A Quick look at Tootsie Roll Industries

Occasionally, I use Finviz to screen for stocks that are at their 52-weeks low. This time round, Tootsie Roll is one of the names that popped up.

Tootsie Roll is not an unfamiliar name to me. I have been trying to familiarize myself with the names of consumer staples stocks to invest in, for their "supposedly" defensive characteristics. Often, even defensive investors ignore this counter for a variety of reasons. First, the yield is measly. At ~1% yield, yield-starved investors could find better deals in the market. Second, its growth pales in comparison to its peers. Third, the management team are very private individuals. They do not participate in earnings calls, industry conferences, etc. Thus, market participants have minimal avenues to pursue as to what are the plans the management have for the future as well as the trajectory that the company is taking. There is also the issue of leadership succession. Tootsie Roll is a family-owned business and there is a huge question mark as to whether leadership will be handed over from one generation to the next since pretty much everything is kept hush hush.

Based on what I have read, a couple of years back, analysts have been talking up Tootsie Roll. They identified the company as a potential target of Warren Buffet. Consequently, the PE ratio shot up as investors bought into the narrative that Tootsie Roll could offer as a special situation play.

It is only recently that their earnings multiple is contracting. I have attached their historical PE chart from Morningstar below.

According to Morningstar's site, their 5-year average PE is 32.6. Furthermore, Tootsie Roll might appear cheap if you compare the TTM PE of 24.1 against its historical PE trend.

Using data from yahoo finance and some fiddling with R, I got the above dividend history of Tootsie Roll. As mentioned previously, there is some differences in how I compute dividends per annum versus how the company could report it. In my case, I compute payouts in a given calendar year. Tootsie Roll may adopt a financial year that does not coincide with the calendar year. Each bar on the x-axis represents a single year, with the least recent year appearing on the left-hand side of the bar plot.

Dividend growth, from 2000 to 2017, could be described as increases followed by a flatline. Percentage-wise, which cannot be obviously seen from the bar plot, the increases are huge. ~10 % increases from 2005 to 2006 and from 2014 to 2015. 

As one of my investing aims is to look for consistent dividend growth counters in the US, I think I shall give Tootsie Roll a miss for now. Am hoping for a better valuation and a greater margin of safety before parking my money in it.

Making a CPF nomination

I have just made my CPF nomination recently. As it is still fresh in my mind, the following is how the process went for me:

1). Head down to one of their CPF Service Centres (see here for a list of CPF Service Centres). I went with my nominee (The person/s who will be receiving your CPF monies if anything untoward happens to you).

2). Produce your NRIC to the staff, answer some questions related to the nomination (Name, NRIC, Nominee Name/s, Nominee NRIC/s, relationship to Nominee/s, marital status). Staff emphasized that any change in my marital status would require another new nomination to be made.

3). Wait, as the staff fills up the CPF nomination form on your behalf.

4). Verify that the information on the CPF nomination form is correct. Signs it.

5). Staff serving me signs as one of the witnesses. Staff informs me that another colleague would ask me some verification questions (my name, NRIC, nominee/s name, relationship to nominee/s). After the verification is completed, staff's colleague signs as the second witness.

6). Requested for a photocopy of the signed nomination form. Staff informs me that my nomination will be reflected on my CPF account in two weeks' time.

That's all. The entire process took around 10-15 minutes. Hope this is helpful for those who are wondering what the process is like. Cheers!

Jan 2006 to Dec 2006 Singapore Government Bond Yield Curve

In one of my previous post, I spammed my readers with a bunch of yield curves from January 2007 to December 2009. The idea is to eyeball the data and verify whether was a yield curve inversion present before/during the Global Financial Crisis (GFC) and how well do changes in the yield curve over time provide us with ample warning of a stock market crash.

Unfortunately, the endeavour did not bear much fruit. The yield curve became more normal as the GFC unfolded. Still, I did observe that the yield curve was pretty much flat during the first quarter of 2007. Could I simply have selected the wrong period for analysis? Maybe the yield curve inverted before January 2007, became flat during the first quarter of 2007, and gradually became more normal?

