seth golden talks retail, earnings, & big profits in this crazy market / retail stocks 2017, target stock, sears stock, retail stock investment david moadel welcome to looking at the markets with david modell we're back with mr. seth golden a frequent guest here at looking at the markets and one of you know one
aapl ticker, of the guys out there who is an expert in the markets and if you have questions about the retail sector about the vics about volatility or about trading or
investing in general a mr. seth golden is the man to talk to welcome once again to looking at the markets mr. golden thank you david those are kind words probably too generous but much appreciated nonetheless absolutely and i think they're well deserved so tell us a little bit first about golden capital portfolio and your investment strategy
sure well i began golden capital management in 2012 as a subsidiary to capital latter advisory group which was a firm that i hate that i was partnered in at first it only included the capital ladder affiliates and partners capital in the in the fund but as the returns generated year-over-year proved to beat the benchmark s&p 500 returns on capital
i gained a sponsorship of wells fargo and since 2012 i've grown the fund and the capital invested in 2012 i was managing roughly three million in investing capital to where it sits today about five years later at 71 million dollars in the fund so i've also grown the client base from six investors to 38 investors since 2012 it's it's a small
fun but the returns on capital invested have been upwards of triple digits in each of the last three years to give you a kind of a perspective on what i invest in and how i manage the portfolio the greatest portion of the funds is dedicated to vic's leverage to instruments since 2012 i've maintained a short position in certain vic's leverage
instruments such as ticker symbols you vxy vxx and tvix the portfolio generally has about twenty percent of capital invested in vicks leveraged etfs and that decreases and increases from time to time depending on the opportunity i seek to to capitalize upon in the market in fact that percentage allocated to vic's leverage instruments has decreased
most recently yeah and your returns on capital in the golden capital portfolio on you v xy which is a fixed leverage instrument something you have a lot of expertise and experience with but your returns have been very very strong can you tell us about that yes well the fixed leverage instruments especially the ones that are designed with decay in
them like u vx y v xx and tv tvix i started in investing in them in 2012 and these instruments are leveraged to the to volatility the nature of volatility in and of itself is that it remains complacent for much longer periods of time then it actually expresses outsized fear so these instruments are tied to volatility or correlated to volatility
but they also have an intrinsic decay in them which causes them to decline over time and when you get those long periods of market complacency we'll call it these instruments just fall and fall and fall and price so dedicating a large percentage of the golden capital portfolio to these instruments from the shorts
i'd works very well in this type of market where you have very you know that it's very complacent market it doesn't express a lot of fear and it has obviously low levels of volatility so that's how i've been able to generate very large returns over the last several years makes sense so let's talk about the markets overall we're just off of
all time highs once again you know i read your latest article and we're going to put a link to that you discussed all this but would you be able to expand on your thoughts here sure uh well to kind of streamline it i would say coming into this week especially so you know last week we had the what will called a no vote on on the health care legislation
so there are two ways to kind of view that in the market as an investor or as a trader and the two ways that i that i was looking at it is ok we had a no vote on on health care legislation so there's 11 camp that might suggest well if there's no vote there and that you know administration couldn't you know pass anything on health care maybe they're
going to have difficulty passing legislation with regards to tax reform we've come a long way in the market over the last several months because we anticipated some type of tax reform so the market has you know gone up ahead of that in anticipation in other words it's kind of priced in that tax reform was coming so you know if we can't get you
know legislation passed for one aspect maybe we're not going to get it passed for tax reform so you have that as kind of the bear camp or the skeptics camp and then but on the other hand or you know the other side of the coin you have the optimist and they may look at it as well we didn't get a we didn't get any passage on health care legislation but
what did that really do to the economy does that really change anything for the economy or the markets as of right now no you know nothing's actually changed there's still the possibility for tax reform then you know there's still the possibility for health care legislation you know later on in the year so nothing's really changed
here so that's the optimistic way of looking at it so you have kind of a tug you know push-pull scenario going on and it's kind of showing itself in the market with the market going sideways so overall what i would say is the trend is your friend and the market overall has been trending up until we have a true catalyst and that that's the other thing
we don't really have a true catalyst to incite a market sell-off and generally a you know history has shown us that you need a true catalyst to to you know incite a sell-off in the market and there's not really a viable one there that breeds any fear into into investors so i believe the trend is your friend in the market will you know either tread
water or continue a gradual up up turn up trend gotcha i love to talk about retail full disclosure i have a position in target right now so i love talking to you about target first well actually let's let's go general than specific generally speaking retailers which retailers are giving you a cause for concern right now as an investor uh yes
