Mondelez (MDLZ) Dividend Payments, LULU Fires Chief Product Officer Over See-Thru Yoga Pants, Ron Johnson Out At JC Penny (JCP) and Has Apple Lost It's Groove?

Now that's weird.

 

Yesterday was dividend pay day for Mondelez (MDLZ).  We got paid $8.30.  Now remember from my previous post that I expected to be paid $3.41 for 26.2504 @ $0.13/share.  Either MDLZ increased their dividend payout (I estimated @ $0.3161/share) or for some reason, they thought we owned 63+ shares of MDLZ.  I know there's an error somewhere and I expect a correction soon. 

 

Now for some news and my opinions:

 

Lululemon has been on the news lately for having a product recall because their black Luon yoga pants appeared to be see-thru.  As you can imagine, female customers would be deeply affected by this product defect which resulted in the recall.

 

Aside from the embarrassingly bad press, future earnings of LULU are expected to drop to offset the estimated $67 million in lost revenue as the cost of the product recall. 

 

Another victim of this product snafu is LULU's Chief Product Officer Sheree Waterson.  LULU announced on April 3 that Ms. Waterson  would leave the company on April 15.  It was obvious that this was a move to help stem the drop of stock price and as the company's atonement for the product recall.  Quite frankly, I wouldn't require someone to lose their job over this and I highly appreciated LULU's quick and fast response towards the issue.  While most companies would spend months with smoke and mirrors denying any fault or even flaws with their product,  LULU faced this challenge head on.  Recalling 17% of your product was very expensive but the possible loss of trust from loyal customers was just too high of a price to risk by LULU.

 

Looking forward, I still think LULU would come back strong and there's always the possibility for a black Luon shortage which may cause a panic buy reaction from the customers (which may increase the price of merchandise - higher margins to offset the loss).  Also, customers may continue to stay loyal to LULU due to the company's fast and effective response and whatever fringe bad experiences that popped up on the internet are just outliers or isolated incidents.

 

If at all, the drop in price is a perfect buying opportunity.

 

In other news, JC Penny (JCP) fired CEO Ron Johnson after almost 2 years on the job.  Johnson oversaw a disastrous drop in earnings for JCP and the Board just had enough of it.  JCP then hired Johnson's predecessor Myron Ullman effective immediately. 

 

Who would have thought that Ron Johnson, the executive behind the highly successful (and profitable) Apple retail stores would fail horribly at JCP?

 

Well, it's easy to see now looking back.  One of the early interviews Mr. Johnson made with CBS Morning News, host Gayle King ask Ron if he was wearing a JC Penny outfit for the interview.  He answered and I quote: "No, it's not, but I will have one on the next time."  Oops.  Back then, it was easy to laugh this off and forget about it but now, I realized it was a big marketing disaster.  Can you imagine the late Steve Jobs being caught with an Android phone?  Even Bill Gates was famously quoted for never touching let alone, own an iPod, iPhone and an iPad.  Ron Johnson getting caught with his pants down figuratively was a sign of him being out of touch with JCP and it's costumers.   How would a CEO know what the customer would want or need if he himself was not a customer?  He ended the promos and coupons and even taken out customer favorite brands.  As a result, Mr. Johnson alienated his loyal customers for the gamble of gaining new "higher-end" customers.  Obviously, discounted jeans and shoes were a foreign language for Johnson who for the most part of the last decade sold premium computers, phones and music players. 

 

Would reinstalling Mr. Ullman be good for JCP? Only time will tell.

 

Finally, we go back to Apple.

