Exploring the Insights of Bill Ackman: A Deep Dive into Pershing Square Capital Management

Bill Ackman, born on May 11, 1966, stands as a prominent figure in the realm of American finance, renowned for his multifaceted roles as an investor, hedge fund manager, and philanthropist. 

Ackman was born to a family where his father served as a mortgage financier and his mother held a prestigious position in New York. His academic pursuits led him to Harvard University, where he excelled, graduating magna cum laude with a Bachelor of Arts in 1988, followed by further studies at Harvard Business School for his MBA.

Embarking on his professional career, Ackman established Pershing Square Capital Management, positioning himself as its CEO. He achieved widespread recognition for his investment approach, characterized by substantial stakes in companies and assertive calls for organizational reform. 

Pershing Square Holdings, Ltd., operating under the laws of Guernsey, stands as a cornerstone in the investment realm, meticulously managed by Bill Ackman’s Pershing Square Capital Management. Ackman’s adept oversight has propelled the firm’s assets to soar into the billions, solidifying its stature as a leading investment vehicle. In a strategic move to broaden its investor base, Pershing Square recently unveiled a new fund tailored to entice retail investors across the United States, marking a pivotal step in its growth trajectory.

While initial plans to list its hedge fund publicly in the U.S. were shelved, Pershing Square Holdings remains unwavering in its commitment to navigating the intricate investment landscape, ensuring its enduring influence. With forward-thinking strategies, Pershing Square Holdings continues to shape the future of finance, offering unparalleled opportunities for investors worldwide.

Here are three stocks in the Pershing Square Capital Management portfolio.

Chipotle Mexican Grill (CMG)

Ackman’s interest in Chipotle dates back to at least 2016 when Pershing Square first invested in the company. Chipotle has remained a significant holding in Pershing Square’s portfolio, representing a substantial portion of their assets. While there have been instances of Pershing Square reducing its stake in Chipotle, as reported in 2020, the fast-casual restaurant chain continues to be one of their key investments. Currently, Chipotle Mexican Grill holds a significant position in Pershing Square’s portfolio, valued at approximately $2.27 billion, making it their largest holding at 23.68% of their stock portfolio.

Price to Book Ratio: 7.66

PEG Ratio: 2.69

PE Ratio: 62.16

Price to Sales Ratio: 6.40

Forward PE Ratio: 42.57

Alphabet Inc: (GOOG) (GOOG)

In the third quarter of 2023, Pershing Square nearly doubled its ownership of Alphabet’s Class A shares. As of the end of 2023, Alphabet’s Class A and Class C shares combined constituted 18.5% of Pershing Square’s portfolio assets. Ackman’s investment in Alphabet aligns with his strategy, as he has made significant gains, with estimates suggesting profits of approximately $370 million from his Alphabet investment.

Price to Book Ratio: 6.25

PEG Ratio: 1.27

PE Ratio: 24.49

Price to Sales Ratio: 5.75

Forward PE Ratio: 18.11

Universal Music Group N.V. (UNVGY)

His interest in Universal Music Group dates back to at least 2021 when Pershing Square acquired 7.1% of Universal Music from Vivendi for $2.8 billion, with an option to buy an additional 2.9%. Ackman’s bullish stance on Universal Music Group continued, as evidenced by Pershing Square’s ownership of 105,325,592 shares in Universal Music Group N.V. by the end of 2022. Additionally, Ackman’s involvement in Universal Music Group extends to his nomination as a director on the board of the company. Ackman’s optimism about Universal Music Group’s prospects is underscored by Pershing Square’s continued bullish stance on the company, considering its stock to be trading at a discount to its intrinsic value. The stock trades Over-the-Counter in the U.S.

Trailing P/E: 42.69

Forward P/E: 27.86

PEG Ratio: 2.66

Price/Sales: 4.62

Price/Book: 19.45

Ackman’s endeavors extend beyond financial markets, with his philanthropic endeavors garnering significant attention, showcasing his commitment to various causes and charitable organizations. As a testament to his financial acumen, Ackman’s net worth is currently estimated at a staggering $3.4 billion.

Disclosure: Author had no positions in any of the above at the time the article was written.

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Unveiling Warren Buffett’s Time-Tested High-Yield Stocks

by Fred Fuld III

Warren Buffett, renowned as the Oracle of Omaha, is celebrated for his long-term investment strategy, which often centers around high-quality, dividend-paying stocks in the Berkshire Hathaway (BRK-A) (BRK-B) portfolio. While Buffett’s portfolio encompasses a diverse array of investments, several high-yield stocks have consistently stood out. Listed below are three of his highest yielding stocks in his portfolio. 

