Recently watched a Mark Wahlberg movie title Invincible again. The movie is a feel good movie and involves sports and based on a true story. In the movie. Mr. Wahlberg’s character is Vince Papale who lives in Philadelphia, is a lifelong fan of the Eagles and fortunately can go to the games (the prices were still reasonable). Mr. Papale never went to college or university where 99% of the recruits to the NFL come from, but he plays pick up football and has skills.  The Eagles had a bad year or losing year and the coach in seemingly desperation tries something new, offers to the fans who live in the Philadelphia area try out. People come, for some of them it will be the highlight of their summer, at least they tried and was on the same field as the professionals and maybe even understand the game better. Most of the people do not have the skills, but at least the dedicated fans could try. Out of the hundreds who came, who were tested for the fundamentals to play only one person was asked to come to training camp – Vince Papale. It turns out the coach is looking for a spark plug someone who has the character to go the extra mile and Vince fits the bill. Vince had a short career of a few years, but the fact that he walk on, made the team and contributed for a few years is a great story.

Linking to dividend paying stocks, for the most part you are looking for the graduates of colleges and universities who have played the game, learned the rules, been recruited and the coaches have a vested interest in the players. The story of the one who slipped under the radar is a great story, but the real money is made with all the others who consistently move from college to the professionals. Remember the great stories, be on the look out for them, but find the easier methods to invest to be consistently rewarded.

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

Just before Easter, United airlines was in the news regarding taking a passenger off the airplane because the plane was overbooked and staff had to fly. Since then, it has apologized and increased the incentive from $400 to up to $10,000. One of the considerations to flying is at one price would you give up your seat? Airlines in general are under heavy price pressure (their customers do not want to pay anymore than they absolutely have to or would like to pay less). On the other hand, over the past number of years there are fewer airlines or some have a near monoploy in their homebase areas or Hubs. In the analysis of the airlines, one of the important elements is revenue per available seat mile (RASM). The RASM measures the revenue earned for every mile each seat has flown and gnerally the higher the RASM, the better the profitablity.

Paul Hoyda of Thomson Reuters examined the top North American airlines based on passenger revenue per seat mile.  Another criteria was:

Enterprise value to earnings before interest, taxes, depreciation and amortitzation (EV/EBITDA). This figure is used because of airlines have high fixed costs and significant depreciation of airplanes. The higher the figure, the better.

Company                          Mkt Cap             Passenger              EV to                  Dividend

(US $ Bil)           RASM                      EBITDA              Yield (%)

Delta Air Lines                33.678                0.1341                    4.06                      1.8

American Airlines          21.335               0.1265                     4.99                       0.9

Southwest Airlines         33.359               0.1252                     6.74                       0.7

United Continental          22.501              0.1240                      4.28                      n/a

Hawaiian Holdings            2.582              0.1167                      4.12                      n/a

Alaska Air Group             11.014              0.1134                      6.75                       1.3

JetBlue Airways                 7.088              0.1121                       4.42                      n/a

Air Canada                          2.707             0.1035                        3.19                      n/a

WestJet Airlines                 2.007              0.0904                       4.01                      2.5

SkyWest                              1.647               0.0895                       6.29                      1.0

Linking to dividend paying stocks, the good thing about this chart are two very specific numbers for you to know if you are investing in airlines. For some distances, it is better to travel by airlines and whether you fly once a year or more than that, going on a plane is better. If you wish to invest in the airlines, you will likely have a bais on where you live, but you can check the RASM on a quarterly basis, to see if your experience is similar to others who fly.

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

 

 

 

 

When you buy shares, you are an owner which entails you to vote at shareholder’s meetings. The more shares you own the greater the ability to influence the company. Over the past few months Elliot Management Corp.- an hedge fund which over the years has done very well has been buying shares of BHP Billiton which is an Anglo-Australian miner (one of the largest miners in the world). Similar to all large investors, Elliot would like to see the share price go higher and according to a Reuters report written by Jamie Freed and James Regan Elliot’s suggestions include spinning off the US oil division into a new company and ending dual head offices to unlock billions in value.

