Every quarter hedge funds managers tell the regulators or the US Securities and Exchange Commission what they have been trading. The form is known as 13F and is released to the public 45 days after the quarter. This means the managers could have changed their positions but the disclosures allows the public to see what values hedge fund managers saw or did not see.

In Mid August David Randall of Reuters went through the holdings and wrote an article called US Hedge funds shed health-care stocks. The news at the time was the health care bill to change the Affordable Health Care Act was not passed. This is why politics matter, when politicians do not do what they say they will, stock prices are affected one way or another. Jana Partners , Third Point sold large positions of their health care portfolio.

Jana and Third Point also sold energy stocks, and increased their holdings in technology favorites FAANG – Facebook, Amazon, Apple, Netflix and Google.

Jana was holding a large position in Whole Foods (23.3 million shares) and cashed out to Amazon as it was acquired.

Warren Buffett bought more of Synchrony Financial – formerly GE Financial.

Linking to dividend paying stocks, hedge funds by their nature need to do a considerable amount of trading and to make money need to take large positions and hopefully sell higher. If your portfolio is a little less, then you do not need to do a considerable amount of trading, buying and monitoring is good enough. If you own a dividend company, your decision to trade can be is the dividend safe? if yes, then hold. If no, what are the alternatives on your list to consider.

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

 

 

In the 1960’s the space race or sending a person to the moon and back safely was the race between the world’s superpowers Russia and the United States. At that time, all of the United States successes and failures were open to be seen by anyone. in Russia only what was reported was widely known. The Russians were first to send a rocket to where there is no gravity; they were the first to send a female into space; the United States was the first to send a person to the moon and back. The story behind the space race is one of the reasons why in the 21st Century we love technology. In 1961 how to send a person to the moon was an unknown. The story of how it was overcome is the book The Race by James Schefter published by Doubleday, NY, 1999.

There are many stories about the people and putting in the correct policies to make the event happen. President Kennedy has said to Congress he wanted a man to go to the moon and come back safety beyond 1970. He also said, We choose to go to the moon in this decade and to do the others not because they are easy, but because they are hard. Part of the hard work is the personalities of the people – attempting to keep as many people as possible working towards the same goal and agreeing how to do it. Politics plays a role because what is NASA’s role after a man comes back from space safely?

Linking to dividend paying stocks, every organization comes up with a plan for next year, but happens if you achieve it, how does everyone stay motivated to do it again? Successful companies find a way and that is why they are rare. Ideally as an investor you want very consistent reliable earnings year in year out for as long as you own the stock, to do that in the very competitive marketplace is difficult. Learn the company’s profit margins on its best-selling products and as long as they are kept high, the stock is worth keeping. If they fall, begin to look for alternatives.

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

 

There are many races, however in the 1950s and throughout the 1960’s there was only one big race – the space race. In August 30, 1955, the Russians sent a rocket up in space to overcome gravity, which for the next 10 years allowed them to claim dominance. The other competitor was the United States and eventually in May 1961, President Kennedy said before Congress I believe this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to Earth. The sending a man on a rocket into space, land on the moon and come home safe at the time were all unknowns. It was relatively easy to go to the point of zero gravity and the early missions known as Mercury did that. The astronauts were the original superstars of the tabloids and a daily feature in Life magazine.

One of the writers of Life was James Schefter and he eventually wrote a book called The Race – The Uncensored Story of How America Beat Russia to the Moon, published by Doubleday, NY, 1999. There are many stories about the people and the backstories to the news. After President Kennedy said we should go to the moon, logistics begin to work. At the time NASA was located near Washington, DC and it had been a policy to include work or research from all the states as possible. Which state or which city would this headquarters be located? Cities such as Boston, Cape Canaveral, Tampa, New Orleans and Houston made bids and Houston won.

Behind the scenes, Texan Lyndon Johnson was Vice President; the Chairman of House appropriations subcommittee was Houstonian Albert Thomas or politically Houston was well connected. In addition the publisher of the Houston Post Oveta Culp Hobby pulled a classic Texas land deal. Humble Oil (now known as Exxon) owned a large parcel of prairie and wetlands on Clear Lake near Rice University. Exxon donated the land to Rice University but kept the mineral rights, Rice donated 1,000 acres to NASA and agreed to sell it another 650 acres for $1,000 an acre. Rice retained some land and made some money. Exxon received a tax deduction for its donation of land to Rice and retained mineral rights; NASA received free and cheap land. The taxpayers lost money but regained it as the NASA complex developed.

