Sears Less Is More Communications

Sears Holding (SHLD) came out with Dec sales and quarter to date numbers. The earnings release just deals with high level financial concepts and does not speak to merchandising or retail issues. From a disclosure point of view, from a transparency point of view, from an engage the investor point of view there is no real information that is truly useful to an investor looking at retail stocks.

Is that because Management does not wish to communicate at this point in time? Yet the stock pops about 10%. So coming in cold to the stock you have to understand the sub-script. But for now management does not have their finger prints on anything.

Monsanto Ignores Fundamentals

Monsanto (MON) issued their Q1 earnings and headlines the release as delivering on Guidance. The market still sold off as they did not like the losses. If Monsanto delivered on guidance the market would not have been surprised. A few things investors should be worried about.

1. They claim a 56% marginal tax rate but have losses not taxable profits. Taxes confuse most investors. Monsanto is not helping today.
2. They have not been able to reduce their SG&A to match declining revenues.
3. Their gross profit has shrunk considerably
4. Cash and equivalents have dropped by 75%
5. Accounts Receivable are up 25% on a revenue drop of some 36%.

Management is not addressing the issues. This is a large cap company that is closely watched. What is the executive thinking?

Warren Buffett Investment Culture Clash!

Berkshire Hathaway (BRK.A; BRK.B) has a value investor’s dilemma. It holds some 138.3 million shares of Kraft. That’s approximately $3.9 Billion. (Roughly 10% of Kraft) Berkshire does not want Kraft (KFT) to overpay and dilute Kraft equity. Kraft to increase cash is selling a promising Pizza Division. Not exactly what a value stock is supposed to do. Berkshire Hathaway AKA Warren Buffett issued a statement indicating he does not support the possible issuance of some 370 million new shares of Kraft.

In a Value Investors mind equity is an extraordinarily valuable and some say sacred instrument. In a deal makers mind equity is a currency. Currency is to be circulated and exchanged. Hence you have an inherent conflict of core values. Cadbury (CBY) investors naturally favour cash for its currency value. If there is too much Kraft for sale the price will drop downwards and stay low for quite some time. Therefore they prefer cash. After all, their shares dividend yield just under 2%.

Warren Buffett has the stature to comment on the deal and give other Kraft investors pause for thought. He has given Kraft management some room to manoeuvre. With a 10% stake he is caught in the middle. Kraft is charged with creating shareholder wealth. The Kraft dividend yield is just over 4%. If they sell promising food divisions and dilute the stock the dividend will be at risk. When will Las Vegas bookmakers start posting odds on management survival?

Google Not Better Than Bing or Yahoo

Comparing Google (GOOG), Bing (MSFT) and Yahoo (YHOO) I search for my favourite search term Financial Skeptic. The results are

Google 938,000
Bing 1,210,000
Yahoo 10,300,000 (OK Yahoo explain yourself)

Boolean Search “Financial Skeptic” results
Google 26,000
Bing 2,440,000 (OK Bing explain yourself)
Yahoo 22,500

The top twenty hits all seem to be similar so one cannot conclude that for financial search any search engine is better or worse.