1. finance
2. investing
3. stocks

How to Lock in a 19% Yield From One
Manʹs Shoes
September 2014 | Volume 1 | Issue 6
www.bonnerandpartners.com
From Jim Nelson and Kelly Green, Editors, Bonner & Partners Platinum
Local DJ Tony Fadell was sitting on a ski lift,
create an MP3 player… exactly what he wanted to work on
contemplating where it had all gone wrong when he got the
– to solve his CD-carrying problem when he headed off to
call. It was that exact moment when the most important
the clubs.
conversation in the history of mobile technology took place.
At that time, there were two main problems with the
We’re being a bit coy here. Fadell, though he was a part-
current crop of MP3 players: for the most part, they were
time DJ, was a technology guru. He was one of the creators
only able to hold about one album’s worth of music, and
behind some of the most successful technologies during the
they took forever to load with even that small amount…
PDA boom in the 1990s. His career ebbed and flowed from
can you imagine waiting five minutes to add just 12 songs to
one company to another, until he started his own firm, Fuse
your device?
Systems.
Fadell was fascinated by the idea of being able to toss his
CDs in the trash. The goal at Fuse was to create engaging
hardware to work with the fast growth of digital music.
Unfortunately, for our tech genius, the tech bubble had
Six weeks turned into 10 years. And today, Fadell is best
known to have been the brainchild behind the iPod and one
of the lead developers of the iPhone.
Since its launch in 2001, Apple has sold more than
350 million iPods around the world. But if you had read
burst. By January 2001, his company was out of money. To
anything about them prior to the first one shipping in
cheer himself up, he took a ski trip.
October of that year, you would have thought this was one
As he was preparing for another run, his phone rang. A
man by the name of Jon Rubinstein from Apple Computers
of the worst decisions any computer company could make.
Why would a company struggling to sell its Macintoshes
wanted to talk about a small consultation gig. Fadell
reach into the dying music industry? Not only was this the
accepted, thinking it was about his previous experience with
pinnacle of troubled times for both the music and tech
PDAs. He needed the money… and it was only a six week
industries (think dotcom bubble and Napster), Apple was
contract.
also a half a billion dollars in debt.
When he showed up to meet Rubinstein about this
short-term project, he was shocked to discover it was to
But as this story shows us, sometimes it pays to expand
into new products. Could you imagine what Apple would
How to Lock in a 19% Yield From One Man’s Shoes
look like without the iPod? Hell, what would your phone
leather handbag that was able to compete in a market-
look like if it wasn’t for Apple’s advances into smartphone
dominated by European companies.
In 1985, Cahn wanted out. So he sold his company to
technology?
Today, we have another company struggling to sell its
Sara Lee (of all places). While the move was not intended
flagship line of products and is breaking into new ones. But
to have any effect on the product, it did open the
like Apple before, it too found an outside genius to head
company up to many more customers through its global
up its future. And today, you can buy it for 63 cents on the
Hanes Group.
Fortunately, its customers didn’t balk upon that
dollar…
The Fadell of Handbags
You could say that Stuart Vevers is to Coach Inc
connection. And Coach continued ever upward and
onward.
Until today…
(NYSE:COH) what Tony Fadell was to Apple. We’ll get
Coach’s New Direction
into that in a moment. For this isn’t the first time Coach
In the 1990s, under the new lead designer Reed
has seen a similar transformation. A more apt comparison
would be that Stuart Vevers is to Coach what Miles and
Krakoff, Coach coined the term “affordable luxury” to
Lillian Cahn were to Coach back in the 1960s.
describe its unique niche in the global market. Brands
The now worldwide giant in the handbag industry was
such as Louis Vuitton, Gucci and Prada are all well-known
once a simple operation in a New York loft apartment, run
luxury brands. But Coach has always refused to try to
by six smalltime leatherworkers. In fact, starting out they
compete with these extremely high-end European names.
only made wallets and billfolds… no handbags at all.
