Posts filed under “Analysts”

New Trade Idea: Buy Spring (SPRNG)

Stock: OTC Nasdaq Spring (SPRNG)
Recommendation: Strong Buy from 40-50; Add from 50-60
Price Target: 85

>

I put a new trade on yesterday — we are now long Spring SPRNG), and expect to maintain this position for a quarter or two.

Recall that we dumped our holdings of Winter (WNTR) late February; that is now a Sell/Avoid.

The Spring buy was a technical/cyclical call based on the 10 day moving average of its price temperature. It has been stuck in the 20s and low 30s for what seems like forever; it has had lots of difficulty breaking out over 40. But the past two weeks have seen SPRNG trade much better than it had been. It finally managed to get past that wall of resistance at 40. On Friday, SPRNG briefly touched 50 before falling back to the low 40s. Now that the 10 day moving average is over 40, we can comfortably accumulate more Spring in the immediate future.

This is an intermediate length hold — typically, 3 to 6 months. Based on a point & figure price projections, we believe this can be a double by the Summer — our 6 month target is in the mid 80s. Note that I would be a seller in the 90s and would short the hell out of SPRNG over 100.

We had lots of success with this same name last year, and though the seasonal patterns are well known, it still has not been arbitraged out of existence the way the January effect has.

Disclosure: Long SPRNG for clients and my own personal accounts

Category: Analysts, Humor, Technical Analysis, Trading

Year End S&P Targets (Big Firms)

Great assembly of forecasts from the boys at Bespoke: >

Category: Analysts, Investing

There Ain’t No Employment “Whisper” Numbers

OK, kids, listen up: There ain’t no such thing as NFP whisper numbers. This oddity seems to come up now and again by the usual tin foil hat types. Let’s explain what a whisper number actually is, and why an Employment whisper # is nonsense. Back in the bad old days before Reg FD and…Read More

Category: Analysts, Corporate Management, Earnings, Employment

Change in Ratings (or, Charlie Sheen Goes to Wall St)

We have decided to change our stock ranking to reflect current sensibilities more closely. Rankings formerly known as “Buy” “Neutral” “Sell” and “Sell Short” have been given more descriptive terms. Buy is now WINNING, Neutral has been changed to GODDESSES, Sell is TURD and Sell Short is AT WAR. Also please be aware that our…Read More

Category: Analysts, Humor, Technical Analysis

Michael Mauboussin Resource Page

Tim du Toit is the editor and founder of Eurosharelab. He has more than 20 year of institutional and personal investing experience in emerging and developed markets. He previously published the terrific James Montier Resource page. Tim is based in Hamburg,. Germany. More of his articles can be found at Eurosharelab (www.eurosharelab.com).

