they do it? Well, they inherited it in many cases, but these people that analyzed the holdings of these families. Large blocks of their worth was tied up in the big name stocks, blue chip stocks - GE, MRK, IBM, JNJ (Johnson & Johnson), KO (Coke), AXP (American Express). Strong histories and operations coupled with strong dividend payouts that simply got reinvested in more shares of the stock.
So, that is where I am at. I probably won't make tens of millions or hundreds of millions of dollars during my life. I might, but probably not. But, I want to see if things I do today can create that opportunity for my daughters and perhaps their children as well to be in that position. No promises, but automatically investing, re-investing dividends, & taking advantage of direct purchase plans with their lower fees & ease of effectively investing in small incremental amounts - these are all steps in the right direction to building that legacy.
Tuesday, September 12, 2006
National Bank of Greece (NBG) & Portfolio Strategy
I have taken another stock position - National Bank of Greece (NYSE: NBG) - $8.49 as of September 12, 2006.
In a nut shell, this is the largest bank in Greece and just a few short years ago, the company was the official state bank. However, the banking industry in Greece has now been further deregulated and hence, NBG is now a totally for-profit enterprise. At least, that is my understanding of it.
NBG is actually an ADR - American Depository Receipt. An ADR basically is a certificate that gives you the right of ownership and benefits of an underlying unit of common stock in a foreign company. This basically lets NBG trade on the US markets in addition to the Athens Stock Exchange.
Concisely, why do I like NBG?
1. Strong financial growth and highlights - The ROE for 2005 vs 2004 is very attractive.
2. International Expansion - being allowed to now it is not a Greek only bank, NBG has expanded into Serbia and other countries are in the works as many former socialist nations privatize their banking industry. I believe this trend will continue.
3. Well off from it's high of nearly $11 that occured a couple of months ago. While it is up from $2/share in 2003 and is up very recently from $7, it still is off from its highs.
4. Annual Dividend - strong annual dividend and was very strong for 2005. My guess is that some people sold post dividend, but the banks prospects remain strong.
5. Lots of cash - $6.81/share of cash in the bank. Not as attractive as Citigroup that has $125/share of cash in the bank and trades at $49, but still a very strong prospect considering when you buy a share, about 80% of that purchase is cash.
I like the long term prospects of international banks that are just starting to get their feet wet in the marketplace. Yes, NBG has history back close to 150 + years, but I think from an international standpoint, there is much greater avenue for growth and NBG is flexing it's muscle by buying the state bank in Serbia and being the leading contender for a state bank in Romania. NBG has the cash to make this happen and looks to yield long term success from its aggressive actions today. NBG is also not new to this expansion, beating out Citigroup for the purchase of a large bank in Turkey. Merril Lynch also upgraded NBG on Sept. 8. Often times, upgrades by firms are bad news, but typically safer bets when it comes to banks and financial industry (http://www.newratings.com/analyst_news/article_1363810.html).
On other notes today, I got out of a loser, LRT, that I initially got in at $3.27 and sold at $2.71 today. It hurts, but it's key to limit your losses early. Most people don't sell to lock in gains and hold on to losers hoping they will break even. Even if you still feel there is opportunity, you are best to protect your capital, re-allocate, and watch the position and maybe get back in if it starts to run as you expected it to. I took the freed up funds to purchase more NBG and more ASHG, which took a dip today down to $193, off from it's recent high of $210.
I wonder if my daughters know they will soon also be owners of a Greek bank? I plan to accumulate as frequently as I can for myself, my daughters, and retirement as long as it is under $9. I'll re-evaluate then.
In a nut shell, this is the largest bank in Greece and just a few short years ago, the company was the official state bank. However, the banking industry in Greece has now been further deregulated and hence, NBG is now a totally for-profit enterprise. At least, that is my understanding of it.
NBG is actually an ADR - American Depository Receipt. An ADR basically is a certificate that gives you the right of ownership and benefits of an underlying unit of common stock in a foreign company. This basically lets NBG trade on the US markets in addition to the Athens Stock Exchange.
Concisely, why do I like NBG?
1. Strong financial growth and highlights - The ROE for 2005 vs 2004 is very attractive.
2. International Expansion - being allowed to now it is not a Greek only bank, NBG has expanded into Serbia and other countries are in the works as many former socialist nations privatize their banking industry. I believe this trend will continue.
3. Well off from it's high of nearly $11 that occured a couple of months ago. While it is up from $2/share in 2003 and is up very recently from $7, it still is off from its highs.
4. Annual Dividend - strong annual dividend and was very strong for 2005. My guess is that some people sold post dividend, but the banks prospects remain strong.
5. Lots of cash - $6.81/share of cash in the bank. Not as attractive as Citigroup that has $125/share of cash in the bank and trades at $49, but still a very strong prospect considering when you buy a share, about 80% of that purchase is cash.
I like the long term prospects of international banks that are just starting to get their feet wet in the marketplace. Yes, NBG has history back close to 150 + years, but I think from an international standpoint, there is much greater avenue for growth and NBG is flexing it's muscle by buying the state bank in Serbia and being the leading contender for a state bank in Romania. NBG has the cash to make this happen and looks to yield long term success from its aggressive actions today. NBG is also not new to this expansion, beating out Citigroup for the purchase of a large bank in Turkey. Merril Lynch also upgraded NBG on Sept. 8. Often times, upgrades by firms are bad news, but typically safer bets when it comes to banks and financial industry (http://www.newratings.com/analyst_news/article_1363810.html).
On other notes today, I got out of a loser, LRT, that I initially got in at $3.27 and sold at $2.71 today. It hurts, but it's key to limit your losses early. Most people don't sell to lock in gains and hold on to losers hoping they will break even. Even if you still feel there is opportunity, you are best to protect your capital, re-allocate, and watch the position and maybe get back in if it starts to run as you expected it to. I took the freed up funds to purchase more NBG and more ASHG, which took a dip today down to $193, off from it's recent high of $210.
I wonder if my daughters know they will soon also be owners of a Greek bank? I plan to accumulate as frequently as I can for myself, my daughters, and retirement as long as it is under $9. I'll re-evaluate then.
Subscribe to:
Posts (Atom)