In this piece, I shall continue spamming my readers with yield curves. This time round, the yield curves are from January to December 2006.

Fire up R! Automate the churning of the yield curves!

In the first half of 2006, the longer duration bonds yielded more than their shorter duration counterparts. However, the yield differential between bonds of different duration is not as wide as, let's say, June 2008. If you look at my previous post, the June 2008 yield curve looks the most normal, with longer-duration bond holders receiving higher yields for the risk they are taking.

Yet I digress.

It is only from September 2006 onwards do we observe the T-bills yielding higher than the longer duration bonds. Yes, there is some evidence of inversion, but the effect is muted. Coincidentally (or maybe I am reading too much into it), the inversion occurred at September/October 2006. If you take the collapse of Lehman Brothers (September 2008) as the start of the GFC, the small inversion preceded the GFC at ~2 years.

Do take my ramblings with a pinch of salt. It is just a mere eyeballing of the data and the conclusion that I draw from the data could be totally spurious.

I will be doing more investigation into this topic.

The smell of desperation

One of my new colleagues who joined us in the last quarter of 2017 is visibly disturbed. Since a month back, she has been panicking over how she could get her name on a journal publication. Her desperation was so bad that, during our last meeting, she raised a question to our bosses how she could be involved in the publication process.......after our bosses gave a dressing down to the data collection team (which she is part of) for failing to meet the data collection KPI even after hiring new data collection personnel to boost data collection rates.

Ouch.

To quote one of my bosses, data collection personnel should focus on data collection. Once we have sufficient data, then do we think about journal publications of our results. My boss followed up by enquiring what pressing research questions and hypotheses she has in mind which we could investigate.

"Don't know. Have not thought about it yet."

Double ouchie.

"Once you have a well-thought idea, we could have a discussion on publishing our findings. For now, just focus on data collection as our sample size is inadequate."

While this was going on, I looked at the faces of my other colleagues. If it was not a formal setting, they would be <facepalming>. Okay fine. This is her very first job after graduation so, as her colleagues, we should be more embracing of her mistakes.

However, the harping about journal publications did not cease after the meeting. In fact, after the meeting, she doubled down on her behaviour. She spent more time thinking of research questions and hypotheses, shirking her primary responsibility of data collection. This earned her the ire of the data collection team who had to pick up her slack. In the end, one of them reported to the bosses that she is not a team player.

Why is she so desperate? Recently, while taking the same commute with her, she shared with me that her performance review with the bosses is, at best, average. Everyone, according to her, has a task that they are responsible for. As a newcomer, she does not have a task that she is solely responsible for that will make her stand out from the others. So, she needs to find an outlet to express her competency........and that would be journal publications, the supposed glorious be-all and end-all of aspiring researchers-to-be.

I can understand her feelings. I wanna publish stuff in peer-reviewed journals as well. In fact, I am reaaaallllyyy itching for it. There is a season for everything, but now is not the season for publications.

It is not ideal to be overly desperate for something. Neither is wearing one's heart on one's sleeves such a good idea. The astute can prod for vulnerabilities and dangle the most-prized carrot to entice the unguarded to do their bidding.

Mask thy intentions, especially in the workplace where many wolves lurk. Failing which, take great steps to understand thyself and thy motivations. Then you will be less likely to take the bait that others deliberately throw in your direction.

Better yet, use the concept of self-complexity from social psychology to buffer yourself from such psychic damage. A self-complex individual possesses multiple independent cognitive models of themselves. If one fails, there are others to buffer the damage.

Said colleague egging me to join in with her push for publication campaign because I am "less" of a social science researcher if I do not do so? Too bad, it has limited effect on me.

Unintelligent Nerd is a son to his mother.
Unintelligent Nerd is an armchair data scientist in his free time
Unintelligent Nerd is a friend to his inner circle of friends
Unintelligent Nerd fiddles with programming in his free time

etc.....etc....

If I "flop" as a social science researcher, my other "selfs" would more than make up for it. :)

P.S. Readers, have you ever noticed that the investment bloggers who possess high levels of self-complexity are generally quite nonchalant about their investment portfolios? ;)