Wednesday, March 28, 2012

Medical Fascism in America

Marketwatch ran this article yesterday.  There are more like it on the internet today.  Medical fascism is alive and well in America.  My comments are in red below.

March 27, 2012, 1:39 p.m. EDT

Justices show split over health-insurance mandate

High court adopts ideological stances on purchase requirement

By Russ Britt, MarketWatch

LOS ANGELES (MarketWatch) — Supreme Court justices appeared to be split along ideological lines after hearing arguments over whether U.S. citizens should be made to buy insurance — the central issue in the health-care-reform debate — in a second day of hearings Tuesday.

Obamacare is medical fascism.  Fascism occurs when government regulates corporations to such an extent that they are just arms of the government with the illusion of private property rights.  Government is telling medical corporations and insurance companies how to run their business and it is forcing the individuals of society to buy it.  This is sickening and tyrannical.

Blog reports from The Wall Street Journal and other sources, however, indicated that there may be two swing votes in Chief Justice John Roberts and the court’s perennial ideological straddler, Justice Anthony Kennedy.

President George W. Bush nominated Chief Justice John Roberts in 2005.  He filled the vacancy left by the death of William Rehnquist.  President Ronald Reagan appointed Justice Anthony Kennedy in 1988.

Reports showed that the court’s liberal bloc, Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan, were arguing in favor of the 2010 Affordable Care Act and its so-called individual mandate during the two-hour debate.

I wonder what portions of the US Constitution the liberal judges were using to support their arguments for the 2010 Medical Fascism Bill?

Meanwhile, conservative appointees to the high court were strongly challenging those who were supporting the requirement that all U.S. citizens be insured. Solicitor General Donald Verilli faced rapid-fire questioning from Justices Antonin Scalia and Samuel Alito in the latter half of the two-hour argument devoted to the question.

What were the Solicitor General’s arguments for forcing U.S. citizens to buy health insurance?  What part of the US Constitution

Throughout the debate, the Journal’s blog indicated that Ginsburg, Kagan and Breyer came to Verrilli’s defense several times as the law faced skeptical questioning from the more conservative justices.

Ginsburg argued at one point that the decision by an individual not to buy insurance affects others. But Scalia and Alito questioned that. Alito contended that the law forces young, healthy people “to subsidize services that will be received by somebody else.”

Individuals make billions of decisions everyday not to buy millions of products or services marketed to them worldwide.  Their decision not to buy affects others, but so what?  Producers of goods and services must persuade individuals to buy their goods voluntarily.  They must make them a better deal.  They must serve customers desires or they will go bankrupt.  Is everyone obligated by government force to buy goods and services that they don’t want just because the seller of the good or service might be affected?  This is lunacy.  Justice Ginsburg absolutely abhors a free market.  Hasn’t she affected red robe makers by not buying their red judge robes and wearing a black robe instead.  Should the government force her to buy red robes instead of black robes be she is affecting them.  If they do, then now the black robe clothiers are affected.  She is a Marxist in supreme court justice’s clothing.

If there is no individual mandate, Ginsburg also said, it would force the price of insurance higher. Scalia countered that’s no different than buying a car; if fewer people buy cars, that could force up prices.

Supreme court justices have no concept of economics.  Politicians enact laws prohibiting free and open competition amongst producers.  The existing producers lobby the politicians to enact barriers to entry for new competition.  This reduces the supply of healthcare while increasing the price of healthcare.  Cartels are bad for consumers of healthcare.  Consumers get high prices and crappy healthcare.  What is needed is the elimination of government involvement in healthcare.  Large profit margins will attract entrepreneurs to invade the existing healthcare market to provide better healthcare than is currently available from the healthcare cartel.

Roberts wondered whether the requirement to buy health insurance is the same as forcing individuals to prepare for other types of emergencies, according to Journal posts. Later, he said the requirement to buy insurance could open the doors for Congress to require the purchase of other types of goods in the future.

 “All bets are off,” Roberts remarked.

It is immoral to force an individual to allocate his life, liberty, or property to the purchase of goods that he has already voluntarily decided not to purchase.  How would the justices like being forced to cross train for a triathlon three hours per day so they can stay fit and not affect the healthcare systems’ costs which “affects others” who pay the taxes that pay for the healthcare system?

Verrilli has responded in most instances by framing the issue around market regulation, which is something that Congress can oversee under the Constitution’s interstate-commerce clause. The clause gives Congress the power to regulate markets. Virtually all individuals are or will become part of the health-care market, he has argued.

