i did my housekeeping today. Sold LM (big loosing position, SHO (concerns about recession), TYC (taking a good profit for a change, stock is at fair value), 1/2 position in CPX (poor results from competitors BAS, UDRL)
I bought some more WLP today near todays low. I think it is a chance to buy into a good business very cheaply. WLP simply miscalculated the cost trends at it seems. UNH may well be affected but possibly less. they have been receding market share to WLP recently ( amongst others Spekulatius family is now insured by WLP instead of UNH). However in the CC, WLP noted that they have renewals coming up during the entire year, so while this may take a while, i think this trend will reverse over time. Both UNH and WLP are the biggest HMO (next to nonprofit Kaiser) so I doubt that anyone can underbid them consistently. this should pass and I am planning to buy more UND/WLP when the dust settles.
Valueminded's post regarding SHO and deflation has got me thinking about companies that might do well in a stagflation.
In a stagflation I want to own companies that have pricing power , plain and simple.
I think that North American Natural Gas may be a great angle to play this theme. I own some service company's (CPX, BJS, UNH) but reduced positions in BJS and CPX because of poor results from companies in the same sector. Those service companies don't have much moat,and neither do the drillers. So i purchased pipeline stock WMZ and think of adding more pipeline/midstream LP's. The high dividends are attractive and my thinking goes that those companies do have a moat that allows them to raise their margins and grow their business over time/ When NG stays where it is, they should do OK, when it rises the better. And i think NG will rise, it's price will follow oil and in a few years this resource may become even scarcer than oil. |