 

In recent weeks, stock analysts such Jim Cramer and tech pundits like Leo Laporte have expressed their opinions about AAPL.  Mr. Cramer was not as bullish as he was before and may have implied that AAPL lost it's "cool factor".  As recently as last Sunday, This Week In Tech (TWiT)'s Leo Laporte pretty much waved the white flag for AAPL.  He said that the AAPL has ran out of innovation and that future product releases would pale in comparison to what the Cupertino-based company released in the past five years.  These opinions, for the untrained eye/ear, would seem the death of Apple and would probably push some investors to sell their shares of AAPL.  But then, I remembered a story from Jim Cramer's book Confessions of a Street Addict where Mr. Cramer's Hedge Fund was getting beat on Wall Street in 1998.  Cramer wrote in his book that there was a point during that time that he just gave up on the Market and even wrote an article for theStreet.com to SELL EVERYTHING.  He then said that was the cue for Mrs. Cramer to start buying for the fund which then saved the Hedge Fund and Jim Cramer himself.  Also, Leo Laporte admitted he was wrong about Apple in the late '90s when he pretty predicted the death of Apple.  This was before the then newly design iMac, the iPod and iPhone/iPad. So in short, I'm considering these recent statements by these two people I respect as a sign that AAPL is at (or near) it's bottom.  Plus, Warren Buffet always said: "I buy when people are fearful and I sell when people are happy/greedy." 

 

I believe AAPL still has a few products up it's sleeve.  Recent news about the iPhone 5s and iPhone 6 being designed by Jobs himself give me confidence and with iOS/Software under Jon Ive, I'm optimistic that AAPL would wow us within the next few months.  Also, let's not forget that AAPL still has that over $100 Billion in the bank.

 

Besides, it's nice that our portfolio is no longer dependant on AAPL's stock price to succeed.  And that my friend, is diversification.

Getting Stuff For Free, Apple (AAPL) May Boost Dividend Yield, Waste Management (WM) Pays Dividends, Mondelez (MDLZ), Xilinx Inc (XLNX) and Kraft's (KRFT) Ex-Dividend Dates!

I got an email from my discount brokerage. 

They gave me a free credit to use their Automatic Investment Plan service for free!  That's $4 savings! 

You might ask: "So what?"

I say: "Awesome!" 

Here's why, that $4 I would have paid (as commission) to buy stock would just go into buying more shares of the company I want to buy.  And when I'm about to chase the dividend distribution, every share counts!

Here's what I did:

Mondelez International (MDLZ)'s ex-dividend date is 03/27/2013.  I also looked into Kraft (KFRT) and Xilinx Inc (XLNX) ex-dividend dates, 03/26/2013 & 05/13/2013 respectively.  As you can see, I'll miss KFRT's must own date by a day and XLNX is just too far off.  That is why, I'm going with MDLZ.  Granted, MDLZ's dividend is "just" $0.13/share which was down from $0.29 in September 2012 (which was paid before the Kraft/Mondelez transaction), I am bullish with MDLZ's future growth.   With the economy improving, consumers would be buying more snack foods and drinks.  Also, with Easter, Memorial Day and summer just around the corner, I expect a jump in sales for Cadbury chocolates, Nabisco and Oreo cookies and Tang beverages.

Anyways, here's a recap of my purchase:

I transferred $250 into our brokerage account (expected funding on 03/25/2013, Monday).

Along with my $184.50 cash position, I executed an Automatic Savings Plan transaction to buy $434 worth of MDLZ shares.

MDLZ is at $29.81 as of 03/22/2013 11:58 am ET

I estimate to buy 14.4666 shares of MDLZ at $30/share.

I would then own 26.3008 shares of MDLZ which will pay me $3.4191 in dividends.

As always, our dividend payments would be reinvested to buy more shares (0.1139 shares @ $30).

As you would observed, without the $4 discount, the dividend payments would have been swallowed by the fee. Also, I would only be able to buy $430 worth of shares which only buy me 14.3333 shares which will bring me to 26.1675 shares = $3.4017.  A net loss of $0.0174.  Yeah, it may be a small loss but the greater loss is in the future growth due to compound growth rate.  The more shares I own, the greater my dividend payments.

In other news, Waste Management just paid me some dividends. 

