MidSouth Week in Review: Feb 16, 2016

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Feb. 16, 2016 | RedChip Companies

From Buzz

Tough week, especially in the financial sector. I bought Bank of America (BAC) last Friday only to see it drop 17% by yesterday. I was four days too early. Yuck! Fed Chairman Yellen saying the possibility of zero interest rates in the U.S. probably won’t ever happen, but could, was the catalyst for the financials sharp price drop. The ten-year Treasury bonds hit a three-year low yield of 1.53%. Yesterday during the collapse, several bank insiders loaded the boat, including J.P. Morgan (JPM) CEO Jamie Dimon, who bought 500,000 shares ($26.5 million). BAC was up 7% for the day and JPM was up 8% as well as most financial stocks. Stocks continue to follow the price of crude, that dropped 19% over six straight losing sessions. Today crude is up 12% with the stock market following its lead. Wild!

The stock market will be closed Monday for Presidents Day.


  • A Fool – is a man who invests his wife’s money. If it goes up its hers, but if it goes down, it’s his…A fool and his money are soon spotted!...A fool and his money are quickly accepted in the highest social circles – Buzz

  • Super Bowl 50 - Last week, USA TODAY columnist Nancy Armour wrote that Carolina was one of the best ever NFL teams. Wrong! Guess she should have been reminded of Paul “Bear” Bryant’s famous quote: “Offense sells tickets, but defense wins championships.”

  • Strange – Of the ten mutual funds carrying the lowest price earnings ratios (PE), their average 12-month return was a negative 23%. Their average PE ratio was 8.7. Normally stocks carrying the lowest PE ratio’s outperform high PE stocks – Financial Planning.

  • You Got My Vote Jeb! – After spending $2800 per vote in Iowa, Jeb Bush and his super PAC spent $1200 per vote in New Hampshire in finishing 4th in Tuesday’s Republican Primary – Huffpost Politics

  • Socialism at its Best – Venezuela has the world’s largest oil reserves yet never set aside a rainy-day fund when oil prices were higher. Today their inflation rate is 700%+ and their bonds are carrying a yield of 37% - Wall Street Journal

  • Income Disclosure – As most of us entered the business world, we learned the one no-no was to not discuss our earnings. A recent study by Ally Bank found that the only group in which the majority discloses their income to friends and family was the 35-44 age group – USA TODAY

  • Rich Rick Pitino – Louisville has been accused of having its basketball program provide strippers and prostitutes for players and fathers at 22 parties from 2010 to 2014. Coach Pitino denies any knowledge of the allegations. Pitino himself had a woman try to exhort $10 million from him after he had sex with her 10 years ago. Pitino, who owns race horses, wears designer suits and Italian made shoes and drives a $450,000 Lexus, recently listed his Miami home at $25.9 million, after trying to sell it in 2013 in the mid-teens – Wall Street Journal

  • Bye, Bye, Bank Branches – Remember when we had to go to a bank to cash our checks, make deposits and borrow money? Not today. 38% of millennials never visit a bank and 26% visit less than once a month – BI Intelligence

  • Lottery Money – An estimated 25 to 30 percent of the pot typically goes to the state. Officials like to tell the public that lottery revenues are plowed back into education. The few states that don’t have a lottery spend an average of 10% more of their budgets on education. That’s why critics say the lottery is “a shell game” and a “tax on stupidity” and a regression tax at that. A 1999 Duke study found that those with household income below $25,000, spend an average of $583 a year on the lottery, which is approximately $838 in 2015 dollars – THE WEEK

  • More Stupid Regs – Some employers face new Federal efforts to fight pay discrimination. Companies with 100 or more workers will have to include salary information on annual reports they already file with the EEOC. To meet the requirement put in place by the Obama administration, each employee on the payroll will be classified into one of 10 job categories and one of 12 pay bands. That information, coupled with already reported data about gender, race and ethnicity, will be used to determine possible violations of equal-pay-for-equal-work rules – Kiplinger Letter…The EEOC estimates it will take the average employer only 6.6 hours to compile the data and complete the form, at a cost of $160. There also would be a one-time cost of $378 to develop information systems tracking this data. The U.S. Chamber of Commerce says both estimates are not credible and reflect EEOC’s woeful misunderstanding of the speed and ease by which complex and customized data can be compiled from computer information systems – The Business Journal

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