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The Stingy News Weekly (08/07/2011)


"I've seen more people fail because of liquor and leverage - leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing."
- Warren Buffett


New @ StingyInvestor

Hunt for dividend stocks
"The beach is sparkling in the sun, the water looks inviting, and I'm sitting in front of a computer screen because Mr. Market is once again sliding into depression. But a little panic is invigorating because there are bargains to be had, and I'm on the hunt for a few good dividend stocks."


Stingy Links

The Heady Thrill of Having Nothing to Do
"My period of greatest creative output was during my corporate years, when every meeting felt like a play date with coma patients. I would sit in long meetings, pretending to pay attention while writing computer code in my mind and imagining the anatomically inspired nicknames I would assign to my boss after I won the lottery. Years later, when 'Dilbert' was in thousands of newspapers, people often asked me if I ever imagined being so lucky. I usually said no, because that's the answer people expected. The truth is that I imagined every bit of good fortune that has come my way. But in my imagination I also invented a belt that would allow me to fly and had special permission from Congress to urinate like a bird wherever I wanted. I wake up every morning disappointed that I have to wear pants and walk."


S&P cuts U.S. rating
"The U.S. had its AAA credit rating downgraded for the first time by Standard and Poor’s, which slammed the nation’s political process and said lawmakers failed to cut spending enough to reduce record deficits."


Moody's Sounds the Alarm on Student Borrowing
"A growing chorus of economists and educators think that the higher education industry will be America's next bubble. Easy credit, high tuition, and poor job prospects have resulted in growing delinquency and default rates on nearly $1 trillion worth of private and federally subsidized loans. Now the ratings agency Moody's has weighed in with a chilling diagnosis: 'Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.'"


Negative nominal interest rates
"Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash."


It’s the elderly
"If leadership is the capacity to take people where they need to go — whether or not they realize it or want it — then we’ve had almost no leadership in these weeks of frustrating and maddening debate over the budget and debt ceiling. There’s been an unspoken consensus among President Obama, congressional Democrats and Republicans not to discuss the central issue underlying the standoff. We’ve heard lots about “compromise” or its absence. We’ve had dueling budgets with differing mixes of spending cuts and tax increases. But we’ve heard almost nothing of the main problem that makes the budget so intractable. It’s the elderly, stupid."


Why chasing success makes us happy
"As he researched his subject, exploring economics, neuroscience and evolutionary biology, Buchholtz became convinced that much of the modern happiness project was a crock—not just unhelpful economically, but unhealthy and unnatural."


AAA rating is a rarity
"But the truth is, even as the government maintained its AAA grade, the markets suggested long ago that the United States was no longer deserving of such a high rating. The credit-default swap market provided one clue. During the financial crisis in early 2009, the price of insurance that would pay off if the United States government defaulted on its debt was similar to that offered for companies ranked just above junk. Even today, the price of insurance on a government default has been higher than that for Colgate Palmolive, the global toothpaste giant, which has a rating two notches below AAA."


A better buyback strategy
"It appears that stocks that had low returns following their previous buyback, but a high completion rate, see amazing returns following their next buyback."


I’ve got all the clarity I need
"And then when you have a company like Boeing, you're talking about one of the iconic US companies gets sued by the federal government. If that doesn't get your attention, nothing will. They get sued for investing $2 billion in South Carolina. Last time I saw South Carolina was a part of the United States of America and you get sued for that."


Stiffen audit rules
"Normally, repos are accounted for as borrowings, which is what they are. The borrower retains all the upside and downside of the securities in question. The lender gets an interest rate. But Lehman found a loophole in an accounting rule, and concluded that if it put up $105 in collateral for every $100 borrowed, it could claim it really was a sale. At the end of each quarter, the company would decide just how much it needed to beautify its balance sheet, and would do repos to produce the desired result. They would be reversed a few days later."


A little yellow
"I will also note that eMails such as the one I received are how the retail perspective transmits to institutional portfolios: I can assure you that in this kind of situation, with dramatic market movements and heavy media coverage, a lot of Portfolio Managers sell (sometimes against their better judgement, if they have any) simply so they won’t have to explain their holdings to their clients. The business is, in general, not about performance it’s about story telling."


Madoff of the Midwest
"The indictment charges that from 2005 to 2009, Durham masterminded a Ponzi scheme that defrauded 5,000 investors in Fair Finance out of some $207,246,329, of which only a fraction may be reclaimed. If convicted, Durham and his alleged conspirators could each face 45 years in prison and $3 million in fines. The case is due to go to trial next year, and the court has registered not-guilty pleas for the three defendants, all of whom declined or did not respond to interview requests. But from interviews with numerous associates, a profile of Durham, who Indianapolis has taken to calling the “Midwest Madoff,” has emerged. In retrospect, Durham’s alleged fraud is almost as impressive for its size as for how obvious it should have been."