We got paid $4.40 in dividends which we reinvested to buy more shares (0.1162 shares @ $37.87).

Extra Credit:  I have read/heard speculation that Apple (AAPL) is "poised" to boost it's dividend payments by 56% (from $2.65/share to $4.14/share) for a 3.7% yield. As you can imagine, shares are up (currently at $459.37) since news of the hike got out.  Although it's a far cry from it's 52-week high of $705. 07, this recent bump may be what nervous shareholders need.  I believe that AAPL being below $500 is really cheap and that it's recent drop is a result of both self-inflicted wounds and external stabs to the company.  From the botched Apple Maps launch to the profit taking during the fiscal cliff, Apple's stock has seen a nose dive to $419 before stabilizing at the $420-$430 range.

In spite of Apple's iPhone 5 and iPad sales being through the roof, Wall Street's expectations are just too high for the Company to beat.  On top of that, Samsung's victories (court judgements and sales) did not help Apple's share price.  But last week, I saw a small glimmer of hope for Apple.  Samsung just launched their new flagship phone, the Galaxy S4 with hype that matched the iPhone but execution that fell flat on Samsung's face.  The whole presentation just showed how masterful Apple's product presentations are.  Samsung's "show" was generally panned by tech journalists and even mainstream media.  The phone however, is a different story.  It told me what I needed to know about Samsung's vision of their phone's future: more of the same.  Critics blasted Apple for the iPhone 5's lack of a differentiating features and design that Samsung seemed to outpace Apple in both fronts.  But with the Galaxy S4 looking and functioning almost the same as the Galaxy S3, I believe Samsung is now experiencing a lag in their "wow" factor. 

In my opinion, it would be tough for Samsung to be "innovative" without Apple to "copy" from. 

That's just my opinion so take it as it is.

So why is this good news for Apple?  Well first, current Galaxy S3 owners have not much of a reason to buy the new S4 which could be the opening for Apple to snatch some of the market share back from Samsung.  Currently iPhone 5s or iPhone 6 rumors have been leading towards a new phone design and with iOS 7 around the corner (WWDC is usually held in June), Apple fans will have a reason to hope.  News of the iWatch and iTV also help fuel speculation that Apple may be launching a new product market that would bring back the Apple cool factor that Steve Jobs used to bring.

So will 2013 bring Apple back on top?  Only time will tell.

Chasing Altria's (MO) Ex-Dividend Date, Dodging Yelp, Xilinx Inc. (XLNX) and Energy Transfer Partners (ETP) Pays Me Some Dividends and Can Anyone Stop Apple (AAPL)?

I just bought 7 more shares of Altria (MO).  

I executed a limit order for $30.41 which bumped my shares of MO to 10.3151.  It cost me $222.82. I bought 7 shares for $212.87 plus the transaction fee was $9.95.  This order was $5.95 more than what it would have cost if I had waited for the Automatic Investment Plan.  I did not wait for the AIP because it would buy the shares on MO's Ex-Dividend Date (Tuesday, March 13, 2012) which would make me ineligible to receive the dividend (per SEC definition of the Ex-Dividend Date).  This would have been a loss of $2.87 (7 x $0.41/share).

Where would I gain the $3.08 difference?  That would come from stock price appreciation (MO's chart has been trending up and today it closed at $30.46) and yield (I'll be paid dividends for 10.3151 shares instead of 3.3151).  I would be able to use the $4.22 ($4.2291 rounding down) to reinvest in MO pushing my yield higher.  

The dividend would be paid on April  9, 2012.

Speaking of dividends, Energy Transfer Partners (ETP) and Xilinx Inc (XLNX) just paid me some nice dividends.  XLNX paid $1.19 and ETP paid $5.91.  These dividends were reinvested in the stocks my yields.  I love dividends.

