JT’s DAILY BLOG for Month Of November 2012
Note: All previous month's posts are available in the archives, as noted above.
All postings for the month are available here, sorted in descending order - i.e. most recent at the top.
All times are Eastern Time - same as the NYSE
1st Posting Friday 11/30/2012 8:30 AM
Stocks gyrated Thursday, as various headlines regarding the political stand-off continued to emerge. The day ended with all of the major averages posting modest gains. Asian and European markets are surprisingly in rally mode. With the release of Personal Income and Spending for October on tap, U.S. futures are positive at the moment, with a little over an hour to go until the open.
Several stocks on my lists have received upgrades/downgrades today:
ConocoPhillips (COP) was initiated at OutPerform at Wells Fargo.
ConAgra Foods (CAG) was upgraded from Hold to Buy at Jeffries.
Pfizer (PFE) was initiated at Buy at Citigroup.
Merck (MRK) was initiated at Neutral at Citigroup.
I took advantage of a surprising surge in Nam Tai Electronics (NTE) yesterday to exit a “legacy” holding without a loss. This week was the first time in over four years that such an opportunity has presented itself. NTE was a one-time dividend stalwart, exposed like so many other firms as not reliable when the crunch came in 2008. While a dividend is currently being paid, who knows for how long? NTE is not a high-enough dividend payer, in terms of yield, to be worth the risk.
1st Posting Thursday 11/29/2012 8:00 AM
Stocks initially declined Wednesday, then reversed course to the upside after some positive comments from some of the key political figures about a deal being reached. All of the major averages finished with solid, but not spectacular, gains.
Overnight, Asian markets closed mostly with gains, with Shanghai being the only laggard, down .53%. European markets are comfortably in the green at this hour. Economic releases on tap are the Weekly Claims for Unemployment, 2nd Estimate of 3rd Quarter GDP, and Pending Home Sales for October.
Although a number of upgrades/downgrades have come out this morning, none were for any of the stocks on my lists.
It seems like the market wants to rally, and the only thing holding it back is the “fiscal-cliff” resolution. Even if a resolution of sorts is achieved and a rally ensues, many pundits still believe a recession is going to occur in 2013, and an accompanying stock decline.
At this point I am waiting for buy opportunities, which are not plentiful right now. Utilities such as American Electric Power (AEP) and Westar Energy (WR) are not too highly bid up, if one has to buy something right away.
1st Posting Wednesday 11/28/2012 9:00 AM
Stocks posted declines across all the major averages Tuesday, as concerns about political gridlock continued to increase. Overnight, Asian markets mostly finished down, with the exception of India, which gained 1.65%, and Singapore, which finished flat. European markets are all trading in the red at this hour.
Economic news on tap is limited today, consisting of New Home Sales, Oil Inventories, and the Fed’s latest Beige Book reading on the state of the economy. Hint; it is probably not good.
Three upgrades/downgrades of interest have come out this morning:
Entergy (ETR) was upgraded from Neutral to OutPerform at MacQuarie.
Century Link (CTL) was downgraded from OverWeight to Neutral at Piper Jaffray.
Windstream (WIN) was downgraded from Neutral to UnderWeight at Piper Jaffray.
The headline economic news is not encouraging: fiscal-cliff uncertainty, delinquent student loans surging, a stand-off forming between Republicans and Democrats on how to deal with taxes and entitlements, and more. Stocks will likely reflect the sour mood over the coming days unless and until something changes.
1st Posting Tuesday 11/27/2012 9:00 AM
Stocks started out the week with modest losses in the blue chip indices, while the NASDAQ and the small-cap Russell 2000 indices posted small gains. Asian markets finished mixed, with Japan, India, and Singapore up, Hong Kong and Shanghai down. Shanghai was down substantially, over 1%. European markets are also trading with mixed results at this hour, with Britain, Germany, and France up, Spain and Italy with small declines. Check that, as I was typing, Spain and Italy just turned positive. At any rate, Europe is in relief mode today, as yet another Greek financial aid deal has been reached, for now at least.
Economic releases scheduled for today are Durable Orders, Consumer Confidence, and a couple of reads on the housing market, the Case-Shiller 20 City Index, and the FHFA House Price Index. U.S. futures are essentially flat, with less than an hour to go until the open.
Several upgrades/downgrades of interest have come out this morning:
Pfizer (PFE) was downgraded from Buy to Neutral at MKM Partners.
Exelon (EXC) was upgraded from Neutral to Buy at ISI Group.
PVR Partners (PVR) was initiated at OverWeight at JP Morgan.
Exterran Partners (EXLP) was initiated at Neutral at JP Morgan.
The so-called fiscal cliff and related news is likely going to dominate the news cycle in the coming weeks, barring some other news-worthy crisis emerging. The “happy talk” seems to have subsided, with both sides appearing to be hardening in their positions. If that is indeed the trend, the stock market is NOT going to respond positively, I predict.
1st Posting Monday 11/26/2012 8:30 AM
Stocks managed to advance on Friday, even though it was a low volume, low volatility affair, typical of a shortened session. All of the major averages gained in excess of 1%.
Overnight, Asian stocks began the final week of November with gains in most cases. Japan led the way with a nearly 2% advance. Shanghai was the only laggard, posting a modest decline. European markets, by contrast, are all trading in the red at this hour, as the European finance chiefs continue to wrangle about the next steps to take in dealing with Greece. The European concerns and the ever present U.S. fiscal cliff issue are both weighing on U.S. futures, which are decidedly negative, with less than two hours to go until the open.
