2014 Investment Predictions

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Here are the best investing ideas I have for the next year.

1. “Cord-Cutting” continues. More people start using products such as Roku and Apple TV. The companies who own and produce content will have pricing power and the Cable Companies who don’t risk becoming commodity pipes.

You want to own companies that own premium content, like Disney (DIS – NYSE) and Discovery Communications (DISCA – NasdaqGS). Cable Companies who are buying or already own premium content, like Comcast (CMCSA – NasdaqGS) and Time Warner (TWX – NYSE) are good choices.

2. Healthcare demand continues to rise. More older Americans and Obamacare continues to add to the demand for healthcare. Buy the stronger pharmaceutical companies and suppliers of medical supplies and devices.

3. Emerging Markets rebound. Simple mean reversion, they are due. Buy an Emerging Market Index Fund.

4. Social Media Shakeout? This one is tough to time, but sooner or later investors are going to want to see some big profits from Twitter and LinkedIn.

 

A&E Caves, Chooses Money over Principle

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Big surprise, A&E has chosen to back off their suspension of Duck Dynasty’s Phil Robertson.

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They issued the following statement.

As a global media content company, A+E Networks’ core values are centered around creativity, inclusion and mutual respect. We believe it is a privilege for our brands to be invited into people’s homes, and we operate with a strong sense of integrity and deep commitment to these principles.

That is why we reacted so quickly and strongly to a recent interview with Phil Robertson. While Phil’s comments made in the interview reflect his personal views based on his own beliefs and his own personal journey, he and his family have publicly stated they regret the “coarse language” he used and the misinterpretation of his core beliefs based only on the article. He also made it clear he would “never incite or encourage hate.” We at A+E Networks expressed our disappointment with his statements in the article and reiterate that they are not views we hold.

 

Cracker Barrel puts Duck Dynasty products back on the shelf

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Well that didn’t take long.

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Two days after removing “Duck Dynasty” -related products, The Cracker Barrel apologized and put them back on.

“Dear Cracker Barrel Customer:

When we made the decision to remove and evaluate certain Duck Dynasty items, we offended many of our loyal customers. Our intent was to avoid offending, but that’s just what we’ve done.

You told us we made a mistake. And, you weren’t shy about it. You wrote, you called and you took to social media to express your thoughts and feelings. You flat out told us we were wrong.

We listened.

Today, we are putting all our Duck Dynasty products back in our stores.

And, we apologize for offending you.

We respect all individuals right to express their beliefs. We certainly did not mean to have anyone think different.

We sincerely hope you will continue to be part of our Cracker Barrel family.”

 

Phil Robertson, A&E, & Duck Dynasty

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I have been trying to wrap my head around the unfolding events regarding Phil Robertson’s interview with GQ and A&E’s response to it.

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The statement that caused all of the controversy is this:

“It seems like, to me, a vagina—as a man—would be more desirable than a man’s anus. That’s just me. I’m just thinking: There’s more there! She’s got more to offer. I mean, come on, dudes! You know what I’m saying? But hey, sin: It’s not logical, my man. It’s just not logical.”

The gay community was not amused.

A&E, a joint cable network venture of Walt Disney Co and privately held Hearst Corp, suspended Robertson for comments made in that interview. They released this statement on December 18, 2013:

“We are extremely disappointed to have read Phil Robertson’s comments in GQ, which are based on his own personal beliefs and are not reflected in the series Duck Dynasty. His personal views in no way reflect those of A+E Networks, who have always been strong supporters and champions of the LGBT community.  The network has placed Phil under hiatus from filming indefinitely.”

This one will be fascinating to watch. Duck Dynasty brings in about $400 million dollars in merchandise sales every year!

Money, homosexuality and Christianity all rolled into a gigantic ****-storm.

December 20, 2013: Cracker Barrel has jumped into the debate, posting this statement on their facebook page:

“Cracker Barrel’s mission is Pleasing People. We operate within the ideals of fairness, mutual respect and equal treatment of all people. These ideals are the core of our corporate culture.
We continue to offer Duck Commander products in our stores.
We removed selected products which we were concerned might offend some of our guests while we evaluate the situation.
We continually evaluate the products we offer and will continue to do so.”

Comedian Jon Stewart weighed in on Thursday night.

Nick Saban to Texas?

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Mack Brown is being forced to step down at the University of Texas. Rumours are flying around that they will hire Nick Saban.

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The biggest reason I think this will not happen is that his wife gave an interview to the Wall Street Journal a few weeks ago and she said they are staying at Alabama. Coaches say stuff like that all the time because they have to, but Nick loves his wife of 42 years and would make her out to be a liar if he bolted to Texas.

Update:

I am going to keep a list of those who think Nick will or won’t go to Texas:

Stays at Alabama:

Terry Saban, on record in November saying they will retire at Alabama

A.J. McCarron, “He told me he wasn’t going anywhere and the man’s never lied to me in the five years I’ve been there,” 12/12/13

Paul Finebaum, opinion only, but he has many connections and has followed Alabama sports for many years

Kirk Herbstreit, “No chance”, 12/11/13

Chris Low, ESPN reporter, “Having talked to multiple people close to Saban and close to this situation, nobody I trust expects him to leave for Texas.”, 12/11/13

Goes to Texas:

Nobody yet

Adding Hibbett Sports, Inc. (HIBB) to the Portfolio

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I have wanting this small cap for awhile now.

This small sporting goods chain is extremely well managed, consistently returning over 15% Return on Equity (ROE), my favorite metric of success.

They are expanding rapidly and and even repurchasing stock. Add in no debt and they have a strong balance sheet.

More kids and even adults are participating in sports and they are going to need gear. This stuff is hard to buy online because people like to try on shoes and feel the gear they are buying for sports. This should keep low-margin competitors like Amazon at bay.