In other news, Yelp (YELP) went public recently.  Just like LinkedIn (LNKD), Zynga (ZNGA), Pandora (P) and Groupon (GRPN), I avoided these new IPOs since I did not get any shares pre-IPO and I do not have enough cash (and time) to get in the deal at the moment of the IPO.  With the exception of LNKD and in some way, ZNGA, these new tech IPOS have no profits to speak of.  Their business models rely heavily on Online Advertising and "Eyeballs" while their costs are going up (content licensing, customer acquisition and labor).

Although I'm not a total Bear on these tech stocks, I am not risking my hard earn cash investing in companies that make no money.   I am even on the belief that even Facebook would fail to satisfy Wall Street post-IPO.

Only time would tell.

Finally, Apple (AAPL) just announced their first major product launch since the death of Steve Jobs.  The new iPad is poised to keep Apple's lead in the tablet market and is targeting the market share of laptop makers.  During the keynote presentation, Apple CEO Tim Cook declared the iPad as the major leader  of the  Post-PC era.  Mr. Cook and company did really well during the keynote and even though it lacked the Steve Jobs Halo Effect, the recent keynote was filled with oohs and ahhs from the crowd and the tech community.  The new iPad boasted the new Retina Display, 4G LTE, a faster graphics processing chip and an amazing battery life all in the same "low" starting price of $499.  Apple also kept the iPad 2 at a lower $399 price.  Tech pundits and analysts predict AAPL would sell at least 10-15 million units on the first weekend.  I'm even willing to bet they would sell up to 20 million units.  My only fear with this prediction is whether Apple has enough iPads to sell that weekend.  I'm sure the workers at FoxConn worked double/triple overtime since November producing these magical devices.  

AAPL's stock price played around $528-$536 during the announcement.  Normally, an Apple event brings down the stock price low enough for a nice re-entry but this time, the stock price held its own.  Perhaps Tim Cook symbolized stability in the company and not seeing a frail looking Steve Jobs made investors "feel" secure about Apple.

Although Apple fans including me would have preferred seeing Mr. Jobs work his magic on stage, his presence, in spite of his health issues, was sorely missed.  As for AAPL's future, I am bullish that this company would keep printing money for years to come.  Their stock price though high, is cheap compared to it's competitors.  The PEG ratio is at 0.66, making it the cheapest of my positions (believe it or not).  The product line, high profit margins and brand equity would keep AAPL on top for a while.  As long as the company continues to innovate and execute, I would keep investing in Apple (and buy a product or two).

Actual Shares Bought, WM Announces Dividend, ETP and XLNX Are Paying Me Dividends and LULU Achieves Cult Status

Automatic Investment Plan kicked in. Just like before, my picks went up a bit and my purchased shares were smaller by a few fractions.  Again, no big deal.

Here's what my $300 did today:

Fees: $8 ($4 per stock transaction)
GLD = 1.1232 shares @ $174.49
WM  = 3.0625 shares @ $31.35

Here's my current portfolio allocation:
AAPL  = 38.3%
LULU  = 18.3%
GLD    = 16.6%
XLNX = 9.0%
ETP     = 7.9%
WM    = 7.1%
cash     = 2.8%

As mentioned in previous posts, I outperformed the market mainly because of AAPL.  In the near future, I would like to rely less on AAPL and spread out my portfolio gains across the board either by having more LULU and GLD or adding new positions.  I think AAPL should be around 15-20% of my portfolio and be big enough to make a dent in my gains but not too big that I crash and burn when they are down a quarter or two.  I came up with this thesis in light of the death of Steve Jobs.  Even though his death was already priced in with the stock price, you can never doubt that his vision was a huge part of what made Apple great.  However, I am still bullish on Apple.  My bullishness was reinforced after reading Walter Isaacson's Steve Jobs Biography.  It highlight how the top management of Apple fought with Steve Jobs on some directions of the business which was beneficial for Apple.  It detailed how Tim Cook controlled the supply chains, Phil Schiller suggested to Steve Jobs to port iTunes to Windows and how Jony Ive worked closely with Steve and produced beautiful and amazing products that even Steve Jobs loved.  I think as long as the current management team is intact, AAPL still has a bright future ahead of them.