very good question so the ones that give me cause for concern if we're talking about you know in general i like to talk about big box retailers mainstream department stores tho those kinds so from that perspective i would definitely say sears holdings they all but said that you know come the fourth quarter we may have some more announcements
surrounding our our go and concern as a as a retail outlet so that would be at the top of my list i think the next in line i would have to say from a debt and profitability standpoint would be jcp any and don't get me wrong when when i say jc penney is is a concern for me it's not as a reflection of where they've come from 2012 because they've
done a lot of heavy lifting did a lot of really good things over the years however they've only gotten to this stage where they are you know eking out some profitability but at the same time starting to show real signs of cracks in their sales and they're projecting basically negative one percent to positive 1 percent sales growth this
year after coming off a flat year for sales last year so that's a concern for me and then from that point i would probably say macy's and kohl's are retailers that at the very least i would avoid they're not really showing signs of turning around their metric performance you have macy's increasing the number of stores they're closing you
have coals even with a huge buyback plan that they initiated towards the tail end of last year you have eps declining and sales declining same goes for macy's eps declining sales declining new ceo at macy's but the core structure of the macy's business there's really no viable change there it's it's more more or less steady as she goes all of these
retailers offering tons of initiatives we're doing this we're doing that we're adding this brand we're adding this service unfortunately none of that is incremental they're just pieces of a puzzle that still can't bring the whole thing together to to produce growing sales and growing eps so despite all these initiatives there's something
structurally wrong with these business models or or retail concepts if you will so those are my lists of at the very east of voids with regards to target i also took a position in target you know late well about a month ago found myself under water fortunately have the opportunity to make a couple trades in the name and then basically back to even
not not counting the the dividend has a you know really strong dividend there what i do like so if we compare target to the other named retailers they're not quite net net closing stores having said that the amount of stores that they open is greatly curtailed and the way the the types of stores they're opening are a bit of a change in concept opening
smaller stores and in smaller format stores in earn urban areas don't necessarily like that idea i don't think it will work for target long-term but it's something that's you know that they're trying what i do like about target is it does have a unique position in the retail landscape as a hypermarket meaning they sell grocery and hard goods
the grocery section is is one of their biggest hurdles to overcome and unfortunately they're heading into a a cyclical problem where they're meeting the demand online for grocery grocery online is is growing exponentially in amazon has a big initiative that they just kicked off inviting all of the cpg consumer packaged good companies to
their headquarters to basically make their case make the amazon case as to why you should sell direct to the consumer using the amazon.com platform they have mondelez coming to this to this invite-only initiative or speech if you will of course kraft heinz and all the big cpg player are coming there so target has its work
cut out for it but it has a very nice dividend has some insulation based on on the the segment of the market it's attacking so i like that one above the others which are more or less just department stores they're not hypermarkets very good well that makes me feel better about my position as well and i do enjoy the dividends absolutely
it's one of the one of the better dividend companies um now for those who don't know mr. golden is a frequent contributor to talk markets calm as well as seeking alpha calm as an article contributor you've written probably a couple dozen articles on targets and i'm going to put some links up for example you wrote about target and the big
retail bust you wrote about target store operations but you've also been critical of the ceo brian cornell should he not be leading target right now um okay so frankly speaking brian was never the right person in my opinion just my opinion i actually wrote an article explaining why brian cornell was not the right guy for target when he was named
back in 2014 i did a careful you know analysis on his history his his work experience his background in both retail and cpg the alarming thing that i found is when you look at brian's history whether it was at michael's or sam's club or pepsi he really didn't stick around for very long i don't think there was a single tenure of more than three
years so here we are at his three-year point and we haven't really seen any benefits from his leadership you would think at the very least with his consumer packaged good background he would have done a better job with grocery category at target but all we've really seen is steady declines in grocery from target and various
different initiatives to you know change the change the product change the packaging change the the format of the grocery section at target but it's it's been for naught i would say you know brian has i'm sure he has all the best intentions and is putting forth his best efforts but you know this is a really tough environment and it would be i'd be
hard-pressed to say who would be the right guy for target all i know is the efforts that he's put four so far finds target back where they were heading into 2014 so far as eps earnings per share they're expecting earnings per share just under what they had forecasted for the 2014 year and i'm sorry but you know that's a that's a real red flag there
for me you know if i'm if i'm characterizing the efforts of a ceo makes sense just a question that's been on my mind as we are both frequent participants on stocktwits as well as twitter and of course i'll put up links to your your stock twits and twitter profiles which everybody should check out if you're not following mr. seth
