In late February, the shares of Air France KLM went down as the Dutch government announced it had bought 14% of the shares; the government of France owns 14.3% of the shares. In an article by Toby Sterling. Tim Hepher and Sudip Kar-Gupta of Reuters the Netherlands spent $744 million Euros or about $1.5 billion for its shares.

The other big holders of shares are Delta Airlines and China Eastern Airlines who own 8.8 % each

Air France reported earnings of E 266 million and KLM reported earnings of E1.07 billion.

The Dutch Finance Minister said they bought the shares in order to have a board seat. The companies have been merged since 2004.

Linking to dividend paying stocks, to all governments some industries are more important than others and they want a say. If they do not feel their say is big enough through fiscal and tax measures, they can buy shares on the open market similar to everyone else. What type of say the countries think they need will affect the outlook for the stock as they try to ensure investments go to one country or another. Institutions buy shares for different reasons than individuals however as an individual you can determine what you want to live with or not.

There are more questions than answers, till the next time – to raising questions.

Killing the SS is a book by Bill O’Reilly and Martin Dugard published by Henry Holt & Company, NY, 2018 and is part of a series of Killing … series. Mr. O’Reilly is a journalist and was a host of a show till he had to move channels.

In the book, the authors focus on 4 people who had high positions with Nazi Germany and what happens after the war. By definition war is horrible and every year with better equipment, it becomes more horrible because people get killed very easily. After WW I, when Germany lost, it had to pay money to the UK and France but essentially the same people who ran Germany ran it again. The Kaisers were still in power. After WW II, the world slowly learnt about Germany’s desire to kill every Jew in Europe, people who had leadership in the system had to pay. There was the famous Neuremberg Trails but in reality Europe was in chaos for a few years and people left for other countries. Some in South America welcomed the Germans with open arms to be free citizens. While not every German who left Germany was a Nazi, some of the leadership did blend in to take on normal lives.

The book focuses on 4 people Adolf Eichmann, Martin Bormann, Klaus Barbie and Jose Mengele who were some of the worst people in the leadership of the Nazi party. These people were not just flowing orders, they were making the orders. One can imagine in the chaos of Europe, the war is over there has been a great amount of destruction and very few things have what we call law and order. Just surviving another day is the most important thing to do. Who was going to go after the leadership – the US and the west were worried about Russia and communism and Nazis had fought Russia, were they friends and allies? In some circles – the Spy service and what became NASA the engineers were welcomed because their expertise was technical in nature, rather than an ideology.

Finding the worst people is both lots of research, some luck and people believing the country where they are located welcome them and they can use their original names, for when they were fleeing Germany many changed part or all of their names. If people use their original names, sources such as the phone book were available, although the people who wished the worst Nazis to trial would never believe it was that simple, but sometimes it is.

Linking to dividend paying stocks, picking a good stock that will do well for a number of years involves research and some luck. You need to research to determine which stock do you want to buy, so patience is a virtue. Once you determine the various stocks you hope to buy when the stock market has fallen to pick it up when it is less expensive. Then with patience in your research, you collect the dividend as the price slowly or not so slowly rises to normal valuations. You are continuously learning because you need to know if the market goes down what should you buy?

There are more questions than answers, till the next time – to raising questions.

Back Water Gold is a movie made in 1970 and relative to productions in the 2000’s looks it, however the message does not change. The premise of the movie is there is gold below the seas, particularly in the Caribbean Ocean. In the 1500’s Spain became the richest country in the world because of the gold and silver flowing from Mexico and Peru. The Spanish continually built larger ships to carry the gold and some sank in the seas. Not every day is a calm beautiful day in the Caribbean, sometimes storms come up and move the boats towards land where the coral ripped holes in the bottoms and ships sank.

One such ship was the focus of the movie – people had done research from journals to possible routes, to when storms came forth and what should happen. Everyone has a different theory and as it was 500 years plus, over the course of time the seas changed, coral forms and the land is a little different. If you went under water, it may be dark and ship wrecks not obvious to the divers. When a ship sank with gold because the value of gold has gone up the shipment is worth a great deal of money. This leads to good versus evil, those who want the money for themselves and those who wish to share the loot. In the movie, those who are on the evil side, kill people who get in their way or perspective partners. In the movies those that are on the good side eventually win. In most movies of the time, those that fit into a bathing suit are good looking.

