Santander

The pullback has exposed a few opportunities. One is Banco Santander which has some risk as it is in Europe, but most of its income comes from Latin America and UK in both areas it is doing well. It pays a good income of over 6% at the current cost of about $8. It is widely diversified globally and seems to be doing a good job of managing its interests. I think it could increase in value by 50% in 12 months and pay interest, not a bad combination and hard to find these days. It is being punished as part of Europe but this bank is not what it appears.

Buffet not alone over Tesco

Warren Buffet admitted he made a big mistake in taking a 5% stake in Tesco a couple of years ago. he's not the only one, I have my own grief in not recognizing that Phillip Clarke was losing his way. I should have seen it, a boy who loaded shelves now running one of the worlds biggest retailers, just  not right. The dividends blinded me to be honest, regular 5% every year like clockwork.

The collapse of Tesco made me decide to stop doing this blog. But after Warren Buffet's admission I feel a bit better, the Sage of Omaha blindsided makes my error look less stupid. I shop at Tesco and so do millions of others. The loss of £250m profit was on a profit for the year of £1.1bn so I think the market has over reacted, more looking at "what else is wrong" than the figures themselves.

Morrison to my surprise has responded in just the right way. Recognizing that Aldi and Lidl are a real threat and bringing them into its price match is a wonderful and clever move and I say so because Lidl and Aldi are not cheap but only careful in what they offer at low prices. Morrisons have obviously decided rather than let shoppers drift away to this unknown low price, lets meet it head on and show customer we are better. Bravo Morrisons.

My worry is that I am not that clear the new CEO at Tesco is up to it either. It should have been Tesco who came out with  this move. The other thing that worries me is that a newspaper report said the new CEO intends to send the 5000+ workers at HO back to the shops. What he should do is cut the 5000 down to 1500!

Visa drops Monitise and causes shares to go into freefall

Today Visa announced it will pull out of Monitise and take development of mobile in-house in a surprising move that comes only weeks after Apple announced a deal with Visa. monitise shares tanked by over 11% as I write due to the obvious conclusion that mobile money is going big time and Moni is being left out.

Monitise has issued several statements trying to calm fears but a lot of investors clearly don't believe this is good. My own take is that Monitise has spent literally years building safe reliable bank friendly applications that are increasingly being used by large banks world wide. I am not clear that Apple will displace them or if the Monitise systems will still be needed. Monitise needs to come out with a road map that shows their value chain in the new Apple world.

Monitise (MONI) poised for breakout due to Apple

Everyone is very excited that Apple has done a deal with Visa to create a iPhone wallet and pay directly. But they are missing a vital clue. Visa has partnered with, and partially owns Monitise, and through Monitise have linked many banks world wide into their systems for mobile use.

Who do the pundits think are going to provide the link between the iphone and the bank? Well I am pretty sure that's Monitise and if so then we are talking mega growth for this company. It is unlikely that Apple will write software for big banks mainframe systems. No they will do the wallet and provide a set of standard links for software companies to use and that's where Monitise comes in, they have the banking to mobile side not only working but working safely and securely and have proved it in many banks all over the world.

Tesco Disappoints

I have written positively about Tesco shares but I am afraid the CEO did not see the problem clearly, his background on the shop floor led him to spend a lot of money on refurbishment, when the problem was more fundamental,  and he gradually let the companies market position slide. Even Asda with the clothes line George have exceeded Tesco a sad state of affairs but show that Asda benefits from its owners long term vision.

The Board recognized this very late indeed and now are in a mess and have to bring in a rescuer Dave Lewis who did sterling work at Unilever but I am not clear why he seems to be a knight in shining armor and will reserve judgement. His background is solid in management but he has never been at the sharp end with customers.

The loss of the dividend payment shows the seriousness of the situation and the Board should be lambasted for letting things slip so long. I think they should have looked around at senior European supermarket executives as Carrefour did rather than going this way, but we will see.

One sees over time why Walmart is the premier company in this segment. Continual increases in dividends continual growth and a history of returning to shareholders.

MONI tise is now a buy again

Monitise is a company I have written a lot about. It plays in the bank to mobile software linkage not in the consumer market. Sales take time but once made stay forever. I originally bought MONi when it was about 40 cents and then sold it earlier this year at $1.30 at its peak, predicting (accurately) that they would soon issue more shares (to fund growth) and the price would drop again.

