Thursday, June 29, 2017

Thank you Chase Purdy (Silicon Valley Unicorn definition)

Unicorn, the white horse with the horn, has numerous alternative definitions, some of them not to be used in polite society.

I keep seeing the term used in financial documents, but with no explanation. Today I saw it defined, not once, but twice. Slashdot with Chase Purdy, "By contrast, Hampton Creek -- just a 20-mile drive from its Silicon Valley rival -- has raised more than $120 million since 2011. It's one of Silicon Valley's unicorns -- a company that has a valuation that exceeds $1 billion."   Tech Crunch, "However, it’s last private valuation was close to $1 billion, the company priced under that mark, and has since moved past the $1 billion valuation threshold into unicorn-land."

So there we have it, apparently a unicorn, in financial parlance, is a company, possibly pre-IPO, that has a value greater than 1 billion.

Tuesday, June 27, 2017

THE NEW$$$$$ and Google News

UPDATE 6/29/16 Either the day I wrote and posted this or the following day, Google News updated its format. I think they are growing closer to the "Sunday Newspaper" experience of yore. If there is money to be made in digital news, these are the folks to beat.

Paper newspapers are dying fast, everyone knows that, (except for the exceptions). We want to read our news online. And we can, sort of. I picked up on this in my information warfare - perception management blog. It is important because it impacts what the man on the street knows - preferably and it also true.

However, this is my investment notebook. How is it possible the Wall Street Journal, (profitable), Washington Post, Guardian are struggling? What about the advertising model?

Yet they want more money from us, the consumers. And, I for one am willing to pay for what I use. However, there are two problems:

  • Does the publisher cover what I need to know?
  • Does the publisher have a bias I need to avoid?
I understand the first problem. If revenue is not coming in, they can't hire reporting staff. The obvious answer is crowdsourcing. When planes crash, police shoot people, buildings burn, or people are saved by jumping into a crowd, odds are it is filmed on a cell phone. Crowdsourcing is already happening and will not stop or be stopped, we are there. However, the potential for trolls, fake news, published assumptions is great.

The second is a bit trickier, bias. Two of the better and more prolific publications right now are the Washington Post and the New York Times. They are competing with each other and that is probably a good thing. But they seem to have a liberal bias. This must read from Pew makes it clear, consumers seek out their bias, "the study finds that those with the most consistent ideological views on the left and right have information streams that are distinct from those of individuals with more mixed political views – and very distinct from each other."

I am a confirmed centrist, I try to read intentionally balanced sources like AllSides. I vote for qualified candidates not along party lines, which means I have to educate myself with tools like Google Alerts by name, (in advance of the election). I need to be careful what I feed my brain, conservative or liberal. 

But, the rich question is where is the money in news media? Mediaguide reports, "The self-evident downside of the digital revolution for media houses is that people are less willing to pay for journalism, as it can be found online for free."

This assumes people even want "news", PBS reports, "As three former News Corp. executives recently told The New York Times, News Corp. today has become "a sports and entertainment company with a newspaper problem."

Assuming there is a set of customers that want news, if you are making money, by advertising, subscriptions or even being paid to influence elections, you have to make your packaged content desirable. And if you skip the well proven Euro tabloid model, (sex may not actually sell), then you quickly get back to bias, including the bias for "bad news".

As an investor do I invest directly in a corporation that owns news outlets to weight my exposure over monster index driven ETFs? This dated article tries to show the players. 
  • GE, which we own gets us Comcast, (NBC)
  • Newscorp, Fox, WSJ, NY Post
  • Disney, ABC, ESPN
  • Viacom, MTV, BET, CMT
  • Time Warner, CNN, Time
  • CBS, Smithsonian
DIS has a paltry dividend, minor exposure to news, is off a bit for the quarter. We clearly have it in our ETFs, I am not moved.  NWS is too bouncy for me. GE, we already hold, the retirement debt has my full attention. Viacom, I will pass on, but the opportunity for targeted news with BET and CMT is duly noted. Time Warner, TWX, is also too bouncy for me, you need one of those flash crash Wall Street auto-traders for this. CBS, well is CBS. With apologies to True Lies, none of the choices are blowing my skirt up. If I wanted low margins coupled with high competition, I would invest in a grocery store chain.

