Out Fox The $treet

Home Depot had a surprising quarterly report with only in line numbers. The home improvement retailer has seen a period of strong EPS growth topped by further multiple expansion. Several signs are starting to point towards the end of the glory days. Home Depot (NYSE: HD )  continued a recent tradition of raising EPS estimates, but the stock is trading down on the news. After years of outsized stock gains, one has to wonder if the glory days are over. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Lowe's generated substantial comp sales growth during Q4 due to warm weather over the holidays. The purchase of RONA, subsequent exit of an Australian business, and reduced stock buybacks are all warning signs. The recommendation remains to avoid the richly priced home improvement retailer benefiting abnormally strong comp sales growth. Despite generally positive  Q4 earnings ,  Lowe's (NYSE: LOW )  traded mostly tepid for the next couple of days. Even with the ongoing positive results, the stock is struggling per my  prior warning .  Read the full article on Seeking Alpha.  Disclosure: No positions mentioned. Please read the disclaimer page for more details.

In a surprising turn of events on Monday, Sears Holdings Corporation (NASDAQ: SHLD ) investors completely ignored the surprising earnings guidance in favor of the news regarding the CEO leaving. The company reported that earnings would smash the analyst estimates of $0.86, but the market focused more on the replacement of the CEO due to family health issues. The stock plunged 6.4% on Tuesday as investors became concerned that more » Disclosure: Long SHLD. Please review the disclaimer page for more details. 

This model was down 0.5% in July versus a 1.3% gain for the benchmark S&P 500. Oddly the model has fluctuated a lot in recent months with large cap stocks in the model moving up or down 10% on earnings reports. While typical of smaller companies this usually doesn’t happen in companies with market caps exceeding $10B. Trades As mentioned previously, one goal of this model is to slowly trim the amount of positions back closer to 20 after reaching 26   due to mergers and partial positions. Hence, the model sold the remaining holdings in Home Depot (HD) and added to existing small positions in Hartford Financial (HIG) and WellPoint (WLP). Home Depot was unloaded as the stock finished a long run from October last year where the stock went from just over $30 to the selling price over $51. This considerable gain pushed the Net Payout Yield (NPY) down as the company dropped buybacks. Not to mention that competitor Lowes (LOW) remains a Top 5 holding. The two purcha...

This model was down 7.7% in May versus a 6.3% loss for the benchmark S&P 500. In a rare occasion, the model underperformed the market by more than 100 basis points. While disappointing, this does happen sometimes. The benefit is that the stocks with large buybacks are able to purchase more shares at these cheaper prices. Trade Only one major position change was initiated in May with the addition of Ameriprise Financial (AMP) in two transactions. The company has a spectacular net payout yield exceeding 15% with the dividend portion at nearly 3%. The other major transaction was switching out of Phillips 66 (PSX) and back into a full position on ConocoPhillips (COP) after the spinoff back in April. After some research, ConocoPhillips provides the higher guaranteed yields while Phillips 66 remained uncommitted on buybacks. A half position in Home Depot (HD) was sold to reduce exposure to the home improvement sector since both Home Depot and Lowes (LOW) had become t...

Sears Holdings (SHLD) has come under extreme pressure lately after a Q4 warning and fears of credit tightening around suppliers. The stock recently bounced back to above the gap down from the December warning, but it is has now closed down for five consecutive days. What stopped the free fall to below $30 from a high above $80 in October was news that Chairman Eddie Lampert accepted management fees from his ESL Investments vehicle in Sears stock. Along with other transfers, Eddie obtained over $150M of stock in early January according to this Wall Street Journal report. One has to wonder why a legendary investor like Eddie would take stock in a company like Sears unless he knows that bankruptcy isn't a looming issue. Would Eddie really just throw $150M down the drain? Read the full article at Seeking Alpha. D isclosure: Long SHLD and HD. 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...

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...

After recent Q2 earnings reports, the market was  impressed  with the talk from Home Depot ( HD ) management and  disappointed  with Lowe's ( LOW ). According to most analysts including Mad Money host Jim Cramer, HD is winning the home improvement market. Click  here  to see the video where Cramer breaks down the two companies. It's very difficult to argue with Cramer or any other Wall Street experts. Sure investors can spends hours researching the stores, but ultimately both are great companies. Consumers tend to shop at the closest store and HD is restructuring so the better results at HD might just be a bounce back from lackluster results previously. Please read the full article at Seeking Alpha.  Disclosure: Long HD and LOW in client and personal accounts. Please review the disclaimer page for more details.