Kraft Heinz Company (KHC)

The dividend yield for The Kraft Heinz Company (KHC) stands at 4.59%. With a payout ratio of 68.83%, close to 69% of KHC’s earnings are disbursed to shareholders through dividends. KHC’s annual dividend payout amounts to $1.60 per share. The Price to Book ratio is an excellent 0.86, and the Price to Sales ratio is right in the mid range at 1.71, but the Price to Earnings Growth ratio (PEG ratio) is on the high side at 3.55. The stock makes up 3.47% of Berkshire’s total portfolio.

The ex-dividend date for The Kraft Heinz Company (KHC) is March 7, 2024. Investors purchasing shares on or after this date will not qualify for the upcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution planned for March 29, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Coca-Cola Company (KO)

The dividend yield for The Coca-Cola Company (KO) currently stands at 3.26%. With a payout ratio of 74.22%, approximately three-quarters of KO’s earnings are allocated to shareholders in the form of dividends. Coke’s annual dividend payout amounts to $1.94 per share. The Price to Book ratio is on the very high side at 9.88. The Price to Sales ratio is also very high at 5.56, along with the Price to Earnings Growth ratio (PEG ratio) at 3.88. The stock currently makes up 6.79% of Warren Buffett’s total portfolio.

The ex-dividend date for The Coca-Cola Company (KO) is March 14, 2024. Investors purchasing shares on or after this date will not qualify for the forthcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution scheduled for April 1, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Chevron Corporation (CVX)

The dividend yield for Chevron Corporation (CVX) currently sits at 4.35%. CVX has a payout ratio of 53.05%. Slightly more than half of CVX’s earnings are allocated to shareholders in the form of dividends The annual dividend payout amounts to a whopping $6.52 per share. The Price to Book ratio is a reasonable 1.74. The Price to Sales ratio is right in the mid range at 1.41, but the Price to Earnings Growth ratio (PEG ratio) is on the low side at an excellent 0.81. The company represents 5.41% of Berkshire Hathaway’s total portfolio.

The ex-dividend date for Chevron Corporation (CVX) is February 15, 2024. Investors purchasing shares on or after this date will not qualify for the upcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution planned for March 11, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Overall, high-yield stocks play a crucial role in income generation, portfolio diversification, and long-term wealth accumulation strategies, making them important considerations for investors with varying financial goals and risk tolerances.

Remember, as a rule of thumb, if the P/B ratio, the P/S ratio, and the PEG ratio, is below one, that is good, if it is between one and two is considered average, and above two, it may be on the high side. Some of these ratios may be irrelevant for high growth stocks.

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Taylor Swift Stock Index: A Great Performer

by Fred Fuld III

Taylor Swift, the name synonymous with chart-topping hits and captivating performances, has also quietly built herself into a savvy business mogul. Her journey extends far beyond the recording studio, encompassing strategic branding, fan engagement mastery, and a fierce fight for artistic ownership.

Taylor Swift’s success goes beyond just being a talented musician. Here are some of her notable business decisions that have contributed to her empire:

1. Reclaiming her music: Swift’s decision to re-record her first six albums was a bold move. While motivated by a desire to own her masters, it also proved to be a successful business strategy. The re-recordings, titled “Taylor’s Versions,” topped charts and reminded fans of her music, leading to increased sales and streaming.

2. Strategic partnerships: Swift has partnered with various brands like Diet Coke and Apple Music, creating mutually beneficial campaigns. These partnerships not only generate revenue but also expand her reach and connect her with new audiences.

3. Building a strong brand: From her signature songwriting style to her nostalgic album themes, Swift has built a strong and consistent brand identity. This allows her to connect deeply with her fans (affectionately called “Swifties”) and fosters a sense of community around her music.

4. Mastering fan engagement: Swift’s social media presence and interaction with fans are legendary. Through online interactions, surprise appearances, and Easter eggs in her music and videos, she fosters a loyal and engaged fanbase, which translates into success in ventures like tours and merchandise sales.

5. Utilizing technology: Swift’s embrace of technology has been crucial. She understands the evolving music landscape and leverages streaming platforms, online exclusives, and digital marketing strategies effectively.

