Articles of the Week: Baldor Bounces

I still like this company and it's latest earnings may help get my portfolio back on track. It may be a little late to get in at this point but this stock tends to fall until the quarterlies are reported, so you may want to keep an eye on it. If you need a little refresher on the company, here are the plus/minuses:

Plus:

• High effeciency, US made motor. The brand that everyone starts with when purchasing new motors.
• Consistant purchased product no matter what the economy.
• Metal prices have dropped while motor prices have stayed consistant.
• Future looks bright as they already make the highest efficiency electric motors and have recieved help with the US gov't to make the next iteration of the product.
• Begun some China production to support that market. (US production supports the US and Europe).
• Has consistantly beaten market expectations for at least 2 years.
• I absolutely think this stock will take off when either the economy turns around and/or real funding is released for green/smart energy occurs.

Minus:

• Carry quite a load of debt but doing extremely well at paying it down. This is the biggest risk of the company.
• Sales have fallen, but not as drastic as most industries.

The Articles:

Baldor Electric Company Announces First Quarter 2009 Results

UPDATE 1-Baldor Q1 profit tops Street; warns of difficult Q2

Funny Feeling...

Okay is anyone else getting a funny feeling about the markets right now. My investments have grown and now stablized for around a week now and it has interest me greatly. Mostly due to the fact that I am extremely sceptic about the market.

It is summer right now, and if consumers are going to buy anything, now is the time. Why do I say that? Traditionally most manufacturing occurs from the March to October time periods due to consumer spending increases. Stuff like lawn mowers, plant seed, bicycles, 2x4's, etc all start selling when the weather gets nice. So even in this bad economy, stuff will sell when the sun comes out. Money starts getting recorded and quarterly reports are reported, investors get jumpy and want back in. Which prices were so low, it wasn't a bad decision to make. A decision that I wish I had an option for.

Here is the thing. Manufacturing is still in the toilet. Every major production facility that I have contacts with are still running on fumes, bairly making anything. Which makes you wonder, why are stock prices going up? I understand a stabilizing in the market and am happy to see it, I just don't know if I believe that the market is truely stable.

My one buying idea is VIG, also known as Vanguard Dividend Acheiver's ETF. Essentially it is an ETF that covers constant dividend acheiving stocks. What is important to note is that it holds barely any banks and is mostly made of good companies that happen to pay a healthy dividend (don't believe me check for yourself here). It is also a Vanguard product so there is little in the way of fees and could potentially be a long term consistant dividend return product (currently ~3%) that could also grow in value over the long term. I am watching this ETF closely as I am looking to switch investing companies so that I can go with a service that does free automatic dividend reinvestment. I haven't decided a price point but will you all know when I do think it is a buy.

Financial Lockdown

Last week I posted about being on "Financial Lockdown" under strict orders of my GF. Now I didn't do anything overly bad and I am not in dire straits that forced this to occur, it is just that I am currently unemployed and any real slip up in the matter of money could prove disastrous down the road if I stayed unemployed. I look at it this way, every $1 I save is a $1 longer I can stay in this house. There are cool blogs out there that are all about proudly saving until it hurts and I have enjoyed them greatly but have never buckled down and done what I could do to save 'til it hurts.

So in reality I am not a big spender, my bills are pretty low, my mortgage is decently priced (although I am trying to get it lower), and I don't really buy much, so what made my GF force me into the lockdown? The answer is eating out. No, not the $10 meals at sit down dinners, but my occasional $6-$7 meals that are a quick pizza or sub that seem to sneak into my diet now and again. In January, while still employed, my eating out roughly equated to 7-8% of my "brought home" income (not gross). That is actually pretty low for me, usually I would eat lunch out 2 to 3 times a week and I would say that it would more typically affect my budget by 10%. 10% isn't bad right? Well wrong, really that is 10% going to only me, and when I have a GF, a future brother-in-law, 2 dogs, and a cat that I typically feed with groceries, it comes out pretty selfish. Not to mention, 'out' food doesn't really keep the whole diet in check. I am also not counting my stops as the local QT for the occasional soda and cupcakes. I can't be trusted when it comes to my stomach, so I get why she did it and why I agreed to it.