Linking to dividend paying stocks, if you buy these stocks and hold them for a number of years, the money is deposited into your account on a regular basis. No need to fight good versus evil, no one has to die, but as time goes on you are wealthier.

There are more questions than answers, till the next time – to raising questions.

In New York City, politicians pushed back on incentives to Amazon and Amazon decided to leave New York. One could understand that New York City is one of the largest economic forces in the world and they have the ability to say no to incentives. Although the incentives was $3 billion in an effort to have $25 billion over 10 years come into the city. For many that was an easy trade off, whether the company is profitable or not.

If you went back in time to the railway age, most people focus on the task of building the railways across the country through all kinds of terrain and it is a very good story. Many civil engineering feats to cross rivers and non flat land are still worthy of hearing about. The other side which we typically do not focus on what was the government’s role and what did they give to the railway companies. The railways were built on a promise of more to come – when they were built the west was unsettled and not the “bread basket of the world growing grains” In reality there was little economic activity although there was plenty of potential. In the book, The Railway Game by J. Lukasiewicz published by McClelland and Stewart, Toronto, 1976; the economics of the railways are examined.

Railway companies have been traditionally been promoted by government leaders who wanted railways in their communities, remember in the 1880’s the alternative was water or ships. A railway could and did bring goods to markets faster which meant if the town or city had railway yards it would grow or how to grow. Many politicians at this time owned land which they could sell at higher prices. The conflict of interest idea was not a large consideration to be in politics, likely if you did not have a conflict, you were seen as less than honorable. While Mr. Lukasiewicz focuses on Canadian railway history, the same thing was seen in the United States. Having politic connections meant the government of the day either in Washington or at the state level essentially guaranteed the repayment of the bonds to construct the railways. The early railway owners – the Vanderbilt, Hill, Morgan, Harriman, Huntington, Stanford and others were known as railway kings. Some of the names now grace universities.

In addition to the guarantees of the force of government, railways were offered subsidies to build track. In many instances the companies were given land. The federal government gave over 187 million acres and grants from states added another 50 million acres. Northern Pacific was the leader in railways with 49 million acres. Texas is a big state and gave away land that is similar to the size of the state of New York. Note the land was given to bring the rails into town in order to ship freight, not passengers. (Further information about land given away is available Southerland and McCleery, 1973)

Linking to dividend paying stocks, for generations public subsidies have helped businesses, whether they acknowledge them or not. Private capital likes monopolies or near monopolies which provide stability of profits. If there is stability they can be dividends flowing every year which is a good thing.

There are more questions than answers, till the next time – to raising questions.

In the area where the writer resides, while it is not far from the lake and a river, it is a day’s journey to the oceans. On the oceans, ships and tankers dominant the movement of goods and services. Have you ever watched the ships and wonder, when and why did they change to what exists today? On such person how did was Daniel Sekulich who wrote the book Ocean Titans published by Penguin Canada, Toronto, 2006.

In today’s world we think of changes in software or technology which can change the way we do things. In the 1859, the number on change on the oceans was the start of the Suez Canal. For generations people had thought about having ships go through the Suez Canal to bring goods from Asia to Europe at a relatively inexpensive matter. Originally the goods moved by camels and when they reached Egypt, they could be transported by sea. This meant only a few items and many would be considered luxury items. If the goods did not go through the Suez, they had to go around Africa on clipper ships – the ones that had the 3 masts and used the wind to move the boats. The trip around Africa adds 4,000 miles of travel and on the sea, not every trip is going to be safe and secure – there are many storms on the seas. In 1859, the French lead by Ferdinand de Lesseps lead a consortium to be a 121 mile long waterway through the Isthmus of Suez.