There are no economic releases scheduled to come out today. A number of upgrades/downgrades have come out this morning on my stocks:
Heinz (HNZ) was downgraded from Buy to Hold at Stifel Nicolaus, citing valuation.
McDonalds (MCD) was downgraded from Buy to Neutral at Lazard Capital, citing a lack of same-store catalysts and expectations for a more gradual recovery.
Eaton (ETN) was upgraded from UnderWeight to Neutral at Atlantic Equities.
Exelon (EXC) was upgraded from Hold to Buy at Deutsche Bank.
ENI SpA (E) was initiated at Neutral at Exane BNP Paribas.
Royal Dutch Shell PLC (RDS.B) was initiated at UnderPerform at Exane BNP Paribas.
Statoil ASA (STO) was initiated at OutPerform at Exane BNP Paribas.
Total S.A. (TOT) was initiated at OutPerform at Exane BNP Paribas.
Stocks on my lists going ex-dividend this week are:
Waste Management (WM), 11/26/2012, yield 4.44%.
NextEra Energy (NEE), 11/28/2012, yield 3.57%.
Molson Coors (TAP), 11/28/2012, yield 3.16%.
Tate & Lyle PLC (TATYY), 11/28/2012, 3.19%. This is a semi-annual payer. I recommend anyone interested verify the ex-dividend for the ADR’s per the company website, to be sure the E*Trade-supplied data is correct.
Prospect Capital (PSEC), 11/28/2012, yield 11.39%. PSEC pays monthly.
Safety Insurance Group (SAFT), 11/29/2012, yield 5.41%.
Realty Income (O), 11/29/2012, yield 4.62%. The “monthly dividend company” pays monthly.
None of my stocks are scheduled to report earnings this week.
The week ahead should be a quiet week, at least for most stocks. NuStar Energy (NS), a stock which has declined precipitously the past couple of weeks over concerns about a distribution cut, will host a management presentation on Thursday, outlining the firm’s recent moves and plans going forward. Depending on what is presented and the reaction of the market, NS will likely be a volatile stock on that day, and possibly all this week.
1st Posting Friday 11/23/2012 8:45 AM
Stocks Wednesday gyrated for a couple of hours roughly in place, then slowly advanced from that point, to finish with decent, but not overwhelming, gains on all of the major stock averages. Volume and volatility were significantly below average ahead of the holiday.
Overnight, Asian markets mostly finished with gains, led by Japan. Only India posted a fractional decline. European markets are mixed, with Britain, France, and Germany trading in the green, and Italy and Spain in the red, with both ups and downs being by very modest margins. U.S. futures are positive ahead of the holiday-shortened session.
There are no economic releases scheduled for today, and apparently most analysts are on vacation, as there are only a handful of upgrades/downgrades out this morning. Only one of my stocks was affected, as Eni SpA (E) was upgraded from Neutral to OutPerform at Macquarie.
Today looks to be a very uneventful session.
1st Posting Wednesday 11/21/2012 8:15 AM
Stocks on Tuesday fell at the open, rose to the high of the day around noon, dropped substantially until about 1:30 PM, then gained back most of the decline by the closing bell. The end result was that the major averages ended up essentially flat, with small gains or small losses. Overnight, Asian markets posted gains, some of which were fairly substantial, led by Shanghai and Hong Kong. European markets are either flat or showing modest gains at this hour.
A number of economic releases are scheduled for today, to include the Weekly Initial Claims for Unemployment, the final University of Michigan Sentiment Index for November, the Index of Leading Indicators for October, and the weekly Oil Inventories report. It will be a busy pre-holiday session, at least as far as economic data is concerned.
U.S. futures are flat, with nearly two hours to go to the open.
Only one upgrade/downgrade has come out so far today on my stocks, as Inergy LP (NRGY) was upgraded from Neutral to OutPerform at RW Baird.
Hewlett Packard (HPQ) has been in the news again recently, as the company reported earnings yesterday (Tuesday). Results were not too bad, actually, except for one thing – a huge multi-billion dollar write down being taken on the firm’s 2011 acquisition of Autonomy, an English software firm. In addition to the purchase being a mistake from all perspectives, the pain is even worse than just a poor business decision, as charges of misrepresentation and fraud are now being leveled at the target firm regarding the financials that were the basis for the acquisition price. HPQ dropped to barely double digits yesterday, closing at $11.71. In my recent article on Seeking Alpha on Technology stocks, I surmised that HPQ was a speculation stock, with the decline continuing unless something changed for the better. Frankly, at the time, I was thinking the $14 range would probably mark a bottom, with a slow, creeping recovery possible over the next couple of years. But I didn’t say that, for which, in the spirit of the upcoming holiday, I’m thankful. So where does HPQ go from here? All I can say is a purchase now would fare better than any buys made in the last several years, but would the speculator see a profit? I won’t say it is not possible, but I will say it is not a sure thing.
1st Posting Tuesday 11/20/2012 9:00 AM
Stocks charged out of the gate Monday and never wavered, as the market posted the strongest advance since the election. The Dow Industrials finished higher by 208 points, and all the major averages ended with similar gains. By contrast, Asian markets mostly traded down overnight, although not by large margins. European markets are also mostly presenting losses at this hour, with only Germany in the green, barely. U.S. futures are slightly negative at this point, with about an hour to go before the opening bell.
Housing Starts and Building Permits for October will be released at 8:30 AM, which will do it for today, as far as economic releases are concerned.
Upgrades/downgrades of interest that have come out this morning are:
Merck (MRK) was upgraded from Neutral to Buy at MKM Partners.
Emerson Electric (EMR) was downgraded from OutPerform to Perform at Oppenheimer.
