Valuentum’s July Edition of Its Best Ideas Newsletter
July 15, 2017
To download the July edition of the Best Ideas Newsletter, please select here (pdf).
Systemic Risk in These Frothy Times
July 14, 2017
Let’s talk about index investing, market valuations, and mention how a few ideas in the Best Ideas Newsletter are doing. By Brian Nelson, CFA For most investors during most parts of the economic cycle, index investing (VOO), or holding a broad basket of stocks that approximate the returns of a large market index may make a lot of sense. I have always said this from the very beginning: Individual stock selection is not for everyone. What may not be well-known, however, is that index funds have experienced multi-year periods of both outperformance and underperformance relative to actively-managed funds since the dawning of the very first index fund many decades ago. I’m worried that some investors today may not have this
Important Valuentum Announcements
July 12, 2017
We have a few important announcements and a couple reminders to share. Hi everyone, I hope you are doing great! I wanted to let you know of a few things that I am very excited about. First, in case you missed the rollout of our enhanced stock and ETF pages, you can read that message here. The enhanced pages make it easier to access and consume data on companies on our website, including their respective fair value estimates, Dividend Cushion ratios, and beyond. We plan to continue to develop these pages to make them as user-friendly as possible. Our goal, however, is to keep them as free from potential bias as possible, so at the moment, outside news services are
Analyzing the S&P SPDR Biotech ETF
July 12, 2017
ETFs are rapidly becoming the preferred investment vehicle to gain broad exposure to a particular sector. The biotech industry is no different with two distinct ETFs dominating the niche. The article discusses the unique characteristics of the SPDR Biotech ETF to determine the merits of the idea. By Alexander J. Poulos Introducing the S&P Spider Biotech ETF The SPDR S&P Biotech ETF (XBI) is a position weighted index with the top 10 components accounting for less than 25% of the overall assets of the index (see image below). The XBI differs sharply from its primary rival the iShares Nasdaq Biotech Index ETF (IBB) which is market-cap weighted with industry stalwarts such as Amgen (AMGN) accounting for over 8% of the
ETF Analysis: Consumer Discretionary
July 11, 2017
Please select the image below to download the report.
Loxo Oncology Presents Compelling Data on Its TRK Inhibitors
July 11, 2017
Image Source: Loxo Oncology The field of oncology remains an area of intense focus with a dire need for new novel therapies. Loxo Oncology generated lots of excitement with the release of its clinical data for Larotrectinib, a TRK-inhibitor for the treatment of a diverse number of tumors. By Alexander J. Poulos TRK Fusion Loxo Oncology (LOXO) is targeting new therapies that take aim at the tropomyosin receptor kinase (TRK) gene abnormalities that lead to TRK-fusion cancers. A defective TRK gene can fuse with another otherwise healthy gene resulting in abnormal growth. The newly fused cell will continue to grow leading to tumor growth.The abnormal TRK fusion gene is witnessed in a wide swath of tumors–genetic testing can help identify
Dividend Increases/Decreases for the Week Ending July 7
July 10, 2017
Below we provide a list of firms that raised/lowered their dividends during the week ending July 7. 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 Bank of the Ozarks (OZRK): now $0.18 per share quarterly dividend, was $0.175. Enterprise Products Partners (EPD): now $0.42 per share quarterly dividend, was $0.415. Highway Holdings (HIHO): now $0.10 per share quarterly dividend, was $0.07. HopFed Bancorp (HFBC): now $0.05 per share quarterly dividend, was $0.04. Medtronic (MDT): now $0.46 per share quarterly dividend, was $0.43. NetApp (NTAP): now $0.20 per share quarterly dividend, was
MLP Speak: A Critique of Distributable Cash Flow
July 7, 2017
–> Handout 1: Pitfalls of Distribution Yield Analysis (pdf) –> Handout 2: Linking P/DCF to Enterprise Free Cash Flow Valuation (pdf) Let’s talk about a controversial metric that is used in master limited partnership (MLP) reporting. Just how useful is it, and should it be allowed? By Brian Nelson, CFA It’s been a few years since the fallout in the prices of most master limited partnerships (AMLP), but to me, it still feels like yesterday. We continue to have many concerns about the longevity of the business models of MLPs, and we maintain our view that the operating structure will be challenged over the long haul. New equity and debt funding (issuance) continues to, in part, fuel the distributions of most MLPs,
Our Reports on Stocks in the Specialized Semiconductor Industry
July 6, 2017
Image Source: Bernard Goldbach Structure of the Specialized Semiconductor Industry The specialized semiconductor industry is intensely competitive and has been characterized by price erosion and rapid technological change. Participants compete with major domestic/international semiconductor companies and often have to defend intellectual property rights against entities that have copied proprietary product lines. Firms are exposed to the global economic cycle, wide supply/demand fluctuations, and continuously face the risk of excess or obsolete inventories. Constituents must introduce new products with more features at higher prices to maintain margins. We don’t like the group. Please click on a company name below to view the corresponding equity report: << Our Dividend Reports
Walgreens Builds Out Its Network
July 6, 2017
Image Source: Mike Mozart Walgreens continues its quest to build out its network of pharmacies. The goal is to maintain the largest network in the US, which would make exclusion from a payer’s network very difficult. Let’s review the recently-revised terms of the deal to acquire a portion of Rite Aid, the third-largest pharmacy chain in the US. By Alexander J. Poulos The Quest to Expand the Network Walgreens Boots Alliance (WBA), under the very capable leadership of Stefano Pessina, is attempting to transform into a global pharmacy-led health and wellbeing provider. The genesis of the idea was initiated with the combination of Boots Alliance, a predominately UK-based pharmacy chain with Walgreens. Upon the consummation of the deal in 2014,