Yet something in my reptilian brain does not accept this. People want news, they just do not want to pay for it. Sex doesn't sell, they say, (and I doubt that is true). Do you remember waiting for the Sunday Newspaper as a kid? We would skim the front page and local news, ditch the ads, and head for comics. Some kids read the sports or arts pages, I read the financial section. It wasn't the news, per se, it was the experience, (yup, the same experience line they use to prove big box malls aren't going out of business). Today, the only time I read print newspapers is when the hotel gives them out for free and I take them for the airline flight, the "experience" is trying to fold the paper pages in the tight airline seats. Newspapers were meant to be read on a big flat table.

So, how do I read news today? Google News! I don't care about their secret sauce patent, it is fast, gives me what I need, (the basics) and seems fairly balanced, my own bias choices affect what I see so I LOVE their balance. I spend enough time reading Google News, it makes sense to use the personalize feature, you should check it out if you haven't. There are no distracting ads, and a fair amount of localization, so I do get some of the "Sunday paper experience".

But how do they monetize Google News? I am not sure, but it is one more reason not to bet against GOOG, GOOGL. While there does not seem to be that much money to be made from being a news producer per se, I think they will give the big six a run.

Monday, June 26, 2017


Kathy and I have been very thankful for the runup in these stocks and do not take them for granted. However, we decided to profit take and lay low for a bit, at a minimum for the Wash-Sale 30 day period.

We set the market sale order over the weekend for the opening bell Monday June 26, 2017. Now of course we are thinking where will we find replacement investments. That would be from the notebook entries in the past and the ones to come.

Current analysis

  • GOOGL is a fantastic company thinking about executing in the present and opportunities for the future. We could not resist the opportunity to profit take, but tech in general is more overpriced that Google in particular. We would buy back in with the right pricing.
  • AMZN is going to face some headwinds. We saw this Seeking Alpha comment, "Earning misses have historically meant very little to Amazon stock as funds have run in to purchase the stock at every dip." We are very thankful for the profit, probably need a couple of changes to re-enter the stock in a meaningful way.
  • COST is another well run, operation focused company. One of the things they do is choose their own location in general instead of anchoring malls though they did some of that a while back. I think the dip on the AMZN Whole Foods purchase was silly, but since the profit was there and we were rethinking that portfolio we took the money and ran.
  • TSLA, the whole car industry is going through some major shifts. We expect headwinds for the biggest players, some success for companies with the right niche, and alternatives such as ride sharing before the smoke clears. They were kind enough to gain a considerable amount in the time we owned them, so we are taking a break. 

Thursday, June 22, 2017

Debt in Canada, Sears Canada, Buffet and CHCG

Sears Canada is seeking bankruptcy protection, closing 59 more stores, slashing payroll. There are no white knights, expect pennies on the dollar for creditors and even more pressure on Sears Holdings USA.

Meanwhile Canada has world's fastest growing private debt, largely household, that could set up a property value meltdown that could extend into small business. The Bank for International Settlements (BIS) puts them in the category of likely financial crisis.

Warren Buffet is going to extend credit to Canadian lender Home Capital Group. It goes without saying the money comes with strings attached.

Analysis, the Canadian economy is over-extended and ripe for a crisis. We have sold our Canadian bank stocks and trimmed EWC, our Canadian ETF.

Tuesday, June 20, 2017

Kroger is starting to get attractive but Wal-Mart may be better

Amazon is buying Whole Foods so Wal-Mart, Costco, and Kroger are doomed!

Hmmmm. Kroger is a dividend payer, (albeit a bit paltry), they have been in business forever so they can spell supply chain and location. I live in the Pacific Northwest and there isn't a Kroger on every corner, but Fred Meyer, Ralphs, QFC and they are all Krogers, (not to mention the greatest of all stores for a geek on the planet, Fry's).

This strength is also their weakness, they are one of the largest grocery stores, but are spread a bit thin with electronics, jewelry, clothes and so forth. In aggregate they are a lot like Wal-Mart, but not as organized and they cannot compete on price.

Over the past five years KR was a better investment than WMT. However, if you held on for the past 12 months, KR got wasted.

KR is cheap and I am thinking about a purchase, but I do not understand them and I don't think many analysts do either.

As always debt is one of the first things to come up on my radar. They picked up $1B in 2016 to finance the purchase of Roundy's. One analyst said, "Levenson wrote that Kroger doesn’t have as much cushion as it used to in its debt ratios. But it can quickly rebuild that with strong free cash flow in the next year or two." However, 2017 has been a rough year. Morningstar rates them BBB, 4 star. However, a lot of debt is due 2019 - 2022.