In addition to the land, Houston did meet all the basic criteria, of close to major universities, an international airport, major transportation networks, local technical infrastructure and more.

Linking to dividend paying stocks, often when you buy a stock it seems to have all the right criteria, but it does not do much. What you do not know is what goes on behind the scenes – how well does the President and Board Chair network to ensure what pieces need to fall in, actually falls in.

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

 

Susan Taylor of Reuters wrote an article which states Newmont Mining – one of the largest gold mining companies in the world has a cash balance of $3.1 billion. Giving the rising outlook for gold, the company has cut its debt by more than 70% since 2013, the cash balance could go to shareholders in the form of boosting the dividend.

Colorado based Newmont Mining biggest debt payments come due in 2019, there is a window of opportunity to give excess cash back to shareholders. This year the company expects to produce a little over 5 million ounces of gold. In the mining world, Newmont has a window of opportunity to do something with its cash. Chris Mancini an analyst at Gabelli Gold Fund says a potential option is issuing a one time special payment. The fund could also boost its gold priced linked dividend again. At a price of $1,250 an ounce that would translate to 30 cents a share.

Linking to dividend paying stocks, Newmont has the ideal problem, given the company is profitable and has lowered its debt it has the ability to do something with its cash. It could buy another company or give the money to shareholders who will either reinvest it or buy something else. That is a good choice to have.

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

In an upward climbing market, being close to or fully invested is a good thing to do, but what happens if markets go down? Sometimes they go down a little bit (correction) sometimes they fall 10% or more. When the markets fall more than 10% people will begin to sell their investments, given billions of dollars are it ETFs, Index funds, Mutual funds, this will mean the fund needs to sell its holdings to pay the redemptions. What should you do? Larry Sarbit writing an article titled The Liquidity Trap says similar to Warren Buffet- cash is to business as oxygen is to people, never thought about when it is present, the only thing in mind when it is absent.

If you buy ETFs or many funds, if they carry less than 5% cash holdings, if and when the markets go down, they will not be able to take advantage of buying opportunities for they will worry about redemptions and funding the fund. If you believe the market is overvalued and the street tends to agree. then having a cash portion is a great idea.

Linking to dividend paying stocks, some of the money you invest is there for many reasons. Sometimes you improve your residence, buy something, reinvest, there are many things you do with money. If the timelines are perfect then there is little overlap however most times the timelines are not perfect, so you will sell when you need to pay these bills. Ideally, the money was invested for the long term and you made money and the market is still favorable to your outcome. Just remember, sometimes cash is king and be prepared. If you have dividend stocks you have a choice with the dividend  – reinvest or take in cash to have patience for the right opportunity.

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

A little while ago, a movie called Flash of Genius was watched on You Tube, the movie was made in 2008 and started Greg Kinnear in the starring role. The movie is about a college professor and part time inventor who invents the interment wiper (if you drive it is the second setting) which is a good thing. After his invention, he patents and makes the rounds of the automobile companies, but he wants to manufacture it. The automobile companies tweaked his invention, for they do not want to deal with him as a manufacturer and use it. Mr. Kinnear’s character sues an automobile company and it takes 20 years plus to go through the courts and finally win. If he had sold the invention or offered a royalty payment his daily life would have been much different.

While the story is based on the wiper, if you know people who invent, have them watch the show and ask what is better to manufacturer or to have a royalty payment?

Linking to dividend paying stocks,  if you own these types of companies the answer to the above question is the royalty payment. The risk is low, other people will spend their lives ensuring the product is standard or the norm for the majority of users, and you do not have worry about manufacturing concerns, logistics, selling the product, you just worry how you will spend the money. Depending on how much comes in regularly, all of the previous have stress connected to it, it is often easier to deal with money – invest or reinvest? buy or save? do something or do nothing – building a cash balance is not a bad thing to do. These are good problems to have

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

In the first of August, Time Warner reported higher earnings helped greatly by the movie Wonder Woman. Rishika Sadam and Jessica Toonkel of Reuters wrote an article about Time Warner. Time Warner is a media conglomerate headquartered in Columbus Circle in New York City and soon it will be a subsidiary of AT&T. If you wish to make about $5 a share, Time Warner will be exchanged for AT&T stock and cash of $107.50 later this year.

