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Any Day Traders on TA? (pg. 6)
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| DigiNut |
| quote: | Originally posted by Skipper
Companies will go a long way to prop up a dividend, what I'm asking is if it's being supported by actual, sustainable operating cash flow. |
And the answer is... yes. They still have over $100M in net income, unless I read their statement wrong.
Can you give a specific example of one of these prime picks for dividend cuts? I'm just curious... |
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| Skipper |
| quote: | Originally posted by DigiNut
And the answer is... yes. They still have over $100M in net income, unless I read their statement wrong.
Can you give a specific example of one of these prime picks for dividend cuts? I'm just curious... |
Net income is not a measure of cash by any stretch of the imagination.
Distributable cash is a non-GAAP measure but is generally looked at by the street to determine how sustainable a divvie is. Doing sensitivities around the distributable cash figure will give you a better sense of what the chances are for a cut. But generally if the stock price is low enough to give you a yield of 15+%, the market has already priced in the cut as if it's a sure thing.
On top of that, when the yield is over 15% a company's cost of capital goes through the roof and you can pretty much bet that they won't be raising equity with a yield that high - and if they're tapped out on their debt then they're screwed if they need money. No one comes to the market for money when it costs 15%. |
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| slingshot |
| quote: | Originally posted by Skipper
Net income is not a measure of cash by any stretch of the imagination.
Distributable cash is a non-GAAP measure but is generally looked at by the street to determine how sustainable a divvie is. Doing sensitivities around the distributable cash figure will give you a better sense of what the chances are for a cut. But generally if the stock price is low enough to give you a yield of 15+%, the market has already priced in the cut as if it's a sure thing.
On top of that, when the yield is over 15% a company's cost of capital goes through the roof and you can pretty much bet that they won't be raising equity with a yield that high - and if they're tapped out on their debt then they're screwed if they need money. No one comes to the market for money when it costs 15%. |
Not necessarily, it depends on how the trust decides the metrics to which their distributions are based. It's going to vary between industries. Boston Pizza for example distributes based on a percentage of sales so that cash flow could be easily predicted by modeling sssg as well as new restaurant openings. Issuing new units in this case wouldn't necessarily be a problem due to what their distribution is tied to. With sound expansion plans it may actually be relatively easy because any increase in overall sales would benefit the distribution.
In something like Yellow Pages, it seems as if they distribute based on what's leftover so the state of their distribution is pretty much tied to the state of their future cash flow projections. In this case rather bleak given the demise of essentially anything in print form. |
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| rabbitjoker |
| quote: | Originally posted by slingshot
In this case rather bleak given the demise of essentially anything in print form. |
YP has significant online assets. |
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| Skipper |
| quote: | Originally posted by slingshot
Not necessarily, it depends on how the trust decides the metrics to which their distributions are based. It's going to vary between industries. Boston Pizza for example distributes based on a percentage of sales so that cash flow could be easily predicted by modeling sssg as well as new restaurant openings. Issuing new units in this case wouldn't necessarily be a problem due to what their distribution is tied to. With sound expansion plans it may actually be relatively easy because any increase in overall sales would benefit the distribution.
In something like Yellow Pages, it seems as if they distribute based on what's leftover so the state of their distribution is pretty much tied to the state of their future cash flow projections. In this case rather bleak given the demise of essentially anything in print form. |
I'm not entirely familiar with Boston Pizza but isn't the distribution 11.5 cents/month? How often does that fluctuate with same store sales?
I guess in terms of raising money, regardless of whether the money increases the sales which supports or increases the distribution, you're still paying 15%. Issuing equity with this kind of yield is expensive, it's like a 15% interest rate on a bank line - and when rates are where they are, it hurts to pay 15% for any form of capital. |
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| DigiNut |
| quote: | Originally posted by Skipper
But generally if the stock price is low enough to give you a yield of 15+%, the market has already priced in the cut as if it's a sure thing. |
Typical. Not even a nod to the fundamentals or the company itself, just a bunch of technical ifs and buts.
Good, I hope the jittery day-traders watching streaming index feeds ignore these equities. It means less wild price fluctuations for conservative investors looking for safe returns (i.e. retirement income). |
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| exstasie |
I'm pretty new to all of this Trading Stuff...
But can someone just give me a better explanation of VTSO?
Thanks!
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| Skipper |
| quote: | Originally posted by DigiNut
Typical. Not even a nod to the fundamentals or the company itself, just a bunch of technical ifs and buts.
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Of course its a nod to the fundamentals. People are selling off the stock because they've analyzed the macro picture and the fundamentals and do not believe the dividend can be sustained. It comes back to the distributable cash - if the dividend is more than operating cash flow (after maintenance capex spending and changes in working capital), the divvie is likely being debt funded or supported by non-sustainable forms of cash flow, which cannot continue forever.