The interstate-commerce clause does not give the congress the power to regulate markets.  It was supposed to prevent states from enacting tariffs that would keep commerce from being “regular”.  See Judge Andrew Napolitano’s more eloquent explanations here: http://tinyurl.com/bp47ny3 .  Statists of both parties had use this clause to justify regulation of everything and anything.

Kennedy said Verrilli needed to answer a “very heavy burden of justification” to show how the Constitution authorizes Congress to require that individuals buy insurance or pay a penalty. At one point, Kennedy commented that the mandate changes the relationship between citizens and the government “in a fundamental way.”

If you really want to see the legitimacy of the US Constitution or any constitution destroyed, then read Lysander Spooner’s “No Treason: The Constitution of No Authority” essay from the 19th century.  Spooner was an abolitionist in the late 19th century.  http://en.wikipedia.org/wiki/No_Treason

But both Kennedy and Roberts grilled Paul Clement, the attorney arguing to strike the mandate on behalf of 26 states.

The law is patently unconstitutional since providing healthcare is not an enumerated power of congress in Article I Section 8.  Don’t these justices see the tyranny that is involved here?

Roberts noted that the government is simply trying to regulate the financing of health care, while Kennedy said all citizens are part of the health-care risk pool, according to the Journal’s blog.

During that portion of the session, Scalia and Alito reportedly did not challenge Clement, indicating they’re planning to support overturning the mandate.

Without the individual mandate, other provisions of the law could be struck down. The mandate places healthy people into the risk pool so that their costs can be shared with those of unhealthy persons.

But it is possible that the court will strike down only the individual mandate, leaving the requirement that insurance companies must offer coverage to any individual, regardless of his or her health history.

If you believe in voluntary exchange, free markets, and property rights; then you should see the immorality of forcing insurance companies to offer coverage to individuals that they would voluntarily choose not to insure.  People that don’t think that is right or who would want it any different way are free to pool their capital to start their own insurance company that makes its unique service proposition to their customers “We insure anyone regardless of their health history!”.  That company will be bankrupt in a short amount of time.

Insurers including UnitedHealth Group Inc. (NYSE:UNH)  and WellPoint Inc. (NYSE:WLP)  struggled on the day, down as much as 2%.

UnitedHealth Group (UNH) pays a paltry 1.17% dividend and WellPoint (WLP) pays a measly 1.64% dividend.

The court hearings took place as protesters from both sides of the health-care debate gathered outside the building. Among those calling for the overturning of the mandate was tea party-favorite Rep. Michele Bachmann, the conservative Republican from Minnesota who dropped out of this year’s presidential race.

Government pits people who would ordinary not interact or have conflict with one another against each other.  This is the lesson in the book/movie The Hunger Games.  Go see it or read it.

Separately, the nonpartisan Urban Institute issued a study Tuesday saying that 7% of all those under age 65 would be subject to the rule requiring the purchase of insurance.

The study says 87.4 million nonelderly Americans would be exempt from the individual mandate because of their low-income or undocumented status. Of the remaining 181 million Americans under age 65, an estimated 86% have insurance, the study says.

Develop a relationship with doctors and nurses in your local area who will be willing to work in the grey market of healing before the full force of medical fascism takes effect.

Monday, March 26, 2012

First Look at 9% High Dividend Stock Vector Group LTD (VGR). Stop Smoking and Stop Buying VGR.

Today I take a look at tobacco company Vector Group LTD (VGR).  I’d never heard of Vector before running a high dividend stock screen recently.  They are a 9% high dividend stock, but is their dividend safe?  No.  How is the stock priced relative to earning power?  Speculatively priced.  What about their balance sheet?  It is awful.  Read on to see how bad the numbers are for this company.  There is a reason the company’s stock price has only increased 0.32% in 10 years while price inflation has eroded over 30% of the dollars purchasing power in the same time.

Vector Group LTD (VGR)

Price: $17.72 (last week)

Shares: 79.57 million

Market capitalization: $1.41 billion

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Preferred stock: None.

Bonds: $1.7 billion outstanding.  Nothing is due soon, but Vector has other debt troubles (see balance sheet below).

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What does the company do?  Vector Group manufactures cigarettes through subsidiaries. Its Liggett Group subsidiary produces cigarettes under discount brands and private labels. The company also produces cigarettes in Russia. Recently, Vector Group has launched QUEST, which it claims is a genetically engineered nicotine-free cigarette.