Instead, it targets the $300-$600 price range. This inspired
The group struggled with the low margin business –
then called Gail Leather Products – until the Cahn couple
a core following of high-middle class customers that could
afford to be repeat buyers.
Throughout the 1990s and 2000s, this new subsector
came in as their saviors. Miles was fascinated with the
aging of high-quality leather. He was especially interested
of the fashion world was Coach’s to do with as it pleased. It
in how leather baseball mitts softened and molded
remains the largest in the group. But Coach has since lost
themselves with use. It was his wife’s suggestion to apply
ground to the likes of Michael Kors and Calvin Klein.
this study to handbags, which he did when he partnered
That’s where things stand today… well almost.
with Gail Leather.
Like the Cahns did in the 1960s, Coach is doubling
The first line featured just 12 bags. While the group
down on new markets and better quality products. The
was far from the only handbag makers in New York, it
company hired Stuart Vevers as its lead designer late last
quickly established itself as a major player, due to the
year. His first line officially debuts next month. To really get
quality of Cahn’s leather.
a grasp on where Coach is going, we need to quickly look at
Today, Coach reports annual revenues of over $4.8
this new face and what he brings…
To fully appreciate just how big of a deal Vevers is,
billion and has a market cap of nearly $10 billion. As with
all great companies, it came down to the right product at
you only have to look at his previous successes. The most
the right time. This product was a US-made, high-quality
striking of his many successes came from his short stint at
2
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
Mulberry (yet another name in the designer purse realm).
You see, North America is not where Coach will get its surge
He took over as creative director there in 2005. Since the
of new buyers in the first place. While it would be helpful to
company’s fiscal year ends on March 31 each year, 2006 was
stabilize that market with the new line, it will play a less important
Vevers’ first year at the company.
role going forward.
His touch – with the introduction of his Roxanne and
The emerging market segment, specifically China, is becoming
Bayswater lines – helped grow Mulberry’s top line like
Coach’s golden egg. It has everything its competitors don’t when
wildfire – eventually setting up its stock IPO in 2008. His
attracting the growing middle classes in China. It:
last line went out that same year. You can clearly see what
1.) …is American made, with products in a high – but not
he did after taking over in 2005, in such a short amount of
too high – price range.
time…
2.) …is a storied and highly recognizable brand, which is
crucial to attracting the ever elusive tipping point in a new
5 Year Revenue Growth (£ m)
market. And…
3.) …has an enormous presence already, with more than 468
51.2
43.4
25.3
45.1
international stores — one-third of which are in what it
calls the Greater Chinese Market (Hong Kong, Macau
30.1
and mainland China).
It is rapidly growing in those areas, while reducing its directly-
2004
2005
2006
2007
2008
Source: Mulberry’s 2008 Annual Report
That works out to top line growth of 70% in just three
years!
This performance is quite impressive, and it is certainly
owned store presence in North America.
Coach is also making a serious splash in an unlikely area:
Europe. As home continent for some of its oldest competitors,
Coach never dared enter Europe as a market for its products. That
changed in 2012, through a partnership with British menswear
company, Hackett. The deal helped Coach gain a foothold in the
in the realm of possibility to see again with Coach. There are
enormous luxury products market in Britain, France, and even
basically two factors at play that will determine how big of
Germany.
an impact Vevers will have.
He has to be able to bring something so new to Coach
Now, Coach is the majority owner of that joint venture and is
opening a slew of stores in targeted markets like London and Paris.
that it steals back many of the customers it lost to Michael
While not as exciting or as lucrative as its foothold in Asia, Coach
Kors and company… without losing its current brand-loyal
is already seeing double-digit gains in those European markets.
patrons. And the company has to continue pushing this
brand into high-growth emerging markets.
The first is still mostly up in the air. While his
All of this is crucial in understanding why Coach could not
only be a turnaround story… it could be a high-growth story as
well.