Besides a shorter route, the Canal did not lend itself to clipper ships, the wind did not blow consistently; the Canal was shallow; it was hard to navigate. The solution was steam built steel ships or steam tugs to tow the ships. With steel ships, ship building changes. Rather than needing supplies of wood, steel is needed, Where were the steel mills, ship building changed locations from southern England to northern England and Germany. Now days the shipbuilding is done in South Korea by Hyundai Heavy Industries in the area of Ulsan. The owners of the ships are registered in many tax haven countries with a postal box because of tax regulations.

Linking to dividend paying stocks, in the world of ship building the world changed because of the Suez and Panama Canals. For consumers around the world, that was a good thing. For older shipbuilders their era was coming to a close. When you invest, that is what you worry about what would change the industry to something brand new or the old ways no longer work?

There are more questions than answers, till the next time – to raising questions.

In college basketball the number one rated team is the University of Duke Blue Devils and the expected number one draft choice for the NBA is playing for Duke, his name is Zion Williamson When you have those overlaying circles, the suppliers of shoes and uniforms will be under the spotlight, in this case it is Nike. In late February Duke was playing North Carolina, the game was matching the hype until something unusual happened. Zion was wearing Nike shoes, these shoes are not the ones you can buy at the sports store, but specially made for the Duke players. Zion’s shoes split, something that would happen if you bought very cheap shoes after a few weeks of wear. As expected social media picked up the accident because that should not happen to premium shoes.

On the stock market, shares of the company fell 1% or $1.46 billion in market capitalization (price of stock times number of shares outstanding). Mr. Williamson was wearing the Nike PG 2.5 basketball shoes which sell for around $100 on Nike’s website.

Nike is showing signs of a rebound as it speeds up new product launches and expands partnerships with online retailers. In an article by Melissa Fares and Amy Tennery of Reuters, Nike has forecast sales growth for 2019 approaching low double digits. Analysts were not expecting the incident to have long lasting effects on the company. Company spokes people said the quality and performance of our products are of utmost importance. We are working to identify the issue.

Linking to dividend paying stocks, sticking to basics never changes. Doing it well is a daily challenge and all companies have to focus on getting the basics right. How well the company does it and understands how to correct mistakes, is something you can easily determine. If the company does it well, then you can expect they fix the worst errors.

There are more questions than answers, till the next time – to raising questions.

 

If you look at your bank and a retail store, do you see them as similar or different. If you ask many people they would say they are different, but although the bank tends to have more of its own software, they also use the software of other companies. The easy example is Mastercard and VISA. For many years, banks could issue one or the other now they can issue both. Recently an article by David Berman examined the company Fiserv. If you are a normal person, you likely have not heard of the company because it sells all its products to financial institutions like banks.

50 plus years ago, everyone paid cash only a few used credit cards. Then consumers had credit cards and the next logical step was payment with no cash or from your bank account. Companies that provide credit cards, develop financial technology and facilitate mobile payments have been rewarding investors for years.

Over the past 5 years, VISA delivered a return (with dividends) of 162%.  Mastercard was 194%. PayPal Holdings is up 157% since it left the parent company of eBay Inc; and Square is up 734% since its IPO in November 2015.

Another company to look at is Fiserv Inc on Feb 17, 2009 the stock was at $8.44 on Feb 15, 2019 the stock reached 85.78 or a return of 872.84% over 10 years.

Fiserv is based in Wisconsin and processes debit and credit card transactions, electronic bill payments and offer image check clearing, and its many services. The company works with banks, insurance companies, and credit unions and has 12,000 clients. A few weeks ago, Fiserv bought First Data Corp of Atlanta which makes point-of-sale terminals and provides e-commerce services and gift cards for merchants. The cost of merging is $22 billion.

Over the past 5 years the share price has risen 3 fold which is better than Mastercard and VISA. Analysts expect the stock to reach into the 90s this year.

Linking to dividend paying stocks, when you adjust your thinking you can see even more opportunities. In the case of the banks, they use external services just like many other retail stores. Doing you homework allows you to determine who supplies the banks you have a habit of making money and paying dividends. By seeing who the supplier is, you can find more than one way to invest in the company.