6. Advocating for artists’ rights: Swift has been a vocal advocate for artists’ ownership of their work, influencing industry conversations and inspiring other musicians to fight for their rights. This not only benefits her personally but also contributes to a fairer music industry for all creators.

These are just a few examples of Taylor Swift’s successful business decisions. Her combination of artistic talent, business acumen, and dedication to her fans has made her a true force to be reckoned with in the music industry and beyond.

Six months ago, I wrote about how the Taylor Swift stock index as outperformed the S&P 500. Her index is made up of the publicly traded companies that Swift is a spokesperson for, such as Coca-Cola (KO) and Apple (AAPL).

Her index is up over 319% during the last ten years, versus 261% for the S&P 500, based on the SPDR S&P 500 ETF (SPY).

Swift’s boyfriend, Travis Kelce, has done a ton of celebrity sponsorships. It will be interesting to see how well his index does. Subscribe to our newsletter so you will be notified when it is available.

Disclosure: Author owns AAPL and has a short SPY position.

How to Spot Potential Short Squeeze Opportunities on the NASDAQ

Ever found yourself shorting a stock only to see a sudden spike, prompting an urgent need to cover your position as soon as possible?

What happened was called a Short Squeeze. Even the most seasoned traders have experienced this phenomenon. But do they really know what happened? 

A short squeeze happens when a heavily shorted stock has a shape increase in buying volume causing short sellers to close out their positions, which drives the prices higher from the covers. As you have read in a previous article about NYSE Squeezes, NASDAQ is home to many short squeezes as well. 

The most famously known NASDAQ short squeeze is GameStop (GME) in 2021. GameStock is a brick and mortar gaming merchandise retailer that had declining sales, which caused investors to heavily short the stock. GameStop had more shares sold short than the total number of shares available for trading (a situation known as a “short interest”). 

A group of retail investors on the Reddit forum r/WallStreetBets noticed that GameStop was heavily shorted and began buying the stock which started driving up the stock price. As the aggressive buying started to surge, this put pressure on the short sellers to cover their positions (buying back at higher prices to limit the losses). 

The unprecedented surge in GameStop’s stock price caused extreme volatility and attracted widespread media attention. The GameStop short squeeze had significant repercussions in the financial markets, leading to losses for some hedge funds that had heavily shorted the stock and prompting scrutiny from regulators and lawmakers. It also sparked a broader interest in retail trading and the democratization of investing. 

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float refers to the proportion of shares held short divided by the total float, where the float represents freely tradable shares. A short percentage exceeding 10% to 20% is typically regarded as high and may indicate potential short squeeze opportunities.

The Short Ratio, also known as Days to Cover or Short Interest Ratio, is a crucial metric in identifying potential short squeeze opportunities. It represents the number of days it would take for short sellers to buy back their positions based on the average daily trading volume of shares. This ratio is significant because it indicates the level of difficulty short sellers face when attempting to cover their positions without significantly impacting the stock price. However, for short sellers, a higher number of days to cover implies a greater and more prolonged squeeze, increasing their potential losses.

Short Percentage Increase refers to the percentage growth in the number of short sellers compared to the preceding month.

The following are some heavily shorted NASDAQ stocks that may be worth considering for a short squeeze.

CompanyCompany SymbolShort InterestShort % ChangeShort Interest Ratio
Novavax IncNVAX41.58%5%6.4
Beyond Meat IncBYND37.86%1%7.8
Immunitybio IncIBRX36.07%7%11.4
Upstart Holdings IncUPST35.63%-11%2.6
Luminar Technologies IncLAZR35.28%13%11.6
Prime Medicine IncPRME34.06%-7%3.9
Blink Charging CoBLNK32.27%-1%2.3

The first stock on the list, Novavax Inc (NVAX) has over 41% of its float shorted, an increase of 5% over last month. The short interest ratio is 6.4, which means that it would take the short sellers over six days to cover their position, based on recent average volume. Take a look at the chart below, you can see increased volume in the past few days…

The second stock on the list, Beyond Meat Inc. (BYND) has over 37% of its float shorted, an increase of 1% over last month. The short interest ratio is 7.8, which means that it would take the short sellers over seven days to cover their position, based on recent average volume. As you can see here, it looks like BYND may have been squeezed.

The last stock on the list, Blink Charging Co. (BLNK) has over 32% of its float shorted, an decrease of 1% over last month. The short interest ratio is 2.3, which means that it would take the short sellers over two days to cover their positions, based on recent average volume. 

