Valuentum Research Update
June 11, 2020
— Valuentum Research Update — Hi everyone! — Hope you all are doing great! I must say I couldn’t be more pleased with the research we’ve been putting out, and thank you very much for your continued interest. In this piece, I wanted to get some of our latest work to you. — First, please note that we’ve done a great job holding the line on many of our fair value estimates (ranges) on our website. Many stocks have been bouncing back, and we’re glad we didn’t rush through any updates. Updating fair value estimates (ranges) too frequently doesn’t make much sense to us. We’re after the right answer, not any answer. — Second, our team has been busy writing up some very
Nikola Corp Shares Skyrocket After Getting Listed
June 9, 2020
Image Shown: Shares of Nikola Corporation have skyrocketed since completing a business combination with a special purpose acquisition company in early-June 2020. By Callum Turcan Nikola Corporation (NKLA) completed its business combination with VectoIQ Acquisition Corp (a special purpose acquisition company or ‘SPAC’) on June 3, 2020, and a day later shares started trading under the NKLA ticker (VectolQ Acquisition previously traded under the ticker VTIQ). Effectively, this allowed Nikola Corp to become publicly traded without undergoing a “conventional” initial public offering (‘IPO’) and furthermore, the combination raised over $700 million to fund Nikola Corp’s ambitions. VectolQ Acquisition was sponsored by VectoIQ Holdings LLC, P. Schoenfeld Asset Management LP, and Cowen. Nikola Corp is run by CEO Mark Russell and
Macy’s Secures Additional Financing
June 9, 2020
Image Shown: Shares of Macy’s Inc have started to recover some of their lost ground after the company secured additional financing to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic. Store closures have decimated the company’s bottom-line, but the reopening of the US economy and many of the retailer’s stores has improved Macy’s outlook. By Callum Turcan Back on April 21, 2020, we published a note on Valuentum (link here) highlighting why it would be hard for Macy’s Inc (M) to unlock the (fair) value of its real estate assets. We are following up on that piece given recent events that we will cover in this article, and we strongly encourage our members to check out that
Our Thoughts on Warner Music Group Going Public
June 9, 2020
Image Shown: Shares of Warner Music Group Corp were trading comfortably above their initial public offering (‘IPO’) price of $25 per share at of the end of normal trading hours on June 8, after going public on June 3. By Callum Turcan Warner Music Group Corp (WMG) went public on June 3, though shares were sold by the company’s stockholders in the IPO and not the firm itself, meaning these proceeds are not expected to go to Warner Music Group. The company owns various record labels including Atlantic Records, Warner Records, Elektra Records and Parlophone Records along with its global music publishing business Warner Chappell Music. For some background, please note Warner Music Group counts Ed Sheeran, Bruno Mars, and
ICYMI — Stay Optimistic. Stay Bullish. I Am.
June 8, 2020
Image: My great-grandfather (second from left) and his buddies in the 88th Division of the United States Army during World War I, at the time of the Spanish Flu pandemic of 1918-1919. He would serve under Major General William Weigel, become proficient in the 37mm gun, and take part in the largest offensive in U.S. military history, the Meuse-Argonne Campaign. As a corporal, he would survive the Great War and the Spanish flu pandemic, returning to the U.S. in May 1919 from the port of Saint-Nazaire, France on his way to Omaha, Nebraska. This article was published May 15, 2020. — New (updated June 4): We continue to encourage members to study the ‘Duration of (Stock) Value Composition’ in Value Trap: Theory of
Earnings Roundup for the Week Ended June 6
June 6, 2020
Image Shown: We highlight the operational and financial performance of four companies that recently reported earnings, which included periods of time where the ongoing coronavirus (‘COVID-19’) pandemic was present. By Callum Turcan In alphabetical order by ticker: AEO, DKS, TOL, ZM Teen apparel retailer American Eagle Outfitters Inc (AEO) reported first-quarter fiscal 2020 earnings (period ended May 2, 2020) June 3 which saw the firm miss consensus estimates on both the top- and bottom-lines. However, investors looked towards the future as American Eagle’s Chairman and CEO Jay Schottenstein noted that “I’m very pleased to see stores re-opening strong, supported by industry-leading health and sanitization measures to ensure safe and secure stores for our associates and customers. American Eagle and Aerie
Cisco Systems Makes a (Potentially) Transformative Acquisition
June 5, 2020
Image Shown: Over the past five years, shares of Cisco Systems have significantly outperformed the S&P 500 (SPY), before taking dividend considerations into account. When including dividend considerations, Cisco’s outperformance would likely grow even further given shares of CSCO carry a juicy yield. By Callum Turcan We include shares of the networking infrastructure giant Cisco Systems (CSCO) as a holding in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Its high quality cash flow profile, pristine balance sheet, and growing subscription-based revenue streams make Cisco quite appealing. As of this writing, shares of CSCO yield ~3.1% and our Dividend Cushion ratio sits at 2.7, earning the firm a “GOOD” Dividend Safety rating. Should that Dividend Cushion ratio climb
Campbell Soup Sees Its Sales Surge
June 5, 2020
Image Source: Campbell Soup Company – Third Quarter of Fiscal 2020 Earnings IR Presentation By Callum Turcan On June 3, 2020, Campbell Soup Company (CPB) reported third quarter earnings for fiscal 2020 (period ended April 26, 2020) and raised guidance for the full fiscal year to reflect the surge in demand for consumer staples goods due to the ongoing coronavirus (‘COVID-19’) pandemic. The firm beat consensus bottom-line estimates but missed consensus top-line estimates. Campbell’s net organic sales (a non-GAAP figure) jumped up by 17% year-over-year (GAAP revenues were up by 15%) and its adjusted diluted EPS (a non-GAAP figure) climbed higher by 57% year-over-year (GAAP diluted EPS was up 34%). Quarterly Update Sales of its ‘meals and beverages’ products rose
Dow Jones Surges Past 27,000; Bull Market Continues!
June 5, 2020
Dow Jones Surges Past 27,000; Bull Market Continues! — By Brian Nelson, CFA — Hi everyone! — What a bull market off the lows we are having. I don’t think we’re finished, as I have pounded the table time and time and time again about how bullish I am. In the words of Frank Sinatra, “The Best Is Yet to Come,” and I truly believe that. Yesterday, I explained to readers why we’re seeing this huge rally, “Stay Optimistic. Stay Bullish. I Am.” — If you understand the duration and composition of equity value (page 74-83 in Value Trap), you can start focusing on what drives share prices and returns. How else could a market rally this much with 13% unemployment, right? How wonderful it
Dividend Increases/Decreases for the Week Ending June 5
June 5, 2020
Below we provide a list of firms that raised their dividends during the week ending June 6. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Agent Information Software (AIFS): now $0.03 per share dividend. Alexandria Real Estate Equities (ARE): now $1.06 per share quarterly dividend, was $1.03. CNOOC Limited (CEO): now $5.204 per share dividend, was $3.766. Diversified Royalty (BEVFF): now CAD 0.0167 per share monthly dividend, was CAD 0.0167. Sabine Royalty Trust (SBR): now $0.1556 per share monthly dividend, was $0.1517. UnitedHealth (UNH): now $1.25 per share quarterly dividend, was
