Wow - One At a Time - HAL, ENTG, DNUT

Wow, I guess we have had almost a full market cycle since I last wrote near the bottom on April 8th.

All the tariff stuff is very confusing. When you actually try to examine it at the company level, the generalist cannot begin to figure it out. When I read what Polaris - PII - $39 - 7% yield, had to say about tariffs, I knew I had to “take a step back”.

I think in 80% of the situations the generalist has an advantage over the industry specific analyst. Potential tariffs are one issue that a generalist cannot handle. As you know I love individual companies with unpredictable earnings, but when the whole world becomes unpredictable all at once, generalists are at a disadvantage.

All we can do is look one company at a time.

In general the Model 25 Portfloio is about 300 basis points behind the S&P 500 for 2025, and about even with smaller company averages for the year.

Let’s start with our worst performing stocks. Worst of the bunch is Halliburton - HAL - $21, which is down about 20%+ in a flat market.

HAL is now one of my favorite ideas. The business is solid and so is the balance sheet (8x interest coverage, net debt 2x EBITDA). The stock sells at about 6x a “trough” level of EV/EBITDA. HAL is generating solid free cash flow and buy backs have been about 5% of their shares in 2024 and 2025. The US business is slow, but they are gaining share. International is growing mid single digits except for Mexico.

This is a true worldwide business, with supply chains reaching everywhere. They say the tariff effect is only pennies per share. Who knows? I will take a pass on trying to understand all the effects. Could we be hit by a tariff surprise at HAL? Yes, but we just have to live with it.

HAL is the only oil service stock owned by one of my favorite value investors, Barrow Hanely. BH has been very good on energy related stocks (especially Hess) for the past decade. The US will eventually get to “Drill Baby Drill”, but the timing is uncertain. With oil near $60, and nat gas near $3.00 now is the time to jump on board the energy sector.

I still like Helmerich & Payne - HP $17, and Atlas Energy - AESI - $13, but right now I am sticking with the better balance sheet at HAL, plus a 6%+ dividend yield

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I know I need to review the existing portfolio, but I am still looking for new ideas.

I had to glance at the latest Barrow, Hanley, portfolio.

They are adding to their Merck position, but bailing a little on Air Products. For the first time I can remember they are stepping up to a homebuilder - Lennar - LEN - $111, I still prefer Pulte. Their 4th largest position is Carnival, but I prefer Norwegian - NCLH - $19.

BH seldom own too many tech names, but they started a new major position in Entegris - ENTG - $77, down from $150. ENTG is roll up of suppliers to the semiconductor industry. The balance sheet is less than ideal, but that is whey the stock is down. This is a new name to me ant I want to learn more.

There was a recent management change at ETRG that looks a little shaky.

But then I looked further down the list and Barrow Hanley is now the proud owner of 5 million shares of Krispy Kreme - DNUT - $3. I fear they paid closer to $6/share and the stock is now $3. Yikes. You guys are not eating enough donuts.

Let’s do Matador Resources MTDR - $44 next.