DIVIDEND RECORD: Vector Group is a steady dividend payer and grower, but the money company is paying out more than it earns.

Dividend: $0.40

Dividend yield: 9%  ($1.20 annual dividend / $17.72 share price)

Dividend payout: 129%  ($1.20 / $0.93 recent EPS) –OR- 164% ($1.20 / $0.73 average adjusted earning power)

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EARNING POWER: $0.73 per share @ 79.57 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

12/2007

$0.93

$74 M

74 M

$0.93

12/2008

$0.69

$61 M

82 M

$0.77

12/2009

$0.31

$25 M

77 M

$0.31

12/2010

$0.68

$54 M

78 M

$0.68

12/2011

$0.93

$75 M

79 M

$0.94

Five year average adjusted earnings per share is $0.73

Consider contrarian buying below $5.84 (8 times average adjusted EPS)

Consider value buying below $8.76 (12 times average adjusted EPS)

Consider speculative selling above $14.60 (20 times average adjusted EPS)

Vector Group LTD (VGR) is currently trading at 24 times average adjusted EPS.  This is stock is speculatively priced.

BALANCE SHEET – Hideous!!  Negative equity!

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Most of the damage to the balance sheet has been due to an increase of short-term debts and other long-term liabilities.

Fiscal year ends in December. $USD in millions except per share data.

2007-12

2008-12

2009-12

2010-12

2011-12

Current liabilities

Short-term debt

21

97

22

52

135

Accounts payable

7

6

4

9

10

Deferred income taxes

24

93

17

37

36

Taxes payable

12

44

30

25

Accrued liabilities

34

69

46

40

42

Other current liabilities

24

19

15

59

68

Total current liabilities

109

296

149

227

315

Non-current liabilities

Long-term debt

277

Deferred taxes liabilities

142

49

45

52

61

Accrued liabilities

2

Pensions and other benefits

35

34

39

46

Other long-term liabilities

156

304

512

678

593

Total non-current liabilities

575

388

591

769

702

Total liabilities

684

684

740

996

1017

Book value per share: ($1.12)  Vector Group has a negative book value per share.  This means stay away at any price.  There are much better stocks to buy.

Price to book value ratio: Not applicable because of the negative book value (under 1.0 is good)

Current ratio: 1.61 latest quarter (over 2.0 is good)

Quick ratio: 1.00 latest quarter (over 1.0 is good)

Debt to equity ratio: Not applicable because they have no equity. (lower is better)

Percentage of total assets in plant, property, and equipment: 6.1% (the higher the better)  Other assets include: Current assets 54.94%, Intangibles 11.59%, and Long Term Assets 27.32%

CONCLUSION – Vector Group LTD is a 9% high dividend stock, but I don’t trust their ability to payout the dividend in the future.  They are going to have to issue more shares or debt to finance the dividend.  The stock is speculatively priced at 24 time average adjusted earning power.  The balance sheet is horrifying.  They have negative equity and no plan to fix the situation.  I wouldn’t buy this stock until its balance sheet is repaired.  Stay away from Vector Group LTD.  It is headed for a cliff when the worldwide recession reappears.  This appears to be a poorly run company.

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DISCLOSURE – I don’t own Vector Group LTD (VGR)

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Wednesday, March 21, 2012

Don't Overpay for Apple (AAPL) Despite the New Dividend.

Today I take a first look at Apple (AAPL) since they finally decided to pay a dividend to the owners of the company.  You’ll learn how small the dividend yield will be, how speculative the current share price is, and how all the claims of massive cash stockpiles is not so true.  Read on to find out.

Apple (AAPL)

Price: $608.60

Shares: 932.37 million

Market capitalization: $567.44 billion

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Preferred stock: none

Bonds: none

DIVIDEND RECORD:  Apple has never paid a dividend in 17 years, but they recently announced that they would begin paying a quarterly dividend of $2.65 per share (http://www.bloomberg.com/news/2012-03-19/apple-to-pay-dividend-buy-back-stock-to-return-some-of-its-cash.html) beginning in the period starting July 1st, 2012.  Will they become a dividend grower?  Who knows; they have no track record.  However, the dividend will not be threatened by any debt, preferred stock, or bonds.

