Every company under the sun believes it offers great service to keep and grow from its customers. It is simple equation and answers two questions Q: why is customer service important? A: If customers are happy, they’ll come back and be will be successful.  Q: What do you want your customers to know? A: We want our customers to know we care about them so that they will keep coming back.  If everyone knows the questions and answers why it is so hard to do? That is what The Ken Blanchard Companies have been trying to help answer and  his book  Legendary Service – The Key is to Care by Ken Blanchard published by McGraw Hill, NY, 2014. Eventually they came up with ICARE.

Ideal Service      – Meeting the customer’s needs on a day-to-day basis by acting on the belief that service is important

Culture of Service  – Fostering an environment of focuses on serving the customer

Attentiveness  –  Knowing your customers and their preferences

Responsiveness – Demonstrating a genuine willingness to serve others as you fulfill their individual needs

Empowerment  – Taking the initiative to implement the service mission

Although ICARE sounds simple, it does have many moving parts and it takes people to do. With moving parts, for example legendary service means consistently delivering ideal service that keeps customers coming back and results in a competitive edge for your organization. Consistently means day in day out and very few people are upbeat every day they are at work. People go through moods and various pressures of the business including those implemented from their boss. In reality, people will look to see who and how people are promoted and will mimic their behavior. In other words, if you are the boss everyone watches how you do or how you do not react to the people below you. This is particularly true of the classic case of vice president meeting clerk. The reaction will do more than the ICARE words.

Another moving point is attentiveness or knowing your customers and their preferences. Are all customers the same? do people try to treat them as the same?  Each moving part has many variables – which people can learn and do better if they are inclined to or actually care to improve.

Linking to dividend paying stocks, in another 50 years the ICARE will be exactly the same for its people that implement them. People are motivated by many things, if the company can motivate its people to care then they will have an advantage and as a customer you can look at the company and do their people do the ICARE? If they do not, then it is relatively easy to ask do they have a really strong competitive reasons why they will continue to make money? If they do not, look at the company falling in revenues for it for people will  seek alternatives and the lower the customer service the more the alternatives will come.

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

Every once in a while, the name of Julian Assange’s name comes in the news in connection to the WikiLeaks and releasing of information. Everyone in the world knows something, sometimes they want the world to know, sometimes they do not. Every company knows something and equally they sometimes want the world to know and sometimes they do not. Governments are the same sometimes they want the world to know the results and many times they do not. Julian Assange through WikiLeaks believes the world should know more and then can decide for itself. The more we know, the better citizens we can be for somewhere there are governments deciding what is in the best interests of its citizens. As a citizen, it can benefit us or it might not, but who should decide? With the growth of the internet, it can be all of us rather a select few. Many words and posts have written about WikiLeaks and one of the books is WikiLeaks by David Leigh and Luke Harding published by the guardian, London, 2011. If you deal with the government, you will know they have various levels of secrecy and what is a classified document. Before the internet it was not impossible but much harder to know what is classified and what is not. With the internet came hackers not just their ability to get into many systems but what do you do with the information? The solution of WikiLeaks was to release the information to the public and they will do it with as they see fit. Is their government really telling the truth? or just part truth?

Similar to all large institutions sometimes the government wants or allows the information to be released, sometimes they do not. There will lots of reasons from political to state secretes to pending negotiations to not giving the opposition any more than they already have. When they do not want the information to be released, the intelligence agency comes into play or hackers with a government salary tracking down other hackers. What will people do with the information and how does it change whatever the road the government is on?  In the book, WikiLeaks was leaking information to journalists who then had to decided what can be printed, how do we check the information and what would happen if we printed, besides the other side not being happy?

Linking to dividend paying stocks, in the stock market companies are expected to disclose material information which could affect their stock price. Often this means if the company is being sued? or the results of sales are not as expected? something that an average investor would say this is good or this is bad. Similar to everyone in the world, releasing good information is easy and done with fanfare; releasing not so good information is designed to try to blend into a very busy news day and many may or not see it or will not react. If the information is not good, the price of the shares typically falls. While as a citizen you may like the idea of WikiLeaks for issues you are passionate about; often times you might say well that what they do as long as it does not directly affect you are okay.

