Archive for March, 2014

New Trade: Long LinkedIn (LNKD) & Short Salesforce (CRM)

By: ispeculatornew | Date posted: 03.31.2014 (3:00 am)

As you have hopefully seen, I will be closing 1 trade this morning, on LNKD and P. As you can now guess, it’s not about closing a long on LinkedIn but rather about not wanting to keep that short Pandora short for too long.  To date, it’s been a great year of trading as the average long & short trade has returned around 8%.  The year is still young though so I won’t celebrate anytime soon. Truth be told, even year end isn’t really time to celebrate given the fact that it’s right back at square 0 afterwards:)

As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:

http://www.intelligentspeculator.net/livetrades

You can see the numbers for both companies involved in today’s trade here:

TickerNamePriceDividend YieldPayout RatioEx-Dvd
WINWindstream Holdings Inc9.110.99250.776/26/2014
DODiamond Offshore Drilling Inc51.66.7888.697/31/2014
FTRFrontier Communications Corp66.67362.426/11/2014
CTLCenturyLink Inc34.846.2#VALUE!5/30/2014
ESVEnsco PLC50.755.9136.96/12/2014
RIGTransocean Ltd42.855.2363.795/28/2014
HCPHCP Inc42.25.17106.925/8/2014
TAT&T Inc35.765.1553.137/9/2014
KMIKinder Morgan Inc/DE32.745.13138.487/31/2014
HCNHealth Care REIT Inc63.5453110.775/8/2014
TETECO Energy Inc17.914.9196.665/9/2014
NENoble Corp plc30.944.8525.28/7/2014
MOAltria Group Inc39.894.8181.436/13/2014
RAIReynolds American Inc55.944.7978.666/11/2014
SOSouthern Co/The44.494.72107.367/31/2014
TEGIntegrys Energy Group Inc58.564.6461.885/28/2014
PBCTPeople's United Financial Inc14.324.6187.677/30/2014
ETREntergy Corp73.134.5483.115/13/2014
DRIDarden Restaurants Inc49.114.4864.097/7/2014
VZVerizon Communications Inc47.394.4751.737/9/2014
EDConsolidated Edison Inc57.034.4267.895/12/2014
PMPhilip Morris International Inc85.344.4167.716/24/2014
PPLPPL Corp34.364.3479.796/10/2014
VTRVentas Inc66.984.33164.066/6/2014
FEFirstEnergy Corp33.424.31245.238/5/2014
DUKDuke Energy Corp73.524.2482.385/14/2014
LOLorillard Inc58.384.2169.925/28/2014
PNWPinnacle West Capital Corp54.664.1560.317/31/2014
PCGPG&E Corp44.864.06100.616/30/2014
SCGSCANA Corp52.254.0260.36/6/2014
PCLPlum Creek Timber Co Inc44.063.99135.515/14/2014
POMPepco Holdings Inc27.143.98245.456/6/2014
AEEAmeren Corp40.623.9475.816/9/2014
KIMKimco Realty Corp22.933.92174.486/30/2014
CNPCenterPoint Energy Inc24.473.88114.155/14/2014
IRMIron Mountain Inc27.83.88213.916/18/2014
MATMattel Inc39.343.8655.25/21/2014
XELXcel Energy Inc31.243.8458.436/17/2014
SPLSStaples Inc12.553.8244.266/25/2014
MACMacerich Co/The65.013.81208.325/7/2014
AEPAmerican Electric Power Co Inc53.363.7564.465/7/2014
PEGPublic Service Enterprise Group Inc39.623.7458.576/4/2014
KRFTKraft Foods Group Inc56.263.7345.056/26/2014
WMBWilliams Cos Inc/The43.523.7222.626/4/2014
FCXFreeport-McMoRan Copper & Gold Inc34.073.6784.827/10/2014
LEGLeggett & Platt Inc32.673.6787.716/18/2014
GASAGL Resources Inc53.53.6670.935/14/2014
CMSCMS Energy Corp29.783.6359.698/6/2014
CINFCincinnati Financial Corp49.023.5952.226/16/2014
COPConocoPhillips76.893.5941.665/15/2014
CVCCablevision Systems Corp173.53122.865/13/2014
OKEONEOK Inc63.733.51114.418/6/2014
IGTInternational Game Technology12.563.532.746/17/2014
PFEPfizer Inc29.963.4757.685/7/2014
GMEGameStop Corp38.153.4637.215/22/2014
GMGeneral Motors Co34.753.4506/6/2014
INTCIntel Corp26.173.4446.568/7/2014
EXCExelon Corp36.243.4273.555/13/2014
CVXChevron Corp125.363.4134.895/15/2014
STXSeagate Technology PLC50.513.4128.185/12/2014
WMWaste Management Inc44.113.4696.946/10/2014
SESpectra Energy Corp39.63.38795/7/2014
NUNortheast Utilities46.623.3759.455/28/2014
PAYXPaychex Inc41.493.3783.785/8/2014
DDominion Resources Inc/VA71.163.3772.885/28/2014
CACA Inc29.663.3748.486/9/2014
DTEDTE Energy Co77.933.3668.536/12/2014
AVBAvalonBay Communities Inc138.243.36932.946/30/2014
GRMNGarmin Ltd57.483.3460.316/13/2014
LLYEli Lilly & Co58.883.3344.895/13/2014
CSCOCisco Systems Inc22.963.3133.167/1/2014
GEGeneral Electric Co26.583.3153.116/26/2014
AIVApartment Investment & Management Co31.473.3335.825/14/2014
CAGConAgra Foods Inc30.353.2952.557/30/2014
EQREquity Residential60.793.29#VALUE!6/19/2014
ABBVAbbVie Inc51.363.2776.997/9/2014
PSAPublic Storage171.933.26105.026/11/2014
WECWisconsin Energy Corp48.023.2556.965/12/2014
CLXClorox Co/The87.313.2560.067/21/2014
LMTLockheed Martin Corp165.123.22525/29/2014
PLDPrologis Inc41.193.2288.826/9/2014
MCDMcDonald's Corp101.143.255.55/30/2014
FFord Motor Co15.743.18227/28/2014
PGProcter & Gamble Co/The81.73.1556.757/16/2014
SYYSysco Corp37.193.1265.997/2/2014
COHCoach Inc43.393.1133.736/4/2014
HASHasbro Inc55.523.172.887/29/2014
GISGeneral Mills Inc53.013.0946.797/7/2014
WUWestern Union Co/The16.273.0734.726/12/2014
PEPPepsiCo Inc85.913.0551.25/28/2014
KMBKimberly-Clark Corp110.233.0558.086/4/2014
IPInternational Paper Co45.883.0541.055/23/2014
OXYOccidental Petroleum Corp94.73.0434.96/6/2014
MCHPMicrochip Technology Inc46.763.04214.955/20/2014
DOWDow Chemical Co/The49.36334.446/26/2014
MRKMerck & Co Inc58.633116.536/12/2014
KOCoca-Cola Co/The40.762.9957.856/12/2014
SPGSimon Property Group Inc174.052.99112.095/14/2014
LYBLyondellBasell Industries NV93.662.9929.38/14/2014
SYMCSymantec Corp20.12.9905/22/2014