Although a stock may exhibit favorable ratios and attract significant short interest, it’s crucial to recognize that these factors alone do not guarantee an upward movement in its price, particularly in a bear market. Additionally, high levels of short interest in a stock could signal underlying issues or concerns that have prompted investors to bet against its performance.

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Disclosure: Author had no positions in any of the above at the time the article was written.

Stocks Going Ex Dividend in March 2024

The following is a short list of some of the many stocks going ex-dividend during the next month, which can be helpful for traders and investors interested in the stock trading technique known as “Buying Dividends” or “Dividend Capture.” This strategy involves purchasing stocks before the ex dividend date and selling them shortly after the ex-date at a similar price, while still being eligible to receive the dividend payment.

Although this technique generally proves effective in bull markets and flat or choppy markets, it is advisable to exercise caution and consider avoiding this strategy during bear markets. To qualify for the dividend, it is necessary to buy the stock before the ex-dividend date and refrain from selling it until on or after the ex-date.

However, it is important to note that the actual dividend may not be paid for several weeks, as the payment date can be delayed by up to two months after the ex-date.

For investors seeking a comprehensive list of stocks going ex-dividend in the near future, WallStreetNewsNetwork.com has compiled a downloadable list containing numerous dividend-paying companies. Here are a few examples showcasing the stock symbol, ex-dividend date, periodic dividend amount, and annual yield.

H&R Block, Inc. (HRB)3/4/20240.322.61%
The Kraft Heinz Company (KHC)3/7/20240.404.45%
UnitedHealth Group Incorporated (UNH)3/8/20241.881.43%
Coca-Cola Company (KO)3/14/20240.4853.20%
Mercer International Inc. (MERC)3/26/20240.0753.53%
Pacific Gas & Electric Co. (PCG)3/27/20240.010.12%
State Street Corporation (STT)3/28/20240.693.79%

To access the entire list of over 100 ex-dividend stocks, subscribers will receive an email in the next couple days with the full list. If you are not already a subscriber, you can sign up using the provided signup box below. Don’t miss out on this valuable information, and the best part is that it’s free!

Dividend Definitions

To better understand the dividend-related terms, let’s define them:

Declaration date: This refers to the day when a company announces its intention to distribute a dividend in the future.
Ex-dividend date: On this day, if you purchase the stock, you would not be eligible to receive the upcoming dividend. It is also the first day on which a shareholder can sell their shares and still receive the dividend.
Record date: This marks the day when you must be recorded on the company’s books as a shareholder to qualify for the dividend. Typically, the ex-dividend date is set two business days prior to the record date.
Payment date: This is the day on which the dividend payment is actually made to the eligible shareholders. It’s important to note that the payment date can be as long as two months after the ex-date.

Before implementing the “Buying Dividends” technique, it is crucial to reconfirm the ex-dividend date with the respective company to ensure accuracy and avoid any unexpected changes.

In conclusion, being aware of the stocks going ex-dividend can be advantageous for traders and investors employing the “Buying Dividends” strategy. WallStreetNewsNetwork.com provides a convenient resource to access a comprehensive list of such stocks, allowing individuals to plan their investment decisions effectively. Remember to stay informed and consider market conditions before employing any investment strategy.

Disclosure: Author did not own any of the above at the time the article was written.

Top Japan Stocks: The Only Country’s Market that Beat the U.S.

by Fred Fuld III

According to a recent article in Barron’s, there was only one stock market that beat the United States S&P 500, and that was Tokyo’s Nikkei 225.

Although Japan does have some investment risk issues, there are still reasons why investors might consider investing in Japanese companies.

  • Undervalued Market: Japanese stocks are often considered undervalued relative to other developed markets. Metrics like price-to-earnings ratios and price-to-book ratios can support this viewpoint, especially compared to the US market. This means you may be getting quality companies at a more attractive price.
  • Improving Corporate Governance: Japan has pushed for better corporate governance in recent years. This includes a focus on shareholder returns, transparency, and improved decision-making, making companies more attractive to investors.
  • Abenomics Legacy: Economic policies initiated under former Prime Minister Shinzo Abe, known as “Abenomics”, have helped stimulate growth and combat deflation. While the full results are debated, some of the positive effects remain.
  • Weak Yen: A weaker yen benefits Japanese exporters by making their products more competitive internationally. This translates to potentially higher earnings.
  • Global Exposure with Stability: Many top Japanese companies are global leaders in their industries. Investing in these companies gives you exposure to worldwide markets while having the backing of Japan’s stable political and economic environment.