There are more questions than answers, till the next time – to raising questions.

 

The book Game Over is subtitled Jerry Sandusky, Penn State and the Culture of Silence by Bill Moushey and Bob Dvorchak published by HarperCollinsm, NY, 2012.

While the book is a sports book, it also deals with Jerry Sandusky who is a sex offender with young boys. The sports aspect of the book is college football – many of us watch the games and cheer the players. If the coaches are doing consistently well, they get treated better than most by fans and law enforcement. At Penn State – the coach was Joe Paterno who was an excellent coach and tried to ensure his players graduated because most would not play professional football, some would and are playing.

Jerry Sandusky was an assistant coach, concentrated on defense and could easily have moved to other colleges to be the head coach. Mr. Sandusky was instrumental in the 2nd Mile Center – think of Boys and Girls Clubs for kids and particularly kids of lower income. He raised funds for it, he assisted in programs and he took an interest in some young people before dropping them for other young boys. In the world of child molestation, it takes patience, time, developing relationships, giving gifts and ensuring secrecy. It also usually takes place away from the eyes of reasonably responsible adults so it is hard to use the force of law and order. In the book, Mr. Sandusky was caught in the shows at Penn State late in the evening with a young boy. By all accounts it seemed to be wrong, but was it illegal because no one saw illegal acts. What should the college do? What should happen to Mr. Sandusky?

The administration of Penn State saw the activity as a once, not a continuous event. Was it weird yes, was it illegal? hard to know. Particularly when the person is someone who is known by all. Is it best to deal with internally or externally? Hopefully now if someone saw an adult in the shower with a minor who was not their child, alarm bells would ring and notifications would go to various outside agencies to investigate.

Linking to dividend paying stocks, the culture of silence exists all over the world. We see people for the good they do, we do not know if they are the “killer” next door. We only want and wish to see the good. In the culture of silence, it is very hard to raise the negative and then what to do when you hear it. It is important all companies have a program to hear the negative and people willing to do something. It is easier to work on customer fixes than dealing with people. How well the company does that makes it a better company for it.

There are more questions than answers, till the next time – to raising questions.

In mid February Peter Ashton of Trading Central wrote an article about some companies which could based on past performance outperform the market. The idea was to search its data base for stocks with reasonable valuations, above average volume and strong short term price momentum hinting at possible future price gains.

He started with companies with a market capitalization of greater than $10 billion.

To find reasonable valuations, he was looking for trailing price-earnings ratios of 25 or less.

For those companies increasing revenues, compare revenues from the last quarter vs a year ago and the benchmark is greater than 7% growth.

To see above average stock volume, he used a 10 day average where the criteria is 110% of the 90 day average.

To check on price momentum, looking for stocks that have risen 5% or more in the past 5 trading days.

Company                    Recent     Mkt                P/E      Revenue    Vol    Price       Dividend

Price        Cap $ bil      Ratio     Growth    10vs90  Perf        Yield%

Conagra Brands          23.82        11.524          12.9       9.7%         1.23       7.4%        3.6

Electronic Arts          103.10        30.658           22.6      9.2            2.95       27.5          0

Masco                            37.05        10.832          15.7        8.9            1.15      11.8           1.3

M&T Bank                   168.11        23.555          15.2        8.1           1.10        5.5          2.4

Ametek                            78.54      17.952          22.7        10.0         1.25         5.6         0.7

Tractor Supply               95.82       11.665         23.5        9.3            1.45        5.3         1.3

 

The idea of this strategy is to see what is moving higher and then you will need to do homework to see if it is a good stock to buy. In the case of Electronic Arts or EA – they released a game which people like much better than their last one.  If you invest in it, determine if the growth rate for signing up remains high.

The other good thing about these lists is some of the companies you may not know or they are in industries which you either do not work in or generally do not follow, these lists help broaden your base, which is good.

Linking to dividend paying stocks, in the case of the list above, the idea is to continually to narrow the list so your criteria can change. Once you narrow the list you need to determine which one suits you or you can wait for the stocks to decline and pick them up later.

There are more questions than answers, till the next time – to raising questions.