Boardwalk Pipeline Partners (BWP) was upgraded from Neutral to OutPerform at Credit Suisse.
Realty Income (O) was upgraded from Neutral to Buy at Janney Capital.
Greif (GEF, GEF.B) was downgraded from OutPerform to Market Perform at Wells Fargo.
Intel (INTC) was downgraded from Buy to Neutral at UBS.
Things will probably slow down as we move closer to the Thanksgiving holiday. Sometimes slow trading with low volume around a holiday can present a stock bargain or two. The rally yesterday took a couple of names I was considering back out of range. At this point, I have to have a bona fide value before I will part with any cash.
1st Posting Monday 11/19/2012 9:00 AM
Friday, stocks managed to post modest gains across all of the major averages, after overcoming a shaky start. The averages were still all down for the week, however. Asian markets finished with gains in Japan, Hong Kong, and Singapore, and losses in Shanghai and India. Japan gained a whopping 3.66%, while the other moves were modest, in both directions. European markets are mostly posting substantial gains at this hour, with only Britain refusing to join the party, trading with a small decline. U.S. futures are indicating the markets will open to the upside, based on, you guessed it, budget optimism.
The only economic data on tap today are a couple of reads on the state of the housing market, with Existing Home Sales and the NAHB Housing Index both due out at 10:00 AM.
Only three upgrades/downgrades on my stocks have been issued this morning:
Crosstex Energy LP (XTEX) was upgraded from Neutral to Accumulate at Global Hunter.
PennantPark (PNNT) was downgraded from OutPerform to Neutral at RW Baird.
Enerplus (ERF) was upgraded from Sector Perform to OutPerform at RBC Capital.
Stocks on my lists going ex-dividend this week are:
3M Co (MMM), 11/20/2012, yield 2.67%.
Medical Properties Trust (MPW), 11/20/2012, yield 6.98%.
Northrop Grumman (NOC), 11/21/2012, yield 3.46%.
Johnson & Johnson (JNJ), 11/23/2012, yield 3.53%.
Earnings season is over for my stocks, with none expected to report this week.
Josh Peters, Editor of the Morningstar Dividend Investor, issued his verdict on what to do with NuStar Energy (NS), in light of a series of disappointments and a huge sell off in the shares recently. He has determined the outlook is troublesome enough that the distribution is definitely at risk of a cut, and therefore, per his fundamental precepts for owning a stock, the position has to be sold. I expected this, and from the perspective of the newsletter, I understand it. The distribution is not covered by earnings, and the company is effectively financing the dividend and expansion plans with debt. Everything has to go right, with minimal margin for error, to avoid a distribution cut in the next year or two. Management’s credibility is none too high right now.
All that being said, I am holding, I believe in the assets and the new direction, and even if the distribution is cut, which I expect, it will still likely yield a decent payout. But I do not recommend NS as a safe investment, as in the past. At this point, it is a speculative, high-yield stock, and thus I will be moving NS from Tier2 to Tier3 on my lists.
1st Posting Friday 11/16/2012 8:30 AM
Thursday, stocks just could not catch a bid, spending most of the day in negative territory, and closing with modest losses, which was an improvement over the afternoon lows, thanks to a late up tick. Asian markets finished mixed, with Japan and Hong Kong up, Shanghai and India down, and Singapore flat. No such indecision is being exhibited by European markets, which are all trading in the red at this hour. U.S. futures are slightly negative as the fiscal cliff talks are set to begin.
Economic releases on tap are Net LT TIC flows for September, and Industrial Production, Capacity Utilization for October. Several upgrades/downgrades of interest have come out this morning, on four of my higher-risk Tier3 stocks:
MFA Financial (MFA) was upgraded from Market Perform to OutPerform at Wells Fargo.
Annaly Capital (NLY) was also upgraded from Market Perform to OutPerform at Wells Fargo.
Windstream (WIN) was downgraded from Neutral to Sell at Goldman.
Frontier Communications (FTR) was also downgraded from Neutral to Sell at Goldman.
Mortgage REITs and Rural Telecom stocks are very high risk in my opinion, but apparently Wells Fargo believes the risk is priced in adequately on MFA and NLY. As for the Rural Telecoms, it is hard to see anything but gloom, as land line telephony continues to decline, and competition for broadband services continues to be fierce.
I tried to buy some more Intel (INTC) yesterday below $20, but my limit order was a little too low, so I missed it. If the opportunity arises today, I’ll try again.
1st Posting Thursday 11/15/2012 8:30 AM
Wednesday was no see-saw day. Stocks started down at the open and continued in that direction all day. All of the major averages suffered declines of over 1%. The Dow Industrials finished down 185 points. Asian markets mostly declined overnight, with the exception of Japan, which rose nearly 2%. European markets are mostly trading in the red at this hour, with Spain being an exception, by showing a small gain. U.S. futures are slightly positive, down from where they were before Wal-Mart reported results that were underwhelming.
A number of economic releases are on tap today, to include the Weekly Unemployment Claims, CPI, Philadelphia Business Index, Empire Manufacturing Index, and Oil Inventories.
A couple of my stocks received upgrades/downgrades this morning:
Triangle Capital (TCAP) was upgraded from Hold to Buy at Stifel Nicolaus. The firm received a 2nd upgrade, from OutPerform to Strong Buy, from Raymond James.
Paychex (PAYX) was downgraded from OutPerform to Neutral at Credit Suisse.
I took advantage of the decline yesterday to add to my holdings of MicroSoft (MSFT), at just under $27. I am watching a number of stocks that are not too far away from my buy levels. The way things are going, I may see some more opportunities to add to positions soon.