Now down to about 70c MONI looks a good buy again. They will soon make the transition to the main London Stock exchange and at that point Mutual funds will move in (many are restricted from buying OTC shares).

MONi is a company that has the total commitment of Visa and is truly global selling as much software in Asia and Africa as Europe and the USA. MONI will never be sexy because consumers will never know its there, driving every transaction. But this company will be a 10 bagger over the next few years.

Walgreens is an opportunity for a return of nearly 20%

Walgreens announced they would buy Boots and then disappointed investors by choosing to keep their HQ in the USA. The stock is down today over 15%. Investors got it wrong. First Boots is not like Walgreen who competes in a fierce market with the likes of CVS. Boots owns the UK completely, there is no competition at all. Second Boots has very well placed stores and is ripe for the kind of amalgam of sales that US Pharmacy does well, almost rivaling supermarkets.

So there is every reason to believe as the figures come in that Walgreen will at least go back to over $70 and on top of that is a very consistent 2% dividend payout in case you have to wait a year to see the result.

Tesco new initiative will be positive for growth and earnings

Shares in big supermarkets may not provide huge growth but they do provide spectacular dividends. Despite their ups and downs my shares in Tesco have netted me almost half their value in dividends over time making them one of my best share purchases ever. But Tesoc and other majore brands are being threatened by Aldi and Lidl and that has caused worry and of course worry means shares drop.

Today Tesco announced a new venture, house building and I am convinced that while this sounds odd it could lead to a big increase in shareholder value. Tesco owns a lot of land and the UK is desperate for housing. If they build following their brand concept of value for money then these houses will all sell immediately and make Tesco a huge windfall. According to the article 15-20,000 homes potential. This makes about £60m profit by my guesstimates.



Tesco is planning to build 4,000 new homes in the UK on land previously earmarked for new supermarkets.

Britain’s biggest retailer has dramatically scaled back its expansion plans in the UK and now plans to use some of its vast landbank to build homes.

Telegraph 19/7/2014

DRWI on track for huge growth

Dragonwave is a company I have watched for several years. They produce very high speed microwave back-haul equipment. As cellular use of data grows their equipment helps operators handle the demand for data. The company was a world leader and did a huge early installation with a major US carrier that took their shares up to $7+. But then disaster struck for a small company with one major client. The company they worked for got into financial problems and halted roll out. Over time the shares of DRWI fell to about $1. They still had the worlds best solution, but the 2008 crash caused a big halt to capex world wide and caused all their potential clients to halt roll out of upgrades even though demand continued to grow.

Roll forward to this year and the CEO announced that they are now getting sales, in fact now they cut back so much to keep on going, they are getting a lot of orders that are making a huge impact. Growth this last qtr of over 25% and projected growth of at least 25-40% from now on. They have a large sale in India, and potential in Africa, and now that Capex is not a dirty word back in the USA Sprint is sniffing around looking for solutions.

The shares went up over 20% overnight on the announcement, and then today have fallen back 7% probably due to a lot of shareholders like me selling their stock after waiting 5 years! But sellers are foolish. This is the time to buy like crazy because once the second quarter confirms that this growth is real (and it will) then the shares will be back to $5-10 from $2 today!



Revenue for the first quarter of fiscal year 2015 was $28.8 million , compared with $17.9 million in the fourth quarter of fiscal year 2014 and $24.5 million in the first quarter of the fiscal year 2014. Revenue from the Nokia channel (formerly called Nokia Solutions and Networks) represented 61% of revenue in the first quarter of this fiscal year, versus 68% in the fourth quarter of fiscal year 2014 and 57% in first quarter of fiscal year 2014.

Gross margin for the first quarter of fiscal year 2015 was 20.5%, compared with 14.5% in the fourth quarter of fiscal year 2014 and 11.5% in the first quarter of fiscal year 2014.

Net loss applicable to shareholders in the first quarter of fiscal year 2015 was $6.6 million or ( $0.11 ) per basic and diluted share. This compares to a net loss applicable to shareholders of $11.6 million or ( $0.20 ) per basic and diluted share in the fourth quarter of fiscal year 2014 and a net loss applicable to shareholders of $6.6 million or ( $0.17 ) per basic and diluted share in the first quarter of fiscal year 2014.