DOW 30 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
AT&T (T)5535
Verizon (VZ)1345
Merck (MRK)1315
Pfizer (PFE)1425
Johnson & Johnson (JNJ)2215
General Electric (GE)3545
EI DuPont (DD)3234
Procter & Gamble (PG)1324
Intel (INTC)4314
Kraft (KFT)1444
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Travelers (TRV)5553
Hewlett-Packard (HPQ)5451
JP Morgan Chase (JPM)5532
AT&T (T)5535
Chevron (CVX)5444
Intel (INTC)4314
Microsoft (MSFT)4112
Exxon Mobil (XOM)4342
Wal-Mart (WMT)4253
Cisco (CSCO)4421
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
AT&T (T)55351.39
Travelers (TRV)55532.30
Intel (INTC)43142.81
Chevron (CVX)54442.96
JP Morgan Chase (JPM)55323.02
Pfizer (PFE)14253.65
General Electric (GE)35453.79
EI DuPont (DD)32343.80
Wal-Mart (WMT)42533.87
Microsoft (MSFT)41124.10
Notes | More Info...


US Stock SummaryYieldP/EV.R.
AT&T (T)YYY
Intel (INTC)YYY
Chevron (CVX)YY
EI DuPont (DD)YY
General Electric (GE)YY
JP Morgan Chase (JPM)YY
Microsoft (MSFT)YY
Pfizer (PFE)YY
Travelers (TRV)YY
Wal-Mart (WMT)YY
Cisco (CSCO)Y
Exxon Mobil (XOM)Y
Hewlett-Packard (HPQ)Y
Johnson & Johnson (JNJ)Y
Kraft (KFT)Y
Merck (MRK)Y
Procter & Gamble (PG)Y
Verizon (VZ)Y
Notes...



S&P/TSX60 Value Screens

High Dividend Yield StocksP/EP/BP/SYield
Yellow Media (YLO)1555
Enerplus (ERF)1515
Sun Life Financial (SLF)5555
BCE Inc. (BCE)3245
TransAlta (TA)4445
Penn West Petroleum (PWT)2525
ARC Resources (ARX)1215
Canadian Oil Sands (COS)5125
CIBC (CM)5235
Bank of Montreal (BMO)5435
Notes | More Info...


Low Price/Earnings StocksP/EP/BP/SYield
Research In Motion (RIM)5450
Magna (MG)5553
Inmet Mining (IMN)5521
Nexen (NXY)5431
Sun Life Financial (SLF)5555
Canadian Tire (CTC.A)5553
Canadian Oil Sands (COS)5125
National Bank (NA)5334
Brookfield (BAM.A)5542
CIBC (CM)5235
Notes | More Info...


Value Ratio StocksP/EP/BP/SYieldV.R.
Sun Life Financial (SLF)55551.43
Canadian Oil Sands (COS)51252.03
Yellow Media (YLO)15552.05
TransAlta (TA)44452.11
CIBC (CM)52352.27
BCE Inc. (BCE)32452.33
Bank of Montreal (BMO)54352.36
Enerplus (ERF)15152.49
Power Corp of Canada (POW)45552.67
Magna (MG)55532.77
Notes | More Info...


Canadian Stock SummaryYieldP/EV.R.
CIBC (CM)YYY
Canadian Oil Sands (COS)YYY
Sun Life Financial (SLF)YYY
BCE Inc. (BCE)YY
Bank of Montreal (BMO)YY
Enerplus (ERF)YY
Magna (MG)YY
TransAlta (TA)YY
Yellow Media (YLO)YY
ARC Resources (ARX)Y
Brookfield (BAM.A)Y
Canadian Tire (CTC.A)Y
Inmet Mining (IMN)Y
National Bank (NA)Y
Nexen (NXY)Y
Penn West Petroleum (PWT)Y
Power Corp of Canada (POW)Y
Research In Motion (RIM)Y
Notes...



The Rothery Report
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The Rothery Report provides research on select deep-value stocks in North America. Discover overlooked and undervalued stocks in quarterly investment reports which provide detailed analysis of Canadian and U.S. stocks. Weekly email news and additional updates keep subscribers informed about new opportunities and developments.

Rothery Report Performance
(03/31/2001 to 06/30/2011)
Average Capital Gain
39.7%



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Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...