gold and i don't know why because he really should be i noticed real quick that on unseres everybody was bearish now suddenly everybody's bullish because it has gone up so much in the last week what would you what would your advice claimer that we're not advising any any purchase or sale of any particular equity what would you say to somebody
who has suddenly flipped bullish because of the recent price action in sears i would say you you know for if you invested in the seven or of you know if you put money to work in the seven dollar range which it was you know just add only a week or so ago you've done well so you might be interested in in taking those profits because the company
itself has said we don't know what our future looks like going into the fourth quarter this year so being bullish on the stock you know is very different from being bullish on the company there's a there's a really strong case to be made that come the q3 or q4 period you know sears holdings may offer a broad you know uh sweeping comments as
to you know many store closures many divestitures or certain aspects of the business that they're liquidating i mean they said they've been selling off major brands that you know within the store that are proprietary so it's a you really have to separate the the retailer from the stock and if you've if you made a good profit you know nobody's ever
gone broke taking a profit that's right great great a great advisement there and finally just to just to wrap it up but you know we're finishing up the first quarter and we're coming upon earnings season once again very soon what are your thoughts on the first quarter business cycle and what are you anticipating for the second quarter or
even the last half of the year i thought the first quarter o was pretty strong we saw a nice bump to gdp i believe this morning but overall i think business sentiment was with strong jobs job growth was strong you had some you know political shortcomings but nothing that really impacted a consumer sentiment for sure we had one of the strongest
consumer sentiment readings this we so i think the first quarter was strong of course you know from an investor standpoint you know you take the good with the bad and you have to follow the trends you know if you're an etf investor you're probably going to do very well but if you're if you're forced to you know be a stock picker you know
you have to really do your research know the company that you're investing in you know and and really do your due diligence because you know for for the retail sector you're going to have your winners and losers the brick and mortars brick-and-mortar retailers probably had another tough quarter you know if we just look at the retail sales that came
out you know last month you know continues to show declines both year over year and month over month for department store retailers and that's pretty much everybody that we talked about on this on this call david but again you had non non non store retailers growing double digits here over a year and that's your amazon's
that's your way fairs that's all your ecommerce foes if you will if you're a brick and mortar retailer those are your foes so you know it's about it's about knowing the retailer that you're invested in and knowing what stage of the business cycle there in most of the retailer's that we've named i think we'll have struggled during the first
quarter one of the big outliers during the first quarter for these retailers was the fact that income tax returns came in late and you'll probably hear a good deal about that headwind for the quarter when these retailers report so overall i think it was a really good economic backdrop during the q1 period going forward i don't see that changing
all that much there's nothing in the macro environment that suggests the q2 will be you know different in any you know major way for the back half of the year there's nothing on the horizon if we look at it really optimistically we may even get some acceleration in the back half of the year should some tax reform
you know come to pass so those are my thoughts on q1 and you know later this year absolutely so i've been speaking with mr. seth golden once again always informative always some food for thought if people would like to tap into mr. goldin's expertise one way is to ask him about the golden capital portfolio and if people want to access that particular
portfolio how can they do so my direct email contact seth golden at cool links i t.com that's c 00 l inx i t-dot-com i have all the information for the portfolio unfortunately we're only allowed to add new investment capital new clients in june period as well as january period but we're always you know ready to hand out you know the
information regarding the portfolio and and how we invest capital throughout the year yeah and i've seen your returns and they're very impressive thank year-over-year month-over-month very very good returns i suggest people check that out and of course if people want to check you out on twitter and stock twits how can they do that now on twitter it's
at seth cl at seth cl and on stocktwits seth marcus also one more thing david sorry to interrupt you i've been updating my portfolio performance on a monthly basis this far well year-to-date i should say we are pushing forty eight point six percent with one more day to go in the quarter we're hoping to achieve the goal of fifty percent so
hopefully i'll have that update on twitter tomorrow we'll see if i can hit that fifty percent mark i don't see why you wouldn't and even if you know what forty-eight percent 49-percent i don't know about everybody else but i would take that gladly so hey very good sir thank you so much mr. seth golden please
go check them out on stocktwits twitter email him with any questions and you know if you want to get in on the golden capital portfolio you're going to have to get in soon because they're only certain times of the year when he will be accepting people for that if you want to get in on those types of returns mr. seth goldman has been a pleasure as
always once again thank you sir thank you david have a great day okay you too you