"We are pleased that the increased demand that we observed in Q1 2015 is continuing into our second quarter. Momentum is such that we anticipate revenue growth between 25% and 40% relative to Q1," said DragonWave President and CEO Peter Allen .

Solar City SCTY

I have not written for a while as there is not a lot of value out there. However I am impressed by Solar City who I think may be at the beginning of a long build. The quote below is from Musk blog and gives one some idea of the scale of his dreams. Now this is the man who intends that we all drive Tesla's one day and is looking like that may work! This is a long term 10 bagger I think.

Solar City at $60 will I think look very cheap in a few years. If there is a correction of course we may get an opportunity to invest at $40-50 but I think it will be a one time shot before this stock rockets up to the hundreds.

We are in discussions with the state of New York to build the initial manufacturing plant, continuing a relationship developed by the Silevo team. At a targeted capacity greater than 1 GW within the next two years, it will be one of the single largest solar panel production plants in the world. This will be followed in subsequent years by one or more significantly larger plants at an order of magnitude greater annual production capacity.

Given that there is excess supplier capacity today, this may seem counter-intuitive to some who follow the solar industry. What we are trying to address is not the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs, but how we see the future developing. Without decisive action to lay the groundwork today, the massive volume of affordable, high efficiency panels needed for unsubsidized solar power to outcompete fossil fuel grid power simply will not be there when it is needed.

SolarCity was founded to accelerate mass adoption of sustainable energy. The sun, that highly convenient and free fusion reactor in the sky, radiates more energy to the Earth in a few hours than the entire human population consumes from all sources in a year. This means that solar panels, paired with batteries to enable power at night, can produce several orders of magnitude more electricity than is consumed by the entirety of human civilization. A cogent assessment of sustainable energy potential from various sources is described well in this Sandia paper:www.sandia.gov/~jytsao/Solar%20FAQs.pdf.

Even if the solar industry were only to generate 40 percent of the world’s electricity with photovoltaics by 2040, that would mean installing more than 400 GW of solar capacity per year for the next 25 years. We absolutely believe that solar power can and will become the world’s predominant source of energy within our lifetimes, but there are obviously a lot of panels that have to be manufactured and installed in order for that to happen. The plans we are announcing today, while substantial compared to current industry, are small in that context.

Kapstone Paper and Packaging - the One that Got Away

About 12 months ago I was researching companies that delivered consistent positive earnings and dividends and tripped up on Kapstone (KS) which at the time was trading at around $13. I liked what I saw. I even write about it in a post dated January 17th story that mentions Kapstone

But not knowing their business well I failed to do due diligence and invest and forgot about them. I look back on that bad decision and see that timidness drove it and I was wrong. Not only is Kapstone now trading above $28 but it has continued to grow and deliver dividends over the year.

What a lost opportunity! Over 100% growth and dividends...

What Happened to Monitise?

Usually when Monitise dilutes the shares fall and in the previous article I hinted that this might be a good time to buy in. Unfortunately what appears to have happened is that Monitise has passed the worry stage of small companies (i.e. the acquisition may bring them down) and now acquisitions are seen less as diluting and more as market growth. The shares in fact have risen on the news to over 70p. I will still wait and see but unless they drop as part of some bigger picture 70p might be cheap.

Possible Opportunity to BUY Monitise

Monitise today announced it has bought the Turkish e-money company Pozitron

The entire issued share capital of Pozitron has been acquired via an all share deal. The initial consideration is to be satisfied by the issue of 35,925,589 new ordinary shares of 1p each in the Company ("Ordinary Shares"), valued at £24m, based on the closing share price of 66.5p on Friday 31 January, 2014,

Because they paid in an all share deal the price of shares may well drop again as they typically do due to the dilution. This may well proved a chance to top up on these shares which will at least double I think during the next 12-18 months.

Fund rises year on year 37%

I changed the way I calculate the fund to annually it was getting to much work monthly. Based on the end of January this year the fund has risen 37% since January 2013. In the same period the S&P rose 30% so a credible performance in a rising year.

