Telecom Foolishness

We took a look at FTR on the recommendation of a friend. They are a communications company serving rural areas of the country. They are involved in broadband, cable tv, and computer tech support. FTR may exist because of anti-trust telecommunications legislation that sought to make sure Ma Bell and her brood of Baby Bells didn't monopolize telecom. Here is an analysis from nasdaq.com (in partnership with The Motley Fool). It explains the rationale behind their evaluation of the stock. While they didn't put a lot of confidence in FTR, it was interesting to see the breakdown of how they evaluated it. This might be a good model for us to try and become more methodical about evaluating stocks. 

Here were their criteria: 

Profit Margin
Relative Strength
Compare Sale and EPS Growth to Same Period Last Yeara
Insider Holdings
Cash Flow From Operations
Profit Marghin Consistency
R&D As a Percentage of Sales
Cash and Cash Equivalents
Accounts Receivable to Sales
Long Term Debt/Equity Ratio
P/E to Growth 
Average Sales Outstanding
Sales Ratio (P/E Growth)
Daily Dollar Volume 
Income Tax Percentage

The article assessed the overal desirability of this stock in terms of Passing of Failing at each of these criteria. There were more than a few criteria where they failed because a lack of data. We found this a little misleading, thinking some other term might be more accurate. 

However, it is interesting to note that we found another article associated with The Motley Fool that said kinder things about FTR. This article supposed that FTR could continue its impressive dividend yield. The problem is that these two analyses send different messages. This is the portion of the program where we mention that investing will never be an exact science. Additionally, the first article is likely heavily automated, whereas the second is obviously the work of a real person. One is not necessarily superior, and there are advantages and pitfalls to both. 

Next week, we should keep hacking through our friend's portfolio. 

And here's the last bit of telecom foolishness.

Profit!

T̶h̶e̶ ̶D̶a̶r̶k̶ ̶C̶o̶n̶t̶i̶n̶e̶n̶t̶ Like No Place Else!

Brian, Bickford, Danak

For this week

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

We took a look at EZA, particularly at the components of the fund. In poking around, Brian came up with some articles that discussed how some funds will sometimes not necessarily reflect the country they are based in. While this is not a bad thing in itself, it may not be ideal if we are trying to focus on a specific economy, as opposed to the global economy.

One component of EZA, MTN Group , is a telecom company that does a lot of business with Iran. Even though this is a South Africa-based company, it would probably be affected by events in Iran and abroad. This is something to consider when choosing this as a possible investment.  

Next, we took a look at NPN (Nuveen Pennsylvania Municipal V?), the second largest holding, and we had a hard time figuring out what it has to do with a South Africa index. Some googling brings up NPNSJ, which is a South Africa media company. That makes more sense, and like when you're doing math and get some kind of garbage answer out of your calculator, you have to call it and look a litte deeper. Did Yahoo make a mistake? Definitely: A look at the ishares summary for the fund shows that they are not investing in Pennsylvania. Additionally, some more searching yielded further discrepancies.

NEW RULE: Be a little more skeptical when looking up data from sites like Yahoo! Finance, or anywhere really. If something doesn't make sense, it probably isn't right.  

Let's take a look at NAFAX:

Well the fund's Chief Investment officer sure thinks so. While he is a biased source, he does make some interesting points about Africa as an emerging market with growth potential. We took a look at the Style Box for the fund, and that confused us further. We are not sure how to judge if this is a good investment or not. It is very diversified, however how do we judge the components?

That's a good questions, and that's where we leave it. Next week, we are going to keep on digging. 

Profit!

  

Honeymarket Don't Even Care!

Members present: Brian, Bickford, Danak...set for global domination. 

Sequester? What sequester?

Last week the gang decided that it was important to make sure that our portfolio is staying diverse. We will become a little heavier in Telecom and Energy with the Norway buy. The next step is to seek out something different.

We looked at gold because we don't have any exposure to commodities, but it had a slight drop in 2009 and it was really cheap in 2005. However, it is up up up, and it doesn't seem like the right time to get in on this. Next, we decided to look into Africa in our quest to have a foothold on the entire Risk map.

In this article about some Africa ETFs there is a case made for investing in the continent while avoiding mining and oil. This might be a nice jumping-off point for some potential investments. We'd like to take a look at the makeup of some of the ETFs on the list.

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

Next week we should do that

Profit!