September full-price store launch is highly anticipated,
Coach might just be the perfect example of a Catalyst
we cannot know its true impact until the follow up outlet
Portfolio play. Vevers’ new line will spark years of highly-
launch early next year. But don’t worry, this isn’t as risky of a
anticipated launches. But it’s also a great catalyst find because of the
bet as it seems.
less-sexy corporate side of the business…
3
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
Breaking the Corporate Mold
Coach watched its sales slide from $5.1 billion to
Coach’s ability to right the ship. And if nothing else, that’s what
this restructuring is all about.
Counterintuitively, luxury goods don’t actually benefit from
$4.8 billion over the last year, mainly due to that increased
competitive pressure we mentioned earlier from Michael Kors
advertisements plastered on every bus and billboard. There’s a
and Calvin Klein. It’s caused a major rethink in Coach’s strategy.
concept in the luxury industry often referred to as promotional
It can no longer rely on its long history and devoted customers
oversaturation. Coach, unfortunately, has committed this sin
– at least not if it remains only an “affordable luxury” handbag
over the last few years. A worse crime still, was its decision to
company.
ramp up its outlet store presence far faster than it should have.
Instead, it decided to make some changes. Clearly, a new
Luxury goods follow the rule that the rarer it is, the better.
designer after 16 years is the first step. But it also moved Victor
Just think about if you dropped a few million on a 1961 Ferrari
Luis into the CEO role from the international side of the
California Spyder (think Ferris Bueller’s Day Off). As you,
business. Clearly, the focus on growing internationally remains a
nonchalantly of course, pull into your driveway, you notice
top priority with this move.
that your neighbor is standing in his driveway polishing up his
But Coach is making other splashes in the world of
fashion. For the first time, it is launching several menswear
lines, specifically men’s footwear. It’s unlikely this will perfectly
replicate the fuse that caused the explosive growth set in motion
by the Cahns all those decades ago. But it is going to help Coach
finally tap new markets, which it desperately needs to do in
North America.
The luxury footwear market is estimated to be worth $25
billion worldwide. Even grabbing a sliver of that with this new
brand new 1961 Ferrari. You lose some of your preconceived
satisfaction of having something that no one else has.
That’s just the case in the luxury handbag market. Women
tend to spend more on a purse because it’s showing two
things. First of all it says that they can afford to have a designer
handbag. Second, because of its price they hope it’s an original
wardrobe piece at least in their circles. So when Coach doubled
down on its outlet stores, which sell its products at significant
line would yield tremendous results for Coach. Of course, this
discounts, it saturated the market — not to mention the
isn’t completely out of nowhere.
stagnation of designs. So women went to other designers and
The company has slowly dipped its foot into what it calls
spent a few more dollars to have something unique.
So part of this restructuring is aimed at fixing that. It has
the “men’s lifestyle” category over the past few years. Since 2010,
this segment has grown from $100 million in annual sales to
toned down its discount, or “flash,” sales. Instead, it is rolling
over $700 million. Its highly recognizable brand and continued
out a new effort to host twice a year sales to drive much greater
association with high-quality leather products gives this new
traffic over a much shorter amount of time. This preserves the
direction real promise.
brand, drives up average order size and keeps the focus on new
Stuart Vevers at the helm will only help with this
rejuvenation. His work at Mulberry showed that he knows what
lines. And with Vevers running that show, that’s exactly the way
it should be.
he’s doing when it comes to women’s handbags as well as ones
designed for men. He did both in his time there.
But most important is what this all means in terms of
numbers. With sales dropping, it’s important to keep focused on
A consequence of this move is to 1) limit Coach’s outlet
presence, and 2) give the company a great opportunity to
redesign its “full-priced” stores to display its new lines of
products.
4
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
margin is a large one, then it is enough to assume that future
The “men’s lifestyle” product line – featuring footwear,
business and leathers – will now be a focus in its stores which
earnings will not fall far below those of the past in order
have traditionally only displayed handbags. This gives its most
for an investor to feel sufficiently protected against the
prestigious locations – like its Fifth Ave. store in New York
vicissitudes of time.
and its South Coast Plaza location in Southern California – a
huge facelift. Traffic should respond accordingly.
