Investment Books Recommended by Warren Buffett

Warren Buffett, head of Berkshire Hathaway (BRKA) (BRKB), really came out with a list of books that he recommends on how to invest.

At last year’s Berkshire Hathaway annual meeting, Buffett actually provided such a list. The books he recommended about himself can be found here and here.

However, if you are interested in reading books about how to invest, that are recommended by Warren Buffett, they can be found on the list below:

Business Adventures Twelve Classic Tales from the World of Wall Street

Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition

The Great Crash 1929

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

Investing Between the Lines: How to Make Smarter Decisions By Decoding CEO Communications

Happy Reading!

 

 

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Top Restaurant Short Squeeze Stocks

by Fred Fuld III

Many restaurant stocks have taken a hit over the last six months, with some dropping by more than 50%. Several of these stocks are heavily shorted, creating short squeeze opportunities.  When stocks rise quickly in price for whatever reason, short sellers scramble to cover their positions by buying shares, and causing the price of the stocks to increase even more.

Traders and investors can make money on the long side from short squeezes. One technique that stock traders utilize is buying short squeeze stocks, in other words, companies have been heavily shorted. Here is a more extensive explanation of  short squeezes.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Here is one example from the list below.  Shake Shack(SHAK) is a stock that is heavily shorted. As a matter of fact, 26% of the float is shorted. (The float is the number of shares of the company that are freely tradeable.) Plus, the number of shares shorted has increased by 4% over last month. It also has a days-to-cover ratio of 5.7, which means that it would take almost six days for the short sellers to cover their position, based on the average daily volume.

So what stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Possibly a short squeeze will cause a few of these to fly higher.

Stock Symbol % of Float Days to Cover
Shake Shack SHAK 26% 5.7
Dave & Buster’s PLAY 33% 1.8
Red Robin RRGB 35% 3.4
El Pollo Loco LOCO 19% 11.2

Disclosure: Author didn’t own any of the above at the time the article was written.

How to Speculate on the Results of the Presidential Election

by Fred Fuld III

If you have been wondering what the percentage chance of a particular candidate winning an election, there is a website you can check out.

It shows the betting odds for the U.S. presidential election and the odds for the Senate control and the House control, based on the oddsmakers.

The site is called Election Betting Odds. Unfortunately (or maybe fortunately?) for Americans, there are laws prohibiting betting on political elections in the United State (with one exception which will be described later in this article).

The Election Betting Odds site is based primarily on Betfair.com, the major betting site based in the UK, along with other sources. Americans are not allowed to bet on this site.

However, if you are a U.S. citizen and you really want to speculate on the outcome of the upcoming elections, you can use a site called PredictIt.org. Why is there this loophole?

Well first, Predictit.org is an experimental project operated for academic purposes at New Zealand’s Victoria University under permission from the CFTC, the Commodities Futures Trading Commission.

Second, the maximum you can “invest” is only $850, so there is not a huge risk to traders if they lose. Bid amounts range from one penny to 99 cents.

The interesting feature about PredictIt is that there are numerous politically related possibilities that you can speculate on, not just the presidential election.

Here are just a few of the things you can bet on:

  • Which party will win Florida in 2020?
  • Will Nancy Pelosi become Acting U.S. President on January 20?
  • Who will win the 2020 New Hampshire Democratic gubernatorial primary?
  • Will Trump resign during his first term?
  • Who will be the next justice to leave the Supreme Court?
  • Will a federal charge against Rudy Giuliani be confirmed by Dec. 31, 2020?
  • Will Kim Jong-Un be Supreme Leader of North Korea on Dec. 31?
  • Will Benjamin Netanyahu be prime minister of Israel on Dec. 31, 2020?
  • Will Scottish Parliament call for an independence referendum in 2020?
  • Will NASA find 2020’s global average temperature highest on record?

I found it fascinating just to browse through to see all the different things that people are speculating on.

The Stock market will be Closed on Labor Day and These Other Days

In case you were wondering, the New York Stock Exchange and NASDAQ will be closed on Labor Day, Monday, September 7, 2020.

These markets will also be closed these following days:

  • Thanksgiving Day, Thursday, November 26, 2020
  • Christmas Day, Friday, December 25, 2020
  • New Years Day, Friday, January 1, 2021

In addition:

The stock market will close early at 1:00 p.m. ET (1:15 p.m. for eligible options) 10:00 a.m PT on Friday, November 27, 2020.

The stock market will close early at 1:00 p.m.  ET (1:15 p.m. for eligible options) 10:00 a.m PT on Thursday, December 24, 2020.

Which Politicians Are Your Friends and Family Donating Money To?

As we approach the presidential election, money is starting to flow to campaigns.

Have you ever wondered who your friends really support? How about your family members?

The best way to tell who someone really supports is to follow the money.

Here is how you can find out what politicians they have donated too. The Federal Election Commission actually posts this information on their website. All you need to do is enter the name of the Contributor and the Zip Code, adjust the date range, scroll down and see the results.

To test it out, enter your mayor or city council members.

