Rice and Tomatoes.

Rice and tomatoes has been on my table for as long as I can remember.  That is rice with tomatoes stewed in with some seasoning for the main course, sometimes the only course.  Add in some sweet tea and you have what I call the Dixon Family Meal, as in the long time Dixon Family Meal that predates my dining on this simple dish.  I got to thinking about this dish after watching A Chef's Life on TV this season and how the chef there had rice and chicken as their family time honored meal. 

I expect if rice and tomatoes was not the first meal I had when I came off of baby food it certainly was pretty close.   Our family has been serving this meal likely since our earliest moved to North Carolina in the 1700's.  Simply put rice was grown in the coastal area here was to be found in abundance, which made it cheap.  Tomatoes of course are a staple of southern gardens since almost forever and a farming family could grow all they wanted or needed.  So combining this pair was a natural food that could fill hungry children with good nutrients without costing a fortune.  My grandparents decided to have 10 children, so of course this meal was a staple on the meal table. 

The natural progression is that the 10 children took the meal as a comfort food when they left home and started having families.  My part of the extended Dixon family certainly did and there was a point where we dined on the food almost every Saturday night.  My mother put up tomatoes in the summer in jars and we had fresh tomatoes to combine with rice all year long.   Frankly there was a time when I tired of the food, but shortly after leaving home it was not long before I welcomed rice and tomatoes stewed up by my mother when I would return home.   

Now I am sure rice and tomatoes has it's many cooked variations over the 10 children, but I have my favorite.  Some good rice, some homegrown tomatoes if possible, some bacon seasoning, salt and a good helping of pepper.  Add in a pinch of sugar as well as most southern cooks do to most all vegetable meals.  Honesty here, no matter how many times my father tried or I tried our rice and tomatoes would not and did not ever taste like my mother's. I expect most of you have that issue with the dish your mother made best. 

So I give praise to the simple comfort food or rice and tomatoes and suggest if you have not tried this meal then give it a try on a cold winter night soon. 

Follow Warren Buffet in this stock?

Over the almost three years we have been posting on this blog we have constantly suggested Canadian oil stocks as good safe picks.  Honestly we have made some picks that were not good up to now.  ERF which was our favorite for many years when we exited earlier this spring, due to uncertainty about it's dividend and management that had not been truthful is down.  CVE, which we considered a long term pick, has not done well since we picked it.  We also suggested one take a look at COSWF and it too has been down over the last two years.  So accepting now what we post on these Canadian oil stocks might not be wise.  

However maybe you will consider what Warren Buffet is doing in Canada.  For several quarters now Mr. Buffet has been buying and buying some more Suncor Energy.  If you take a look at the stock trend line for SU you will find that it too has not done well over the last year.  In fact two years out this stock is flat.   So with a 2% dividend I suppose one can say they are up a little, unlike CVE, ERF, and COSWF, which are down even with the higher dividend payout in these two stocks.  It appears from what can be surmised from the release of stock buys from Berkshire Hathaway BRK.B, Mr. Buffet's stock, that he added even more shares of SU over the past quarter.  So what is one to make of these buys by the Oracle of Omaha. 

Frankly I do not know and neither does anyone else from what I can search and read.  SU is a major player in the oil sands of Canada as is COSWF, which is the major holder of the oil sands real estate. Imperial Oil, IMO, is the other major player here and it's stock is slightly down over two years.   The majority holder of IMO is Exxon Mobile so there is some major money in this space.  COSWF has been rumored for some time to be a buy out candidate, but as yet no one has pulled the trigger.  Exxon has been the most rumored buyer of COSWF so as to cement their place in the oil sands project.  There has been some noise about Mr. Buffet buying out COSWF.  

Now here are the pertinent facts we know.  One BRK.B has significant profits in the railroads hauling oil out this area for some time now via the company's rail holdings in Burlington Northern.  In fact the cash flow from transporting oil has been huge the last year.  So owning more of these oil sands makes some sense due to the increasing use of Canadian oil assets in the US and the Gulf oil refineries.  Note that BRK.B has big holdings in Phillips 66, PSX, which owns refineries on this Gulf end.  Warren has big money in oil and notably Canadian oil already.  Let's also consider that Exxon has interest here in not allowing a big player take over oil assets in the oil sands that might damage their investments there.  So lots of angles here and we have no clue which one to follow. 

There is another wildcard here too and that is the Keystone XL Pipeline.  This pipeline that would transport oil from the oil sands to Gulf refineries and would increase the use of Canadian oil.  It could also hurt the profits on BRK.B's railroad assets.   Of course this pipeline is being held up by Obama due to assumed environmental concerns or more precisely appeasing his environmental supporters.  Unions are hopping mad due to the holdup since the pipeline would produce lots of high paying jobs with juicy union dues. Lots of players and lots of angles.  Could be Mr. Buffet knows Obama is going to approve the pipeline at some point and there will be enough oil flowing south that both the pipeline and the railroads will have lots of business.  Trust us here there is enough oil in Canada to supply oil to the US for hundreds of years. 

There is also plenty of oil here in the US to make us all but energy independent in a decade and if that occurs Mr. Buffet loses some of his investment in SU and his railroads lose business.  So is maybe Warren is pushing Obama to approve the pipeline to make his Canadian investments good.  So you see there is no way to be sure with any stocks in this sector. 

Finally is the fact oil use is going to decline in the US due to the huge supply of cheap natural gas coming on the market via fracking.  How much decline is to be seen, but it is going to decline and along with less dependence on the middle east too. 

With all that said here are some ideas.  COSWF has a 7% dividend and could pay you while you wait.  CVE has a 3% dividend and it's own refinery.  ERF seems to have regained it's footing and has a 6% dividend as well and would benefit from the pipeline. SU has the upside of being in the Buffet portfolio.  IMO has the huge backing of Exxon.  Take your pick as it seems sooner or later Warren Buffet is rarely wrong. 

               

Some position changes in portfolio.

With the November trading period starting next week we are making some changes in our portfolio.  

NOV...this stock has run up over $20 per share and we are no longer comfortable with any possible downside.  Still a good company with excellent prospects.  We will be dropping it as of this Friday's options expiration. 

IBM...We have been warming up to IBM for some time since it keeps selling off and reporting weak quarters.  IBM still has significant advantages in it's business and we believe they will get their operations back growing shortly. A single digit PE and a $170 strike price are a good entry point. 

KO..Has had some bad quarters of late, but has enormous leverage and reach in it's stable of businesses.  The stock seems to have settled in here around $39, so we will make our strike price $37.50. 

CSCO.. Sooner or later the upgrade cycle will commence and Cisco makes components required for almost any upgrade in technology.  A stable price that is not overvalued at around 11 PE and little downside risk.  Our strike price will be $21. 

JCP...Housekeeping note.  We will likely be called out of half of our position in this stock this Friday with a sizable loss. However we have been able to mitigate about half our expected loss with the use of options.