NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
Among his posts this past week, Kass explained why there's no room for error when it comes to corporate profits, unveiled a financial-services stock pick and explained why he's getting out of his Apple position.
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Market on Wire
Originally published on Wednesday, March 27 at 12:29 p.m. EDT. It remains my view that consensus corporate profit estimates are too high -- this is the crux of my negative market outlook. Even a slight reversion to the mean in profit margins will severely undercut analysts' expectations of growth in 2013 and 2014. Maintaining today's margins is a high-wire act that even the best of the Flying Wallendas (profiled on CNN) could not navigate. And with the Shiller P/E at 23, there is less of a safety net in the U.S. stock market than meets the eyes of most investors. (Here is Bob Shiller's methodology.) The good news is, is that Corporate America is "lean-and-mean." The bad news is that Corporate America is "lean-and-mean." But, to paraphrase Warren Buffett, there is absolutely no "margin of safety" on both the operational leverage front and balance sheet leverage front, as profit margins of 36% is the best of all possible Voltairean worlds. Below is the chart of profit margins since 1929. At the time of original publication, Kass had no positions in securities mentioned.
Originally published on Wednesday, March 27 at 1:59 p.m. EDT. I want to brief you on the long idea that I mentioned earlier -- the one that I have been doing work on and that shows the potential for great promise over the next few years. While I plan to exhibit a synopsis of my analysis in the days ahead, the company is Monitise, and it trades on the London Stock Exchange for about 33 pence under the ticker MONI. Monitise is involved in the mobile money business, and its product allows the consumer to bank and pay anywhere on one's mobile phone. The company's equity capitalization is about $825 million.
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