Tuesday, May 2, 2017

New Strategy for investing in Under Armour Inc. (UAA) and Monster Beverage Corp. (MNST)

On March 24, 2017 my blog entry Under Armour Inc. (UAA) Opportunity I talk about my purchase of 100 shares of UAA on 2/6/2017 for $20.55. I have decided after the most recent quarter where UAA had a better than expected results losing .01 instead of the expected .04 to go with a different strategy.


The new strategy is with options. It comes with risk but also will free up cash. We all know cash is desperately needed and I have many ideas. I have done this before with AMZN blog entry I used options in place of owning the stock. What this does is allow you to use less overall cash to own the same amount of shares. The risk is higher as options are based on time and have time decay they can end up worthless.


Lets look at UAA $21.05 as of May 2, 2017 I put on the trade May 1, 2017.


I purchased 2 options
The first Oct 20'2017 22.5 Call for $1.26 ($126 to control 100 shares. Anything over $23.76 by Oct 20th is Profit)
The second Jan 18'2019 20 Call for $4.15 ($415 to control 100 shares. Anything over $24.15 by Jan 18 2019 is Profit)


So I sold my common stock of 100 shares to buy these 2 options... The second giving me quite of bit of time for a turn around. I think the company will rebound this year hints why I bought an option expiring in October.


I will continue to update to see if it works out.


I also have liked MNST for awhile and sold my position for a profit but wanted to get long without have so much cash tied up. I do think there could be a takeover sometime in the future thats why I want exposure plus it is a well run company. The product is quality and popular.


I purchased an option Jan 18'2019 45 call for $7.20 ($720 to control 100 shares. Anything over 52.20 by Jan 18 2019 is Profit)


I continue to work on the Stocksnowball Portfolio to get it updated on google numbers. I will have Current long positions, Dividend info, Lifetime earnings which will be dividend and capital gains/loss on closed positions or trading around a core position, and a Watchlist. It will be password protected for those who follow me and interact on my profile. Contact me for more info.


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


Sunday, April 23, 2017

Book review "SPECULATOR High Ground" by Doug Casey and John Hunt

I like and recommend "Speculator High Ground" first in the High Ground Novels. I learned of this book though recommendations of others who speculate and invest in mining shares. "Speculator High Ground" was very insightful on economics, politics, philosophy, and adventure. An educational and entertaining story. I usually don't read books that are fiction but this has a good story and characters.

Below are my notes, things I found interesting. Like many have said in other reviews, this book will keep you thinking.

Notes:

Lesson one: to succeed, position yourself to take advantage of luck. Lesson two: bad luck happens. So plan on bad luck, not good luck.

Professors that teach these subjects never define what money is, how is it important. Money isn't just hunks of metal, pieces of paper or computer entries. It is a representation of all the time spent earning it. It represents all the good things you want to have, and do, and provide for others. It is a concentrated form of like itself.

It is like teachers expected everyone to join a union, like theirs, and collect a salary for the rest of their lives.

On page 90
UN, United States came in the the African country with hundreds of millions of dollars to build new bureaucracies. What this ended up doing is: Free food depressed farm prices, bankrupting farmers and driving them to the city to beg for the free food that made farming uneconomic. It wasn't a lack of sufficient government that led to all this dysfunction, but rather the cutthroat competition for control - ownership, really of the government, followed by its exploitation..

Page 96
"My dear boy, you're dealing with a business that turns your money and their dream into their money and your dreams."

Page 109
Soundness... briefly described as integrity. Charles said his Uncle supplied him with books. "he thought I would learn important lessons from. He called them sound books."

What is wealth?

Page 217
One character thinking a Harvard grad or having an Ivy League degree was a badge even if not real. The other saw it as evidence that she'd spent years swimming in a  cesspool of political correctness.

Page 226-227
Politics, national debt, patriots and how the politicians may be misguided, rather than the revealed essence of the state itself.