Of course, by doing this, it simplifies how it sells its
products. The increase in “men’s lifestyle” from $100 million
four years ago to $700 million today happened mostly outside
of its traditional channels. Now, it will be alongside its core
handbags.
The initial efforts to switch these stores around will cost
an estimated $250 million to $300 million – which started in
full effect this most recent quarter. But the savings will start as
early as next year, estimated to be around $70 million… and
In essence… no one knows the future. So be well
protected with the information we have, in case the shit hits
the fan… and you’ll make money.
We love the concept of a margin of safety. We know
what has occurred, down to the penny due to strict rules
applying to regulated securities in the U.S. The Securities
and Exchange Commission requires all listed U.S.
companies file regular financial reports to keep investors up
to date on how their investments are performing.
Unfortunately, the concept of this margin of safety has
$150 million annually thereafter. So in just two and a half
years, this move will have paid for itself, transformed its look
been skewed and misunderstood as time goes on. Now,
and doubled its potential customer base. Remember, this is
anything that appears cheap on the surface is considered a
the largest move the company has made since it first switched
Graham – or worse, a Buffett – type play.
from wallets to handbags in the early 1960s.
Armed with all of this information, we still remained
skeptical on the future of Coach. It still has plenty of
Fortunately, a look back through Graham’s actual
writings on the subject help us clarify what a true margin of
safety on so-called “bargain stocks” means:
hurdles, which we’ve already covered. At the end of the
day, we decided that this is the perfect position to own for
one reason… and it’s the most important reason there is in
investing…
Buffett’s Mentor Would Kill for a
Play Like This
The margin-of-safety idea becomes much more evident
when we apply it to the field of undervalued or bargain
securities. We have here, by definition, a favorable difference
between price on the one hand and indicated or appraised
value on the other. That difference is the safety of margin…
Any true follower of value investing knows the term “safety
of margin.” What most don’t look at, or purposefully ignore, is
…The buyer of bargain issues places particular emphasis
how it applies to so-called bargain stocks. Benjamin Graham –
on the ability of the investment to withstand adverse
mentor to Warren Buffet and father of modern value investing –
developments. For in most such cases he has no real
describes the idea in his infamous book The Intelligent Investor:
enthusiasm about the company’s prospects…
...the function of the margin of safety is, in essence, that of
rendering unnecessary an accurate estimate of the future. If the
5
…But the field of undervalued issues is drawn from the
many concerns – perhaps a majority of the total – for which
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
Bringing it back to Graham… he claims that a stock, as
the future appears neither distinctly promising nor distinctly
unpromising. If these are bought on a bargain basis, even a
a rule, is overvalued once it reaches a price ratio of 15 times
moderate decline in the earning power need not prevent the
earnings. At 12.1, we’re looking at a very basic margin of safety of
investment from showing satisfactory results. The margin of safety
will then have served its proper purpose.
That’s a lot of words basically saying that discounted stocks
are often viewed as holding great potential or great further
decline. But the principle of safety of margin – remember, this is
how Buffett made all his money – says that even if the company
disappoints, the margin of safety protects the investor and can still
provide profit.
What we have here today, Coach Inc, is a company that not
only falls into this “bargain” territory, but we also believe that it
could turn into a tremendous long-term opportunity. If these new
lines, its emerging market trajectory and its deep pockets turn into
the kind of future business it’s capable of, we are looking at the
best of both worlds. Basically, what Graham would call a bargain,
growth security… practically unheard of, even in 1973, when the
revised edition of his Intelligent Investor came out.
Of course, don’t take our word for it. Coach’s incredible
numbers back this up…
As of its most recent earnings – filed just this month – Coach
is sitting on $868.6 million in cash. It had $140.5 million in
short-term debt (to cover its short-term expenses related to the
restructuring mentioned above). It has no long-term debt.