Again, the trend looks terrible for LNKD and I generally stay away from companies that have such numbers. I am a believer in LNKD though and do think they will turn this around.

CRM Revenue (Quarterly YoY Growth) Chart

CRM Revenue (Quarterly YoY Growth) data by YCharts

$LNKDLong LinkedIn (LNKD)

I’ve been a long time believer in LNKD but have never been able to make it a long term holding because the valuation never made sense. It has come down mostly on growth concerns but not enough for me to buy outright. I do like to buy it on a long & short basis though because I do think that LNKD has done a good job of diversifying its revenue sources and that some of the concerns have been overblown. It makes little sense for example to look at y/y traffic to its website (which has been declining) without considering use of its mobile apps in a world where everything is moving towards mobile. I do think that LNKD is a no-brainer when I compare it to a stock such as CRM which is trading at a comparable valuation.

LNKD2

Next earnings release: May 2nd 2014

$CRMShort Salesforce.com (CRM)

I’m certainly a believer in cloud-based software and I do think Salesforce has a terrific business but the results have lagged in recent years and it’s difficult for me to see how CRM would warrant such a valuation. When I look at diluted EPS (normalized) for the past few years, here is what I see:

2011: $0.12
2012: ($0.01)
2013: ($0.31)
2014: ($0.39)

Needless to say that things are not going in the right direction. They’ll eventually turn things around I believe but until there are clear signs that it will happen, I can’t imagine buying CRM at its 80 forward P/E.

