Dan Miley

Commentary for this week

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The Senate has passed the 1.9 Trillion-dollar bill.   I cannot fathom how a married couple making $150,000 per year is “struggling”.  And if they have 2 children, they will be getting $5,600!  As Margaret Thatcher said: “The problem with socialism is that you eventually run out of other peoples’ money.”  I believe that will be extraordinarily inflationary. So, how should this affect the affect the “Miley Growth Fund” and the “Miley Income Fund”? As for the “Growth Fund”, be prepared for more volatility and the fund may turn negative for a period.  But the fund is intended for medium to long term investors, so I believe that the fund will still outperform the S&P for 5-10 years.  And if you have been lucky enough to buy VIP Shop Holdings (VIPS), I would recommend that you take some profits, since the stock has exceeded my expectations by growing at over 50% in the short period since I picked it. On the “Income Fund”, it has outperformed the “Growth Fund”, mainly because of the presence of several financial stocks like Jefferies Financial Group (JEF).  Financials have been going up lately because of the rise in interest rates.   As for the poor performers like Pfizer and Merck, I am disappointed, but the stocks pay a healthy dividend, so sit back and collect your dividends and don’t worry. As for asset allocation today, the traditional 60-40 mix of stocks-bonds is in trouble since interest rates are on the rise.  If you are using aggregate bond fund like AGG, I would recommend investigating some actively managed bond funds or perhaps a real estate investment trust like Reality Income Corp (O).  Another alternative would be to lighten your bond index fund allocation to 30% and move the remaining 10% into Treasury Inflation Protected Securities (TIPS) and/or into mortgage-backed securities with a fund like GNMA.  Moves like this should smooth out your returns.  And if you have a 401k, I recommend that you utilize a Stable Value Fund for the 10% allocation – these funds are backed by insurance companies and pay a much higher return than money market funds. So there you have my current commentary, please feel free to comment or write to me directly. Dan

My Current Thoughts

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      I am pleased with the performance of both the Growth Fund and the Income Fund.  Note that there is no need for me to post weekly gains or losses as the performance of the funds is tracked on a separate page.  But I will say that I was actually surprised by the performance of VIPS being as good as it is.  They announce earnings on February 25th, so it may be case of “buy on the rumor, sell on the news”, so don’t be upset if the stock underperforms on that day.  I would still hold on the stock as well as all of the others in the portfolio.  As for the Income Fund, several of the stocks have underperformed, but remember that the primary purpose of this fund in income via dividends, so again, just sit back and enjoy receiving dividend payouts in excess of the S&P average.   read more

Knightscope

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I made a small investment in this company.  It is a security robot company that appears to have great prospects.   Here is a link for more information:

Invest in the future. | Knightscope, Inc.

 

This is a very speculative investment, so only invest with money that you could afford to lose.  You may make a lot of money or the stock could end up being worthless.   I think the company will do very well, but of course there are no guarantees.  So please carefully read the prospectus and only invest if you understand both the potential losses as well as gains. read more

Miley Fundamental Update

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Dear Friends,

Again, I apologize for not updating this portfolio more often.  I promise to do better.  I have dumped nearly all of the former stocks (for example, I dropped DST at 112 a few months ago).  But I am retaining AAPL, CELG, ORLY, and SKWS and adding 5 new picks.  Here is a round up of my thoughts:

  • Apple – I am maintaining my position in this one.  I believe that Apple is still a great pick, even if earnings only grow at an anemic rate of 6%, the stock is still undervalued and should be at least 128.
  • Celgene – Even with the recent bad news, I still think Celgene is undervalued and should sell for 116, a significant upturn from its current price.  Don’t expect instant gratification but I advise staying with them.
  • O’Reilly Automotive – I am maintaining my position in this one.  It is fairly valued at these levels so I wouldn’t buy more.
  • Skyworks Solutions – This stock has been pummeled along with Apple.  But I think it is still undervalued and should be accumulated.
  • United Therapeutics Corp (UTHR) – United Therapeutics Corp is a biotechnology company.   The company is engaged in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions.  This stock is my top pick.  With an ROE of 49% and expected growth north of 22%, I think that this one will be 200 by this time next year.
  • Avago Technologies (AVGO) – Avago Technologies Ltd is a designer, developer and supplier of semiconductor devices with a focus on analog III-V based products and complex digital and mixed signal complementary metal oxide semiconductor, or CMOS, based devices.  With an ROE of 35% and expected growth of 26%, I see this stock reaching 141  (it currently sells for about 126).
  • Taiwan Semiconductor (TSM) – Taiwan Semiconductor Manufacturing Co Ltd engages in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices; it also manufactures masks.  With an ROE of 30% and expected growth of 15% I see this stock reaching 41 from its current level of 21.
  • Gentherm, Inc. (THRM) – Gentherm, Inc. is engaged in the design, development, and manufacturing of thermal management technologies. The Company has two reportable segments for financial reporting purposes: Automotive and Industrial.  With an ROE of 27% and expected growth of 25%, I see this stock reaching 100 from its current level of about 39.
  • Maximus, Inc. (MMS) – Maximus Inc provides business process services to government health and human services agencies in the United States and to foreign governments.  With an ROE of 27% and expected growth of 19%, I see this stock reaching 64 in a year from its current level of about 52.

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    Miley Core Portfolio Update

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    Dear Friends,

    I apologize for not updating you on my portfolios.  Yes, I have been busy, but also I have been a bit reluctant to speak, given the poor performance of some of my picks.  But today, I will go over the Core Portfolio and offer my opinions and updates on each stock:

  • Dow – I am maintaining my position in this one.  I believe that Andrew Liveris is a competent CEO and that the DuPont merger will be successful.
  • IBM – I am sticking with this dog as I have little choice. All I can say is that Ginny Rometty has got to go!  The company needs new direction and dynamic leadership.   She has disappointed us for too long.  For evidence on how a new CEO can turn things around, just look at one of my other core holdings – McDonald’s.  As far a replacement for IBM as a core holding, Microsoft is a safer bet.
  • McDonald’s – I am maintaining my position in this one. Steve Easterbrook has turned the company around and I am glad held on.  As I said, a good leader can make a real difference in the success of a company.
  • Kraft and Mondelez – These consumer staples stocks are still a good holding. I trimmed my holdings in Kraft but still hold some.  You may want to consider a beverage company like Coke (KO) or maybe a spirits maker like Constellation Brands (STZ) in this area as a replacement or supplement to your holdings in this area.
  • Altria and Phillip Morris – I trimmed a bit of Altria but still have significant positions in both of these excellent dividend payers. Stay with these for income!
  • Pfizer – I added to my position in this drug powerhouse. Pfizer is a no longer a growth stock but the dividend is solid and safe.
  • Pittsburgh National – I sold my position in PNC as I am less than sanguine on financials. I think a position in an insurance giant like Travelers (TRV) is probably a better bet.
  • Southern – A good utility holding is always a good bet so I would stay with Southern. You may want to consider PPL Corp (PPL) as well.
  • United Technologies – I sold my position in UTX at 100 several months ago. I replaced UTX with General Electric (GE).  I like GE’s divesture of the bulk of their financial assets and it pays a better dividend than UTX.
  • Exxon Mobil – As most of you know, I have held Exxon for many years. It is the best managed oil major and oil prices will eventually recover.  Plus, its dividend is safe (despite what some pundits may say).

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