Meaning, it is essentially sitting on a mountain of cash to
19.3%. Remember, a margin of safety is the amount of discount
between current market price and indicated or appraised value.
Discounting further, to continue this line of thought, let’s say
it takes four-to-five years before the effects of Coach’s restructuring
takes hold (as opposed to the estimated two and a half years)…
We’re looking at an average 12-month forward earnings per share
of about $2.60 (based on adjusted earnings after restructuring
costs without adding in savings). That gives us a forward price-toearnings ratio of 12.8. That’s a margin of safety of 14.7% and a
discount to the average stock P/E of 33%.
Now, this is one of the most conservative estimates we could
find. After running several examples and what ifs in this manner,
it became increasingly clear that Coach has one of the largest true
margins of safety we’ve seen, especially since the market began to
rise following the 2008-09 crash.
In the truest sense of Graham’s definition of “margin of
safety,” Coach gives us a deeply discounted opportunity today.
This is a play that even Warren Buffett, Graham’s old disciple,
might buy.
If that wasn’t enough… the last time Coach looked this
cheap, share’s tripled in price in less than three years. The chart
below shows that the last time Coach’s P/E (in blue) dipped below
15, its shares were going for about $25. Over the next three years,
they jumped to nearly $80.
Buffet’s Mentor Would Kill for a Play Like This
cover its obligations. So let’s just subtract all of this out and look at
just what its business brings in…
COH Price
COH P/E Ratio(ttm)
After paying off this debt, the company is sitting on $2.63
90
50
80
45
70
40
per share of net cash (cash minus debt). Shares currently cost $36
60
35
each. So for our comparisons, we’re looking at a current price of
50
30
$33.37. Projected 2015 earnings per share come in at $2.75.
40
25
30
20
to-earnings of 12.1. Currently, the S&P 500 has an average P/E of
20
15
19.2, and competitor Michael Kors is even higher at 22. Meaning,
10
10
0
5
$36.0
After subtracting out the cash and debt, we have a net price-
we are looking at a discount of 37%. Or, in other words, Coach
shares are trading for 63 cents on the dollar.
6
2010
2011
2012
2013
2014
11.0
Source: GuruFocus.com
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
Of course, we aren’t stopping there. As we wrote just
last week:
Action to take: Buy shares of Coach Inc (NYSE:COH) up
to $38.57.
Owning shares of Coach gives you a great opportunity to
If you want to speculate a bit more by holding naked stock (stock
make money from an oversold position. Writing (or selling)
without covered calls), by all means. But if you want to take
covered calls on that position will yield even more income for
the sure income up front in exchange for the possibility that you
your portfolio.
But in the sidebar below, you’ll find yet another way to
might not always maximize your gains, we recommend our
strategy. We always favor taking the guaranteed income today,
play Coach. And, going forward, we believe the new strategy
rather than the potential gains later.
presented will do even more amazing things for your returns.
We urge you to read on before you do anything else…
That’s it for this month. As always, send us any comments or
Here, we’re referring to covered calls. Unlike some of the
other Catalyst Portfolio plays we’ve discussed in these pages,
questions to platinumfeedback@bonnerandpartners.com.
And be on the lookout for this very special flash covered call
Coach’s recent uneasiness with investors has actually given us a
great option-writing opportunity. Premiums are through the roof.
recommendation on Coach.
In the coming days, we’ll be sending you a very special
covered call recommendation on Coach – the first time we’ll
Sincerely,
use turbo-charging in our Catalyst Portfolio.
But even without this added income – which, right now,
looks to be around 19% annualized – Coach’s dividend yields
3.7%. And its new CEO, Victor Luis, made very clear that it
is going to maintain that level throughout the restructuring. Its
Jim Nelson and Kelly Green
tremendous cash position more than covers both the short term
Editors, Bonner & Partners Platinum
debt and this dividend level.