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

 

 

 

In the mid 1990’s the hottest stock on the stock market was a gold company called Bre-X, its share price had risen from 28 cents or $280 for a thousand to $ 180 or $180,000 in less than 2 years. The premise was the company was sitting on the biggest gold mine in the world and the world was believing the story. Even if the mine was not the world’s largest it would be a working gold mine and the major mining companies were trying to get a piece of the action. It turned out the story was built on lies and salting of gold flakes, there might be gold but not enough to mine it. The stock collapse in price and the question was why did the price rise so much, if there was nothing there? Some of the questions are answered in the book Bre-X – The Inside Story by Diane Francis published by Key Porter Books, Toronto, 1997.

Part of the reason for the increase in price was some other very large proven mineral zones around the world had been found, places were people had looked but new and different ideas had found the minerals. Many of us have a belief that technology will benefit us in ways we have never used before and this is the same in the mining industry. We really do not know what is in the ground until drilling and looking at the ground which comes out. Every year, the major mining companies have a better idea of what is there and is not there, but they can not possibly drill everywhere. The chief prospector was suggesting the last company drilled in the wrong area, had they understood the geology of the area, they would have seen the gold was located in the southern section of the land.

Part of the reason was the internet, the internet played a bigger role in marketing the property or telling all the good things which was happening and often times the remarks accented the positive or stretched what was really happening. Now days we expect as much information to flow from the internet as possible, so those with a background in the field will be able to make their own conclusions and often either agree or disagree with what the company says or they are cynical enough to say what does that really mean?

Part of the reason for the success of the company, as the shares were rising in price people who had a long history in the mining industry were joining the company in senior roles which added to the attraction of the company. In many large organizations there are people on the Board who have seemingly direct access to decision makers in an industry or country where the assets of the company are. In the same vein, Bre-X was attracting senior people to its board who should have known. In addition, the industry group was giving the founders its highest awards. Similar to the sales conventions awards for making the company a lot of money, the industry was giving their awards and adding legitimacy.

We all depend on third parties to do their work and report. Part of the argument was there was an existing gold mine about 100 miles away and the geology is similar, there is no reason it might not be the same thing. With the price of the shares rising the larger companies wanted a piece of the action, including those that could help finance the building of the mine. The involvement of more senior firms in the industry leads to greater belief in the size of the underlying asset – it is a large deposit. As the senior firms emerge as players so do funds that try to stay away from small potential growth stocks and when they turn on the tap, money can flow into the stock price.

Linking to dividend paying stocks, there is a world trying to raise money for the next great thing, usually it does not happen which is why the risks are very high for 90% of the time money is lost or not made. It is the other 10% (although no one really knows what the 10% is) where the big money is made. For dividend buyers, we tend to stay away but if the company becomes a $25 stock rather than a 90 cent stock, it is worth investigating. At the point, it should had greater scrutiny from a wide variety of players and they bear watching. Bre-X paid no dividends but the size of the company put it on the stock indexes and that is where seemingly less risker investors would own some shares indirectly through the indexes. At the time of being included in the index, investors would believe more in the story and the price rose. It seemed the system failed and when it did all were affected.

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

 

 

For many people around the world, the sea or oceans are not far away for very good reasons. People first settled around where there was food – the sea and then learnt to grow things in the ground. From the seas we travelled, moved goods and then later developed trains, cars, roads and airplanes, but we still move remarkable amount of goods by the sea. Daniel Sekulich wanted to learn more about the ships and wrote a book called Ocean Titans published by Penguin, Toronto, Ontario, 2006. He writes about the building of the ships in South Korea to the recycling of the ships in India. In between are stories about the designers, the owners, the ship captains and the people who work on the ships.  It is an interesting story for much of the work is done where no one sees for they are in the middle of no where in the oceans. Most of the time the ocean is easily passable until storms happen and then if nature is not respected, cargos do not make it on time.

Much of the business of cargo ships is moving goods quickly and when demand increases the pressures to deliver consistently and quickly increase. When demand falls, there are too many ships and to achieve the proper balance ships have to be taken out of service. There is no doubt the ships are better over time, but the essential business aspects remain the same. Move large amounts of material for relatively less cost in order to mark up the finished goods.

Linking to dividend paying stocks, no matter what industry there is today, chances pages have been written to help you guide through the industry. In the book Ocean Titans, there were different perspectives of people depending on their job from the captain to fill up the ship and sail smoothly to the next destination; the workers to quickly and efficiently load and unload the ship; and the owners who are trying to ensure the cycle repeats itself. There should be little reason why your would not understand what the company does.