Click the following link to do your search:

Federal Election Commission Donor Search

https://www.fec.gov/data/receipts/individual-contributions/?two_year_transaction_period=2020&min_date=01%2F01%2F2015&max_date=12%2F31%2F2020

 

Winning Now, Winning Later: How Companies Can Succeed in the Short Term While Investing for the Long Term

by Fred Fuld III

When I first got the book Winning Now, Winning Later: How Companies Can Succeed in the Short Term While Investing for the Long Term, the first thing that caught my eye was the list of successful people who gave it endorsements, including Bob Iger, Executive Chairman of Disney, Hank Paulson, former U.S. Secretary of the Treasury, Marc Benioff, Co-CEO of Salesforce, and Indra Nooyi, former CEO of PepsiCo.

The author, David M. Cote, was the CEO behind the enormous success of Honeywell. He covers, in great detail, the process for successfully achieving both short-term goals and long-term goals for your company. Every chapter has a summary at the end called Questions to Ask yourself.

The book includes many informative and sometimes amusing anecdotes, which help to explain his process for business success for both a short term and long term basis.

I found Chapter 4 Focus on Process, to be the most important. It explains how it is imperative to get employees involved in improving company processes, and the utilization of phases to improve success.

Whether you are the head of a large publicly traded corporation, the CEO  of a mid-size business, or managing a fast growing startup, I recommend that you read Winning Now, Winning Later as you will find extensive advice and information that will help your organization.

 

 

 

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Coffee May Benefit You and Your Portfolio

by Nkem Iregbulem

Many people drink coffee first thing in the morning. Some heavily rely on this dose of caffeine to boost their energy and start their day. Turns out that in addition to its energy-boosting powers, coffee may be associated with more health benefits than we once thought. Recent studies have highlighted different reasons why coffee may be good for us.

A cohort study published in the Current Developments in Nutrition journal this past May investigated the association between coffee consumption and mortality rates. The participants of the study were 36,758 US adults ages 20+ years who participated in the National Health and Nutrition Examination Survey (NHANES) from 1999 to 2014. Researchers found that drinking 1 to 2 cups of coffee a day was significantly associated with a reduced risk of heart disease mortality. Additionally, they found that participants who consumed 1 or more cups of coffee a day had a lower risk of all-cause mortality.

Recent studies have also studied the potential health benefits of caffeine, a key component of coffee. A meta-analysis published in Nutrients this past June explored the effect of caffeine on the risk and progression of Parkinson’s disease (PD). Nine different studies were included in the healthy cohort, and four were included in the PD cohort. Researchers observed a significant deceleration in the progression of motor symptoms in patients with PD. They also found that caffeine consumption among healthy individuals was associated with a lower risk of developing PD.

These potential health benefits may also compel you to invest in some coffee-related companies. Your options include Starbucks (SBUX), Coffee Holding (JVA), Farmer Brothers Co. (FARM), Spot Coffee (SPP), and Youngevity International Inc. (YGYI). All of these stocks are traded on NASDAQ except SPP, which is traded on the TSX Venture Exchange — previously known as the Canadian Venture Exchange.

Your first option is Starbucks (SBUX), the largest coffeehouse chain in the world. The company has over 31,000 stores around the world that sell coffee, tea, blended drinks, sandwiches, pastries, and many other food and drink items. The global coffee powerhouse was founded in 1971 and is based in Seattle, Washington. Starbucks has a market cap of $90.09 billion and pays a dividend yield of 2.13%. With a high price-to-sales ratio of 3.81 and a price-to-book ratio of 71.29, its stock trades at 28.25 times forward earnings. The company enjoys a 3-year revenue growth rate of 7.54% and an even better 5-year revenue growth rate of 10.02%. Starbucks has managed to increase its revenue each fiscal year over the past decade.

You might also consider investing in Coffee Holding (JVA), a company that makes, roasts, packages, markets, and distributes roasted and blended coffee for private labeled accounts and its own brands. Its products can be divided into three product categories: wholesale green coffee, branded coffee, and private label coffee. The company was founded in 1971 and is currently headquartered in Staten Island, New York. Coffee Holding has a market cap of $18.1 million and does not pay a dividend. Its stock has an excellent price-to-sales ratio of 0.22 and a price-to-book ratio of 0.71. As of its most recent quarter, Coffee Holding has $2.65 million in total cash and $7.6 million in total debt. The company has a 3-year revenue growth rate 3.08% but a negative 5-year revenue growth rate of -4.50%.

Another option is Farmer Brothers Company (FARM), a coffee foodservice company that makes, wholesales, and distributes coffee, tea, and hundreds of other foodservice items to retailers and foodservice providers. Its customers include hotels, offices, restaurants, convenience stores, and other establishments. Founded in 1912 and based in Northlake, Texas, Farmer Brothers Company has a market cap of $123.08 million and does not pay a dividend. The stock has an excellent price-to-sales ratio of 0.22 and a price-to-book ratio of 0.83. As of its most recent quarter, Farmer Bros has $26.39 million in total cash and $105.91 million in total debt. The company enjoys a 3-year revenue growth rate of 3.06% and a 5-year revenue growth rate of 2.44%.