After the lockdown, what did I learn about myself? Well eating at home ain't all that bad, never has been in fact. I enjoy cooking and without a job, I find myself grilling, stir-frying, and baking at least a couple of times a week. A college favorite, PB and J's are made when I am ready to snack and I stay out of stores. My killer is soda pop, I go in and out of full on addiction to it. Currently I am on but when the last 2-liter is emptied I will try again to keep away from the Dr. Pepper.

What else? When you are in the savers mentality everything becomes a chance to save. My GF wants to make a garden on the south side of the lawn, that can be a lot of money right? Well, we are probably going to get some limestone rocks from my parents house to border the garden and most of the plants will likely be re-purposed from other spots in the yard. The only spending I see will be some planting soil and maybe a couple of $10 plants. Another example is in my garage, I finally grabbed my bicycles from my parents shed and needed storagefor them in my garage. $3 in hooks and some scrap 2" x 4"s later everything is hanging. Not bad, I think.

Great, what else? I don't shop for anything but groceries really. My GF and I look for things to work on around the house and not things to buy. We hang out with friends at their homes (no one is forced mind you, everyone is worried about excessive spending too) not the bar. We go 'out' to places we have long-not-used gift certificates for if we are feeling the urge, and generally look for free fun.

To me it is really not that bad. I have always wanted a simplified lifestyle, and this was just yet another way of achieving it. In a month, my GF may give me all of my monetary freewill back and I feel as if this lifestyle should continue. We'll see...

From The Makers of Viagra

Kalamazoo study finds Pfizer factory release drug into water supplies.

According to this news release:

In one study, samples taken at two treatment plants down the sewer line from drugmaking factories contained a range of pharmaceuticals -- among them opiates, a barbiturate and a tranquilizer at "much higher detection frequencies and concentrations" than samples taken at other plants, according to preliminary research by the U.S. Geological Survey.

In another study, Environmental Protection Agency researchers tested sewage at a municipal wastewater treatment plant in Kalamazoo, Mich., that serves a major Pfizer Inc. factory. Bruce Merchant, Kalamazoo's public services director, provided data that showed unusually high concentrations of the antibiotic lincomycin entering the plant, a drug the factory was producing around the time samples were collected.

So, now we have a reason for the recent rise in illegitimate children in the State of Michigan. ;-)

Job Search: Interview Articles...

Two great articles showed up on Yahoo the other day for the interview process of a job search. It is well worth your time to read these, it is basically the same advice that I would give:

The Interview That'll Bag a Job

Answering One of the Trickiest Interview Questions

When Green has jumped the shark...

Maybe you have read this and never understood what the term commonly referred to as "jumping the shark" is. This term is commonly referred to something once it has become so popular that it starts to veer off course into something totally absurd. Sometimes it refers to when a fad becomes absurd and ends, and othertimes refer to when something 'sells out'. It literally refers to a Happy Days episode where the Fonz actually jumps a shark on water skis to keep TV viewers interested in the show.

Regardless I have officially read the article over at the Green Wombat that "jumps the shark" on the green movement:

PG&E signs deal for first space-based solar farm

The whole green thing is great and if you are going to be an engineer in the US, become a Electrical or Computer Engineer. Your future will be bright. But really people, why are we investing in this? As of right now when have you known anything can transfer radio waves into usable energy? I know of plenty of things that use energy to convert to radio waves (microwaves come to mind), but this is ridiculous.

Also I saw Twitter on my local news today, it's official some other Internet fad will take over. Or will that only be after some Twitter based crime occurs?

2008 Taxes Turned in Yesterday...

And I clearly feel like the winner. I purchased a new home last year, paid off student loans, and worked in a different state than where I lived, and you know what, I came out ahead $2,900 total. Needless to say that keeps me in my house another two months (if I need it) after the unemployment wears out. So all in all, I am super happy.

Also, job update is both good and bad. The bad is that the good engineering job I interviewed for is going to wait 3 weeks before they get to finish their interviews and select the final candidates for the position. Craptastic. Good news is tomorrow I am having my second interview for the project management position, they are flying in to talk to me so that is pretty good sign.