Since the plans are not the same as the strategy employed by management which is something more than the desire for commodity prices to increase and when they do and stay high, the company will rake in the profits. The management says while the ideas are interesting, they are flawed and the results would be costly to implement. The suggestion outlined billions, but when management runs their numbers it seems there is a downside risk or possible losses. If you are an average shareholder reading about the proposal, you would side with management.

Linking to dividend paying stocks, suggestions are always welcomed by shareholders because if you do not like the strategy or the management, you always have the ability to seek alternatives or consider buying  other companies. In the government when there is a vote in the House or Senate, somebody counts the votes and if they have the votes then the bill will pass. If they do not have the votes, the vote dies. As a shareholder, you can have many ideas, however if you do not have the votes, the ideas of management will continue. When you buy your shares, after you done your homework, one of the issues will be in the annual report voting, how many shares does management tend to win by.

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

The entertainment reporter said the franchise has brought in $ 8 billion to the movie companies including Universal Pictures which is owned by Comcast. Whenever you hear box receipts of a movie in the billions it moves the stock price of even the biggest companies. The movie is the Fast and Furious franchise which release its 8th segment in a long line to come over the Easter weekend. The movies and soundtrack and anything else connected to the movie is available for purchase as well when you are dealing with billions,  there is also a large number of illegal movies in the marketplace as well.

Linking to dividend paying stocks, every weekend there are a number of movies released all over the world, very few of the become the megahit the Fast and Furious is. If you never seen the movies, watch the trailers on You Tube or at the movie website and you will get the adrenaline rush the movies create. In every industry there are key numbers, in the Fast and Furious franchise it is $ 8 billion (and climbing); in other movies the number will be much less and that is why there are many repeating themes of movies.

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

 

South Africa located at the bottom of the African continent is one of those wonderful countries for the most part. In travel magazines, the sites and sounds to be seen in the country will amaze you. Then comes the politics. At the present time, the President,Jacob Zuma is becoming much wealthier than his Presidential paycheck should be enhancing his bank accounts. A few weeks ago, the President shuffled his cabinet to ensure those that have said no to him are on the outside looking in. Those that will say yes to his dealings are on the inside and doing. The result of the Cabinet shuffle sent the South African rand (dollar) downwards and equally important the stock market has gone down.

In every book you read, the experts will tell you to buy low and sell high. The question is when do you buy low? If you take the politics out of the equation and with President Zuma it is very hard to, but if you try, then some of the South Africa’s largest and best companies are priced much lower than they traditionally trade. This maybe your buying opportunity because if you do not normally trade on South African stocks, you should wait and do research. The key is to figure what you are going to buy – an ETF? a mutual fund? or the bank and other well capitalized companies. The situation will not change tomorrow, but at some point sanity will come back and you can profit by buying companies such as FirstRand Ltd and Barclays Africa Group Ltd as noted in the Bloomberg News article written by Renee Bonorchis.

Linking to dividend paying stocks, no one wants an recession but in reality, the economy moves through waves with highs and lows. The best time to buy is in a recession, the best time to sell is in the boom, however most of us will never get the timing correct. The key then is to ensure your portfolio generates cash to be a ready buyer of quality stocks which pay a dividend. If you are not living off the dividends, you can reinvest or accumulate the cash to buy quality stocks at lower prices (some companies will be rising, some are lower for lots of reasons.

The book The Edge of the World by Michael Pye published by Penguin Books, London, UK, 2014  is about the countries and events of the North Sea in Europe. If you went back to Roman times, all the maps would be centered around either Rome or Jerusalem and the Mediterranean Sea. To go beyond would be to fall off the edge of the world? at this time of the world, in many circles the world was considered flat. We often believe the world is centered this way and trade routes came from China to Constantinople (Istanbul) to Venice and then made its way to Paris and in reality much of the trade did go that way. In the book about the North Sea – another trade route is discussed the route via the Rhine to the Netherlands.