1st Posting Wednesday 11/14/2012 8:30 AM
Stocks initially gained on Tuesday, until around 11:00 AM, then began a slow, steady descent that lasted the rest of the day. The end result was that all of the major averages posted losses on the day. Not huge losses, but not trivial, either. Asian markets ended with gains in Japan, Hong Kong, and Shanghai, and losses in India and Singapore. European markets are all trading to the downside at this hour. U.S. futures are positive, indicating the market here will initially be pointing towards the upside.
Cisco Systems (CSCO) reported yesterday that FQ1 EPS was $0.48, beating by two cents. Revenue was $11.88B, up 5.5% Y/Y, beating by $110M. In the earnings call the company issued guidance in-line with expectations. The stock traded up in the after-market last evening, and is poised to open with those gains intact this morning.
The pace of economic data releases picks up today, with Retail Sales, PPI, and Business Inventories all due to be announced. At 2:00 PM, the minutes from the most recent FOMC meeting will be released.
Only one upgrade/downgrade of interest to report this morning, as Cisco Systems (CSCO) was upgraded from Sector Perform to OutPerform at Pacific Crest.
I gave NuStar Energy (NS) my final shot Monday, buying just above $40. The stock incredulously then continued on down to barely above $38. Arghhh! Tuesday was a recovery day for NS, with the stock closing just shy of $41. The MLP definitely has some issues, but I believe shares purchased in the low $40’s will be winners. As for shares purchased in the $50’s, it will probably be a while before the market price gets back into that range.
Time to get ready for the market day.
1st Posting Tuesday 11/13/2012 8:30 AM
On Monday, stocks initially declined, then rose to present middling gains, then declined again, ending up almost exactly where they started, with all of the major averages ending flat or very nearly so. Volume was extremely light, as was volatility, with only one TICK reading below a negative 750, and none above a positive 750.
One stock that did NOT finish where it started the day was NuStar Energy (NS), which continued it’s waterfall decline, losing another $3.12 Monday, closing well under $40, at $39.07. I have to admit I never expected this. I believe the numbers and the firm’s basic business condition are not nearly as dire as the selling would imply, but clearly management has lost credibility with investors, and there is some doubt as to whether the firm can recover earnings sufficiently to cover the existing distribution level. Considering the management missteps that seem to continue with each passing quarter, there is probably some doubt that the company can execute the new strategic direction to invest in fee-based transportation and storage vs. margin-based businesses such as refining and asphalt, at least in time to save the distribution. If they can turn things around, NS is one heck of a buy under $40. If not, I won’t describe what it is, as this is a family-friendly website.
Overnight, Asian markets universally dropped, with Hong Kong and Shanghai declining more than 1%. A new article on MarketWatch entitled Economist Duncan: China Consensus Wrong paints a gloomy picture for the Chinese economy if the world economy slows, especially the United States. European markets are trading mixed at this hour, with Britain, Germany, and France down, Spain and Italy up. U.S. futures are decidedly negative, with over an hour to go before trading begins. The only economic release scheduled for today is the Treasury Budget for October, due out at 2:00 PM.
The only upgrade/downgrade action of interest this morning is an upgrade of, believe it or not, NuStar Energy (NS), from UnderPerform to Neutral at Credit Suisse. The new rating of Neutral is not exactly a ringing endorsement, but an upgrade is an upgrade. As a NuStar investor, I’ll take anything positive I can get on NS. The upgrade was based on valuation, with a price target of $44.
Earnings season is effectively over, with only Cisco (CSCO) slated to report this week, after the bell today.
Another down day may be in store. I have reviewed my buy list, as some stocks may come into buy range soon if the market slide continues. The S&P 500 is down nearly 5% from the September highs. It would need to come down around 13% or so to reach the June 2012 lows. It sure seems like this recent slide has been more severe than what the numbers say, but I guess it is because we haven’t experienced a down market for awhile. Unless and until something changes the outlook towards the positive, the slide is likely to continue. If no debt/fiscal cliff deal occurs over the next couple of months, the slide will accelerate. If a meaningful deal is surprisingly reached, a significant rally is likely, so short positions are not particularly safe either, with that being a possibility. My approach is the same as it always is during a market decline; maintain a list of buy candidates and buy under prices at which incremental buys are advisable, avoid risk, and be mentally prepared to see much lower prices if everything goes to heck.
1st Posting Monday 11/12/2012 8:30 AM
Friday, stocks rose until just after noon, then declined for an hour or so, and finally, after gyrating in a tight range for the rest of the day, finished with small gains from the prior day closing levels across all major stock averages. Even with a substantial rally on Election Tuesday and a neutral day Friday, stocks posted their worst week in more than five months. The potential for continued political gridlock and the looming fiscal cliff has been blamed by most pundits for the decline.
Overnight, to start the week, Asian markets finished mixed, with Hong Kong and Shanghai up, Japan, India, and Singapore down, but not by large margins in either direction. European markets are likewise mixed at this hour, with Britain, Germany, and Italy up, France and Spain down. U. S. futures are modestly positive at the moment. No economic releases are scheduled for today.
As for upgrades/downgrades to start the week, we have:
Energy Transfer Partners LP (ETP) was upgraded Friday by Morgan Stanley, from UnderWeight to Equal Weight, with a price target of $50.
Prospect Capital (PSEC) was upgraded from Sell to Hold at Stifel Nicolaus, on the strength of a positive earnings report last week.
Merck (MRK) was upgraded from Market Perform to OutPerform at BMO Capital.
Johnson & Johnson (JNJ) was downgraded from Buy to Hold at Jeffries, citing valuation and a worsening environment for reimbursement.
