Bullseye Brief presents three thematic, actionable investment ideas every other week. My goal is to help identify opportunities most worthy of your time. I analyze data, distill complexity and share insights from a deep network of experts. In the process I read vast amounts of information, and while the journey sometimes presents more questions than answers, I do my best to pluck kernels of truth which reap bushels over time. I love what I do and invite you to join me.

Adam Johnson

Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.


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Slippery When Wet

3 Energy ETFs for Rational Investors

  • Baker Hughes Index of active U.S. land-based drilling rigs rises 10% in 10 weeks
  • IEA ups its forecast of global refinery throughput to all-time high on strong refining margins
  • Mideast OPEC producers still engaging in price war over market share for term contracts
  • Energy equities up significantly since Feb lows but flat since May

Misinformation is everywhere, and it’s especially entertaining in the oil business when OPEC ministers chirp about pumping rates. Saudi Arabia’s oil boss Khalid al-Falih promises a ministerial meeting in Algeria next month to stabilize the market, even as he directed Saudi Aramco to pump a record 10.67M barrels in July at the request of customers. He’s quite the chess player, jawboning markets higher while opening the spigots and claiming it’s all about the customer. Does the world really need more oil, Mr. al-Falih? Chinese demand fell to a two year low in July, and U.S. demand has been sideways since May. Oh never mind. Your Kingdom faces a 15% budget deficit and you’re Mr. Fix It.


August 19, 2016

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Industrial Surprise

Guiding Down but Getting Bought

  • AMETEK Inc. (AME) issues two disappointing earnings reports and notable buyers acquire shares
  • Volume spikes on down days establish $45 as triple bottom underpinning stock price
  • Management trims guidance for second time and offers detailed outlook by segment
  • $1B cash available for opportunistic and accretive acquisitions my provide upward catalyst

I’ve been trying to get excited about beleaguered industrials on the assumption every dog has its day. Now I finally have reason to pay attention. 13-F filings released this week reveal activist investor Dan Loeb of Third Point Partners has initiated a position in oft-overlooked AMETEK, Inc. (AME). To quote one of my favorite special situations strategists, Don Bilson of Gordon Haskett “It’s hard to find a name more under the hedge fund radar than AMETEK… coming out of Q1, not a single hedge fund manager was a top-30 holder.” Nonetheless, Mr. Loeb now has a stake and he’s been buying on terrible news. So have the top three shareholders (Fidelity, BlackRock and Vanguard). When avowed activists hedge funds and and deep-pocked mutual funds join forces, I pay attention.


August 19, 2016

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Is Anything Cheap?

10% Growth for 10x Earnings

  • Only 8 companies in the S&P 1500 are growing at least 10% and trade less than 10x earnings
  • All 8 have strong current franchises but face longer-term strategic uncertainty
  • These are “story stocks” with unique fundamentals and adamant investors on both sides
  • Half present attractive entry points from a technical perspective

On last week’s podcast I asked whether anything is still cheap. It’s certainly a worthwhile question as defensive sectors like Utilities and Telecom drive the S&P 500 Index to new highs, and global pension funds plough record billions into negative yielding sovereigns. Push me a little and I’ll say “No, nothing is cheap. Global central banks have penalized cash balances to ensure we deploy every cent of capital. We’ve bid up asset prices to the point of absurdity. NY condos go for $90M!” Okay, quantitative easing has made me cynical, but not oblivious to data, nor the power of the Bloomberg Terminal. Screening the S&P 1500 for growth and price, I did indeed uncover a handful of companies which are truly cheap –one even got acquired the day before publishing. Value does exist.


August 19, 2016

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As in SolarCity CEO Lyndon Rive cuts his annual salary to $1 while laying off 15% of employees, but will still pocket $98M in stock awards.
#Bogus

21.6


As in drillers working in the Eagle Ford shale formation of Texas consumed 21.6% more fracking sand than last month as oil’s rise towards $50/bbl makes more wells profitable.
#DelicateBalance

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As in cows account for 30% of all methane produced in the U.S. according to the EPA.
#TheOtherNaturalGas

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“The reduction in taxes for businesses didn’t result in gains for the whole economy. We weren’t able to transform those cuts into increased investments and demand.”
-Dilma Rousseff, Brazil’s ex-President
Economists LOVE to debate the merits (or not) of supply-side economics.
#DependsWhoYouAsk

“You get a lot out of law school, but the most you get out of law school is debt.”
-Lloyd Blankfein, CEO Goldman Sachs
Is it just me, or does Lloyd seem to find new ways to insult and criticize no matter what the topic.
#ZipIt

“I really, really, really, really want it… but you never know.”

-Jamaican Olympian Usain Bolt
The sprinter’s thoughts ahead of trying to beat his own 200m world record from 7 years ago.
#Honesty