Traders no matter where they are in the world deal with ratios. In the logistics industry the ratios are ratios between shiploads, ratios between wood and wool, grain and pots, wine and iron, so that everyone could understand them and use them the next market day. The traders calculated the content of their ships, their goods at a fair, they turned the very physical world of barges and cargo into numbers. The sea which carried their business also brought ideas, books, thinkers back and forth and carried the idea of what we now consider normal – the use of money.

One of the many thinkers of the time is Robert Grosseteste, he was inventing our idea of science. Mr. Grosseteste presented many ideas, testing theories, finding some false, proving some things impossible, insisting on combining observations and ideas.

The merchants of the North Sea known as Hansa was a cartel of towns on the Baltic more or less German-speaking which banded together to keep their ships safe, making sure they were well treated in foreign ports, and get as close to the perfect state of traders: monopoly. The Hansa acquired power without the ceremony and pretence of kings and without the sense of responsibility. The Hansa was townspeople with only two things in mind: trade and profit to be made from it, and as long as the ships were sailing on the Hansa’s terms there was no need for talk. Hansa lived from the water: sea ports like Bremen, Hamburg and Cologne. Almost everywhere else power, and title and position depended on land: estates or kingdoms, the income from rents,  the service of serfs. In the water towns, the only source of wealth was trading outwards or offshore.

Linking to dividend paying stocks, there are other stories covered in the book, but most important is the perspective. Most of us learn of one method, but in reality there are more methods. The start of the book talks about trade going around the Mediterranean Sea which we all learn about, in reality they were other important trade routes. Understanding this means you can ask different questions. An example is Amazon who delivers packages – where do they deliver them? who was serving the market before and at what cost? You begin to see the world that exists and could be invested in differently an if you can do that – once in a while you will ride into the sunset on your terms.

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

T

 

The book The Edge of the World by Michael Pye published by Penguin Books, London, UK, 2014  is about the countries and events of the North Sea in Europe. If you went back to Roman times, all the maps would be centered around either Rome or Jerusalem and the Mediterranean Sea. To go beyond would be to fall off the edge of the world? at this time of the world, in many circles the world was considered flat. We often believe the world is centered this way and trade routes came from China to Constantinople (Istanbul) to Venice and then made its way to Paris and in reality much of the trade did go that way. In the book about the North Sea – another trade route is discussed which ended up in Dorestad which is now in the Netherlands. For a time in the 700 and 800’s, Dorestad was the second most active mint and was one of the main customs posts for the empire founded by Charlemegne. The goods flowed from the Danube to the Rhine and then to  Dorestad and then sent around the North Sea. Another trading route was from the Black Sea north via the Dnieper River then a connection made to Lovat finally into Sweden.

In time, the Vikings were an interesting aspect to the story, they came from Scandinavia and their great invention was the ship. Their ships combined a single sail, rowing and a flat bottom to travel up rivers. The ships were faster than what existed in the other ports and allowed the Vikings to cross the sea rather than clinging to the coasts. An interesting story is the Vikings learned how to sail so the curve of the earth would hide them from land. (if you thought the earth was flat, then the Vikings were using every advantage a round earth offered) and they knew where they were going. The reason the Vikings went into Russia was silver or money. The silver came from Arab states and the Vikings were determined to go where they mined the silver. At this time, countries often sent people to other countries for silver, think of the immigrants sending money to their hometowns. Some worked, some were slaves.

For generations, the clothes on your back symbolized your wealth. In some countries if you dress more than earned you were taxed. More interesting stories are in the book.

If you went to the Netherlands today, you would likely see many dykes around the North Sea to hold the salt water back and increase farm production. It started easy enough, the land was peat and one time there was a drought and people could see if they drained the water with ditches with the tools all the peasants owned, the land could be used for  agricultural production. This worked too well, peat that is soggy will hold plant stuff with little decay, peat that is without water is fluffy and a tenth of its original volume. The land was lowered, a storm came and salt water was not good for crops. The new idea the water had to managed, not drained. This simple idea, the digging of peat, changed a culture, redefined how the world thought of a people, changed the way money makes things happen, remade a whole landscape and turned peasant farmers to men with international connections.