Japan has many companies that trade on the NYSE in the form of ADRs (American Depository Receipts).

Honda Motor (HMC) is Japan’s second largest automobile manufacturers by market capitalization, which stands at $57 billion.

The company is widely known for its diverse range of products including automobiles, motorcycles, power equipment, and even private jets. They are the world’s largest motorcycle manufacturer and are a leader in engine technology, striving for sustainability and safety initiatives in all their endeavors.

The stock has a trailing price to earnings ratio of 8.8, a forward P/E of 8.2, and pays a dividend yield of 3.4%.

The stock is trading at a 33% discount to book value, has an excellent 0.66 price to earnings growth ratio, and an outstanding price to sales ratio of 0.41.

Earnings per share grew by over 38% for the year.

ORIX Corp. (IX) is a company name that you may not be familiar with. The company  offers leasing and loans to small and medium-sized businesses.

It is a major diversified financial services group based in Japan, providing a broad spectrum of financial solutions, including leasing, lending, rentals, life insurance, real estate, and investment banking. With a global presence, ORIX operates across North America, Asia, the Middle East, and Northern Africa.

The stock has a market cap of 24 billion, trades at 12.3 time trailing earnings and 9.1 times forward earnings.

It sells at 8% below book, has an average P/S ratio of 1.24, and a decent PEG of 0.93. The dividend yield is 3.03%.

Of course, there is Sony Group Corp. (SONY), probably the most recognized brand in Japan. This Japanese multinational conglomerate is a powerhouse in electronics, entertainment, and financial services. They are known for iconic consumer products like the Walkman and PlayStation, but their reach extends far beyond. Sony boasts a diverse portfolio that includes film and music production, financial services, and cutting-edge technological ventures like AI and robotics. This global leader constantly strives to deliver innovative experiences and push boundaries, making it a household name synonymous with quality and progress.

The company has a market cap of $105.5 billion, a trailing P/E of 16.6, and a forward P/E of 15.3.

The stock’s ratios are a bit high with a PEG at 2.81, P/S of 1.18, and price to book value of 2.04. The yield is small at 0.64%.

Maybe the land of the rising sun can make your portfolio rise.

Disclosure: Author didn’t own any of the above at the time the article was written.

The Stock That Went From $24,480,000,000 a Share to $7 a Share

by Fred Fuld III

Yes, you read that right. There was a stock that traded at $24,480,000,000 per share on a split adjusted basis back on October 3, 2011. That’s $24.48 billion!!!

Today, the stock is trading at $7.25 per share.

The company has had numerous reverse splits, which account for its very high historical price.

Not too bad a trade if you were short it.

Actually it is technically an exchange traded fund, more commonly called an ETF.

This ETF is the ProShares Ultra VIX Short-Term Futures ETF (UVXY), has a goal of producing one and one-half times (1.5x) the daily performance of the S&P 500 VIX Short-Term Futures Index.

The problem with investing in these kinds of ETFs are the risks that are involved, which can affect the price adversely if held for long periods of time. These risks include:

High Volatility: UVXY aims to deliver 1.5 times the daily performance of the S&P 500 VIX Short-Term Futures Index, which tracks the implied volatility of the S&P 500. Volatility is inherently unpredictable, and even small movements in the VIX can lead to large swings in UVXY’s price. This means you could lose a significant portion of your investment very quickly.

Leverage: UVXY uses leverage to achieve its 1.5x target. This means it uses borrowed money to amplify returns, which magnifies both gains and losses. While leverage can lead to larger profits in rising markets, it can also lead to much steeper losses in declining markets.

Decay over Time: Unlike traditional assets that tend to appreciate over time, VIX futures tend to revert to their long-term average. This means holding UVXY for extended periods, even in volatile markets, could lead to significant losses due to this “backwardation” effect.

Rolling Costs: VIX futures contracts expire monthly, and UVXY needs to continuously roll these contracts into new ones. This rolling process incurs costs, which can eat into returns over time, especially during periods of low volatility.

Liquidity: While UVXY is an exchange-traded fund, its underlying futures contracts may have lower liquidity than stocks. This could make it difficult to enter or exit positions quickly, especially during volatile periods.

Expenses: UVXY has an expense ratio of 0.95%, which means it charges 0.95% of your assets annually for management fees. These fees can further erode your returns, especially over longer holding periods.