Wal-Mart, by contrast has an AA- rating. And the debt due bulge is 2034 - 2043.

I need to take some money off the sidelines for one or the other.  While the world is concerned about AMZN, it might be a bit of a buying window. Lidi and Aldi, (Aldi appears to be two different companies, mostly in the Eastern half of the USA), may be threats in the future, but not in 2017 - 2018 and they both will have to face the eCommerce dragon.

Saturday, June 17, 2017

GE: The lesson for future retirees

GE is in some trouble. Stock buybacks over the past few years ate up their "running room" and did not yield the desired results. They have some troubled business units. And somehow they need to come up with 47B over the next ten years for existing retirees.

Bloomberg reports, "According to Dennis Rocheleau, a 36-year GE veteran who was its chief labor negotiator until 2004, the company considered its pension well prepared and thought its investing prowess could help keep the plan in shape. No one could foresee the financial crisis or the rock-bottom rates that followed."

Fifteen years ago, my financial advisor told me the day I retired he would put everything in a bond ladder.  Today, of course, it is 60 - 70% stock chasing returns, (though at higher risk). What changed? Those rock bottom rates Mr. Rocheleau refers to.

A well placed CNBC article reports not saving enough for retirement early enough is the top financial regret most people have. But what if you did save? And then the financial crisis and the rock-bottom rates that followed damaged your nest egg, (because they probably did).

Part of this is much ado about nothing. If you are trying to buy municipal bonds, you have probably noticed you are not alone in the market. Yes, there was a financial crisis - followed by seven or so really good years depending on how you count. Most individual investors should be back, or even up from the crash. So now what?

Observation: Signs are increasing that GE should not be held long
Orientation: I have 2k shares in MLs, Don't worry about ETFs
Decision: Look for a replacement holding
Action: Communicate with broker, they will not be a good long choice over the next decade.

Thursday, June 1, 2017

Es Tech Stocks

I am not an investing expert. This is my trading notebook for myself, friends and family. You are welcome to my ideas and research, but please make your own decisions and do your own research. As I remind myself all the time, this is real money we are spending.

Basket Es Thesis:

This money is a retread. I used to invest with Motley Fool guidance, but the MF advisor left several years ago, they changed everything around, so I decided that most of the money should go to Vanguard ETF/Munis. I still keep some tech stocks, and Wal-Mart, (based on their focus on online sales), and IBM are welcome here at the right price).
NOTE: I will be tracking IBM and Wal-Mart separately

6/5/17 sold my entire position in GOOG, still have GOOGL due to the stock split.

Historical: Basket Es THESIS (this portion last updated 9/18/14): 

The strategy in basket Es is to follow the advice of the Motley Fool Million Dollar Portfolio, a paid advice service. When they say buy, I do, when they say sell I do. It is one of my best performing strategies and I have enjoyed the communications from them. I especially appreciate that they allow me to read a transcript of their video updates. I process information much better and faster by reading.

2/27/15 The POT sale executed @35.72, really glad I used the trailing stop. As I sold out the news is all about people buying POT. Was this a mistake, or the blessing of not being where the majority is? Only time will tell.

2/18/15 PRLB is a rapid prototyping company that is growing rapidly. There was a bit of a dip today -$2.33 at present. Put in a limit to open a position that is good for the day, we have 31 minutes of market left to go.
PRLB 50 Limit 71.10 Current 71.17
Executed at 71.10, now let's put in a bigger order for less money:
PRLB 75 Limit 67.02 Current 70.99 and bouncing like a beach ball

2/17/15 I have wanted to open a position on Tesla, (TSLA) for some time. I have a strong sense that it is going to drop after I get, but this is a long term position and if it does drop significantly I will be very tempted to add to the position. What is the driver that causes me to do this now? The more I think about the battery factory and its potential in addition to electric cars.
TSLA 35 Limit 203.00 Last close 203.77
2/18/15 Bought at 203.00 current 204.89

1/27/15 I may need to rethink my thesis for this basket, can't sort out all the mail, but MDP may be under new management.

The new team, (and I am reading about that right now), has made several sell recommendations, including Tile Shop, (TTS), and Bridgepoint, (BPI),  I agree and have closed those positions. They also recommend closing Potash, (POT). I find myself squeamish here, but current price is 36.53 and I have a trailing stop sell at 34.69. POT has continued to go up, as of 2/16/15 the sale point is 35.52, last close 37.04.