So with or without turbo-charging, we recommend you buy
shares of Coach today.
7
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
How to Collect a 26.1% Income Yield on Coach Without Buying Shares
We believe you will do very well to own Coach and write covered calls
on it. We expect when all is said and done, you’ll be yielding close to
19%. What’s not to love!
But what if you could have the same results (or even better) without
ever picking up shares… or at least get paid to pick your own entry
price? In this bonus section, we are going to show you how to do just
that…
Up until now, we’ve focused our turbo-charging strategy on call
options. Clearly, these go a long way in boosting your income yields.
But that’s not the only way to play options for income. In this section,
we’re going to be talking about put options.
You’ll recall from your primer, we like to take the position opposite to
the gambler in the options market. We know that the house always
wins. With our turbo-charging strategy, speculators buy call options
hoping the underlying stock will skyrocket – letting them quickly profit
from any gains above the strike price of the calls. They are placing a
bet that the price of the stock will pass the strike price of the contract.
But the options market also lets them place a bet that the price is
going to decrease.
These gamblers buy put contracts. Puts give the speculator the right
but not the obligation to sell shares at a certain price (still called the
strike price) by a certain time (still the expiration date). Much like calls
give them the right to buy stock, puts let them sell stock (or put those
shares on you).
This gambler owns a block of the shares. They want to secure a
backstop against fast drops in price. From the put buyer’s perspective
it’s like having insurance on their investment. For us as the contract
seller we get to set that backstop or strike price. Which, if we’re put
those shares, would be our entry price.
Here’s how that works.
Today, we recommended you buy shares of Coach Inc (NYSE:COH).
Above, we went through all of the amazing reasons to own it outright
— drastic restructuring, legacy products, new designer and such a
deep value even Warren Buffett’s mentor would line up to buy it. But
with puts, you can actually pick an even lower entry price.
The gambler owns 100 shares of Coach right now. They have been
worriedly watching as shares tumbled over the last year. They like the
company, but don’t want to risk any further falls. So they want to buy
a put option.
At the same time, you’d like to own 100 shares of Coach. Shares
currently go for $35.98, as we write, but you’d really like to own
them for $35. We can then offer to buy his COH shares for $35 at any
point over the next three months. So, we sell him a November $35
COH put.
We don’t buy a single share today. All we have to do is keep the
amount it would take to buy his 100 shares in our account. Since
we are obligated to pay $35 per share, if he decides to exercise
his put option, we need to make sure we have $3,500 in cash in
our brokerage account.
In exchange for this option, he gives us $2.50 per share… or
$250 instantly credited to our account. That’s our compensation
for leaving that $3,500 in our account. There are only two
outcomes from here. At the end of the contract, we either own
shares of COH for our desired price, or we still have our $3,500.
Let’s look at both…
Shares of Coach fall below $35 before November 22. If this
happens, the shareholder will gladly sell us his shares for $35.
But because we collected such a large “buy in” from the gambler
or premium, shares would have to fall all the way down to $32.50
before we would be sitting on a loss (our cost of $35 offset by
the $2.50 we already received).
And as we noted above, not only are shares already cheap at
$36… they pay out nearly 4% per year in dividends. A breakeven
price of $32.50 makes them even better.
We’d be sitting pretty. But what happens if shares don’t fall
below $35?
Shares of Coach stay above $35 until at least November
22. Just like when we have a covered call expire worthless,
that’s what happens with puts. We already pocketed $250, just
for sitting on some cash. We don’t have to buy his shares. And
we can use that $3,500 to sell another contract, again naming a
lower entry price and collecting more premiums.
You can guess what that looks like if we end up selling round
after round of puts. An extra $250 every few months for very
little (we’d argue basically zero) risk is a nice way to invest. This
trade annualized works out to $912.50 in premiums, or a return of
26.1% on the $3,500 in cash sitting in your account. That’s yours
to keep even if Coach doesn’t pan out like we expect.