Not a Hedge: While some investors use UVXY as a hedge against market downturns, it’s crucial to understand that it’s not a perfect hedge. Its performance can be uncorrelated to market movements, and it may not effectively protect your portfolio during all market conditions.

These are extremely speculative ETFs which are appropriate for experienced traders only.

Thanks to Slope Of Hope for giving me the heads up about this.

Disclosure: Author’s no position in the above ETF.

The Worst Mistake You Can Make as an Investor

by Fred Fuld III

Do you know what the biggest mistake you can make as an investor? Selling too soon. Just because you have a great profit on a stock, doesn’t mean you should sell it, assuming you are a long term investor and not a trader.

I have many examples of selling too soon. Here are just a few.

When I was in the financial services industry many years ago, I was selling a lot of the Franklin Municipal Bond Funds and Franklin GNMA Funds to my clients.

I went to visit the Franklin Mutual Funds headquarters (the company was in its old building at the time, and is now called Franklin Templeton) to do some due diligence, and meet with the broker liaison at the company.

When I was given a tour of the place, I noticed that walls were being knocked down, four employees were sharing a small office designed for one person, and cables were literally being run down the hallways by installers right in front of me.

My first thought was “Wow, this company is growing like crazy. I should check and see if Franklin Resources (BEN) is publicly traded.” It was, on the Pink Sheets. (This was way before it was traded on the New York Stock Exchange.) I bought a couple hundred shares at about $7 per share, and it shortly rose to $8.

Also, at that time, I just bought a rental property. I thought at the time that I should probably sell the Franklin stock in case I needed the funds to do upgrades on the property, plus I had just made a 14% profit in a short period of time. I actually didn’t need the funds for the down payment since I bought the property for nothing down (that’s another story I will write about eventually).

Since then, the stock has had ten stock splits. If I had just kept the stock and forgot about it, my $1400 original investment would now be worth around $542,000.

I have another example. I had 100 shares of Boston Beer Company (SAM) that I held in the form of multiple certificates on one share each (another story). I had paid about $30 a share for the stock back in 2009.

The next year, it rose to $90 a share. I thought that tripling my money in such a short period was a pretty good return, actually a fantastic return, so I thought, why not take all these certificates in to my broker and liquidate them.

While I was in the brokerage firm and one of the representatives was preparing a receipt for me including making copies of every certificate, another representative came over and said “What the hell is with all these certificates?”

When he was making these rude comments, I seriously considered picking up my certificates, and leaving, but I didn’t, unfortunately. I wanted to take my profit. The stocks eventually traded over $1000 a share back in 2020 and 2021. The stock is now trading over $350 a share, still more than ten times my cost.

I could tell you one more story about Apple (AAPL) stock, but it would make you sick. It makes me sick even to think about it.

The point that I’m making is that the dollar amount of profit and the percentage amount of profit you have in a stock is irrelevant. If you believe in the company, there is no reason to sell it, unless you are very desperate for money. And if you are that desperate, see if you can get by with selling half.

Obviously, there’s a chance of holding on to losers, and not getting out soon enough. Maybe you lose $5,000 or $10,000 on a stock that goes to zero. But it’s the big long term winners that pay for all those losses, and still provide huge returns.

The best way to tell if you should sell a stock is to imagine that you didn’t own the stock but you have the money to buy it. Would you buy it now? If the answer is yes, hold on to the stock. If the answer is no, then maybe it is time to sell.

Disclosure: Author owns AAPL and SAM.

4 Stocks Paying Over 5% Selling Below Book Value

by Fred Fuld III

Yes, it’s possible to get a yield of over 5% from a money market fund, but maybe you want a high yield but you also want some capital appreciation potential.

Of course, if you are concerned about your principal, then you should probably stick with the money fund.

But if you want growth, there are four stocks worth looking at that yield in excess of 5%, are selling below book value, and have a market cap over $2 billion.

Book value, in simple terms, reflects what a company’s assets would be worth if it sold everything and paid off its debts today. It is similar to the net worth on a personal balance sheet, but for a business. It’s calculated by subtracting liabilities from total assets. While it offers a snapshot of financial health, it doesn’t capture intangible assets like brand value or future growth potential, which can often influence market value.

Kohl’s Corp. (KSS), the operator of family-oriented department stores, has a market cap of $3 billion.

