Hardinge, Inc. not getting it’s act together
Back in February I added Hardinge, Inc. (HDNG: 14.32 0.00 0.00%) to this site’s stock tracking as a turnaround candidate. In the 3rd quarter of 2007, the stock price was hammered by 50% when the company showed a zero earnings quarter. Previously, the company had been a steady generator of growth and profits. My thought was when the company was able to start generating profits at historical levels, the stock price would make a nice recovery.
In February, the 4th quarter earnings came in with a small net loss (-1¢), with the company claiming a decrease in net margins due to the unloading of some old inventory. Now, today, 1st quarter results are out with another quarterly loss! They reported a loss of 6¢ per share for the quarter on decreased sales and gross margin. Hardinge management blames a significant portion of their woes on currency exchange issues with their customers in Europe and Asia.
At this point in time, I see a company with 3 quarters in a row of negative earnings results. It appears management does not yet have a handle on how to return the company to its former profitability. For this reason I am removing HDNG from this site’s Special Situations Stock Portfolio. The share price after the news today is down a few bucks from where I added the stock to the portfolio. For me, there are better more interesting opportunities for stock investing at this time.
Note: I currently do not have a position in HDNG.
Filed Under ValueIncome Portfolio Additions
I have been looking for a couple of securities to round out my Income Portfolio. Currently the portfolio consists of only 7 stocks: 3 energy LPs (or Canadian royalty trust), 2 oil tanker stocks, a REIT and a bank. To give some balance and hopefully a little stability to the portfolio I am now adding a CEF and an ETF. Both pay monthly distribution, always a nice factor, and give some opportunity for future capital appreciation.
First up is the ETF: PowerShares Preferred Financial Portfolio (PGF: 21.23 0.00 0.00%). This fund tracks an index of preferred shares of financial institutions. PGF is about 40% each in the preferred stock of insurance and banking. The balance of about 20% is diversified financial services. The current distribution yield is right at 7%. Financial companies have had a terrible last year (self inflicted!) but many good companies have been driven downward at the same time. I think PGF is a good place to invest for income and the possibility of price appreciation if/when the financial sector recovers.
The closed end fund (CEF) that has caught my attention is the Alpine Global Dynamic Dividend Fund (AGD: 18.85 0.00 0.00%). This fund employs several strategies to maximize tax advantaged dividend income. Here is an outline of their stated strategies (paraphrased):
- High dividend value stocks: High yielding companies that management feel are undervalued. Global approach to find opportunities.
- Dividend “capture” strategy: Rotation in and out of high yield stocks to capture extra dividends paid in different months and special one-time payouts.
- Growth potential: Attractive yielding companies with potential for earnings and dividend payout growth. Again, a global approach to selection.
Some positives for the fund are that they do not use leverage or sell covered calls to enhance the yield. All payouts have been earned income, not returns of capital. Also, AGD definitely has a global approach; only 22% of assets were U.S. based companies. Current yield for AGD is 10.2%. If someone is planning on investing with a tax advantaged account, they may want to look at the similar, Alpine Total Dynamic Dividend Fund (AOD: 17.0801 0.00 0.00%), which cares not about finding tax advantaged dividends and yields and attractive 12.4%.
I do have a couple of concerns about the fund. First, it currently trades at a 13% premium to NAV. Historically, the fund has traded at a premium, but this is at the high end of the range. The other concern is the NAV errosion: Is it due to market conditions or the result of faulty trading activity in the dividend capture strategy? Adding AGD to this site’s Income Portfolio give me the opportunity to watch for buying opportunities if the price/NAV premium narrows.
Note: I currently do not have a position in PGF, AOD or AGD.
Filed Under Income, InternationalNew Energy Finance - NEX - Weekly Review
Each week I post how the New Energy Finance Index, NEX, faired for the previous week. The NEX is a global index of renewable energy companies. The NEX is tracked by the ETF: PowerShares Global Clean Energy Fund (PBD: 0.00 N/A N/A). If you want to see former weekly reviews, look on my articles page under renewable energy.
Last week the NEX diverged from the broader U.S. markets. NEX had a negative 1.8% return, while the S&P 500 was up 0.8% and the NASDAQ gained 1.6%.
The leading sector for the week was power storage, up 3.5%. The “top” losing sector was solar energy, off 3.9%. On my interest radar, biofuels and biomass gained 1.1% with ethanol producer, Aventine (AVR: 4.38 0.00 0.00%) gaining 13.3%.
Here are the top and bottom stocks from the index for the week:
NEX top gainers since 29/04/08
Xingjiang Goldwind Science & Technology 2202 + 18.1%
Aventine Renewable Energy Holdings AVR + 13.3%
LDk Solar LDK + 10.7%
Umicore UMI + 10.2%
Saft Groupe SAFT + 8.9%
NEX top losers since 29/04/08
Echelon ELON - 18.6%
Zoltek ZOLT - 11.9%
Yingli Green Energy Holding YGE - 10.3%
JA Solar Holdings JASO - 8.9%
VeraSun Energy VSE - 8.3%
Note: I do not have a position in any security mentioned here.
Filed Under Renewable EnergyHave energy prices peaked?
Could oil mania be coming to an end? | Anatole Kaletsky - Times Online
Today, with oil reaching new highs, is probably not the best day to link the article from the U.K. Times Online. However, it is interesting and thought provoking so I will reprint a few exerpts and you can read the rest if interested.