Guzzo dropped more posts than I have the last two weeks because I felt that I don't have money to invest right now, so I don't have much advice. I am on, as my GF describes it, financial lock down so I won't do anything stupid with the money that I have. Interestingly enough I spent roughly 7% of the money I brought home my last month of real work (January) on eating out. That is a lot in my opinion, so eating at home is helping a lot. We dropped cable as well so the savings is adding up.

More later, but don't be surprised if I am a sparse poster for awhile.

Article of the Week...

Every investor has a style. Mr. Guzzo (now back at his regular gig) is a contrarian, but firmly believes in the teachings of Mr. Bogle. My college buddy Grant (over at the Corner Office Blog) firmly believes in stocks that pay a high dividend. Besides being a bit of those two (I always look for a dividend, and now about half of my portfolio is Bogle-esc), my stock picking is heavily influenced by Benjamin Graham and his modern disciple Joel Greenblatt of Magic Formula Investing. That is I am a value investor, recently a a good article popped up on Barron's that gives some insight to this style again. Enjoy:

A Back to the Future Value Strategy

Is this Rally for Real? - Morningstar's Take

That's when a couple of bones were thrown my way....

So I have been posting lightly this week due to some interesting circumstances.

Tuesday: Went through the first steps of getting my mortgage loan readjusted with the bank. It looks as if it may go through, I should get a call for the next steps some time in the next two weeks. Yay unemployment!

Wednesday: Worked on taxes, I still need to do state but so far $1300 from federal coming back. Will finish this on Saturday. Yay new home purchase and student loans!

Thursday: Two interviews, yeah TWO interviews today. The first was a first round phone interview for a project manager position and the second was a first round face-to-face interview for a manufacturing engineer position. Both in Kansas City. I don't know if I will get called back from either, but I know that gave the best interview I could for each. Yay possible employment!

Overall I am pretty happy with this week, I feel like something was accomplished.

Arbitrage Opportunity

Just bought 1000 shares of Image Entertainment (DISK) at $1.10/share as a speculative arbitrage opportunity.

As a speculative play, the details about their business isn't too important to me since I'm only attempting to capitalize on the difference in the stock price now compared to the buyout price. What do I mean?

According to a definitive merger agreement in January:

On November 17, 2008, our board of directors approved, and on November 20, 2008, we entered into, a merger agreement providing for the acquisition of Image by Nyx Acquisitions, Inc., a Delaware corporation, or Nyx. If the merger is completed, you will be entitled to receive $2.75 per share in cash, without interest, for all of the shares of our common stock that you own at the time of the merger.

What is important to me are the chances of this merger actually happening.

The current stock price would indicate that most investors probably don't think this merger will ever come to fruition, and there's good reason for their skepticism. Nyx Acquisitions, Inc. has already extended the closing date of the merger a few times and investors are worried that Nyx won't be able to swing the financing or that they may back out of the deal.

But, I think differently.

With each extension of the merger closing date, Nyx is basically required to pay an ever-increasing, and non-refundable, extension cost to Image referred to as a "business interruption fee". After news today of another reported extension, the amount of extension money Nyx has paid to Image now totals $4 million.

I bought DISK because I believe NYX wouldn't just walk away from such a large deposit if they weren't truly intending to buyout Image. It's difficult finding financing at this time, but not impossible. The merger date may be postponed again, but I think that that it's a done deal sometime in the near future.

Of course it's all speculative, but when it happens, I should more than double my investment in this arbitrage opportunity. If it doesn't happen, Image Entertainment, Inc. would be "sitting pretty" with a free cash infusion of at least $4 million.

Madoff Released!

Breaking news today. According to the AP:

Bernie Madoff to become a free man on Friday. A federal judge in lower manhattan district court ruled that evidence gained from Madoff's confessions violated self-incrimination rights, and he ordered all charges to be dismissed immediately. The judge also ordered all seized assets to be return to Madoff by the end of this month.

Until all of his assets, including interest, are returned to Madoff, he will be released to his advisory team of Milken, Boesky, and Kozlowsky on April fools day.