Several of my stocks are scheduled to trade ex-dividend this week:
MicroSoft (MSFT), 11/13/2012, yield 3.19%.
Exelon (EXC), 11/13/2012, yield 6.75%. EXC hit a low this past week of 30.91 intraday, lower than at any time during the prior five years, on fears of a dividend cut. The dividend may indeed be reduced in 2013, but hopefully not drastically, like the banks.
Chevron (CVX), 11/14/2012, yield 3.40%.
Emerson Electric (EMR), 11/14/2012, yield 3.27%. EMR increased the dividend effective with the upcoming payout, to $0.41 per share per quarter.
Royal Dutch Shell PLC ADR B (RDS.B), 11/14/2012, yield 4.91%.
GlaxoSmithKline PLC ADR (GSK), 11/14/2012, yield 5.33%.
Gladstone Investment (GAIN), 11/15/2012, yield 8.50%. GAIN pays monthly.
Only one of my stocks is scheduled to report earnings this week, Cisco Systems (CSCO), on 11/13/2012.
Regarding earnings, a couple of earnings reports came out last week and the week before on my stocks that were not highlighted by Seeking Alpha, causing me to overlook them:
Universal Corp (UVV) reported Tuesday, November 6 for FQ2 for 2013, ending 9/30/2012. Net income was $48M, or $1.68 per diluted share. The quarter included restructuring costs of $3.7M, or $0.05 per dilute share. UVV also announced a 2% dividend increase, bringing the quarterly payout to $0.50 per share.
Safety Insurance Group (SAFT) reported way back on 11/2/2012 that Q3 2012 net income was $14.3M, or $0.94 per diluted share, a 62% increase over the comparable 2011 quarter. The firm also announced that a fourth quarter dividend of $0.60 per share will be paid to shareholders of record on 12/3/2012.
I have selectivity updated my stock lists to reflect recent price changes, adjusting buy under prices. Also, I have added Kraft Foods (KRFT), and adjusted data to reflect a two for one split for Magellan Midstream Partners LP (MMP). After year-end, I will do a top to bottom review, updating all data items, and possibly adding and/or dropping some stocks. I am planning to add back a few stocks that I dropped because of valuation. The interim changes are:
Cisco Systems (CSCO), updated buy under prices to reflect the recent decline.
Intel (INTC), updated buy under prices to reflect the recent decline.
Kraft Foods (KRFT), added to Tier1. The dividend of $0.50 per quarter is per a press release of the dividend KRFT intends to pay, or at least what management intends to recommend to the board. No KRFT dividends have yet occurred.
Buckeye Partners LP (BPL), updated buy under prices to reflect the recent decline.
Exelon (EXC), updated buy under prices to reflect the recent decline.
Magellan Midstream Partners LP (MMP), updated buy under prices and other data to reflect the recent two for one stock split.
Norfolk Southern (NSC), updated buy under prices to reflect the recent decline.
NuStar Energy LP (NS), updated buy under prices to reflect the recent decline. I had been inclined to view the recent sell off as a buy opportunity, but a Friday update from Morningstar has shaken my confidence, as management has made one misstep after another lately, and the sustainability of the current payout is certainly an open question. The stock is under review by the Dividend Investor, and I will be waiting to see what editor Josh Peters determines holders of NS should do, sell or hold. I’m pretty sure it won’t be to buy more. Even if Josh says sell, I probably won’t. The pipeline assets and planned expansion of the segment of the business that they SHOULD have emphasized early on will probably allow for NuStar to recover eventually, but it may take years.
Time to see what the new week will bring.
1st Posting Friday 11/09/2012 9:15 AM
Thursday, stocks initially hinted that a bounce back from the sell off of the previous day might be in store, but as trading began, that hope was soon dashed. All of the major averages headed down within minutes of the open, with charts indicating a near 45 degree angle towards the downside. The selling did not let up all day, and in fact accelerated in the final minutes, with the stock averages closing at the lows of the day in most cases. Following the U.S. lead, Asian markets overnight posted losses on all major exchanges, and European markets are doing likewise at this hour.
Economic releases so far this AM have been Import and Export Prices for October, rising slightly more than expected for Imports and less than expected for Exports. Coming out later in the day, we will get the Michigan Sentiment survey for November, first reading, and Wholesale Inventories for September. U.S. futures are currently indicating the fiscal-cliff inspired sell off will continue.
Several upgrades/downgrades of interest have come out this morning:
Cisco Systems (CSCO) was downgraded from OverWeight to Neutral at JP Morgan.
3M (MMM) was upgraded from Reduce to Neutral at Nomura.
Public Service Enterprise Group (PEG) was upgraded from Sell to Hold at ISI Group.
Triangle Capital (TCAP) was upgraded from Neutral to OutPerform at RW Baird.
More earnings have come out on my stocks since yesterday’s post:
Prospect Capital (PSEC) reported late Thursday that FQ1 Net Investment Income per share was $0.46, beating by two cents. Net Asset Value was $10.88, up five cents from the prior quarter.
Also Thursday, Westar Energy (WR) reported Q3 EPS of $1.10, beating by five cents. Revenue was $695.7M, up 2.6% Y/Y, missing by $12M.
Friday morning, Alliant Energy (LNT) reported Q3 EPS of $1.34, beating by four cents. Revenue was $887.6, up 2% Y/Y, missing by $105M.
Let the trading begin, or should I say the selling. I’m not complaining. In fact, that is when I get enthused, as buy opportunities start showing up, as previously over-priced stocks come down to more reasonable levels.