Spot Coffee (SPP) is a Canadian company that designs, builds, and operates coffee cafés throughout Canada and the United States. These cafés sell coffee, sandwiches, pastries, salads, and many other food and drink items. Most of the company’s revenue comes from sales at these cafés, licensing and franchise fees, and the wholesale of roasted coffee beans. Founded in 1996 and headquartered in Buffalo, New York, Spot Coffee has a market cap of $4.71 million and pays a dividend yield of 3.07%. Its stock has an excellent price-to-sales ratio of 0.53. As of its most recent quarter, the company has $6.89 million in total debt. Spot Coffee has a negative 3-year revenue growth rate of -4.22% but a better 5-year revenue growth rate of 1.44%.

Finally, you might consider Youngevity International Inc. (YGYI), a company that develops and distributes nutritional products and commercial coffee. It operates in two segments, Direct Selling and Commercial Coffee, but generates most of its revenue from the Direct Selling segment. It offers a wide variety of products including gourmet coffee, skincare and cosmetic products, nutritional supplements, sports and energy drinks, fashion accessories, digital products, and organic food. Youngevity was founded in 1996 and is based in Chula Vista, California. The company has a market cap of $24.26 million and does not pay a dividend. The stock has an excellent price-to-sales ratio of 0.13 and has a price-to-book ratio of 0.43. As of its most recent quarter, Youngevity has $7.27 million in total cash and $24.42 million in total debt. The company enjoys a 3-year revenue growth rate of 1.23% and a much better 5-year revenue growth rate of 13.66%.

Maybe a coffee stock will wake up your portfolio.

Disclosure: Author did not own any of the above stocks at the time the article was written.

 

Stocks Going Ex Dividend in September 2020

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

TOP DIVIDEND STOCKS

This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and many with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount.

Schlumberger N.V. (SLB) 9/1/2020 0.125 2.66%
Home Depot, Inc. (HD) 9/2/2020 1.50 2.14%
H&R Block, Inc. (HRB) 9/10/2020 0.26 7.25%
Coca-Cola Company (KO) 9/14/2020 0.41 3.46%
Portland General Electric (POR) 9/24/20 0.407 3.96%
Yamana Gold Inc. (AUY) 9/29/2020 0.018 1.14%

The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists HERE . Most of the lists are free.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

TOP DIVIDEND STOCKS

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written; affiliate links.

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How to Buy Stocks at a Greater than 12% Discount

by Fred Fuld III

It is actually  possible to buy stocks at a discount to their current trading prices. Here is how you can do it.

You can invest in closed end funds, also known as CEFs, that are trading at a discount to Net Asset Value, also known as NAV. The NAV is similar to the book value of stocks. In other words the NAV is calculated by adding up the value of all the stocks in the portfolio, and dividing that amount by the number of outstanding shares.

A closed end fund is similar to a regular mutual fund except that they trade throughout the day while the market is open and the trading price of the CEFs can fluctuate way above or way below the NAV. In addition, the number of shares is fixed. There are many closed end funds that are trading at a discount of over 10% of their net asset value. Many investors invest in these discounted CEFs in the hopes that the gap between NAV and price per share will eventually narrow.

One other advantage is that some of these CEFs pay a dividend, so that you can receive income while waiting for the gap to close.

Sometimes activist shareholders buy up a large amount of shares of heavily discounted CEFs and force the liquidation of those CEFs, in order to realize the net asset value.

Here are some examples with discounts ranging from 12% to 38%.

CEF Symbol Discount Yield Dividend
Foxby FXBY -38% 0.5% Annually
Herzfeld Carribean Basin CUBA -26% 16.7% Quarterly
Central Securities CET -18% 1.4% Semi-Annually
General American Investors GAM -18% 1.1% Annually
Eagle Capital Growth GRF -17% 7.7% Annually
Boulder Growth & Income BIF -16% 4.0% Quarterly
Royce Micro-Cap Trust RMT -16% 7.4% Quarterly
Miller/Howard High Income Equity HIE -14% 7.2% Monthly
Adams Diversified Equity ADX -14% 1.2% Quarterly
Sprott Focus Trust FUND -14% 6.8% Quarterly
Gabelli Dividend & Income GDV -13% 6.8% Monthly
Royce Value Trust RVT -13% 7.5% Quarterly

You should be aware that there are several risks with investing in discounted CEFs. First, the gap may exist for a long time, and can even widen. Second, the gap could theoretically narrow but the stocks in the portfolio could drop, so the fund would drop in price also. Third, many CEFs hold illiquid, private, or non-trading stocks, and the NAV is based on how the company valuates those shares, which may be a much higher value than what they could get if they tried to liquidate those stocks. Plus, some funds may own real estate or mortgages, which are very hard to value.

Before investing in any of these, check out the web site of the CEFs to see what stocks they own, and how many are invested in illiquid shares.

Maybe you can find some bargains with closed end funds.

Disclosure: Author did not own any of the above at the time the article was written.