| March 31, 2020 Negative COVID-19 news continues to grip the media and the markets, with nearly everything else taking a backseat. But what is rarely mentioned is the growing number of folks that are confirmed recovered. 
Confirmed Recovered (COVID-19)—Source: Johns Hopkins, WHO & Bloomberg As of today, there are 172,000 confirmed recovered. That is a big number, and you can see from the chart above that it has been accelerating. China is working through its bout with the virus and is also recovering well. I had an encouraging conversation with one of my long-time friends in Shanghai who told me that he was in a meeting of business leaders held by a large accounting firm—no masks. And as the leaders were polled, none had known of anyone that had been infected with COVID-19. Every one of them has their businesses fully up and running, including factories. Adding to that, China just released the purchasing managers' surveys for both manufacturers and service companies, which showed dramatic improvements. Manufacturing jumped back up to 52.0 from 35.7, and non-manufacturing jumped to 52.3 from 29.6. 
China Manufacturing (White) & Non-Manufacturing (Gold) PMI Indexes—Source: China Federation of Logistics & Bloomberg Their main stock market index, the China Stock 300 Index (CSI 300), has dramatically outperformed the US S&P 500 Index, with a loss year to date of only 10.2% compared to 19.4%. 
CSI 300 (White) & S&P 500 (Orange) Indexes—Source: Bloomberg So, there is a work-through underway there, and there will be for the US. The big thing for us as investors, which I covered in the April issue, is knowing the "status" of each company. By that I mean the ability for a company to service its debts and maintain credit. It also means owning companies with cash and credit clout and business models that will keep employees, suppliers and customers through the lockdowns and beyond. This is where Microsoft (MSFT), one of the standouts in the Total Return Portfolio, continues to shine. Given its massive pile of cash, Microsoft will be in the driver's seat when it comes to research and development as well as snapping up other companies and their assets at bargain prices. MSFT is a buy under a raised price of $170.00, ideally for a tax-free account. But you don't have to be the biggest to have plenty of cash clout. Compass Diversified Holdings (CODI) has the equivalent of over $100 million and current assets exceeding $644 million, which is impressive given the current market capitalization of $813 million. This is on top of a $600 million line of credit with Bank of America. CODI is a buy under $14.00, ideally for a taxable account. The other part of getting through this for companies is making sure that they also include shareholders. This means lots of information and disclosures and dividends. This is now under threat in European markets, as more major companies in France and Germany are working to eliminate dividends and are trying to compel their peers to go along, including calling on the European Commission (EC) to ban payments. This does not include our non-EC Swiss company, Nestlé (NSRGY). NSRGY is a buy under a raised price of $104.00, ideally for a taxable account. Now, I have been working on collections of companies that are also thriving under two themes. The first includes companies in the Asian markets that are already through the lockdowns. The second includes companies capitalizing on the remote-work and stay-at-home conditions for those that are still on lockdown. You'll be seeing my work on that in the May issue. But for now, here are some of the companies already in our model portfolios that fit those themes. The South Korean company with huge, productive assets and operations in the region and in China is Samsung Electronics (SSNLF) in the Niche Investments. The stock has maintained a positive return for the trailing year at just over 2%, including the significant drop from January to March. It also has $149 billion in cash and current assets sitting on its books. SSNLF is a buy under $41.00, ideally for a taxable account. As part of the stay-at-home theme, all of the remote data and cloud operations means Digital Realty Trust (DLR) in the Total Return Portfolio is right behind Microsoft. DLR is a buy under a raised price of $135.00, ideally for a taxable account. In the Incredible Dividend Machine, all of that work data and video calls are flowing through the networks of AT&T (T) and Verizon (VZ). T is a buy under a raised price of $31.00, and VZ is a buy under a raised price of $55.00, both for tax-free accounts. On the home front, all of those Amazon boxes means more disposal fees and contracted clean energy-from-waste (EFW) revenue for Covanta (CVA) in the Total Return Portfolio. CVA is a buy under $10.00, ideally for a tax-free account. And with boxes and packages piling onto home doorsteps, Waste Management (WM) in the Niche Investments is also benefitting. WM is a buy under $95.50, ideally for a tax-free account. Then, as grocery store shelves keep getting emptied as quickly as they are restocked, along with surging online purchases, packaged foods, consumer and household goods are the leading sales items right now in the US. In the Total Return Portfolio, that includes Hormel (HRL), which is a buy under $47.50, and Procter & Gamble (PG), which is a buy under a raised price of $112.00—both for tax-free accounts. Then, in the Incredible Dividend Machine, buy Mondelez (MDLZ) under a raised price of $52.00 and Colgate-Palmolive (CL) under a raised price of $67.50—both for tax-free accounts. And with lots of folks locked down at home, the boob tube is getting a workout. Gray Television (GTN) in the Niche Investments is a buy under $12.00, ideally for a tax-free account. Lastly, on Saturday, I learned of the death of former Oklahoma Senator and physician Tom Coburn. I had the privilege and the pleasure to first meet Tom many years ago and enjoyed conversations with him on many subjects, including the responsibility of legislators to watch taxpayer dollars. His devotion to service has rarely been matched. I also miss his annual Wastebook, which listed and detailed the most egregious wasteful government spending items. My condolences to his family, friends and his patients. All My Best, 
Neil George PS—It's that time of year again! Our annual Diamond Club meeting is coming up, and I'm busy preparing to get together with my subscribers to discuss my outlook for the stock and bond markets and how to best position our portfolios for the remainder of the year. This exclusive in-person meeting is only available for Diamond Club members. But don't worry… If you're not already a lifetime member of my Profitable Investing research service, there's plenty of time to sign up and save a ton on your subscription. Click here for details. | 
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