1st Posting Thursday 11/08/2012 8:30 AM
Stocks suffered their most significant decline of 2012 on Wednesday, apparently on fears of continued deadlock in Washington, as the results of the election appeared to change the political makeup very little. With drastic cuts in defense and social programs, along with significant tax increases, slated to occur at year-end unless Washington can come together with a solution, many investors decided to sell now and avoid the storm if it comes along at year-end.
Overnight, Asian markets followed the U.S. lead, declining across the board. European markets, by contrast, are mostly trading in the green at this hour, with only Italy showing red on the screen. U.S. futures are indicating a bounce-back is in store at the open here.
Economic releases today are the weekly Initial Claims for Unemployment, already out at 8:30 AM, as 355K vs. 370K expected, and the Trade Balance for September, also just released, coming in at a minus $41.5B vs. a minus $45.4B expected.
Only a couple of upgrades/downgrades have come out this morning on my stocks:
Exelon (EXC) was upgraded from Sell to Neutral at UBS, based on valuation.
Southern Company (SO) was upgraded from Sector Perform to OutPerform at RBC Capital.
Catching up on earnings on stocks I follow, from Monday, we have:
Southern Company (SO) reported Q3 EPS of $1.11, missing by two cents. Revenue was $5.05B, down 7% Y/Y, missing by $920M.
Sysco (SYY) reported FQ1 EPS of $0.49, missing by a penny. Revenue was $11.1B, up 4.7% Y/Y, in-line.
Entergy (ETR) reported Q3 EPS of $1.95, missing by five cents. Revenue was $2.96B, missing by $460M.
National Health Investors (NHI) reported Q3 FFO of $0.80, beating by a penny. Revenue was $25.5M, beating by $3M.
Plains All American Pipeline LP (PAA) reported Q3 EPS of $0.74, beating by $0.21. Revenue was $9.04B, up 5.89% Y/Y, missing by $120M.
Ares Capital (ARCC) reported Q3 EPS of $0.42, beating by a penny.
Annaly Capital (NLY) reported Q3 EPS of $0.45. A Net Interest margin of 102 basis points was reported, down from 154 at the end of Q2. Book value per share was $16.60. A number of articles have come out recently about the deteriorating environment for the mortgage REITs.
Next, reporting on Tuesday, were the following:
Emerson Electric (EMR) reported Q3 EPS of $0.44, beating by six cents. Revenue was $6.7B, up 1% Y/Y.
Health Care REIT (HCN) reported Q3 EPS of $0.91, beating by two cents. Revenue was $474.1M, missing by $5M.
SCANA (SCG) reported Q3 EPS of $0.91, beating by two cents. Revenue was $1.04B, down 4.9% Y/Y, missing by $40M.
Frontier Communications (FTR) reported Q3EPS of $0.07, in-line. Revenue of $1.25B was also in-line.
MFA Financial (MFA) reported Q3 EPS of $0.19, missing by two cents.
BreitBurn Energy LP (BBEP) reported Q3 EPS of a minus $1.00, missing by $1.22. Revenue was $111.7M, up 17.9% Y/Y, missing by $6M.
Energy Transfer Equity (ETE) reported Q2 EPS of $0.19, missing by $0.26. Revenue was $1.98B, flat Y/Y.
Then, on Wednesday, several more reports came out:
Kraft Foods (KRFT) reported Q3 EPS of $.79, beating by ten cents. Revenue was $4.61B, up 3% Y/Y, in-line.
Molson Coors (TAP) reported Q3 EPS of $1.37, beating by three cents. Revenue was $1.19B, up 25.3% Y/Y, still missing by $60M.
TICC Capital (TICC) reported FQ4 EPS of $0.24, missing by four cents. Revenue was $15.2M, missing by $1.9M.
CenturyLink (CTL) reported Q3 EPS of $0.66, beating by eight cents. Revenue was $4.57B, down 1% Y/Y, in-line.
Triangle Capital (TCAP) reported Q3 EPS of $0.58, beating by three cents.
Energy Transfer Partners LP (ETP) reported Q3 EPS of $0.26, missing by three cents. Revenue was $1.42B, missing by $300M.
Finally, just this morning (Thursday), we have:
Windstream (WIN) reported Q3 EPS of $0.12, missing by a penny. Revenue was $1.55B, up 51.7% Y/Y, in-line.
Amerigas Partners LP (APU) reported FQ4 EPS of $0.86, beating by three cents. Revenue was $510.3M, up 11% Y/Y, missed by $56M. A cold winter will help this propane distributor.
Today could be a bounce-back day, as investor’s realize the world isn’t ending (yet) and recent declines present better values. At this stage, there is a certain amount of happy talk about “reaching across the aisle” and so on, which may lull investors for a time. And there may indeed be better prospects than in 2011 for a deal to avoid the fiscal cliff. Still, the task is daunting, with very little time. Expect more volatility in the days ahead as the fiscal cliff soap opera plays out. I predict the status quo will be extended one year while the parties agree to develop solutions in the New Year.
1st Posting Wednesday 11/07/2012 8:30 AM
Stocks surprisingly rallied on Tuesday on Election Day, probably from a sense of relief that the electioneering was finally at an end. Overnight, Asian markets mostly finished with gains, with only Japan posting a small loss. European markets are all trading to the downside at this hour. I have not read anything that says Europe is down because of the Obama win, but that might be the reason. U.S. futures are signaling that the markets here will start out on a down note.
Economic releases today are sparse, with Oil Inventories due out at 10:30 AM, and Consumer Credit at 3:00 PM.
Only one upgrade/downgrade to report so far today, as Exterran Partners LP (EXLP) was downgraded from OutPerform to Market Perform at Wells Fargo.
I am behind on reporting earnings as they have come out this week on my stocks. I will catch up with either a 2nd posting today or in tomorrow morning’s post.