Republished here with permission.

~~~

I have been an avid reader of Michael Mauboussin’s research since about 2004 when he started working for Legg-Mason.

If you want to learn what successful investing is really about, along with the research to back it up you cannot do better than read Michael’s work.

I have unfortunately not had the pleasure of meeting Michael but it is something I would really like to do.

To get to know his work I have put together this resource page, a listing of all Michael’s articles I could find on the internet along with a short description.

First something on Michael’s background.

Michael Mauboussin Bio

Michael Jacques Mauboussin is the Chief Investment Strategist at Legg-Mason Capital Management Inc. He joined the firm in 2004.

He is also Chief Investment Strategist and Senior Vice President at Legg Mason Funds Management Inc.

Prior to joining Legg-Mason he was a Managing Director and Chief U.S. Investment Strategist at Credit Suisse First Boston (CSFB). He joined CSFB in 1992 as a packaged food industry Analyst.

Michael is the former President of the Consumer Analyst Group of New York and was repeatedly named to Institutional Investor’s All-America Research Team and the Wall Street Journal All-Star survey in the food industry group.

His latest book, Think Twice: Harnessing the Power of Counter intuition was published in the fall of 2009.

He has also written “More Than You Know: Finding Financial Wisdom in Unconventional Places” and was co-author of “Expectations Investing: Reading Stock Prices for Better Returns”.

He has also been an Adjunct Professor of Finance at the Columbia Business School since 1993.

Business Week’s Guide to the Best Business Schools (2001) highlighted Michael Mauboussin as one of the school’s “Outstanding Faculty,” a distinction received by only seven professors.

In 2004, SmartMoney magazine named him as one of its Power 30, a list of “the most influential people on Wall Street”.

Mr. Mauboussin is on the Board of Trustees at the Santa Fe Institute. He holds a B.A. in Government from the Georgetown University.

Now on to Michael’s research

2011

In the article, “The Real Role of Dividends in Building Wealth” dated January 25, 2011, Michael Mauboussin argues that for dividends to be included as a source in accumulating capital, the investor must reinvest dividends. Research has shown that this is unfortunately not the case with the majority of private investors.

In this January 12, 2011 article called “Blaming the Rat” Michael Mauboussin talks about the relationship between incentives and behaviour.

Social scientists often assume that poor behaviour is a result of faulty incentives and that good behaviour reflects well-structured incentives.

Ironically, management literature shows that the relationship between incentives and behaviour is more complex that what these scientists originally thought. In most cases, drive and mindset are more important than the incentive program.

For investors, the objective is to find driven leaders who have good capital allocation skills and have a substantial stake in the company. A good example is Warren Buffett who receives a relatively modest compensation as CEO. Since nearly all of his net worth is invested in Berkshire Hathaway, he has the motivation and incentive to perform well.

2010

In the July 15, 2010 article called, “Untangling Skill and Luck” Michael Mauboussin provides framework on how to differentiate between skill and luck. One of the most difficult things a fund investor has to do. And something you have to test your own performance against all the time. Was the return you generated based on luck or was it skill?

In this article, Michael Mauboussin discusses what comprises a good investment process – finding gaps between expectations and fundamentals and gives guidelines as to the correct sizing of investments.

In a presentation at the CFO Executive Summit titled “It’s all about Managing for Value” dated June 11, 2010, Michael Mauboussin discusses that the primary goal of a corporation is to maximize its long-term shareholder value.

In corporate strategy, the litmus test is whether the strategy will ultimately increase shareholder value.

In this article on “The Colonel Blotto Game” dated May 12, 2010 Michael Mauboussin draws lessons from the Colonel Blotto game on how to compete when you are the underdog.

For a company with fewer resources than its competitor, the best strategy is to compete in a non-traditional way in order to expand the number of battlefields thus changing the basis of competition.

Another lesson from the game is that the “best” team does not necessarily win the game. The winner is usually the one who has effectively played to its strengths and weaknesses.

In “A Surge in the Urge to Merge” Michael Mauboussin writes in January 12, 2010 that a Mergers and Acquisitions (M&A) wave is currently brewing.

While research shows that company making acquisitions in the early part of the cycle deliver the best returns the focus of any investor in evaluating M&A deals is whether the acquiring company adds shareholder value from the acquisition. In economic terms (do the synergies exceed the premium paid) not just looking at accounting based measures.

Read More

Category: Analysts, Markets, Psychology, Web/Tech

Weekend Miscellany

Invictus here. I have been reviewing a variety of assorted miscellaneous items: Likely flat-earther/creationist Peter Wallison continues to believe that if he blames Fannie, Freddie, and CRA enough times, eventually it will be true that they — and they alone — were the sole causes of the financial crisis.  His inability to back down in…Read More

Category: Analysts, Current Affairs, Investing, Markets

Conformism and Public News

Get your geek on: We study a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment. The information of investors consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment. We assume…Read More

Category: Analysts, Investing

Dopey Cowboy’s Broker Wars

This might be a little “inside baseball” for readers who don’t work on a trading desk, but the Dopey Cowboy has a great take on Institutional trading at Broker Wars. Here are my favorite riffs on > > The full run of amusing logos can be found at the Dopey Cowboy

Category: Analysts, Humor, Trading

Surprisingly Strong Q4 2010 Revenues

One of the knocks on last year’s earnings was that it was cost cutting was driving profitibility — not organic revenue growth. The recovery could not turn into an expansion, we were told, without solid revenue gains. Earnings may have surpassed Wall Street expectations for seven straight quarters, but sales have trailed forecasts since 2008….Read More

Category: Analysts, Cycles, Data Analysis, Economy

Merrill Lynch’s Horrific Irish Bank Adventures

In Friday’s reading, I mentioned Michael Lewis’s piece in Vanity Fair: When Irish Eyes Are Crying. It is your must read of the weekend. The problems in Ireland makes the woes in Greece look merely like a bounced check. And Ireland’s eejit politicians, FOLLOWING THE ADVICE OF MERRILL LYNCH, turned the entire population of the…Read More

Category: Analysts, Bailouts, Really, really bad calls