Stock Holdings Final Essay

Why we kept these stocks;

Focus on FUTURE & what was created or expanded. Compay changes in management or business structure. Etc.


Many high profile insider investments lead me to believe in the company. Mr. Morfit, General Director of Microsoft, is stepping up to the plate again and buying more shares on a recent pullback. This leads us to believe he is very pleased with the new CEO and sees big things in the future for this ‘mature tech’ stock. We’re overall very comfortable with the future outlook & direction of the tech giant.

The Geo Group (GEO)

The GEO Group is a real-estate investment trust. They are profitable and growing sustainably. They specialize exclusively in the ownership, leasing and management of correctional, detention and re-entry facilities. They also provide provisions of community-based services and youth services. This all takes place in the United States, Australia, South Africa, the United Kingdom and Canada. With the prison system as unbelievably full as it currently is, (US currently has the largest prison population the country has ever seen) and no reform on the horizon for these systems in the foreseeable future, this is a very safe & profitable investment.

Costco (COST)

Costco does one thing better than any other store of its kind. Supply chain & distribution management. Where most groceries stores take on average 1 &1/2 -2 weeks to receive fresh products from their sources, Costco averages just over 4 days. When you purchase milk from Costco, the expiration date is consistently 2 to 3 weeks longer than that of traditional grocery stores. With their large buying power, they are able to sustain massive growth while maintaining this core value. Intrinsically this places them as a front-runner in the foreseeable future for public appeal.

United States OIL ETF (USO)

Energy is a smart long-term investment. We will always need more and more. As it’s a company with pipelines already in the ground that is consistently pumping oil, security isn’t an issue. Large speculators are holding large lengthy positions. With such a large long position, it could take a while to unload these positions and it will create significant selling pressure on oil. As we’re swinging back around toward summer, these numbers are rebounding back up. With the economy in an upturn, this summer’s car sales will increase and more drivers will be using the gasoline to get to their favorite destinations. It’s a safe seasonal position.

Vanguard Small Cap Value ETF (VBR)

Vanguard Small Cap Value ETF: Why did we keep it? Small Cap Value has been one of the best performing asset classes over the long term. Over the past 87 years, small cap value has returned an average of 13.6% per year. Compare this to the S&P 500, which returned 9.8% over the same time frame. VBR is a great way to get diversified, low cost exposure to this robust but volatile asset class.

Why we sold these.

AT&T (T)

ATT reported earnings on Feb 12th that were 0.11 below analysts expectations. As a result, many firms have revised their price targets down, with the average being $35.53. Given that the stock is currently trading at 33.28 we feel as though the upside is limited and that we could find better opportunities elsewhere.

General Mills (GIS)

General Mills: GIS is currently trading at $52.54 and is covered by 14 research analysts who have a consensus price target of $52.25. On March 18th they released earnings which beat the street estimates by $0.03 but revenues were slightly lower from one year ago. Based on the current valuation we believe the upside is limited and we can find better opportunities elsewhere.

Teco Energy Inc. (TE)

We sold Teco Energy Inc. because of two red flags. One, its highly unimpressive, 2014, fourth quarter earnings. Two, their was a large reduction in sale price of one of its coal subsidiaries to Cambrian Coal by $30 Million. Florida’s current economic condition is another risk here as well. If it weakens any going ahead, electric and gas company’s earnings could be negatively impacted resulting in negative returns for shareholders. Also because it operates in a highly regulated environment, if it earns ROE above allowed ranges, earnings could be reduced by the government.

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Why we bought these.

Mercury General Corporation (MCY)

Mercury General Corporation is an independent broker and writer of insurance products across 13 states. Mercury General has assets of over $4 billion and provides homeowners & an array of other insurances as well as personal umbrella. They carry an appreciation-annualized rate of 13.58%, higher than the S&P 500’s 13%, and net income per share rising up 58% from last year. And the company is a member of the S&P Mid Cap 400 index and was added to S&P’s High yield dividend at the beginning of 2015. All of this notable growth is hard to ignore. The Companies decision making in the last 5 years is equally as hard to ignore. It’s a very comfortable position for our otherwise aggressive portfolio & is very promising for the future.

