Out Fox The $treet

Bristol-Myers Squibb (BMY) agreed to acquire Celgene (CELG) in a stock and cash deal valuing the later at a 51% premium from their closing price. So much to like with a deal that has an EPS accretion of 40% in the first year. The transaction is about 50% cash and 50% stock with a unique CVR worth up to $9 based on the 3 potential blockbuster drugs getting FDA approvals. Bristol-Myers should be up on this news, not down 10%. Disclosure: Long CELG. Please review the disclaimer page for more details. 

Last week, Bristol-Myers Squibb (BMY) announced an additional $3B buyback program (see article here on avoiding stock) that signaled to investors to be cautious. While the amount sounded significant, the details suggested the buyback wouldn't amount to much more than 1.5% of the outstanding stock each year. Now after the close on Friday, Bristol-Myers announced the agreement to purchase Amylin Pharmaceuticals (AMLN) along with AstraZeneca (AZN) for $5.3B. This deal surely suggests that the company won't buyback as much stock as expected at least in the near term. The timing of the two announcements has to be in question. Why increase a buyback with the stock hitting a ten year high? Not to mention right before announcing a cash intensive acquisition that will not only strain any cash that could be used for a buyback, but also that is dilutive making the stock less attractive. Investors buying last week have to feel duped. Read the full article at Seeking Alpha. Di...

After the close on Tuesday, Bristol-Myers Squibb (BMY) announced a headline grabbing additional $3 billion share-repurchase program. With a market cap approaching $60 billion, investors quickly gravitated to the potential for a repurchase of 5% of the outstanding shares. Not so fast! Further details in the announcement indicate that the last $3 billion repurchase plan hasn't even been completed in the two years since its announcement in May 2010. Not to mention research indicates that the net buyback will be significantly lower due to large amounts of stock options. Figure 1 below highlights the actual net payout yields (net buyback + dividend) for the last five quarters. Not as appetizing as originally presented by the headline grabbing number. Read the full article at Seeking Alpha Disclosure: Long COP and KSS. Please review the disclaimer page for more details. 

December was yet another solid month on a absolute basis, with a 0.53% gain for this portfolio, but on a relative basis the portfolio underperformed the benchmark S&P 500 that was up 0.85%. For 2011, the portfolio was up 6.82% versus 0.0% for the benchmark. Despite all the volatility in the markets, the Net Payout Yields Model had a good absolute and relative performance for the year. 2012 Outlook  Since this portfolio is not dependent on fundamental analysis or economic forecasts, it isn't always prudent to focus on the prognosis for the stock market and economy. The whole goal is to find high net payout yielding stocks and then harvest the benefits of huge dividends and stock buybacks. In a way, let the management teams earn their money while investors enjoy the spoils. Naturally as an investment advisor with other active portfolios, I definitely have opinions on the market and economy but it just doesn't seem prudent to focus on them here. Anybody interested can vi...

On Wall Street it appears that a good thing has to always end in a bubble as investors follow the herd. With interest rates on government debt so low, naturally investors finally began flocking into high dividend-paying stocks in the 2nd half of 2011. It only makes sense to grab a 4% yielding large cap when the 10-year Treasury pays a sub 2% rate. What doesn't make sense though is that investors have begun flocking to dividend-paying stocks with reckless abandon. The thought process is apparently void of any concept that capital appreciation or at least stabilization is so crucial in that 4% dividend paying off. Read the full article on Seeking Alpha. Disclosure: No positions. Please review the disclaimer page for more details. 

This report is very behind schedule this month, but I thought it was worth writing anyway. This model continues to work well and the word needs to get out more about the advantage of net payout yields over just focusing on dividends. November was yet another solid month, with a 0.05% gain for this portfolio, on both a relative and absolute basis, as the benchmark S&P 500 lost 0.51%. When the market has down months this model continues to shine and overtime the results become much more evident. For the last 12 months, the portfolio was up 12.72% versus the 5.63% for the benchmark. Despite all the volatility in the markets, the Net Payout Yields Model has had a great absolute and relative performance. Trades The model had only one trade in November. Lowes (LOW) was purchased on November 1st as the net payout yield (NPY) surpassed 16% at the end of October. While LOW only paid a dividend of 2.6% at the time, 2.3% now, the company bought back a significant amount of stock in the f...

September was another decent month for the Net Payout Yields model with a return vs. benchmark of 3.46% - the portfolio was down 3.72% while the S&P500 fell 7.18%. Naturally on an absolute basis the results are disappointing, but this model is not designed to time the markets. The goal remains to outperform on the way down and remain even on the way up, in the effort to produce superior returns over time. For 2011, the model remains roughly 7.0% higher than the benchmark. As of the end of September, year to date the model was down 2.92% while the S&P500 fell 10.04%. Trades The model was inactive for the second month during September as the weak market increased the yields and hence the valuation attractiveness of most of the equities in the model. A few stocks though have recently reached new 52 weeks highs causing the yields to decline. For example, Bristol-Myers Squibb (BMY) has seen the dividend yield drop to 4% and without a buyback the Net Payout Yield (NPY) has reac...

Actually this is the Chartiest of the Day report. Carter Worth on CNBC gave his reasonings for the market lows being hit on Oct 1oth follow by the lower low on Nov 21st which technically confirmed the Oct low since it only stayed below for 1 day. Carter was pretty accurate on the way down so I have faith in the guy. Interesting view which makes it seem like you should accumulate stocks around the S&P 840 low and look to sell any big gains at close to 990 at least for now. The market has clearly oversold, but he makes some good points on why the market won't rally big for now. He also said that because we've breached the lows of Oct. 10, in the short term, the market will be directionless. “The capitulation phase of the bear market is over. Now we’re heading into the apathy phase,” he says. “We’re stuck in a range with 990 being the top and 790 being the bottom.” Interesting comments on BMY. BMY has been one of our favorites in the Net Payout Yield portfolio.