The election is finally over. The surprise to me is not that Romney lost, but how close he came to the upset. The media bias, the unfortunate, secretly recorded 47% comment, the shrinking pool of the group leaning to Romney (white males), and the expanding pool of groups leaning towards Obama (Blacks, Hispanics, Asians, single women) made it pretty much inevitable, barring some major gaffe by Obama. He tried, with “you didn’t build that”, and “the private sector is doing fine”, but they were not enough to trip him up, especially with the media hardly reporting on them. The Republicans had better re-invent themselves, or they can look forward to permanently being out of power.
Time to get ready for the first post-election trading day.
1st Posting Tuesday 11/06/2012 8:30 AM
Stocks opened the week Monday with as lackluster a session as I can recall in a long time, a standout even in the current low volume, low volatility environment. The major averages barely moved, spending the early part of the day just under the flatline, and then rising ever so slightly to finish just barely above the flatline. No TICK readings above +1000 or below -1000 occurred, and only two above +750, and one below -750.
Overnight, Asian markets mostly declined modestly, with India being the lone exception, advancing modestly. European markets re universally trading in positive territory at the moment. U.S. futures are slightly positive.
There are no economic releases scheduled on this Election Day Tuesday.
Only one stock of interest has seen any analyst attention so far today, as Kraft Foods (KRFT) was initiated at Buy by Canaccord. I have not added KRFT to my lists just yet, but I plan to do so soon. I’m still debating the price at which I would be a buyer.
Two of my stocks have fallen on hard times lately, Exelon (EXC) and NuStar Energy (NS). EXC posted decent earnings, but comments from the CEO about a possible dividend cut being required to maintain the firm’s investment grade rating have tanked the stock recently. With the shares now yielding over 6%, and an ex-dividend date coming up (11/13/2012), I added shares at just over $32 yesterday. I believe the shares are a buy here for long-term investors, and even if the dividend is reduced, it won’t be cut too drastically, I’m betting. A utility has to pay a decent dividend; otherwise, why would anyone ever buy a utility stock? NuStar’s earnings were a disappointment, no doubt, but I still believe in the firm’s eventual recovery from the disastrous foray into asphalt. Significant purchases by management of units at the depressed prices seen recently tells me that management believes in the recovery scenario. Still, I have not added more yet on the most recent swoon. I added at $48.65 when the shares swooned earlier a few weeks ago, and I was congratulating myself as they quickly rose back above $50. This time, with the shares barely above $46 and today being the last day before the next ex-dividend date, I may add more – certainly if I can buy under $46. If the stock pops back up, I probably will pass. If I buy more, it won’t be a lot more – I’m close to being maxed out on both EXC and NS.
Life as a value investor is tough. Value is usually not found in the absence of concerns. Yet, I believe it is the only way to invest. If you buy Colgate Palmolive (CL) at $110 or 3M (MMM) at $95, to name two exemplary firms and their recent price highs, with yields well under 3%, you are aiming for mediocrity at best. Your chances of making money in a two to three year time frame are much better with EXC at $32 and NS at $45 than with CL at $110 and MMM at $95, both of the latter firms being priced for perfection at those highs. Of course, any stock can blow up, so no matter how much of a bargain a troubled stock seems to present, an investor has to limit the position size to avoid a portfolio disaster if the unthinkable happens. You can take a portfolio hit on 2% to 3% of a portfolio without too much grief, but not on 20% to 30% of a portfolio.
Time for an Election Day rally or sell off, either one would be OK with me, just do something.
1st Posting Monday 11/05/2012 8:30 AM
In spite of a decent Payroll report, stocks declined on Friday, possibly on the uncertainty introduced by the upcoming election, as polls show the candidates essentially even. Overnight, Asian markets finished mostly down, with India being the lone exception, rising fractionally. European markets are all trading in the red at this hour. U.S. futures are flat to fractionally down. The only economic data coming out today will be the ISM Services reading at 10:00 AM.
Hercules Technology Growth Capital (HTGC) was downgraded during the day Friday from Buy to Hold by Robert W. Baird.
Upgrades/downgrades coming out this morning are:
Exelon (EXC) was downgrade from Buy to Hold at Argus.
ONEOK Partners LP was upgraded from Sell to Neutral by Goldman.
Williams Partners LP (WPZ) was upgraded from Neutral to Buy at Goldman.
Buckeye Partners LP (BPL) was upgraded from Hold to Buy at Deutsche Bank.
A number of stocks I track will be trading ex-dividend this week:
PVR Partners LP (PVR), 11/5/2012, yield 8.55%.
Inergy LP (NRGY), 11/5/2012, yield 6.00%.
Boardwalk Pipeline Partners LP (BWP), 11/6/2012, yield 8.00%.
Entergy (ETR), 11/6/2012, yield 4.66%.
American Electric Power (AEP), 11/7/2012, yield 4.25%.
Pfizer (PFE), 11/7/2012, yield 3.58%.
Unilever PLC ADR (UL), 11/7/2012, yield 3.29%.
Exxon Mobil (XOM), 11/7/2012, yield 2.53%.
Amerigas Partners LP (APU), 11/7/2012, yield 7.20%.
NuStar Energy LP (NS), 11/7/2012, yield 9.34%.
Enerplus (ERF), 11/7/2012, yield 6.70%. ERF pays monthly.
Breitburn Energy PartnersLP (BBEP), 11/7/2012, yield 9.18%.
Exterran Partners LP (EXLP), 11/7/2012, yield 8.88%.