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

 

There are many methods to try to find the outperforming stocks and the only perfect information that anyone can tell you is to look backwards. When you look forwards it becomes an educated guess, but there are always methods to minimize the risk. In this column Jean-Didier Lapointe of Inovestor Inc used the software from StockPointer to look at US large capital stocks.

The first thing he did was to use the S&P 500 from that list it was narrowed down to

market capitalization of at least $5 billion.

all companies must pay a dividend

an economic performance index or EPI (return on capital divided by the cost of capital) above 1.5

a positive EVA per share (economic value added or cost of capital – return on capital and multiply the result by the total invested capital.)

a return on capital of 15% or more

Positive free cash flow to capital. A positive number is good; 5% and above is excellent

debt-to-equity ratio to be taken into consideration.

Mr. Lapointe added a few more variables and you can do the same – the analysis can be done by all the reputable brokerage companies.

Company               Mkt Cap       Divid     EPI      Return        EVA          FCF        Debt

(US $Bil)     Yield %                  on Cap                           /Cap       /Equity

Altria Group        124.                  3.57      3.5        24.90 %         2.30        5.9  %           468%

Clorox                      17                   2.36       3.3        21.10             4.50         6.90              693

Nike                       100                   1.08       2.8       21.70             1.60          5.80                17

Home Depot        172                   2.03      2.7        23.80            4.00         14.70             331

Marriott                  18                    1.74       2.5       23.60             2.80       18.10               n/a

Starbucks               83                   1.41       2.5         21.10             1.3            10.80             48

Sherwin-Will       27                   1.15        2.3          20.20           7.9          14.80              191

VISA                        187                 0.72      2.2         19.30             1.70         13.40              54

Southwest Air        27                0.71        2           17.90              2.20        8.90                31

JB Hunt Trans        9                   1.06        2         19.4                  2.2           5.10               75

Linking to dividend paying stocks, all the above stocks pay dividends which is a good thing because you never know what will happen, although you can expect things to happen. While you believe companies are doing the right thing, the economy will dictate. By starting with profitable companies, you can make money and focus on what part of their company you like best. Which metric is more important to the street – right down low interest rates companies can carry more debt; do they have enough debt? should the companies be considering something else? who has the highest free cash? There are many reasons for selecting a company however by starting with dividend paying companies there tends to be less risk and more reward for you.

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

 

Escape Plan is a movie staring Sylvester Stallone and Arnold Schwarzenegger in which Sylvester Stallone is hired by governments and private security companies to break out of their unbreakable prisons. If you examine prisons they are designed and built to keep people in and for 99.99% of the people they do their job. If the movie, Stallone plays a person who figures how to get out. The first step of his job is to watch the routines of the people or the guards. Then he can began to look for opportunities to escape. To escape means to have both knowledge and the ability to improvise with what is there. In one example he peels off the wax on the milk carton to be able to see what the numbers used on the alarm systems are – then by trying various combinations the numbers will be in the correct order. Much of the job is silent observing, seeing without saying anything.

Linking to dividend paying stocks, if you watch the markets over a period of time there will be patterns to be found. Some of them are reasonably obvious, some of them need a more trained eye to figure out. One of the obvious patterns is profitable companies should be worth more than non profitable companies (with a few exceptions). If a company can become profitable and stay there for a number of business cycles it is worth owning. Dividend companies fit these patterns or this is where the easy money is to be made. Investing in companies that will move to higher multiples and receiving a payment as the market rewards the shareholders is a good thing with limited risk. There are many patterns on the stock exchange take advantage of the easy ones.

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

Every couple weeks stock analysis are published and the great thing for average investors is they give factors which can help lower the risk return level. Ian Tam of Morningside Research examined dividend paying stocks:

Earnings consistency – measured by the standard deviation of reported earnings per share over 5 years – lower the number the better.