CRM

Next earnings release: May 23rd 2014

Disclaimer: Long LNKD and no positions on Salesforce (CRM) but I will initiate the trade on the open today

Closing 1 Trade

By: ispeculatornew | Date posted: 03.31.2014 (2:00 am)

On this morning’s opening, I will be closing out one of the current live trades that is beyond +20%. No, it’s not Apple (AAPL) vs Rackspace (RAX). I am comfortable with that one. Rather, I’ll be closing out Long LinkedIn (LNKD) & Short Pandora (P) which is slightly better than +20% at the moment.

LNKD

P

Weekend Readings

By: ispeculatornew | Date posted: 03.28.2014 (3:00 am)

ycharts_chartIt’s been fascinating to see the Ukraine crisis develop and I have been closely tracking the RSX etf that tracks the Russian market. It just feels like the downside is fairly small at this point… or is just me?

Here are a few readings that might be of interest;)

General Readings

Can the Bloomberg terminal be toppled? @ MattTurck
The impossible quest for fair markets @ Muslings

Tech Stock Readings

So you want to compete with Amazon @ A16Z
The price of music ($P) @ Recode
Bear hugging Android @ Bubba
What’s next for messenging after WhatsApp @ techCrunch
Twitter’s big problem @ WSJ

2 Questionable Tech Stocks Going Public? ($KING, $BOX)

By: ispeculatornew | Date posted: 03.27.2014 (3:00 am)

CandyCrushSagaYou’ve likely seen news regarding 2 tech IPO’s this week.

Yesterday morning, I added a new stock to the list of tech stocks that I follow. King Digital Entertainment (KING) turned public. You might have never heard about this company. In fact, it is a gaming company that has published “Candycrush Saga”, perhaps the most popular mobile game these days.

King Highlights

Fast growing revenues:

2011: 63.9M
2012: 164.4M
2013: 1.9B
2014E: 2.5B

EPS also looks good:

2011: -0.005
2012: 0.03
2013: 1.86
2014E: 2.44

The Bad News

Of course, it seems impossible to not compare KING with Zynga which also had an incredibly successful game (FarmVille) but was never able to follow it up despite many different attempts:

ZNGA

In both cases, the company has one hit game, with revenues based mostly on virtual goods purchases by users.

When you look at competitors such as Blizzard, it’s difficult to not consider King’s significant risk when CandyCrush does eventually lose some of its popularity.

I often talk about “lock-in” as a significant factor in evaluating the future value of a company and I just don’t see anything that gives me confidence in KING’s “next big” games.

Would I buy KING? I doubt it. There is certainly a chance that the stock is cheap but I’ll have to see strong evidence that it can sustain success in its future games. I’m willing to risk losing out on an opportunity.

Looks like I’m not alone here…just look at its first day of trading:

ycharts_chart

$BOXOnline Storage Market = Bad Business

On the surface, Box and Dropbox are two incredibly promising companies. They are both involved in the online storage business which is seeing very strong growth. Box already has 25 million users and 225,000 businesses using its services.

One great thing about this business is the fact that its a booming industry and customer retention is high.

The Bad News

The less optimistic view of course is the competition. Box can probably do well competing with pure storage competitors such as Dropbox and Evernote. Its problem is when trying to compete with Amazon, Google Drive, Microsoft OneDrive, etc. These are huge players that have an “ecosystem strategy”. They don’t need to make much profit on storage because it’s mostly about integration with everything else that they do. Some even argue that they are willing to lose money on storage for several years in the hopes of gaining a solid customer base. Not only will that make it challenging for pure storage plays but it will also drive margins to the ground.

Already Losing Money

Revenues
2011: 21,084
2012: 62,173 (13 months)
2013: 124,192

Net Profit

2011: -50271
2012: -117,690
2013: -168,557

So the company is quickly increasing revenues but losses are also exploding and it’s actually losing more money than it has in revenues…

Red Flags All Over The Place

Once again, I find it difficult to get excited about Box’s IPO. The same will likely be the case when Dropbox comes out. Since the pricing is not out yet, I can’t say how expensive or not BOX will end up being but there does seem to be a lot more talk about potential that what I personally expect so I doubt I’ll be a buyer on either one. Time will tell though.

Would you invest in either of these stocks?

Passive Income Update – March 2014

By: ispeculatornew | Date posted: 03.26.2014 (3:00 am)
millionThey say earning the first million dollars is by far the most difficult. That doesn’t seem very difficult to believe does it? When you’re starting out, most of your assets are held in real estate which isn’t very liquid and doesn’t work as well in terms of generating compound interests:) However, it does look like it’s easier than ever to make that first million, just take a look at this chart:
That being said, being a millionaire clearly does not mean what it used to, especially in this era of ultra-low interest rates. Someone earning 4% on $1,000,000 (which would be fairly good) would only generate $40,000 before taxes. And that is for a portfolio of 100K. It’s unlikely that someone with a net worth of $1M would have all of his money in the market. 