Earnings season is not over yet. In fact, I have more of my stocks scheduled to report this week than either of the last two, with a couple of reports having been delayed to this week because of the storm. Tentative reports by date are:
Southern Company (SO).
Sysco Corp (SYY).
National Health Investors (NHI).
Plains All American Pipeline (PAA).
Ares Capital (ARCC).
Emerson Electric (EMR).
SCANA Corp (SCG).
Health Care REIT (HCN).
Frontier Communications (FTR).
Breitburn Energy Partners LP (BBEP).
Energy Transfer Equity LP (ETE).
Safety Insurance Group (SAFT).
Triangle Capital (TCAP).
TICC Capital (TICC).
Annaly Capital (NLY).
MFA Financial (MFA).
Westar Energy (WR).
Vodafone Group PLC (VOD).
Amerigas Partners LP (APU).
Tate & Lyle PLC ADR (TATYY).
BlackRock Kelso Capital (BKCC).
Prospect Capital (PSEC).
QR Energy LP (QRE).
Alliant Energy (LNT).
Earnings on my stocks that have come out since my last posting are:
Buckeye Partners LP (BPL) reported Friday that Q3 EPS was $0.87, beating by $0.14. Revenue was $966M, missing by $40M.
Also reporting Friday, Chevron (CVX) reported Q3 EPS of $2.69, missing by $0.20. Revenue was $58.04B, down 9.1% Y/Y, missing by $5.9B.
No hurricanes are in the forecast so far this week, thankfully. Of course, the big event of the week will be the election.
1st Posting Friday 11/02/2012 6:30 AM
The second day of trading following the storm, i.e. Wednesday, saw U.S. markets gaining across all of the major stock averages. Asian stocks overnight took their cue from the U.S. and likewise were all in the green. European markets are effectively flat at this hour, with Italy being an exception, showing a modest decline.
The all-important monthly Payroll numbers will be out at 8:30 AM. This report has even more significance than usual, as the last reading before the election. Earnings will be reported by Chevron (CVX) and others as earnings season continues.
Earnings on my stocks that have come out since my last posting are:
Exxon Mobil (XOM) reported Q3 EPS of $2.09, beating by $0.13. Revenue of $115.7B beat by $3B.
Exelon (EXC) reported Q1 EPS of $0.77, beating by five cents. Revenue of $6.57B missed by $1.4B. EXC was downgraded from Buy to Hold at Jeffries this morning. The CEO hinted at a possible dividend cut in the earnings call yesterday, which tanked the stock.
Public Service Enterprise Group (PEG) reported Q3 EPS of $0.68, missing by four cents.
Pfizer (PFE) reported Q3 EPS of $0.53, beating by a penny. Revenue was $14B, missing by $640M. PFE is now experiencing the full impact of the Lipitor patent expiration.
Spectra Energy (SE) reported Q3 EPS of $0.27, missing by four cents. Revenue was $1.07B, missing by $40M.
Enterprise Products Partners LP (EPD) reported Q3 EPS of $0.66, beating by six cents. Revenue was $10.4B, down 7.55% Y/Y.
Royal Dutch Shell (RDS.B) reported Q3 EPS of $1.14, with Net Income up 3% to $7.23B. Revenue was down 8.3% to $115.4B.
Hercules Technology Growth capital (HTGC) reported Q3 EPS of $0.23, in-line. Revenue was $23.9M, up 27.9% Y/Y, also in-line.
This may be an exciting day in the market, and the direction will depend upon the 8:30 AM release of the latest Payroll readings.
1st Posting Thursday 11/01/2012 8:30 AM
After being shut down for two days, the action was so muted, one has to wonder, why bother to open? Maybe it would be better to have taken the whole week off. The averages actually opened with a fairly substantial gain, but then the market slowly rolled over to finish flat or with small losses on all the major averages. Volume was light, and volatility was minimal. Only one TICK reading above plus 750 all day, and only one reading below minus 750, also all day. Between the Election and the Monthly Payroll Report due out Friday, investors are apparently in lockdown mode.
Overnight, Asian markets mostly finished higher, with the lone exception being Singapore, which posted a small decline. European markets are all trading in the green at this hour. U.S. futures are flat, as the market awaits a deluge of economic data, some of which was originally scheduled for today, and some of which consists of releases delayed to today by the storm.
During the day yesterday, a couple of my stocks received new upgrades/downgrades:
American Capital Agency (AGNC) was upgraded from Hold to Buy at Wunderlich.
Amerigas Partners LP (APU) was initiated at Neutral by JP Morgan.
Additional upgrades/downgrades that have come out this morning are:
Magellan Midstream (MMP) was downgraded from OutPerform to Neutral at Credit Suisse.
Total Petroleum (TOT) was upgraded from Hold to Buy at Societe Generale.
Additional earnings that have come out on my stocks since my last posting are:
Magellan Midstream Partners (MMP) reported before the open Wednesday that Q3 EPS was $0.35, missing by a penny. Revenue was $435.1M, up 33.8% Y/Y, missing by $33M.
Also before the open Wednesday, GlaxoSmithKline (GSK) reported Q3 EPS of 22.6p (pence). Revenue was 6.5B Pounds Sterling, up 36.7% Y/Y.
Waste Management (WM) reported Q3 EPS of $0.61, beating by a penny. Revenue was $3.46B, missing by $80M.
Eaton (ETN) reported Q3 EPS of $1.07, missing by two cents. Revenue of $3.95B, down 4% Y/Y, missed by $260M.
Total (TOT) reported that adjusted net profit was up 20% to 3.35B Pounds Sterling. Revenue was up 8% to 49.9B Pounds Sterling.
Perhaps today will see more action than yesterday’s dull session.