Dividend yield – stock price divided by dividend

5 year dividend growth

5 year historical beta ( a measure of the stock’s price to an underlying index)

5 year earnings per share growth rate

Minimum a market cap of more than $ 500 million and a dividend payout ratio or less than 60%

Company                Mkt Cap     Earnings    5 year     5 yr dividend   5 yr EPS          Payout    Yield

$ Mil           consist        Beta         growth rate    growth rate   ratio %     %

GameStop Corp    3.251           3.78              0.96             51                      7.67                37        4.73

Cisco Systems      135.162        2.45              1.31               33                      7.27               40        3.87

Cracker Barrel         3.545        4.34              0.48              49                     16.96             53         2.97

Penske Auto            3.382        2.17               1.56               38                     22.35             26         2.75

J & J                          310.952      2.41              0.59                 6                        4.82            48        2.84

Wyndham                  7.982      2.13              1.3                    27                     20.82          34         2.82

T Rowe Price           18.597       3.17              1.21                   14                    13.45           46         2.88

3M                           101.628        1.98             1.1                     19                      6.97           53         2.64

Hershey                   20.106       2.67             0.19                 13                       9.97           54         2.51

Amgen                   117.589       3.67              0.84                44                      17.81          36         2.56

Linking to dividend paying stocks, the list has a minimum of 20 but by learning what metrics to look at including free cash flow you will can narrow the choices. All companies which sell stocks have great access to information and these tables help you lose less money. Not losing money should be one the first goals of most of your investments and investing in companies which have consistently paid dividends and have an expected future payouts is a good thing. Start with the top ten on the list or make your own top 10 and you will be investing for all the correct reasons.

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

 

 

If you look at the private money one of the more influential elements are hedge funds and the people who run them. Once in a while, using for a charitable cause, they get together and announce some of their best ideas. This year the 12th Annual Sohn Investment Conference (cause is childhood cancer) was held at the some ideas were given.

Mr. Einhorn of Greenlight Capital believes Caterpillar is overvalued and expects the price to fall.

John Khoury of Long Pond Capital likes Hyatt Hotel group despite the success of Airbnb.

Chamath Palihapitiya of Social Capital believes Amazon and what Amazon can become.

Zachary Schrieber of PointState Capital believes Saudi Arabia’s currency will drop in the next couple of years.

Stanley Druckenmiller believes the fed is all over the map and he is a gold bug.

In another article Boston Consulting released their annual top value-creators based on total shareholder return over a 5 year period.  The top companies were:

Regeneron Pharm   75 %

Allergan PLC              43

Gilead Science            41

Naspers                       41

VISA                              35

Biogen                        35

Tencent Holding      35

Netflix                         35

KDDI                            35

MasterCard                35

Linking to dividend paying stocks, there are many opportunities, however in the list you might find something that is in your wallet – credit cards. If you use them regularly, you are not alone and for the past 5 years they have done well and should continue. Sometimes the best solutions are the ones closest you and things you do on a regular basis.

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

 

 

If you think about the National Football League (NFL) you think because of its success both on and off the field, just about every aspect of the game has been analyzed inside and out. The game is worth billions to the economy and recently the first pick in the draft was a quarterback. On the magazine Inc there is an article about a punter who is bringing innovation to punting. The rules of the game are after 3 tries to make 10 yards, if not successful, then the team typically punts (or kicks) the ball down the field. For many years it was either distance (punt as far as possible) or try for the sideline. The receivers are getting better and there are some punt returns who had a career out of returning punts well. The Baltimore Ravens punter Sam Koch is changing the way punters do their job.

The first aspect is practice, practice and even more practice to build confidence in order to execute when called upon.

Part of the practice is doing bad drills – if you watch football on a regular basis over the years you will likely have seen the ball coming from the center to the punter go high or low or sideways or the punter having to adjust the ball before kicking. Mr. Koch practices those situations to be able to adjust in game situation.

The next aspect is ask what result do you want from each punt? Besides to have the ball deep down in the opposition territory so the defense can stop them and then the offense has a better opportunity to score. The reality is punt receiving has improved and so yards kick minus yards return is a better metric. Mr. Koch has been averaging 44 years net, that is very good.

What has he been doing? he has been changing the risk/reward situation by trying to ensure the ball does not do exactly what the punt returner thinks it will. He has put in hooks; miss directions ( setting to kick in one direction and kicking across the body in a different direction); balls design to roll; from the baseball world a knuckleball; or things designed to make the other team think rather than just act. If the other team has to think first, then there is a possibility the coverage if the punter catches the ball will be better.

For each kick, there needs to be the execution of the play called for in the huddle. What should be the result?and where should the ball be going?

Linking to dividend paying stocks, most games are not decided by the punts but well executed special teams do make a considerable difference in the outcome of the game. In all sectors of the economy and in all companies there are aspects which people seem to not pay  as great attention as possible. For organizations that do or try to do, it could be the competitive advantage for consistent long term results. As you evaluate your companies, look for something which others seem to just miss or not realize the importance.

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