During that time Dell went private so I will reallocate those and maybe alter the mix a bit once 2014 become clearer. I still favor Vodafone as its global reach and takeover potential remain high. Also not show in the funds performance is the very credible dividends from several of these stocks which amount to another 10% in real gain. Tesco will continue to deliver high dividends but maybe not the growth. Carrefour has shown its worth as the stock has regained a lot of ground under the new CEO whose strategy is clearly working. Monitise has doubled and I think will continue to grow, I am looking for a dip to buy more. Dragonwave has languished but has huge potential and I think I see signs of a turnaround. Quik has finally shown it can deliver and the stocks have risen 100% to reflect that. TSEM will eventually get to $10 it will just take time. The company is firing on all cylinders and doing well.

Like big tractors? Like Deere

Deere is a company that might be worth studying a bit and even buying shares. By all measure they seem undervalued or fair valued. They pay a good dividend and consistently and the shares have stayed at around $90 since 2011 despite the overall market showing much better returns. This is in a world where Monsanto has risen consistently year on year and while not exactly aligned they both play in similar markets. Surely if the value of fertilizer is rising then the vehicles used to spread it should too?

I was reading recently a series of articles by a man who has taken the value concepts and put them to work on companies today and Deere was one of the companies closest to Grahams ideas.

Of course in a falling market everyone will fall but this seems  a good place to invest a portion, you may not get stellar growth but you will get those satisfying dividends of 2.5% and people seem unlikely to stop buying tractors and Deere tops the market. When I drive around Scotland all I see is Deere.

Sell Facebook

I have never been an admirer of this service, like most of us I use it because its there. But I know that billions have been invested by large companies trying to use it to gain value. Yet a recent study by the EU show that the key audience these companies are trying to reach no longer use Facebook. Yes they have an account but only use it to talk to older relatives, all their real interactions is elsewehere.  In fact the study noted 16-18 year olds are a bit embarassed to admit they have such an account as its no longer cool at all!

Maybe its time to sell Facebook which was over valued at IPO price of $38 and now looks sickly.

The Global Social Media Impact Study, which was funded by the European Union, observed 16- to 18-year-olds in eight countries for 15 months and found that Facebook use was in freefall. Instead, young people are turning to simpler services like Twitter, Instagram, Snapchat and WhatsApp

Potash Corp (POT)

The shares in this global giant of agricultural materials have fallen dramatically from highs of $60 down to today's $30. This is because the global potash market has been in turmoil over a risk of flooding the market with product and driving down prices. I think that the risk may well be overplayed and that POT makes a good investment. A $27bn company paying 5% dividends in a filed that will experience growth cannot be long ignored, take a look at Monsanto at a 10 year high point based on similar markets. Yes Monsanto is at the top of its game but POT is oversold I'm sure.

TSEM surpasses my expectations

In March this year I wrote that the shares were a good buy at around $1 and they then went up to $2. Today they shares doubled before the open on news that TSEM has done a very exciting deal with Panasonic. They now trade at $7. So if you had bought on my advice at $1 you would now be sitting on a seven bagger in less than 1 year. The thing is that TSEM is good at what they do and Panasonic recognized that. The shares should be doubled again but I doubt they will. Still its nice to see a prediction fulfilled beyond ones expectations.

AVAV justifies my confidence

I have long promoted this company that makes drones and electric chargers. I still think that its a long term double. But for a while there it looked iffy as it traded around $20 and seemed unable to shift. So anyone who took my advice in September and bought at that price is grinning now as AVAV shot up suddenly and intriguingly on a bad qtr to nearly $30 and continues to rise. I have egg on my face as I sold at $26 thinking that was the top!

Kraft KRFT looks like an opportunity

Everyone loves the brands but its an odd company that was only spun off 18 months ago so no one really knows if they are good or over priced. Well I think that Kraft is an investment for this time. It trades about $52 and pays 4% dividends as well as just having announced a staggering $3bn share buyback program. Looking at the team they seem focused on making their brands the worlds best in each category and eliminating second and third runners and I think for this company that makes sense. McD would hardly focus on their soft drinks for example they know what their brand is.

I think that this is a good play, its defensive and it pays good dividends and the stock is likely to rise slowly despite the market as people buy Kraft whether its a recession or not. No stock is recession proof as we saw in 2008/9 but during that time these family brands made good way.