MidSouth Week in Review: Jan 4, 2016

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Jan. 4, 2016 | RedChip Companies

From Buzz

The S&P was down slightly for the year vs. the 14.6% estimated return by 22 chief market strategists of the biggest banks and brokerage firms in 2014. Bloomberg poled 17 market professionals and got an estimated average market return for 2016 of 7.3%.

Only 28% of the stocks in the S & P 500 were positive in 2015, according to Zero Hedge. However, if all the S & P 500 stocks in the index were unchanged for the year, with the exception of Google, Facebook, Amazon, Microsoft, General Electric and Netflix, the S & P would have been up 6.8% for the year. These stocks represent 13% of the S & P 500's market value, which means that if you invest $100,000 in the S & P 500 ETF (SPY), approximately $13,000 of your funds would be in the above mentioned super high-multi stocks, which are selling at approximately 100x 2016 estimated earnings.


  • Buy Value – "The market is increasingly driven by a handful of high-flying growth stocks such as Amazon.com (AMZN) and Netflix (NFLX), leaving more opportunities in out-of-favor cyclicals and value stocks. We believe investors are too pessimistic about certain apparel, energy and industrial companies, among others." – Matthew Coffina, MorningStar

  • Expensive New Year's Eve - Dinner at the Olive Garden in Times Square will set you back $400 this year, which includes an open bar and buffet meal. Bubba Gump Shrimp at the same location is charging $799 a person to see the ball drop – New York Post

  • Ford Motor Company – went public in 1957 with a record number of investment firms (750) participating in the offering. The maximum order was limited to five shares because the company felt that a shareholder might become a future Ford owner

  • Christmas – About nine out of ten (92%) Americans and nearly all Christians (96%) celebrate Christmas. But what might be surprising is that a big majority (81%) of non-Christians in the U.S. also celebrate Christmas, including 87% of those with no religion, according to a new Pew Research report – Investor's Business Daily

  • Always sell your boat before you die. The art of life is passing losses on – Robert Frost

  • Credit Worthy ? – A handful of startups are looking to revolutionize lending by having potential borrowers install apps on their smart phones to determine their credit worthiness. Good lending risks include: those who make more calls in the evening when calls are cheaper, those who send less texts than they receive and gamblers because data shows they are more likely to repay loans. The bad risks include: those who drain their battery more quickly, those who don't go to diverse locations and those who send more texts than they receive – Branch of Inventure

  • Strange Valuations – In 2014, a T. Rowe Price fund valued its Cloudera holding at $27.83 a share, which was about twice as high as a Hartford fund said it's holding in the private company was worth – Wall Street Journal

  • Cash is Trash – In Sweden, bills and coins represent just 2% of their economy vs. 7.7% in the U.S. In more than half of their bank branches, no cash is kept on hand, nor are cash deposits accepted. At Valmont Church, 85% of tithes collected come in the form of cards or digital payment. The government has benefited from more efficient tax collection because electronic transactions leave a trail, unlike Greece and Italy, where cash is heavily used and tax evasion remains a problem – New York Times

  • South Carolina Sad – The recent results from the ACT college admission tests, showed that only a quarter of their students were ready for college-level reading or math and just 6% of blacks and 15% of Hispanics were ready. In one poor rural school district, where grad rates have risen to 85%, not one student scored high enough on the ACT to be college ready – New York Times

  • Marriage of Equals – A research study at the Karolinska Institute showed that about half of the expected financial gains of attending college derived not from better job prospects but from the chance to meet and marry a higher-earning spouse

  • Minimum Wage Problem – Apple's annual profit per employee is $407,000, so the forced minimum wage increase will have little effect on them. However the retail business with only an average profit of $6,300 per employee will suffer. An increase from $7.25 to $9 an hour would result in an annual wage increase of $2,730 and according to the Congressional Budget Office, cost the economy 100,000 jobs. At $10.10 an hour 500,000 jobs would be lost. At $12 an hour, the employee would make $7,410 more a year, resulting in a loss per employee of $1,110. Businesses would turn to slashing costs and the hardest hit would be the most vulnerable of the working class – Andy Puzder, CEO of CKE Restaurants

  • Tats For Success – The 53% of Millennials (aged 18 to 34), sport at least one tattoo – Wakefield Research.

Buzz Heidtke

"I work with many of the companies that would be RedChip companies. And we certainly ascribe to the same view that the RedChip Companies do, which is Discovering Tomorrow's Blue Chips Today."

  • Bob McCooey, Senior Vice President, NASDAQ Stock Market