The market bashed Microsoft down over 8%. I have concerns about MSFT myself though as a Washington State resident I wish them well. Added 25 shares to my position @ market, (43.03).
2/11/15 Last close 42.38.
2/16/15 43.87

9/18.14 Closed my position in Exelsis, (EXEL). Great, more cash to invest in an aging bull market *grin* Infinera, (INFN), oh yeah. The hardest lesson in investing is to wait. I am still hugely overweight on this and aware the CXOs are cashing out. And every share is long, (over a year). Even so, I think I will ride this train a bit longer. I rarely make recommendations to family members, but I tipped this one to Trey, Hunter, and Ben.

7/22/14 WFM never hit, need to rethink it. Set a limit order to increase my holdings of LL. They missed their numbers and the market punished them. 50 shares, limit @ 54.00, last close 55.71.

6/11/14 Trying to open a position in Whole Foods, (WFM). They got smacked today, but are recovering in after hours trading. Going to use a limit order for safety. Price at market close is 41.24, but with after hours trading they are bumping 42.05. 200 WFM 41.00 L 41.24.

6/7/14 I have a solid holding of Amazon in my ecommerce basket, but will set some limit orders to open a position here as well. 20 Limit 320 LC 329.67, 25 Limit 310 MDP recommends selling Hillenbrand, (HI), to raise cash for other opportunities. Executed the trade, but did it as a trailing stop of 5%. I put the bid in on Saturday June 7 against a Friday close of 31.13. So far, the peak is 31.69 on June 10. According to the online stock service, the sell trigger is currently at 30.096.

5/12/14 Setting up some limit orders Tile, (TTS), 100 L@13, L 13.64, Invensense, (INVN), 50@18.00 L 18.42

4/23/14 Market was a bit soft. Using a limit to add to EXEL position, 650 L@3.40 L3.445

3/11/14 Market dropped a bit today, added to INVN position, 50 M@21.23

2/20/14 Leap Frog, (LF), leads the market in kids tablets, but their stock has been creamed. 750 shares, Limit@6.60 LC 6.78

1/29/14 Closing the position on Denbury Natural Resources, (DNR).

POT They have gotten cheaper, my thesis is that as populations grow fertilizer will be important. I wanted to set a limit order, but this broker would not let me. When I tried to call for help, the answering machine said they were closed. OK, OK, Market, 160 shares, last close was 30.74.

INTC They have been on a climb, thesis, they will solve the mobile chip issue with System on a Chip. Market 200 shares last close 24.45.

11/22/13 TSLA As insane as it sounds I want to open a small position on TESLA, they are selling well and at higher margins than Ford or GM, ( though I love our Cruze). Also, opened a larger position on POT, thesis is there are only so many potash mines possible on planet and the world will keep growing crops.

1/10/14 100 Limit@18.00 last close 19.57
5/17/13 INVN was down 3% today. 100 Limit@11.60, last close 12.42

1/10/14 Still liking Lumber Liquidators, but think this ride has been too good. Set another trailing stop for 5% with a goal of reducing this to 3% of my basket. Last close 104.32.
5/2/13 Lumber Liquidators has been incredible, but I am going to sell part of the position. Set a trailing stop at 5% which works out to $76.50. It hit the same day I set it.
5/17/13 This is insane. Last close was 87.50, great company, but why is the stock so high?

4/16/13 Market took a hit today, probably because of the Boston Marathon, our prayers and concerns are with the injured and those grieving the lost. Added to my position in IPGP and DNR.


1/10/14 FIGRX 40.46 now up +4.5%, FIREX 10.19 -9.8% Tried to set an online alert to monitor these, but the website seems to be having issues.
5/17/13 FIGRX 37.15 FIREX 10.82
FIGRX  34.72 up up 13.3% for the year
FIREX 10.83 Up 33.87% for the year
3/23/13 There are two mutual funds in a very small basket on the same online broker, but a different strategy and account number. The idea was to increase my international coverage. Both are down they are FIGRX and FIREX. I have held both for years.

Today, I used a fund screener to see if I could do better than FIREX (International real estate).
                 30  90  180  1yr   5yr
FIREX      1    1    1      1      -
TAREX          3                    2
GRSIX     3    2     2     3
JIRSX      2           3     2       1
Decision: hold FIREX and hope it can make up some more lost ground. Set an alert and a calendar setting to check on it.