Dividend: $2.65 quarterly starting in 2Q 2012

Dividend yield: 1.7% ($10.60 annual dividend / $608.60 share price)

Dividend payout: 30% ($10.60 dividend / $35.11 recent EPS) -0R- 85% ($10.60 dividend / $12.39 average adjusted earning power)

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EARNING POWER: $12.39 per share @ 932.37 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

9/2007

$3.93

$3,496 M

889 M

$3.75

9/2008

$6.78

$6,119 M

902 M

$6.56

9/2009

$9.08

$8,235 M

907 M

$8.83

9/2010

$15.15

$14,013 M

925 M

$15.03

9/2011

$27.68

$25,922 M

937 M

$27.80

Five year average adjusted earnings per share is $12.39

Consider contrarian buying below $99.12 (8 times average adjusted EPS)

Consider value buying below $148.68 (12 times average adjusted EPS)

Consider speculative selling above $247.80 (20 times average adjusted EPS)

Apple (AAPL) is currently trading at 49 times average adjusted EPS.  This is stock’s price is highly speculative.

BALANCE SHEET – The chart of the balance sheet is beautiful, but the price to book value ratio shows you how overvalued Apple is at the present time.  Investors have forgotten that Apple traded at $82 - $85 a share between November 2008 and March 2009.  You can buy Apple near its book value if you are patient.  Their current ratio is not impressive despite all the pundit talk of Apple having so much cash.

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Book value per share: $81.80 as of September 2011

Price to book value ratio: 7.44 (under 1.0 is good)  You are paying a massive premium to book value for every Apple share at today’s prices.  Remember that is only as good as its last product.  Not every product is going to be a homerun.  When it eventually disappoints the share price is going to crash as the hedge funds retreat.

Current ratio: 1.58 latest quarter (over 2.0 is good)  I thought with all that talk of Apple being loaded with cash that they would have blow the current ratio away.   That simply isn’t the case.  They have $54.771 billion in current assets and $34.607 billion in current liabilities.

Quick ratio: 1.35 latest quarter (over 1.0 is good)  There is the cash showing through.

Debt to equity ratio: 0 (lower is better)  They are long term debt free.  Outstanding.

Percentage of total assets in plant, property, and equipment: 5.64% (the higher the better)  Not a lot of plant and equipment.  Here are where their assets are relative to total assets: Other long term investments 51.72%, current assets 39.49%, and intangibles 3.15%.

CONCLUSION – Apple will be a small dividend payer yielding about 1.7% at today’s stock price.  It will be interesting to see if they become a strong dividend grower over time.  The dividend will be safe at the onset.  Payout ratios are not a problem.  In my opinion the stock price is highly speculative at 49 times average adjusted earning power of $12.39 per share.  Apple’s share price has taken a beating in the past.  In late 2007 the share price peaked at $199.  By March 2009 the stock price had fallen to $85.  Don’t make the mistake to believe that Apple is crashproof.  There is a worldwide recession coming and Apple will take another beating.  I think the dividend it to entice hedge funds from pulling out of the stock with the recession hits.  Apple’s balance sheet is not as strong as I thought.  The price to book value is ridiculous right now and their current ratio is unimpressive.  However, they are in much better shape than most companies.  I recommend you sell it  if you own it now.  I think Apple is a safe buy below $148; otherwise, you’re playing a speculative game of the greater fool theory.  Don’t get trampled by the hedge funds when they exit their positions in Apple.  The dividend yield will be much higher below $148, you won’t be paying through the nose for earnings, and you’ll pay a much smaller premium to book value.

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DISCLOSURE – I don’t own Apple (AAPL).

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Tuesday, March 20, 2012

Apple dividend

There is news that Apple will begin paying a $2.65 per share quarterly
dividend (http://news.investors.com/article/604927/201203201524/apple-shares-retreat-fr....
That is great news, but I like high dividend stocks. Apple would
become a 6% high dividend stock if it pays its proposed dividend and
its stock price drops to $176.66. Unfortunately for current Apple
investors that would be nearly a 71% price decline from today's
closing price of $605.88 per share. Right now you are laughing at me.
How preposterous!! Ahhh, but you forget that Apple was selling for
$176 in mid-September of 2009. Apple is not market-proof. I will
write a "First Look" article on Apple soon where we can discover their
average earning power together.

There is another way for Apple to become a high dividend stock. They
could pay out 80% of the recent earnings of $35.11 per share in the
form of a dividend. A $7.02 quarterly dividend payment would bring
the yield up to 6%. I'm very confident that Apple will not do this.