Will $1M Be Enough?

Clearly not for me. It’s a good starting point though so if I can reach that point in the next few years, I’ll be able to start working on #2!:

Why Do I Post This?

The reason I post this monthly update is both to keep myself accountable but also have a more public discussion about my plans and how I can become financially independent as quickly as possible.

With both sides of the US government acting like complete fools these days, more than ever I feel like being financially independent is critical, don’t you? So here is how I went about this whole process:

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources.

March Updates

-Following the reading of Berkshire’s annual letter, I did get inspired and wrote about building my own little Berkshire
-I did publish the March update of the USDP

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location. I discussed the idea of needing 100K in yearly income here.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

usdp3

Current Passive Income Flows:

7.70% – Dividend/Investing Portfolio: Not much to report here but the expected dividend income did increase slightly, always a good sign.

8.08% – Private Investment In My Online Company: No changes here although I did meet my biz partner and we do expect to raise our kickbacks later this year which will hopefully make a decent difference.

Total: 15.75%

It’s not spectacular by any means yet. That being said, I am 32 years old and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

usdp2

Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate as well as the question of becoming (or not) a landlord. I’ve also looked into the possibility of renting property that I’d own though AirBnB (and an updated post here) and a few other questions I had been wondering about.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here🙂

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

usdp1

It’s easy to look at a chart like this and think that I’m still so far away from my goal but I’m getting there, step by step.

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

 

New Trade: Long eBay ($EBAY) & Short IAC Interactive ($IACI)

By: ispeculatornew | Date posted: 03.24.2014 (3:00 am)

Things continue to go very well in terms of long & short trading with an average trade return over 8%. I’ve been able to avoid huge moves (the 20-25% overnight move following surprise earnings). Those can go either way of course but I prefer staying away from violent moves, it’s better for my nerves:)

As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:

http://www.intelligentspeculator.net/livetrades

You can see the numbers for both companies involved in today’s trade here:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
IACIIAC/InterActiveCorp72.7622.5315.847.157.933.9520.521.0336.2116.67N/A
EBAYeBay Inc56.9626.8116.924.1114.034.418.27112.3917.7582.52

IAC Interactive had quite a climb in the past 2 years but it does look like the days of high growth are over for now!

IACI Revenue (Quarterly YoY Growth) Chart

IACI Revenue (Quarterly YoY Growth) data by YCharts

Long eBay (EBAY)

It’s somewhat ironic that a couple of weeks after closing a trade on eBay based partly on events that are still going on, I’m back at it. The truth is that with 6 live trades, I didn’t have as many options and while I do think there is a bit more downside on EBAY at the moment given the Carl Icahn involvement, there is also significant upside and when I was looking for the best trade options, going long EBAY was an attractive option. I continue to think eBay should be valued as a bank and that Paypal is a gem. I also think it will eventually lose much of its dominance as the competition is clearly aiming at much better products. Will that happen anytime soon? I personally don’t think so no. The payments space is incredibly attractive, features startups (Stripe, Box) but also web giants (Amazon, Google, etc) and traditional players (Mastercard, Visa, Amex, major banks, etc).  It’s also a lot more complex and difficult than most of us could imagine and Paypal does have significant lock-in effect.

EBAY

Next earnings release: April 29th 2014

Short IAC Interactive (IACI)

I’ve been impressed overall by the performance of IAC in the last few quarters and they have been posting solid progress both in terms of fundamentals and stock price performance.  That being said, I think the comeback was expected after a fairly severe setback following the 2008-09 financial crisis for IACI. The fact is that there is very little excitement coming out of its products or properties and I don’t expect IACI to keep up with a company such as eBay that has a fast growing payments site.

IACI

Next earnings release: April 30th 2014

Disclaimer: No positions on eBay (EBAY) or IAC Interactive (IACI) but I will initiate the trade on the open today

Weekend Readings

By: ispeculatornew | Date posted: 03.21.2014 (3:00 am)

Five-Thirty-EightYou might have heard about data-driven journalism? Nate Silver is probably the best known example and I’m loving what him and his team have going at FiveThirtEight so far! It has its critics of course but that’s generally a good sign. You an read more about it here.