Like any investment, there are some drawbacks. For starters, if
a straight stock investment in Coach does pan out, you won’t be
enjoying the ride… your maximum gain is the $250, unless it
dips below our strike and is exercised before it rallies. Likewise,
8
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
you won’t collect any dividends until you are “put” the shares.
But for a more or less guaranteed 26% return for just sitting on
cash, we’d say that is still worth your time.
BUT… this is where you can unlock infinite steams of income.
If you are put shares of Coach for $35, you can then – at that
point – sell covered calls. So this really is a win, win, win
situation. Collect income on your cash, until you are obligated
to buy shares (for a cheaper price than you would have paid
originally). Collect dividends and call premiums until your
shares are called away at a higher price. That’s a lot of income.
For the sake of entertainment, let’s look at how that might
look. Now, we obviously don’t know the exact twists and turns
shares of Coach will take. If we did, we’d all be millionaires.
But for the sake of argument, let’s say you do sell a put
contract today and shares do drop to say $34 by November.
You’d be sitting on shares that cost you $35… but you pocketed
$2.50 from selling those puts. Now, let’s say you sell $36 calls
that expire three months later (February in this case). While we
won’t know exactly what you’d collect, we can guess based on
comparable trades today. As we write, calls that are currently
$2 out of the money with an expiration date three months down
the road trade at $1.58 per share. Let’s say you sell those, and
are called away in February. Here’s what your six-month return
would look like:
Amount
Sold $35 puts
Bought shares
Sold $36 calls
Collect December dividend
Shares called away
Total Gain
$250
($3,500)
$158
$33.75
$3,600
$542
15.48%
Publisher
Will Bonner
Bonner & Partners Platinum is
published by Bonner & Partners.
Editors
Jim Nelson, Kelly Green
Registered office: 14 W Mount
Vernon Place, Baltimore, MD 21201,
United States.
Graphic Designer
Heather Gorsuch
Customer Care:
Call (800) 681-1765
8 a.m. to 5 p.m. ET
www.bonnerandpartners.com
Postmaster: Send address
changes to Bonner & Partners,
1001 Cathedral St; Baltimore, MD
21201, United States.
©2014 by Bonner & Partners. All
rights reserved. No part of this report
may be reproduced by any means
without the express written consent
of the publisher.
That’s a 15.5% gain in about six months. To annualize it, you can
simply double it. So you’re looking at an annualized gain of 31%.
Here’s the best part. Shares are going for $36 right now. This
example has us ultimately selling shares for $36. So between now
and February, regular shareholders would be sitting on $33.75 in
total income (from the dividend). We’d have locked in 16 times that
amount!
Unless you are already familiar with these kinds of trades (called
selling “cash-secured puts,” since we’re securing them with the cash
in our accounts), we don’t recommend you jump in just yet. Over the
next few weeks, we are going to unveil a project we’ve been working
on for quite some time. And selling puts will be front and center.
Don’t worry. We’re going to give it to you for free until we are ready
for an official launch. That’s part of the deal you get as a Platinum
subscriber: you will always have the opportunity to beta test any
income product we launch at Bonner & Partners. And that’s exactly
what we have planned.
In exchange for giving you first access to this unique project, all we
ask is for your feedback. What do you like? What don’t you? How can
we improve?
So keep an eye out… We’ll send you more about this soon, letting
you in on exactly what we are thinking.
So until we pull the curtain completely back, our question for you
today is simply: “What do you think of selling cash-secured puts?”
As always, the best place to reach us is platinumfeedback@
bonnerandpartners.com. While we can’t give individual investment
advice, we do read each and every email we receive. And we try
to respond as much as possible in your regular weekly updates and
monthly issues.
That’s it for this month! Whether you’re already an expert at puts and
want to get in that way, or through simply buying shares, there might
not be a sexier income idea in the market right now than Coach. We
recommend, at the very least, you pick up shares today.