Page 244
The discussion is on what is harmful... everything can be harmful in large quantities even food. There are many voluntary activities that risk harming the user, such as extreme sports, or that harm society, such as voting socialists into positions of power. We don't ban those activities.

Page 245
The tax cheat to many is looked at as a despised individual. The story in the book "Let's say a man approaches you with a gun and demands the money in your purse. Out of fear you give it to him. Should you also turn over the cash you have hidden in your hatband? If you don't, are you cheating the thug?" The moral thing is to deny funding him and defend your property... I really like the next line... Your property represents the hours of your life you spent to earn it; in a way, property is concentrated life. The defense from the one character is then everyone has to pay more! The moral context is the thief would have to rob someone else for more money. She replied "If everyone abided by that, the country would go broke." The best reply not the country but the government would go broke. We are idiots for thinking it has a right to tax and that taxes are even necessary for an orderly society.

Page 248
How can someone be opposed to charity? "charity tends to destroy the recipient by, in effect, rewarding him for his misfortune. We all understand accidents happen people often need or deserve help. Such help should come from an individual to another. This encourages responsibility of both the giver and receiver. Big organizations destroy capital end up making the recipient feel and behave like a mooch. Not to mention how much actually goes to the cause.

Increasingly in our society, people have come to accept that the ends justify the means, and therefore government should be allowed to do pretty much anything. This is of course, the road to socialism and fascism.

Page 368
The topic of insider trading came into play: From an ethical standpoint, only shareholders, not the public, have a right to corporate information. It goes on to say a CEO or CPA who have fiduciary duties not to put themselves ahead of the shareholders. But applied in any other sense, making insider trading a criminal offense only quashes the free flow of information and chills the functionality of whistle blowers. ~ But it does give regulators a reason for existing and law firms a massive source of income.



Friday, March 24, 2017

Under Armour Inc. (UAA) Opportunity

I have recently bought UAA Under Armour after a great fall in the stock price. The company had some lower growth expectations and the stock plunged. This has been a name that if you didn't get in early and everything didn't workout as predicted you would see a huge fall in the stock price. UAA was like CMG Chipotle Mexican Grill a few years ago everyone wanted to invest in them and the stock was extremely expensive. We can say it is just expensive now. I have had it on a watchlist and never thought we would see these prices. The 52 week price range is 18.04 - 47.95. 

The market cap now is only 8.2 billion, this is smaller than competitors Lululemon which is 8.7 billion and Nike 93.25 billion. I like something I learned from Peter Lynch, buy things around you, a familiar brand you know, and see on a daily basis. Just to add my favorite method of evaluating a company is the Peter Lynch value which is at the 15 P/E but I don't see that happening here. I am less and less into sports as I find better uses of my time but I do see the brand around town, in the gym, or on TV.  Now these companies are still good but a minor set back or two has changed people's mind. Many are now looking for the next hot growth stock. I think this is a great time to get in.

UAA doesn't pay a dividend as all money is needed to reinvest in the business. The CEO Kevin Plank is the founder and has skin in the game which I consider a plus. I know they have had a weird situation with the recent CFO leaving. I think this can be fixed and quickly. I usually don't like buying non dividend stocks but this company I put in with MNST Monster where I think the money is better served in expansion. UAA could be bought out I mean it is dirt cheap and the brand has a great reputation. 
The company is still the same as it was before the earnings call. That is the funny thing about a liquid market prices can go crazy without anything actually changing. I am long and I do think this was more of an anomaly than the norm we will see from this company's growth in the future. I am long UAA.  

I bought 100 shares on 2/6/2017 at $20.55

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


Thursday, February 16, 2017

Investing the Railroads!