Linking to dividend paying stocks, how we look at the world and our investments can change. If we need to make enormous capital gains, then larger risks must be taken. If we focus on dividends and the total return, then we should be taking less risk and still making money.

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

 

 

Another theory to investing is to examine the total return of the company and if it reinvesting in the company. Did the company make money and is it expected to make money again next year? Ian Tam of Morningstar used his data base to look at S&P companies and the criteria he used was:

latest return of total assets

trailing return of equity (ROE)

reinvestment rate relative to the sector median (higher numbers preferred)

must be in the S&P 500 total return index

Company                      Mkt Cap       Return on      ROE        Ind Rel                      Dividend
($ Bil)          Total Assets                    Re-Invest Rate        Yield

Seagate Technology    13.578         11.3%              59.9%        26.8%                     5.5%

KLA-Tencor                  15.004          17.2                133.0           54.3                        2.3

Celgene                          96.608          14.6                 71.0             60.0                       0.0

Home Depot                176.396          18.1                135.9         115.3                       2.4

Delphi Auto                    20.241         13.8                   72.4          44.7                         1.5

Monsanto                         50.570        11.8                  52.5             6.7                     1.9

Sherwin-Williams           28.858       17.0                  86.9            37.4                     1.1

Mettler-Toledo Ind           12.370      17.8                  77.3            82.8                     0.0

Hershey                             23.168        16.9               111.4            59.6                     2.3

MasterCard                      120.802       21.8                  70.6            51.0                    0.8

Mr. Tam had 15 on his list the other companies were Intuit, Newfield Exploration, S&P Global, Clorox and CBOE Holding.

Linking to dividend paying stocks, if a company can earn a profit and reinvest in the business, in is doing something right. The task is to look at alternatives to pick the best company and let the management continue to do the good things they are doing. These lists allow you to see other company names you may or may not have heard about to ensure you are not too bias in your investment picks.

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

 

There are many different theories to which stock is best, one theory is which company does the senior people buy more shares? If they are risking more of their money, perhaps the stock is doing better than expected or something is in the future which will enrich them sooner than later. All the data sources track the information and you can determine if you wish to do it to. In early April, Khaled Eniba of Thomson Reuters examined insider buying. His criteria was:

companies trading at price-earnings to growth (PEG) multiples lower than the main index (S7P 500 was 2.1) . PEG is the company’s Price/Earnings divided by the expected earnings growth rate over the next 12 months. Lower numbers are good.

price discount to analyst target less than 5% – the ratio of the current market price to the average analyst price target

insiders have been consistently buying shares over the past 24 months

an insider-net-buyer ratio at or greater than 75

Company                     Price to      P/E      PEG   Dividend     Inside Net    No of Adj Net Insider

Price Target                      Yield            Buyer Ratio   Buyers     Sellers

Citigroup                    7.2%            12.6     1.1          1.1%             77                   27            3

Morgan Stanley        9.7                14.6     0.8          1.9                 78                 20             2

Dow Chemical          10.0               17.9     1.9          2.9                93                  23             0

Gen Dynamics            7.5              19.0       1.8         1.8                 75                 24              3

Capital One Fin         13.9              12.4       0.9          1.9                93                24              1

Southwest Air             14.0             15.2       1.2         0.7                 88               17              2

Northern Trust             5.1            19.9         1.5        1.8                  86              27              2

Citizens Fin                   8.1            17.7         0.9         1.6                 96               24             1

Huntington Banc        11.5            19.0        0.6         2.4                 92               30              1

Harris Corp                    5.9            21.1         0.9        1.9                 80                21             1

Snap-On                         14.1           18.2          1.7        1.7                 75               16             3

E*TRADE Fin                 15.4           17.6          1.7        n/                   78               18            0

Linking to dividend paying stocks, while all the above pay dividends, one would expect there are more buyers than sellers because it would take a significant event to move the price one way or another. The above data would encourage you to hold, if you own any of the above. However, if you changed the data to smaller companies, there might be something which would suggest more research, for example is the company going to be bought? is the company not making money? why are people selling – for newer companies there are holds before senior management can sell. Being curious is good.

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