The revenue from the movie industry was up 12.4% to just under $3 billion; the movie Wonder Woman brought in $800 million; while Game of Thrones brought in $1.5 billion.

In the TV channel business the company owns Turner Broadcasting including the TNT and CNN channels. The revenue was up 3.1% but viewers continue to leave cable and go to on line streaming of Netflix and Amazon.

Linking to dividend paying stocks, a media conglomerate will generally earn a profit, in the case of Time Warner $7.33 billion but it often takes a hit movie to move the earnings in a substantial method. The media industry needs the home run type of result; ideally you are looking for companies which only need to hit singles and doubles to consistently earn their money.

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

 

The best stocks to own over the last number of years is the FAGA or an acornym like it because they had the combination of growth, competitive “moats” and fat margins. What is not to like – the FAGA stands for Facebook, Apple, Google and Amazon. Similar to all things on cycles, while the companies are dominate and are still expecting to be, the combination of growth, competitive moats and fat margins is changing. Shira Ovide writing for Bloomberg News suggests they are changing as fast as the tech companies change.

Apple is still dominate in iPhones (2/3 of its revenues come from it), but Apple is less flush that it normally is (although it has $100 billion in accounts outside of the US), however its most recent quarter, operating profit as a share of revenue was its lowest in 9 years. Apple is spending more and more of research and development, Apple’s operating expenses were nearly 12%, the highest percentage in 7 years.

Amazon is a powerhouse in delivery of packages and over 100 million people pay $100 to be in Amazon Prime to have free shipping and access to music. Amazon is increasing the number of merchandise warehouses, Web video programming and computer-data centers which is good. What is not good, is a operating profit margin of 1.7%. Amazon has gone a terror of spending in the last 12 months for every $1.00 in cash coming in, Amazon keeps 1 cent after accounting for its cash expenses.

Facebook and Google tend to have higher margins, but Google’s parent company Alphabet gave its partners in YouTube videos and Web browsers 22% of its revenues which is highest share since 2014. Google’s profit margin is still a healthy 26.5% but it was 31% in 2011.

Facebook is trying to become a TV-like destination as Facebook is trying to do the same things as Google through partner sharing. The same result will be lower margins for Facebook.

Linking to dividend paying stocks, it is very hard to find stocks which have the great combination of growth, competitive moats and high margins. For the past number of years it has been the FAGA stocks and their stocks reflect the higher stock prices. According to a recent study, it has been important to be in the stocks for less than 5% of the entire listing of stocks leads the market.

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

 

 

A few months ago, perhaps as a public relations countries such as Britain, France and Norway announced they wish to have a fossil fuel ban by 2040. It is true, automobiles are a large contributor to green house gases, however the market is not going to change tomorrow. When the average electric or hybrid car is priced at the entry point of average fossil fuel car, then markets will drastically change. Until then, the hybrid – electric car will be seen as helping save the environment. Hopefully, since all of the countries have automobile plants within their borders, government policies will help the auto companies make the change to electric.

As the change begins, metal markets are changing to reflect the higher need for some metals over the others. To look inside the existing electric cars is to look at different metals than fossil fuel cars, electric cars contain 3 times more copper than fossil fuel. The batteries are a combination of lithium. cobalt, graphite and manganese. In an article titled Electric cars shake up the metal markets by Mark Burton and Eddie Van Walt based in London writing for Bloomberg News, they look at the existing and what might be.

For copper the existing large companies such as Glencore (very strong in copper and the world’s biggest producer of Cobalt), Freepot-McMoRan and First Quantum Minerals .

Lead producers such as Recylex SA and Campine SA are going to have to adapt their operations. Lead is used in starter batteries for fossil fuels but not electric batteries.

Electric batteries are powered by lithium-ion units.

One of the methods to allow cars to travel longer on less power is to make them lighter and automobile companies are using aluminum for that. The steel companies such as AK Steel, ArcelorMittal and Tata are trying to make steel lighter.

Platinum is used in catalytic converters to curb pollution, electric cars do not need them.

A rule of thumb according to Michael Widmer, head of metals market research at Merrill Lynch for metals like copper and nicket, if you underestimate electric sales by 1 percentage point, you can add 1 percentage point to global demand.

Linking to dividend paying stocks, as the make up of the vehicles on the road begins to switch as an investor what you need to do is look under the hood to see what materials are being used. As those change, so does the outlook for the companies who mine and process the materials.

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