                 30  90  180  1yr   5yr
FIGRX      2    1    1      1     2
FSIIX        1    2    3      3     3
SWISX     2    2     3      3
VDMIX    2     2    3      3
TRIPX      2    3     2      2     1

I also screened it against ETFs
FIGRX     1     1    2     1       1
GWL                    1
EFA         2     2            2
VEA                     3      3       3

The mutual funds are VERY HIGHLY CORRELATED, it almost does not matter which one I pick. There is more variation between FIGRX and the ETFs. I hold SCHF in basket Cs. The strategy there is to use the online broker's offer to trade with no commission and add small amounts on days when it dips. So even if the SCHF ETF does not outperform FIGRX, with free commissions, the ability to buy on dips and the much lower fee, at some point I should make SCHF the primary way I play the FTSE Developed ex-US Index.

FIREX 10.41 I am still down 8%, this is only a Morningstar 3 star with an expense ration of 1.19, this is one of those what was I thinking moments, hopefully we still will make a bit more forward progress.
FIGRX 36.90 down 4.67% from the time I bought it


1/10/14 Director Kenneth Goldman just unloaded 12,100 INFN shares at an average price of $10.00 netting $120k. Wonder what that will result in on Monday?

7/23/13 11.61 some financial group called Needham has raised the price target to 16.00.
6/1/13 10.53 can you believe it? Wow!
5/1/13 Finally a pop. A loud resounding pop. I try to be fairly patient as an investor, but this was overdue. I close my eyes and try to imagine the pain the short sellers are feeling. Last close 8.42.

5/17/13 9.62
4/20/13 6.26 this is now the 2nd worst performing equity in the basket. And they just installed a 100G network that is an astounding 38,00km long.
Update March 18, 2013 7.02, INFN won two more customers, Pacnet and Akado, who knows?
Update February 12, 2013, INFN is still making some progress, last close at 6.79, but it is being jerked around by Wall Street Trading programs. The word picture in my mind is a Raggedy Ann Doll in the jaws of a 200 pound Rotweiler.
Update January 10, 2013 6.51 short intrest still 14,511,000
Update January 2, 2013 major update 9% in a day closed at 6.34, according  to Short Squeeze, short interest is 14,511,000 down from 14,955,300.
Update January 1, 2013, last closed at 5.81, will be VERY interesting to see if it can keep climbing in January 2013.

Update November 5, 5.07 another positive day; who knows
Update November 28, 5.41, up 11% in three days. Come on and pop! When a stock has a lot of short interest and the short sellers have to close their positions it can accelerate the increase.
Update November 29, this press release is fairly exciting. It talks about demonstrating a Software Defined Network ( SDN ) using Open Transport and Open Flow.
Update December 6, 5.73 and it dropped .06 on the day
Update December 17, 5.84, up 34% in 30 days. With all respect to Marvin Martian, "Where's the pop? There was supposed to be an earth-shattering pop!" Well, this is one of those moments where individual small investors have to sweat the Wall Street Efficient market engine. The number of short stocks is increasing when the stock is up 34% in 30 days. What does Wall Street know that I do not?
Update December 21, 2012, I am guessing some Wall Street program made a pretty big sell bet this morning. INFN had raised to 6.05 and then plunged to below 5.80 and closed today at 5.94. So it is still on an uptick with a setback today.

Infinera Thesis 11/4/12

The biggest reckless play I have in the entire portfolio is Infinera, INFN. I have been in this equity for a long time and watched it fall further and further, but believe in their technology and also believe we are going to need faster and faster networks. This is my field. Every week or so, I pull it up in Google Finance hoping to see forward motion. Every week I look at my Google Alerts hoping to see of another sale of DTN-X. So far, all I have seen is more red ink.

They have been increasing sales and the fourth quarter of 2012 should give a lot of clarity as to whether they have a chance of shaking the short sales and earning back the ground they have lost in the market.

Hillenbrand (HI)
7/23/13 I was reading an analyst note saying this casket maker would soon be dropping. They are up 6% for the month and a number of other analysts say things look good for them. Current price is 24.95.


11/18/12 Markel is going to take some damage as a result of Hurricane Sandy. I am *assuming* ( yeah, yeah, I know), the earlier drop was a result of both the fiscal cliff concerns and also the Hurricane. I picked up five shares to add to my position using a market buy@482.00
7/23/13 543.40 up 25% YTD