General Readings

The tea party and Wall St are friends? @ NYMag
What happens if Elon Musk is the next Steve Jobs? @ WSJ

Dividend & Passive Income Readings

2014 Canadian Dividend Aristocrats @ TheDividendGuyBlog

Tech Stock Readings

Google drive goes on the offensive @ TechCrunch
Is Yahoo’s business worth less than nothing? @ Bloombergview

New IPO’s On The Horizon (Alibaba, GoDaddy, Box, etc)

By: ispeculatornew | Date posted: 03.20.2014 (3:00 am)

With Facebook, Twitter and others trading at “sky-high” valuations (as well as deals like FB’s $19B purchase of WhatsApp), two things tend to happen. The “B” word debate strikes again. I can’t tell you how many “bubble” blog posts I’ve seen in recent weeks. It’s difficult to blame them and while there are similarities between now and the 2001 meltdown, this time does look very different. Of course, isn’t that what people always say before bubbles collapse?:)

The other more interesting thing that happens is that private companies do end up going public in periods like this one. There are several possible IPO’s coming this year that will likely appear in the stocks that I follow. I do generally stay away from trading them in the first few weeks/months because of the incredible level of volatility but I know that I’ll likely be trading these names.

IPO within a few months?

A few names have emerged as planning a spring IPO:

alibabaI’ve discussed the incredible value in trading Chinese internet stocks. I’ve been more quiet on that front personally because I’ve struggled to get good sources of information. I am working on that but there is no doubt that these 2 IPO’s will make big waves:

Alibaba: The ecommerce giant is set to become one of the largest IPO’s ever with the company being valued at approx $150B. Another very interesting aspect is that Yahoo holds 24% of Alibaba. Given that Yahoo is worth around $38B, you can see that almost 100% of Yahoo’s value is based off of its Alibaba holding. It will be very interesting to see how that whole story will pan out.

Weibo: Interesting note is that Alibaba owns 18% of Weibo… You might have never heard about this Chinese social web company that describes itself as an alternative to Facebook and Twitter in China. It has 241 million users, almost entirely based in China.

godaddyDropbox-logoGoDaddy: The company more known for its splashy Super Bowl ads than anything else does have a solid business as a domain registrar, web host, etc. The company was purchased a private equity group in 2011 and been rumoured to go public for at least a couple of years now. It does look more serious and while I can’t imagine holding them long term, it would make an interesting

Dropbox and Box: Both companies are in the cloud storage area and have been looking at an IPO for some time now. They probably should have gone ahead a few months ago. Last week, Google’s surprise announcement to dramatically improve its cloud hosing prices is a major blow to Dropbox and a reminder that they will have a very difficult time competing in a low margin space (cloud hosting) with rivals such as Google, Amazon and Microsoft ready to battle and perhaps even lose money to keep market share. Already, Dropbox users have been very vocal on social networks asking for prices to improve dramatically. Box does have a stronger enterprise client base which will help but I would personally also be very careful about evaluating its long term prospects. Both are looking to turn public as soon as possible.

Would you expect to buy any of these companies when they’ll turn public? I personally am not that excited about any of them but time will tell and I’ll be more than happy to do some shorter term trading on them

 

 

Ultimate Sustainable Dividend Portfolio – March 2014 Update

By: ispeculatornew | Date posted: 03.19.2014 (3:00 am)

Protecting a good investment and making money conceptIn September 2011, I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term. I would personally say that things have been going very well and will certainly continue to evolve. I do have a few more things planned which I will discuss in the near future.

The USDP is obviously a critical part of my now very public quest to replace my job income with passive income. you can see my most recent update here.

Things continue to go very well for the USDP which I’m thrilled to see. The past few weeks were not the most successful but overall the performance remains very solid. I will be publishing more analysis of the stocks from the portfolio in the free newsletter. If ever you would like to receive those types of updates, please join, it’s free:

Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.