Concerning a U.S. recession:
While the slowdown in Britain and Europe has only just started, the US economy now seems likely to avoid an outright recession as Washington’s huge tax cuts, interest rate reductions and bank and mortgage bailouts appear in the nick of time over the economic horizon,
What could prevent economic recovery:
there is now only one key uncertainty marring the signs of improvement: the huge increase in energy, food and other commodity prices since the start of this year. This now poses a far greater danger to the world economy and financial system than the correction in US and British housing markets and the related credit losses suffered by leading banks.
Three reasons commodity inflation is worse than housing deflation:
First, rising prices of food and energy hit poor people hardest and therefore provoke turmoil among groups that would otherwise be politically apathetic
Secondly, inflation is inherently harder for governments and central banks to deal with than deflation
Thirdly, the countries most exposed to the risks of commodity inflation - China, India and other large consumers of energy and food - are precisely the ones that the world economy now depends on for most of its growth.
However, the author puts forth the opinion that the commodity inflation is primarily panic and speculation driven and not by a supply and demand imbalance. He gives several arguments to back up his position and I will include one:
The Chinese and Indians are not eating any more rice today than they were three months ago. The doubling of rice prices cannot therefore be explained by a sudden shift in supply and demand. And the same is true of oil, since the global growth of oil output in the past two years has been substantially faster than the growth of consumption.
The article closes with this note:
This week Brian Marber, one of London’s most experienced technical analysts and one who has been consistently forecasting higher oil prices, told his clients that the trend was probably reversing. Let us hope he is right.
Read the article and see if you get the same take from it that I do. Four years ago we were in the middle of a housing price boom and look where we are today. The same four years ago gold was under $400 an ounce and oil was under $40. Is this another bubble that will burst in the near future?
Filed Under Commodities, FearNordic American Tanker nice dividend boost
Nordic American Tanker (NAT: 36.64 0.00 0.00%) is out with their first quarter results and the boosted the dividend 136% from Q3 and Q4 of 2007. Nordic American runs a fleet of 12 Suezmax tankers all in the spot market. The first quarter results are good news and the company indicated the 2nd quarter of 2008 is off to a great start.
The revenues for NAT are entirely derived from spot market rentals of their oil tankers. The company has a policy to pay out all of a quarter’s free cash flow as dividends. Dividends fluctuate tremendously as do spot market rates for their ships. Nordic American believes the spot market will give the best returns on their tankers over time. Investors have to live with the fluctuating dividends, although the stock has historically yielded over 10%. Here are couple of notes from the press release:
- The declared dividend for the first quarter will be $1.18. This is compared to 50¢ for the previous two quarters.
- The company has now paid a dividend for 43 consecutive quarters.
- Average charter rate for the first quarter was $46,600 /day/tanker. This compares to $27,000 in Q4, 2007.
- Average charter rate for the 2nd quarter, 2008 is exceeding the first quarter.
- Of the 360 worldwide Suezmax tankers, 46 are single hulled and will be out of service by 2010. New building has slowed, reducing the chances of a tanker over supply in the next few years.
- NAT has 2 new tankers on order to be delivered in 2009 and 2010.
I like NAT in the tanker space for it’s strong dividend policy, which is related to their low cost structure. NAT’s daily expenses per tanker are less than half those of larger fleets like Frontline (FRO: 58.86 0.00 0.00%). This allows the company to keep paying a dividend when spot rates are low, and really boost the payout when charter rates are good. NAT is a component of my Income Portfolio.
Note: I have a long position in NAT
Filed Under Income, UncategorizedPortfolio name change
I keep thinking and this blog keeps evolving, I hope for the better! Last fall, when I decided to start tracking a portfolio of stocks I was interested in, I set up a 20 Stock Portfolio of companies I believed would be good investment prospects. After about 7 months of building up and tracking the 20 Stock Portfolio, I felt my interests were naturally divided into two areas, and thus I split my portfolio into two: an Income Portfolio and a Growth Portfolio. I started tracking the separate portfolios for the 2nd quarter of 2007.
I have come to think the Growth Portfolio was severely misnamed. Although there are some pure growth stocks in the portfolio, it is far from a 100% strict “growth” orientation. In my research I am trying to find stocks that I believe have a good chance to double or better over the next few years. Also, I have some particular interests such as South American stocks and markets. This means the stocks in the portfolio could fit in a wide range of categories: growth, value, turn around, international, cyclical. I have my own criteria and methods to evaluate whether I think a company and it’s stock are a good investment, and I do not stock to any particluar discipline.
One general criteria I have is market cap. For U.S. companies (and most foreign) I try to stick to those in the $2 billion or less market cap range. I believe an individual investor and researcher like myself can find an edge in smaller companies vs. the well researched and over-analyzed large cap companies.
The result of all of this deep thinking is a decision to change the name of my Growth Portfolio to Special Situations Portfolio. For now the portfolio itself is the same and the old links to the Growth Portfolio still work. As of now, the stocks are still tracked on a equal dollar, quarterly basis with no buying and selling. Hopefully, more advanced portfolio tracking is the next step for my evolution here.
Filed Under Emerging Market, Growth, ValueSubscriptions
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