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sheets.

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Thursday, March 15, 2012

A First Look at Ship Finance International (SFL). Floating or Sinking?

Today I take a look at diversified ship operator, Ship Finance International (SFL).  They are a high dividend stock yielding 8.8% at present.  But is the dividend safe?  Are they a steady dividend grower?  Is the stock over or under priced?  Is their balance sheet strong?  Read on to find out.

Ship Finance International (SFL)

Price: $13.74

Shares: 79.12 million

Market capitalization: $1.09 billion

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What do they do – Ship Finance International leases a fleet of 57 crude oil tankers exclusively to a company called Frontline Shipping Limited. Ship Finance purchased the oil tankers from Frontline Ltd., the parent company of Frontline Shipping. Ship Finance also provides administrative and maintenance services for the vessels through a partnership with Frontline Management Ltd., another subsidiary of Frontline Ltd.

Preferred stock: none.

Bonds: $1.7 billion outstanding

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DIVIDEND RECORD: Spotty.  They have a pattern of growth and cuts.  In 2007 the dividend was $0.55 quarterly.  In 4Q2008 it grew to $0.60.  Then they cut it in half in 2009.  It grew from $0.30 to $0.39 in 2009 to 2011.  This quarter it was cut to $0.30 again.

Dividend: $0.30 quarterly

Dividend yield: 8.8% ($1.20 annual dividend / $13.74 share price)

Dividend payout: 57% ($1.20 / $2.09 recent EPS) –OR- 55% using average adjusted earning power ($1.20 / $2.16)

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EARNING POWER: $2.16 @ $79.12 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

2006

$2.48

$181 M

73 M

$2.29

2007

$2.30

$168 M

73 M

$2.12

2008

$2.50

$182 M

73 M

$2.30

2009

$2.59

$193 M

74 M

$2.44

2010

$2.09

$166 M

79 M

$2.10

2011 (est)

$1.56

$133.45 M

79.12 M

$1.68

2011 earnings quarter by quarter

EPS

Net income

Shares

Adjusted EPS

2011 Q1

$0.40

$32.1 M

79.12 M

$0.405

2011 Q2

$0.40

$41.47 M

79.12 M

$0.524

2011 Q3

$0.35

$27.45 M

79.12 M

$0.346

2011 Q4 (est)

$0.41

$32.43 M

79.12 M

$0.409

2011 Total (est)

$1.56

$133.45 M

79.12 M

$1.68

Six year average adjusted earnings per share is $2.16

Ship Finance International (SFL) is currently trading at 6.36 times average adjusted EPS.  This is stock is in contrarian territory.

Consider contrarian buying below $17.28 (8 times average adjusted EPS)

Consider value buying below $25.92 (12 times average adjusted EPS)

Consider speculative selling above $43.20 (20 times average adjusted EPS)

BALANCE SHEET – You would be paying a 30% premium to book value at today’s share price.  The company is strapped for cash and current assets.  Too much debt for my liking.

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Book value per share: $10.61

Price to book value ratio: 1.3 (under 1.0 is good)

Current ratio: 1.0 latest quarter (over 2.0 is good)

Quick ratio: 0.49 latest quarter (over 1.0 is good)

Debt to equity ratio: 2.2 (lower is better)

Percentage of total assets in plant, property, and equipment: 4% (the higher the better)

CONCLUSION – Ship Finance International is a high dividend stock yielding 8.8% despite the recent dividend cut.  The amount of the dividend has been irregular, but it has paid 31 quarters of consecutive dividends.  The company’s share price has been pummeled into contrarian territory at only 6.36 times average adjusted earnings.  I like this company below book value of $10.61.  It has traded below book value as recently as December 2011.  The rest of the balance sheet is weak.  It has very little current assets relative to current liabilities (current ratio).  I’d like to see them pay down their long term debts with their free cash flow.  The return of the worldwide recession will drive SFL’s stock price down again.  You’ll have your chance to buy it below $10.61.

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DISCLOSURE – I don’t own Ship Finance International (SFL).

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Tuesday, March 13, 2012

First Look at 12% Dividend Yielder Capital Product Partners (CPLP)

Its back to the high dividend stocks that I’ve never examined before.  Today I take a look at oil tanker company Capital Product Partners (CPLP).  I’ll bet your wondering if their 12% dividend yield safe?  Read on the find out.