The trailing yield is 7.42% and the estimated forward yield is 8.03%.

Kohl’s is an omnichannel retailer, operating over 1,100 physical stores and a robust online presence. They mainly focus on apparel, footwear, and home goods for families, offering both national brands and their own exclusive lines. Kohl’s is known for its frequent discounts and rewards programs, aiming to provide an affordable and convenient shopping experience.

The stock is trading at 80% of book value, and has a very favorable price to sales ratio of 0.17. (Remember, a P/S ratio of below 1 is great, and above 2 is not so good.)

The forward price to earnings ratio is 10.2.

Newell Brands, Inc. (NWL) makes, markets, and sells of consumer and commercial products. This $2.84 billion company has a 6.42 % trailing yield and a 5.27% forward yield. The drop is due to a large reduction in the dividend payout back in May of 2023.

Newell Brands is a leading consumer goods company that owns and operates a portfolio of iconic brands you likely recognize. Think everyday items like:

Writing instruments: Sharpie®, Paper Mate®, Parker®, etc.
Storage and organization: Rubbermaid®, Contigo®, Sistema®, etc.
Appliances and cookware: Oster®, Mr. Coffee®, Calphalon®, etc.
Outdoor gear: Coleman®, Campingaz®, Marmot®, etc.
Baby and parenting products: Graco®, NUK®, Baby Jogger®, etc.
Art supplies: Elmer’s®, Prismacolor®, EXPO®, etc.
Fragrances: Yankee Candle®, WoodWick®, Chesapeake Bay Candle®, etc.

They sell these products through various channels, including retail stores, distributors, and their own online platforms.

The stock sells at 91% of book value and has a favorable P/S ratio of 0.35. The forward P/E is 8.01.

Walgreens Boots Alliance, Inc. (WBA), the provider of healthcare and retail pharmacy services, has a market cap of over $19 billion.

After a dividend drop, the stock still has a forward dividend yield of 6.83%.

Walgreens Boots Alliance is a global leader in retail pharmacy and healthcare, serving millions daily with a 170-year heritage. Their business operates across two main segments:

  1. Retail Pharmacies:

Over 12,500 locations in the US, Europe, and Latin America under brands like Walgreens, Boots, Duane Reade, and Benavides.
Dispensing medications and offering a wide range of health services like vaccinations, immunizations, and health screenings.
Selling health and beauty products alongside other convenience items.

  1. Pharmaceutical Wholesale:

Alliance Healthcare distributes pharmaceuticals and medical supplies to hospitals, pharmacies, and other healthcare providers globally.

Key Points:

* Large footprint: Over 330,000 employees and presence in eight countries.
* Integrated healthcare: Combines pharmacy, retail, and wholesale operations for a comprehensive offering.
* Focus on convenience and innovation: Provides digital platforms and healthcare solutions for patients and consumers.

The stock sells at 98% of book value and has a superior price to sales ratio of 0.13.

The stock trades at 33 times trailing earnings and 6.3 times forward earnings.

Xerox Holdings Corp. (XRX) is a workplace technology company, which builds and integrates software and hardware for enterprises.

The company has a market cap of $2.27 billion and pays a yield of 5.41%.

While Xerox may first come to mind as a photocopier company, their business has actually evolved significantly in recent years. Here’s a short description:

Focus: Xerox is now a workplace technology company, offering both hardware and software solutions for document management and workflow automation.

Key Services:

Workplace Printing Solutions: Still relevant, offering printers, copiers, and related supplies for both office and production printing.
Digital Services: This has become a major focus, providing document workflow automation, digital document processing, personalized communications, and managed IT solutions.
Security Services: Emphasizing information security with services like managed security and robotic process automation.
Target Market: Businesses of all sizes, from small and medium-sized enterprises to large corporations.

Key Differentiators:

Legacy of innovation: A history of research and development, contributing to advancements like the graphical user interface.
Global reach: Serving customers in over 160 countries.
Client-centric approach: Tailoring solutions to individual needs and challenges.

The company is selling at 90% of book value and trades at a forward P/E of 7.6. The price sales ratio is an excellent 0.33.

Summary

A stock with a lot of great ratios can turn into excellent investments. However, when stocks sell far below the book value, it may be a bargain or it may be a harbinger of negative things to come, such as lower earnings or worse losses.

Disclosure: Author didn’t own any of the above at the time the article was written.

