Traders Corner   9 comments

The markets didn’t stay oversold for long! But don’t get too comfortable, as this morning’s futures are pointing down again. Expect the S&P 500 to test the 50 day moving average once more. Whether it bounces back from there, or finishes below it, remains to be seen. The technicals are mostly neutral today.

The S&P 500 levels to watch today:

UPSIDE: 1691-1696 (4 data points and the 20 day moving average), 1698 (July’s high), 1709 (August’s high), and 1721 (top of the Bollinger Bands).
DOWNSIDE: 1687 (May’s high), 1680-1682 (2 data points), 1679 (50 day moving average), 1670 (October 3rd’s low), and 1668 (bottom of the Bollinger Bands).


9 responses to “Traders Corner

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  1. For you stockpickers out there, a drop today should create some bargain opportunities. SWHC stands out as the biggest, but some others include: SYMC, BBL, TC, and possibly NSC (it needs to drop into the $75-76 range).

  2. Marshall

    I thing you recommended ABR before. Here is a very positive article from Seeking Alpha. But note the comments at the bottom related to salary and bonuses paid out to senior management and the Deutsche Bank price target manipulation as the underwriter for the share offerings.
    Yield is very attractive at near 8%. Your (and anyone else) thoughts please.

    • Executive compensation is always very tricky. I actually went and looked at the proxy to see what they got paid and how they got paid. There is a footnote that states that the CEO and CFO do not actually receive the listed salary and bonus from ABR. They are employed and compensated by their manager. So my read is of the 3.8m those two got in 2013 for the 2012 year, only 1.6m of that was paid by ABR. That seems a little more reasonable.

  3. Zosa, the payout ratio at 161% is enough to scare me off that stock.

    • Agreed on payout ratio

      • Obviously everyone has to make up their own mind. I find ABR attractive as it is trading 12% under book value. Their forward PE is about 10, which suggests to me they should be able to make dividend payments. In fact they have increased the dividend 3 of past 4 quarters. Toss in that Leon Cooperman got up in front of delivering alpha conference and called it one of his top picks helps as well.

      • Marshall, I do respect your opinion, but I have to disagree with you on this one. I think there will be a better opportunity to buy this one in the future. They are ramping up their dividend too far, too fast, especially in the face of falling earnings (their earnings were down 73% yoy in the June quarter, while they have raised their dividend 4 times in the past 2 years). On top of that, no levered free cash flow, and the two analysts covering it estimate quarterly earnings will drop in the 3rd quarter and again in the 4th quarter.

        Admittedly, it is possible Cooperman knows something I don’t. Then again, it may also be possible he is recommending it to get people to buy it so he can dump the position he is holding.

        If ABR were trading 50% or more under book value, I might see your point. But ABR could easily lose 12% of it’s book value in a quarter, as it keeps throwing it away on dividend payments. Unless ABR gets a large earnings pop, and soon, there are just too many red flags there to recommend this one.

    • Good point. I overlooked it. thanks

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