Capital Product Partners (CPLP)

Price: $7.59

Shares: 70.79 million

Market capitalization: $537.28 million

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What they do – Based in Piraeus, Greece, Capital Product Partners owns and leases small to medium-sized ships for the transportation of refined oil products. These rental contracts are typically long-term and range from three to 10 years. The company outsources vessel management to parent company Capital Maritime. Spun out from Capital Maritime in 2007, ownership in Capital Product Partners represents a limited-partnership stake.

Capital Product Partners LP. is an international tanker company. The Company is engaged the seaborne transportation services of crude oil and refined petroleum products, edible oils and soft chemicals, by chartering its vessels under medium to long-term time and bareboat charters. Its fleet consisted of 27 modern high specification vessels with an average age of approximately 4.0 years as of January 31, 2012, including two very large crude carrier tankers, four Suezmax crude oil tankers, 18 modern MR tankers. As of December 31, 2011, it charter 24 of our 27 vessels under medium to long-term time and bareboat charters to charterers, such as BP Shipping Limited, Petroleo Brasileiro S.A., Cosco Bulk Carrier Co. Ltd., Capital Maritime and subsidiaries of Overseas Shipholding Group Inc. On June 9, 2011, the Company acquired Patroklos Marine Corp.

Preferred stock: This company has a small amount of preferred stock.  In 2010, they paid $359K out of $17,936K (about 2%) in preferred dividends.  In 2011, they paid $1,742K out of $87,120K (about 1.9%) in preferred dividends.  The preferred does not threaten the common stock dividend at this time.

Bonds: no bonds.

DIVIDEND RECORD: CPLPs grew its dividend from $0.36 quarterly in 2007 to $0.41 in 2010 Q1.  Boom! Then they cut the dividend in almost half and it been there ever since.

Dividend: $0.23 quarterly

Dividend yield: 12.12%  ($0.92 annual dividend / $7.59 share price)

Dividend payout: 51.6% using 2011 reported unadjusted earnings of $1.78 –OR- 153% using average adjusted earning power of $0.60 per share

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EARNING POWER: $0.60 per share @ 70.79 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

2007

$0.95

$27.8 M

22.3 M

$0.39

2008

$1.54

$50.7 M

24.2 M

$0.72

2009

$1.15

$29.2 M

24.8 M

$0.41

2010

$0.54

$17.5 M

32.4 M

$0.25

2011

$1.78

$85.4 M

47.1 M

$1.21

Six year average adjusted earnings per share is $0.60

Consider contrarian buying below $4.80 (8 times average adjusted EPS)

Consider value buying below $7.20 (12 times average adjusted EPS)

Capital Product Partners (CPLP) is currently trading at 12.65 times average adjusted EPS.  This is stock is priced for investment.

Consider speculative selling above $12.00 (20 times average adjusted EPS)

BALANCE SHEET – Nice equity growth.  The company doesn’t have much in the way of current assets to cover current liabilities.  Great price to book value ratio.

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Book value per share: $7.30

Price to book value ratio: 1.03 (under 1.0 is good)

Current ratio: 1.05 latest quarter (over 2.0 is good)

Quick ratio: 0.94 latest quarter (over 1.0 is good)

Debt to equity ratio: 1.18 (lower is better)

Percentage of total assets in plant, property, and equipment: 89.78% (the higher the better)

CONCLUSION - Capital Product Partners (CPLP) is a high dividend stock yielding over 12%.  However, I’m a little troubled by the high dividend payout ratio using the average adjusted earning power.  You need to really dig into the annual reports and quarterly reports to determine if its earning power will grow enough to protect the current dividend.  Remember that CPLP cut its dividend almost in half in 2010.  I’m always leery of dividend cutters.   It is priced for investment at barely over 12 times average adjusted earning power and the stock was contrarian cheap as recently as August 2010.  The only ding on the balance sheet is the low current ratio.  The return of the worldwide recession will drop CPLPs price.  You will have another opportunity to buy this stock between $7.20 to $4.80.  Wait for it.  Read the annuals and quarterly reports while you are waiting.  I haven’t read them yet, but I will: http://www.capitalpplp.com/sec.cfm

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http://stockcharts.com/c-sc/sc?s=CPLP&p=W&b=5&g=0&i=p59203526393&r=2148

DISCLOSURE – I don’t own Capital Product Partners (CPLP).

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