Cheap Stocks: Stocks Selling Below Cash per Share with No Debt

by Fred Fuld III

If you are looking for a stock that has limited downside, it is hard to beat a stock that is trading at a price below the amount of cash it has per share, and on top of that, has little or no debt. 

If a debt free company is selling below its cash per share, and if the company were to go out of business today, assuming all the company’s assets are completely worthless except for the cash, then an investor would have a guaranteed profit.

This biggest problem with these below-cash stocks is that sometimes corporate spending can deplete cash very quickly.

There are actually a few companies that all into this category, in spite of the fact that the stock market is trading near an all time high.

LendingClub Corp. (LC), which provides an online marketplace that facilitates loans to borrowers and investments, is trading at a 27$ discount to cash per share.

LendingClub is a financial services company headquartered in San Francisco, California. It was founded in 2007 and is the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC) and to offer loan trading on a secondary market.

Today, LendingClub is more than just a peer-to-peer lender. It is a full-spectrum fintech marketplace bank that offers a variety of financial products and services to its members, including:

  • Personal loans: LendingClub offers personal loans for a variety of purposes, such as debt consolidation, home improvement, and medical expenses.
  • Savings accounts: LendingClub offers high-yield savings accounts with competitive interest rates.
  • Certificates of deposit (CDs): LendingClub offers CDs with a variety of terms and interest rates.
  • Checking accounts: LendingClub offers checking accounts with features such as mobile banking and bill pay.
  • Business loans: LendingClub offers small business loans for a variety of purposes, such as working capital, expansion, and equipment financing.
  • Auto refinance loans: LendingClub offers auto refinance loans to help borrowers lower their interest rates and monthly payments.
  • Patient solutions: LendingClub offers patient solutions to help borrowers with medical bills.
  • K-12 education loans: LendingClub offers K-12 education loans to help parents finance their children’s education.

As of December 31, 2023, the company had over 4.7 million members and had originated over $80 billion in loans.

The stock is selling at a 24% discount to its book value, and has an excellent price to sales ratio of 0.75.

This $946 million market cap company has a trailing price to earnings ratio of 24 and a forward P/E of 10. Earnings per share growth next year is anticipated to be 270.66%.

American Well Corp. (AMWL), which provides online healthcare services, is trading at an amazing 24% discount to its cash per share, and the amount of long term debt being very low. The market capitalization is $316 million.

American Well Corp., operating as Amwell, is a leading company in the telemedicine field, headquartered in Boston, Massachusetts. They connect patients with doctors through secure video consultations, offering a convenient and flexible alternative to traditional in-person visits. Amwell primarily operates through two arms:

  1. Platform solutions: They provide a subscription-based platform to healthcare providers, enabling them to offer telehealth services to their patients. This includes features like scheduling, video conferencing, and electronic health record integration.
  2. Direct-to-consumer services: Through their Amwell Medical Group, patients can connect with licensed doctors directly for various non-emergency concerns,receiving diagnoses, prescriptions, and referrals if needed.

Amwell boasts a vast network, partnering with 55 health plans, 240 health systems, and over 40,000 providers, reaching millions of patients across the US. They also offer specialty consultations, chronic condition management programs, and are continuously expanding their services in this ever-evolving healthcare landscape.

The company has $538 million in cash, yet only $11.8 million in long term debt.

The stock has a reasonable price to sales ratio of 1.18 and an excellent price to book value of 0.63. Unfortunately, the company has been generating negative earnings.

NET Power, Inc. (NPWR), a $596 million market cap company, is a provider of clean energy technology.

Net Power Inc. is a clean energy technology company aiming to revolutionize power generation with their “energy trifecta”: clean, reliable, and low-cost energy. Founded in 2010 and headquartered in Durham, North Carolina, they focus on natural gas as a fuel source while capturing and sequestering the resulting CO2 emissions.

Their key innovation lies in the NET Power Cycle, an oxy-combustion process that combusts natural gas with pure oxygen. This unique method captures over 97% of carbon dioxide at the source, significantly reducing greenhouse gas emissions compared to traditional methods. Additionally, the captured CO2 can be used for industrial purposes or safely stored underground, further minimizing environmental impact.

The stock is trading at 92% of its cash per share and has no debt. Earnings have been negative.

Just Remember this About Below Cash Stocks

Often there are significant (negative) reasons why stocks sell below cash. In addition, these stocks are very low cap, so they should all be considered extremely speculative.

Disclosure: Author didn’t own any of the above at the time the article was written.