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Stocks Will Benefit From Bond Market Turmoil

By Yale Bock

My Long Term GARP Portfolio on Covestor’s platform had a positive month in May as it rose 4.0% (net of fees), better than the S&P 500’s gain of 3.0%.

Iconix Brands (ICON)  is the owner of a broad range of well known brands like OP, Mossimo, Joe Boxer, Peanuts, and Sharper Image.  Iconix bought out the rest of its ECKO brand and presented at the Citigroup Investor Conference.

I sold 40% of the ICON stock position as it nearly doubled in a year and became a long term capital gain. Summer has arrived and there were a few investor conferences for the portfolio holdings, and one company reported earnings. All in all it was pretty light month for news from the holdings.

The summer has already started to see volatility pick up in the market, and the last two weeks of May were generally negative for equities. Much has been made of the recent slight rise of the 10- year bond rate, as it now is above 2%.

Many believe if interest rates go higher, the outcome will be negative for equities. I personally disagree as bond positions are at far greater risk than equities, especially at the long end of the yield curve.

Another area bearing close scrutiny is the Japanese market as many investors are short the yen, and long the Nikkei. If that trade does not go according to plan, I believe leverage can work against those who employ it.

Liberty Interactive (LINTA) is the owner of QVC, Bodybuilding.com, Provide Commerce, Buyseasons.com, Backcountry.com, and large passive minority positions in other large, well known internet based business like the Home Shopping Network. Liberty Interactive gained a majority stake in TripAdvisor when it bought out Barry Diller’s voting shares.    Liberty Interactive presented at Barclay’s Investor conference on May 22.

Liberty Ventures (LVNTA) tracks the economic performance of Expedia, Inc., TripAdvisor, Inc., Tree.com, Inc., Interval Leisure Group, Inc., Time Warner Inc., Time Warner Cable Inc., and AOL, Inc. Liberty Ventures operates as a subsidiary of Liberty Interactive Corporation.

Quest Diagnostics (DGX) is the largest health care diagnostic testing company in the United States. The company reported disappointing earnings and guidance in January, but did raise their repurchase plans for 2013.

Intuit (INTU) reported earnings on February 21, 2013 which was not as good as expected because of weakness in the TurboTax segment.

Starbucks (SBUX) is the largest coffeehouse company in the world.  Starbucks recently opened their first stores in India at the end of October, and in Vietnam on the first day of February.  The company presented at the Bernstein Investor Conference.

Liberty Media (LMCA) is another stock of Liberty Media, the assets inside the holding company structure include Starz Media, the Atlanta Braves, 50% ownership of Sirius Satellite (SIRI), almost 20% ownership of Live Nation (LYV), 16% ownership of Barnes & Noble, and a few other non controlling positions of small public and private.

Liberty announced it increased its stake in Sirius (SIRI) Satellite Radio to 50%, and increased its position in Live Nation (LYV).  The company also completed its spinoff of Starz Media on January 11, 2013.

Liberty Media announced earnings on February 27, 2013 which were in line with expectations. In addition, the company acquired nearly 30% of Charter Communications, one of the largest cable television providers in the United States.

Liberty Media presented at the Barclay’s Investor Conference- VCA Antech- Second largest owner of animal hospitals in the United States also owns the laboratories for diagnostic testing of animals.

IAC Interactive (IACI) is the owner of Ask.com, Match.com, Meetic, Service Magic, Vimeo, CollegeHumor.com, and the Daily Beast, among other web sites.

Another stock that I follow is Moneygram International (MGI).  MGI is the second largest money transfer and bill payment company behind Western Union. The company reported earnings on May 2, 2013 which were better than the last quarter.

British Petroleum (BP) is working on becoming more efficient by upgrading its Whiting Refinery in Indiana, as well as increasing the number of wells it uses in the various operational areas in the upstream segment.

Unilever (UL) is a massive food company based in the UK that gets over half of it’s nearly 50 billion dollars of sales in the emerging markets of Asia and Africa. The company pays a dividend of 3.3% and has the goal of doubling its sales by 2020.

If you would like to open a mirroring account at Covestor.com for the Y H & C Long Term GARP Portfolio, please click here:

The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

Yale Bock

Yale Bock

Founded by Yale Bock, Y H & C Investments is a registered investment advisor with the State of Nevada. Yale

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