The stock sells off before the cut (thus pushing the yield up) because no one wants to get caught owning it when the cut is eventually announced and the stock sells off further. |
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| Nrg2Nfinit |
just dumped some tfsa money into rim.. a good stock thats slightly volatile and liquid. Im hoping it can come up to 90 or 100 (wishful thinking).
Usually it defy's the market when the markets down. Rogers' low q1 and RIM hiring during a mobile slump sent rim down today. |
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| DigiNut |
My winnars for today: PCX, DXO, HOU, made 5-10% on all of those. These babies have been super reliable over the past month; every time they go down by more than about 10% they bounce back up.
Also picked up GMR the other day when I saw it bottom out at 8.41. It didn't do today but AH it's suddenly up to 9.61! No idea what happened, and I know AH doesn't mean dick, but I hope it holds, because that's a tidy 14% on a 2-day trade.
So far my strategy's just been to buy whatever got seriously beaten up at the end of the day (obviously not arbitrarily - looking for ones with high market cap that dropped for silly reasons or no reason at all), and set a 3-5% stop or just keep a close eye on it. Cut and run at a 5-10% profit depending on momentum.
I don't know if this would work for everyone, but it's been working very well for me, even doing it over and over again for the same stocks. I'm still new, and maybe I've just been lucky, but I don't understand why people say that most active traders lose money; they must be referring to folks who buy on rallies and hold on despite losses, and then start trying to pump them up on Yahoo/Google as if that could possibly have any effect. Sunk costs fallacy, getting hung up on the "recovering losses" notion, etc.
Aaaanyhoo, to extasie:
I think VTSO is the technical term for what I just call a trailing stop (even though I suppose that's incorrect because there are several kinds of trailing stops). You set a percent limit, say 10%, and every time the share price goes up, the actual "stop" price is updated to be 10% of the new share price, but if the share price goes down, nothing happens. It's called "virtual" because it's not a real stop order, it's more like several successive stop orders.
A typical scenario would be:
- Buy XYZ for $10 and set a 10% trailing stop.
- If XYZ drops below $9 on the first day, it gets sold.
- If XYZ closes at $12, your new stop price is $10.80 on the next day. If it goes below $10.80 it gets sold.
- If XYZ drops to $11, your stop is not changed. It is still at $10.80.
- XYZ drops to $10.50 the day after that. Your trailing stop gets executed at $10.80. You've made an 8% profit without having to really watch it or do any work.
Make sense? It's basically a lazy way of locking in profits, if you're confident that the price will go up but are worried about volatility. |
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| exstasie |
Thanks Digit.
I was reading up on it and was a little confused, but that explains it a bit.
The only part i'm still confused is when i'm placing an order. From what i've read, and what you stated, I put in a % as my limit, but on my Trading Account, it never gave me that option. Only a Stop Limit $..unless it assumes that what ever you put in the Stop Limit $ is actually the %.
I found this which also helps explain it and makes sense.
And yeah, I funded my account yesterday to buy some HOU this morning, but for some reason my account didn't get funded! ARGHHHHH
PS. What's everyone's thoughts on ETFs? I got some ETFs in my portfolio mainly for longterm growth and dividend payout...
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| DigiNut |
| quote: | Originally posted by exstasie
The only part i'm still confused is when i'm placing an order. From what i've read, and what you stated, I put in a % as my limit, but on my Trading Account, it never gave me that option. Only a Stop Limit $..unless it assumes that what ever you put in the Stop Limit $ is actually the %. |
Is it TD WebBroker? Because they don't have trailing stops, just plain vanilla stops. That was my complaint about them earlier in the thread. Some other brokerages may also consider that an "advanced" or "active trader" type feature. I don't know, I guess it's a little trickier to implement, system-wise.
| quote: | | And yeah, I funded my account yesterday to buy some HOU this morning, but for some reason my account didn't get funded! ARGHHHHH |
I wouldn't worry, you missed the boat anyway if you were going to buy this morning. It opened high today but didn't go up very much. I guess it's possible it might open higher tomorrow, but Monday was the day to buy (5.25). Today was the day to sell. :p
| quote: | | What's everyone's thoughts on ETFs? I got some ETFs in my portfolio mainly for longterm growth and dividend payout... |
Which ETFs pay dividends? I know there are a few, but I'm not used to seeing that.
Anyway, I love 'em - HOU is an ETF, DXO is an ETN, I know some people who bought the PowerShares water ETF as a medium-term investment and made a bundle, and FAS/FAZ are great if you can keep your wits about you or are willing to play with options - although they seem to be running out of steam lately. Plus, Powershares has a wind power ETF called PWND, and you just can't get more l33t than that.
Just make sure you understand that leveraged (2X or 3X) ETFs do generally shrink over time, so you probably don't want to hold them as "investments" - they are trading tools. And make sure you understand what the ETFs are actually tracking. Crude oil ETFs for example do not track the spot price, they track futures and/or moving averages. I see a lot of confusion over that type of thing.
...Aaaand GMR is back down again in AH. Le suck. |
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