Railroad stocks owned
-Berkshire Hathaway (BRK-B) by way of BNSF Railway
-Canadian National Railway (CNI) 

One of my favorite investors is Warren Buffett and I own his company Berkshire Hathaway (BRK-B). Berkshire owns BNSF Railway according to their website is a product of 400 different railroad lines over the last 160 years that have merged or were acquired. After studying Warren Buffett I know he understands and respects the history of the railroads. In my book review video of Harriman vs Hill: Wall Street's Great Railroad War  one of the reviews was from Buffett, he said, "I first read about the Northern Pacific Corner when I was ten years old. When I opened my office on January 1, 1962, I put on the wall a framed copy of the New York Times of May 10, 1901, describing the fateful prior day. Larry Haeg now tells the full story, and I enjoyed every word of it." —Warren Buffett I know BNSF Railway is only a small part of the overall Berkshire conglomerate. The Railroad, Utilities, and Energy make up only (19% of revenue). In my opinion he was waiting for the perfect time in history to acquire this prestigious railroad line once owned by the Business Legend James J. Hill, he made a great addition and perfect timing in the 2010 acquisition.

I also recently invested in Canadian National Railway (CNI) a new holding that is the only transcontinental railway in North America. This is a holding in Bill Gates stock portfolio. CNI is the largest railroad in Canada in physical size and revenue. The company continues to raise its dividend with 19 consecutive dividend increases with dividends paid since 1996. A ratio I like to always factor is the payout ratio CNI has a 47% payout ratio. The DGR has been 18.27% over the last 5 years. The bottom line is the company has been run well. Revenue is spread out and not dependent on one industry. The photo below will give an idea of the size of the line! 

Just like I do when I buy oil stocks I love to research the rich history of the industry and companies.
CNI
Source www.wikimedia.org



BNSF
Source www.r2parks.net


As a retail "small" investor I always talk about how we have the advantage of being nimble. We can buy and sell a companies shares without anyone noticing and usually liquidity is never a problem. Our work is to use the company website, financials, following financial journalists, and investors that follow the company. We make our money with dividends, spin-offs, or selling for a gain. I would say the hardest part is patience letting the story unfold after research and our thesis is made. We can't get emotional and if the story changes we must sell or buy protection. As a retail investor we can't buy enough to make waves if changes need to be made. The only way to voice our displeasure is to sell. 

This type of investment is a bullish sentiment on the future! 

If you like this blog entry you might also like Amazing History of Oil

As always leave comments and thank you for reading.

S. Cummings

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.





Friday, January 13, 2017

Ford Motor Company! Dividend and Supplemental Dividend!

Ford Motor Company (F) announced its first quarter dividend and a supplemental dividend!

The great thing about a supplemental dividend implies there will be a recurring dividend when the company exceeds earnings and cash flow above a set base amount. A special dividend is usually a one-time event. F will continue with a supplemental dividend if the company does well.

So how did F do since my last blog entry Why I like Ford Motor Company. In the first quarter of last year F announced its regular dividend of 15 cents a share and a 25 cent special cash dividend. There was a total of 40 cents worth of dividends in the first quarter of 2016. This year the first quarter produced the 15 cents a share dividend and a supplement cash dividend of 5 cents! I was hoping for another "special" dividend and F came through, the special dividend was one reason I bought and own the company. F is a stable income producer with potential upside. With the closing stock price of $12.63 and dividends projected to be 65 cents this year we are looking at a 5.1% yield. My average price is $12.02, my (YOC) is 5.4%. I also have covered calls. I wrote January 20th 12.75 calls to add .26 to my income for the last quarter for a third of my shares. 

I like F moving forward it continues to run its business well. There are record sales in China. Steady profit and sales in the U.S. The new CEO has adapted to the political landscape. The company has a pipeline of popular models being reintrodued in the next few years. Its P/E ratio is still very low compared to the overall market. F has a management committed to give back to shareholders. 

My strategy moving forward will be to write calls and trade around a core position. I could see the shares rising if the market continues upward momentum. I see limited down side unless a unforeseen issue arises. There is also the chance of P/E expansion. 


Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


New Strategy for investing in Under Armour Inc. (UAA) and Monster Beverage Corp. (MNST)

On March 24, 2017 my blog entry Under Armour Inc. (UAA) Opportunity I talk about my purchase of 100 shares of UAA on 2/6/2017 for $20.55. I...