Here are the holdings as of last night to start off:

TickerNameSharesMar 17 2014 PriceMar 17 2014 Values
OMCOmnicom Group Inc31$72.80$2,256.80
MSFTMicrosoft Corp73$38.05$2,777.65
JCIJohnson Controls Inc41$46.58$1,909.78
PEPPepsiCo Inc/NC29$82.05$2,379.45
ETNEaton Corp32$72.40$2,316.80
DOVDover Corp25$81.43$2,035.75
ITWIllinois Tool Works Inc28$81.78$2,289.84
XLNXXilinx Inc38$52.91$2,010.58
SJMJM Smucker Co/The20$96.12$1,922.40
BLKBlackRock Inc12$298.71$3,584.52
TROWT Rowe Price Group Inc30$81.58$2,447.40
OXYOccidental Petroleum Corp23$96.85$2,227.55
COPConocoPhillips26$67.29$1,749.54
XOMExxon Mobil Corp20$94.32$1,886.40
ADIAnalog Devices Inc45$50.68$2,280.60
HASHasbro Inc31$54.96$1,703.76
MATMattel Inc44$37.66$1,657.04
INTCIntel Corp54$24.70$1,333.80
AFLAflac30$63.82$1,914.60
BAXBaxter International25$66.50$1,662.50
IVZInvesco Ltd68$34.90$2,373.20
VWOVanguard FTSE Emerging Markets43$38.42$1,652.06
BNDVanguard Total Bond Market25$81.18$2,029.50
Cash$790.67
USDP$49,192.19
SPX15.02058773$3,349.66$50,313.88

Dividends Received

Great month of income as the portfolio will end up generating $138 of dividends, a 75% increase over the same period last year! I LOVE seeing such progress!!

usdp2

Ultimate Sustainable Dividend Portfolio News

A great month in terms of news as you can see:

PepsiCo Inc (PEP) Dividend increase from $0.655 to $0.5675, a 15.4% increase
Eaton Corp (ETN) Dividend increase from $0.42 to $0.49, a 16.7% increase
T Rowe Price Group Inc (TROW) Dividend increase from $0.38 to $0.44, a 15.8% increase
Analog Devices Inc (ADI) Dividend increase from $0.34 to $0.37, a 8.8% increase

Returns

There isn’t that much to report this time around. Although you always hope for this portfolio to outperform, the reality is also that I’d expect it to slightly underperform in rising markets and outperform in more difficult environments. Markets continue to cruise so I did lose a bit more ground compared to the S&P500. You can now see a small difference in the chart below, if you look close enough:)

usdp1

Trades

This time around, I am not entering any new trades apart from re-investing the dividends that were received. I will be doing an in-depth review of the stocks within the next week which will surely lead to 1-2 trades at a minimum.

New Trade: Long LinkedIn ($LNKD) & Short Pandora ($P)

By: ispeculatornew | Date posted: 03.17.2014 (3:00 am)

This is my 9th long & short trade of the year and with an average return of 8%, I’m very happy with the results so far.  I do still have one trade above +20% that could be closed soon (TRIP/ADBE) but I do like being long TRIP at this point so I’ll let it go a bit longer.

As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:

http://www.intelligentspeculator.net/livetrades

You can see the numbers for both companies involved in today’s trade here:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/Share
PPandora Media Inc35.27N/A73.2530.53132.523.782.621.65N/A3.54
LNKDLinkedIn Corp196.32860.1773.49-8.7657.214.1921.850.9805-02-201413.45

Wow… talk about slowing growth for both companies. LinkedIn is slightly better but both have discouraging trends when you consider their P/E’s.

LNKD Revenue (Quarterly YoY Growth) Chart

LNKD Revenue (Quarterly YoY Growth) data by YCharts

$LNKDLong LinkedIn (LNKD)

LinkedIn is a company that I’ve discussed several times and have been a big believer in. I have always had an issue with their valuation though and while it is coming down a bit, it still seems expensive to me. In the context of this trade though, it’s a perfect match to contrast two companies that are trading at virtually identical forward P/E’s. I do think LinkedIn will continue to show strong growth as it’s been able to diversify its audience but also has many different revenue sources and a corporate (and fairly wealthy) client base.

LNKD

Next earnings release: May 2nd 2014

$PShort Pandora (P)

I’ve been sceptical about Pandora’s ability to generate significant profits for some time now. The base of my theory resides in the fact that:

-Pandora very much depends on different ecosystems such as Apple’s iOS and Android devices. It’s not meaningful (yet) that Pandora seems to be excluded from the upcoming CarPlay but it’s certainly cause for worry.
It is simply too competitive: While some are slightly different products, Pandora does compete with the likes of Apple (iTunes and iRadio), Google, Amazon, Spotify, etc. Even if Pandora does end up having the best overall product, it will have less negotiation power both with consumers and artists/labels which will continue to squeeze Pandora’s bottom line.

is

So no, clearly I do not believe Pandora is worth its current forward P/E of 70 or so….

P

Next earnings release: 

Disclaimer: No positions on LinkedIn (LNKD) or Pandora (P) but I will initiate the trade on the open today