Biogen IDEC Inc. (BIIB)

Two huge reasons. One was the result of new data from compound BIIBo37. The data shows this could be one of the biggest drug advancements in the treatment of Alzheimer’s to date. The bad news for patients, but the good news for long-term investors is that any potential major medical launch will be 5 years away. The even bigger reason is Biosimilars. They recently have filed for approval of two multibillion-dollar drugs, Remicade and Enbrel. This will allow for Biogen to better diversify their revenue streams. It will also allow for the company to expand outside of the neurological disorder department. Were talking about a practical monopoly potential for 7 years on the development & sale of this new Alzheimer’s drug. All of this growth shows huge potential for profit in an ever-expanding market.

Ryman Hospitality Properties Inc. (RHP)

Recent performance & trend behavior indicate a short-term, mid-term and long-term uptrend for the stock, which generates a buying mode for long-term investors. With a steady earnings growth and favorable dividend behavior, it seems like a safe and steady long-term investment and we like our opportunities with it. It’s another real-estate investment trust. This one specializes in the properties that Marriott places its prestigious Gaylord Hotels on. With a favorable uptrend in expenditures on travel with the summer approaching and economy up, it’s a favorable seasonal position.


General Mills

Despite some competitive pressures and muted consumer spending around the world, we think firms with strong brands & vast scale, will ultimately win out over their peers. That’s why we felt a bond from them would be stable and provide a good home base for an otherwise moderate to aggressive portfolio.

T- Note (2-year)

For nearly the same exact reasoning as General Mills, we choose the government bond. With an honest average of 2.53% return, it seemed like a sound place to assure we get at least some ROI help from bonds.


Got rid of:

(MU) Micron Technology

We decided to get out of Micron because it is down 20% since the start of the year. Samsung is pressuring their margins. Also Samsung has struck deals with Apple and LG to supply DRAM for upcoming phones with them handling at least half of the DRAM being used in the new iPhone 6s. The company’s major channel was supplying DRAM for iPhone’s, so its expected to take a huge hit. Without any foreseeable upturns we wanted out because the risk was too great.

(FBT) First Trust NYSE Arca Biotechnology ETF

FBT Looks to be on a wild roller coaster. It has an ETF rank of 2, meaning a ‘buy’ rating, but with a very high-risk outlook. In the last 6 years, FBT has gained nearly 628% in returns. The fund follows the NYSE Arca Biotech Index and holds 30 securities. Being so well spread out, and diversified across market caps, its growth creeps over 80%. A stock performing so highly with no signs of slowing down doesn’t bode well for a short sale, regardless of how over-valued it may be.

Netflix (NFLX)

The Future trajectory of Netflix’s stock couldn’t be more unclear. When taking into consideration growing concerns about the quality of the companies earnings; relationships between net income and cash flows that are frightening by anyone’s definition; an abysmal credit rated “junk” by the agencies and a tremendously high share price, It’s clear this stock is over-valued by a country mile. All this combined with its popularity and success as a company, and continued sustainability/growth in memberships makes it perfect for the short sale.

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FMC Corporation (FMC)

This stock is currently inflated because of the sale of their minerals business to Tornonx for $1.64 Billion on February 5th of 2015. Their primary revenue growth in 2014 of 30% was attributed to that business. FMC has decided to take an agricultural direction, which they acquired Cheminova for $1.8 Billion in November of 2014. They have growth of 1.9% annually in this market. However all analysts believe as 2014 results showed, the demand for agricultural chemicals and herbicides is not as strong as FMC believes. With massive declining demand for Agrochemicals in Europe, North America, and Latin America, and a large uptrend in organic farming, especially with the young generation, this company is going to lose money. It’s because of this that we should short sell now.

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