I would also like to add more dividend paying stocks.  I think this will help my portfolio grow just by waiting and doubling down on great dividend paying stocks.

Speaking of dividends, WM just announced their cash dividend.  It will pay $0.34 per share payable on December 16, 2011.  I still have until November 30, 2011 (Ex-Dividend Date) to buy more if I want to get in more dividends. This dividend pay out would bring WM's yield to 4.30%. Not bad right?  This is my way of making another man's into money in my pocket.

ETP will be paying out dividends on November 13, 2011.  They will pay $0.89375 per share. This will bring ETP's yield to 7.78%.  Again, not bad.  XLNX will be paying $0.19 on November 30, 2011.  XLNX's yield will be 2.31%.  Not bad... not great.  I will have to review my thesis for XLNX.  Perhaps there may be other stocks that pays a dividend and appreciates in price that would yield more for my money.

The other star performer in my portfolio, LULU will be huge within the next few months.  They just announced a new online store for iviwa (Iviwa Athletica is a new sports apparel line target to young girls ages 6-12).  Iviwa initially launched in 3 Canadian cities and now it will launch in the US via the online store.  The timing is perfect because they just made it right before the holiday spending season and I believe the US market would be huge for Iviwa (I mean, just look at how many soccer moms are out there).  Speaking of the US market, LULU has achieved a cult status in the US and it's even more popular in Canada.  LULU enjoys brand loyalty in Canada as shown by their sales reports (Canada makes up almost 50% of their sales).  Meanwhile, in the US, LULU is poised to reach critical mass if we take San Francisco, LA and New York as a barometer.  Brand recognition and loyalty is high.  I can verify this because every time I'm at the gym, all I see are LULU tank tops, yoga pants and sweats.  I believe LULU will be the next Nike within the next few years.  LULU not only is a great product to work out in but it is also a fashion statement for most consumers.

Anyway, I look forward into adding more LULU in my portfolio.  Perhaps, it would help balance out the AAPL juggernaut.

Going Against The Grain - Investing in Stocks When Others Pull Out

I got some extra dough this week.

I decided to activate my auto invest plan for Tuesday.  And here are my picks:

LULU = $140.00 (2.71 shares @$50.18 + $4 fee)
ETP    = $140.00 (3.06 shares @$44.38 + $4 fee)

I'm still bullish on LULU because of the customer (brand loyalty) loyalty and the fact the LULU does not compete in the cheap apparel market.  LULU's customers are willing to pay up for the products because of the style, technology and what the company stands for.  LULU does not pay millions of dollars to have pro athlete endorse their products.  Instead, LULU does it in a local, word-of-mouth marketing strategy.  Free yoga classes given by local personal trainers build a community of loyal customers (and endorsers).

ETP is my energy play for the coming winter.  Natural gas and LPG will be used by millions to heat their homes and cook their food this coming winter.  Plus, I get paid a dividend just to wait for the stock to go up.  Plus I think the moves Kinder Morgan Partners (KMP) would have some pin action in the Nat-Gas sector.

I would have bought some more AAPL but I'm a bit short on liquid cash.  I'm still bullish on AAPL even after Steve Jobs' death.  I am confident that the genius CEO had 2-5 years of product line in the pipes and I shall review my position in the next 6 months and see if the new leadership has captured the Steve Jobs magic.

The recent decline of the Stock Market (Thanks a lot Europe) caused a lot of people to fear the market.  This is good news for me.  The time to buy into the market is when everyone is afraid and baby, everyone IS afraid.  Due to my age, I can afford to take some near term declines from my positions because I have a lot of time to recover.. unfortunately, the boomers do not have a lot of time.