The information contained herein is
obtained from sources believed to be
reliable. While carefully screened,
the accuracy of this information
cannot be guaranteed. Readers
should carefully review investment
prospectuses, when available, and
should consult investment counsel
before investing.
NOTE: Bonner & Partners is strictly
a financial publisher and does
not provide personalized trading
or investment advice. No person
mentioned here by our writers should
9
be considered permitted to engage in
rendering personalized investment,
legal or other professional advice as
an agent of Bonner & Partners.
Additionally, any individual services
rendered to subscribers of Bonner &
Partners Platinum by those mentioned
herein are considered completely
separate from and outside the scope
of services offered by Bonner &
Partners. Therefore, if you decide
to contact any one of our writers
or partners, such contact, as well
as any resulting relationship, is
strictly between you and that service
provider.
Bonner & Partners expressly
prohibits its writers from having a
financial interest in any securities
they recommend to their readers.
All employees and agents of Bonner
& Partners must wait 24 hours
after an Internet publication and
72 hours after a print publication is
mailed prior to following an initial
recommendation on a security.
www.bonnerandpartners.com
How to Lock in a 19% Yield From One Man’s Shoes
Payout Schedule
Ticker
Amount
Ex-Dividend
Pay Date
INTC
$0.23
8/5/14
9/114
JNJ
$0.66
8/22/14
9/9/14
PEP
$0.66
9/3/14
9/30/14
WM
$0.38
9/3/14
9/19/14
COH
$0.34
9/5/14
9/29/14
SCG
$0.53
9/8/14
10/1/14
GE
$0.22
9/18/14
10/24/14
AGI
$0.75
9/28/14
10/16/14
UVV
$0.51
10/12/14
11/10/14
CLX
$0.71
10/20/14
11/7/14
TGP
$0.69
10/20/14
11/7/14
INTC
$0.23
11/5/14
12/1/14
JNJ
$0.66
11/21/14
12/9/14
Legacy Portfolio
Position
Intel Corp
Ticker
Entry Date
Entry Price
Recent Price
Bonus Income
Total Return
Advice
INTC
3/17/14
$24.70
$33.92
$0.62
15.87%
Buy up to $30
6/12/14
$1.07
JNJ
3/17/14
$93.93
$101.80
$2.45
9.07%
Buy up to $94.67
5/6/14
$3.18
3/17/14
$87.83
4/11/14
$0.85
6/20/14
$27.00
7/3/14
$0.25
7/10/14
$88.74
7/17/14
$1.40
Oct $28 calls
Johnson & Johnson
Oct $100
The Clorox Co.
CLX
Oct $95 calls
General Electric Company
GE
Sept $28 calls
Agrium Inc.
AGU
Oct $95 calls
Hold calls
Hold calls
$88.26
$4.12
5.18%
Buy up to $94.67
Sell for at least $1.30
$25.83
$0.25
-3.41%
Buy up to $29.33
Sell for at least $0.20
$90.56
$1.40
3.63%
Buy up to $100
Sell for at least $0.75
Waste Management
WM
7/24/14
$44.25
$45.70
$0.00
3.28%
Buy up to $48.67
Pepsi Co Inc.
PEP
7/24/14
$91.98
$91.67
$0.00
-0.34%
Buy up to $95.27
Catalyst Portfolio
Position
Ticker
Entry Date
Entry Price
Recent Price
Bonus Income
Teekay LNG Partners LP
TGP
SCANA Corp
SCG
Universal Corporation
Coach Inc.
Total Return
Advice
3/18/14
$39.98
$42.59
4/9/14
$50.89
$50.03
$1.38
9.98%
Buy up to $50.31
$0.53
-0.66%
Buy up to $56
UVV
5/8/14
$54.96
$51.76
$0.51
-4.89%
Bu up to $58.29
COH
8/14/14
NEW
$35.82
NEW
NEW
Buy up to $38.57
10
www.bonnerandpartners.com