Taxes and the Distressed MLP Investor
October 25, 2016
Image show above: Performance of the Alerian MLP ETF. “Perhaps the worst thing about MLPs is that investors can spend more time doing and thinking about tax-related items than actually evaluating the businesses of the underlying entities. This could result in poor investment decisions.” – Brian Nelson, CFA By Brian Nelson, CFA What a sensitive topic for many… Our team presented at the Chicago chapter of the American Association of Individual Investors (AAII) last weekend. It is always an honor and a privilege to have the opportunity to present to such wonderful people! They ask so many great questions. (By the way, I’m working on my schedule for 2017, so if you’d like our team to speak on a topic
Samsung’s Pain Is Apple’s Gain
October 25, 2016
The long-term outlook for Apple is debated in light of the Samsung Galaxy Note 7 debacle. What does the future hold? Let’s get the thoughts of the Valuentum analyst team. Companies mentioned: AAPL, GOOG, GOOGL, SSNLF, BBRY
AT&T Targeting Disruption in Transformational Merger
October 24, 2016
Key Takeaways AT&T has agreed to acquire Time Warner for $85.4 billion in cash and stock in a deal that is expected to close by the end of 2017. Strict regulatory scrutiny can be expected. The deal has the potential to disrupt the traditional pay-TV industry while setting AT&T apart from its competitors in the wireless telecom industry, where growth has become sparse for the firm. The telecom industry is maturing, and price-slashing competition has changed the game as network differentiation has largely become a thing of the past. We’re not fans of the debt that will come with the completion of the deal, but the prospects of what the combined entities could produce are certainly interesting. We view the
Podcast: FALLACY of Index Funds!
October 23, 2016
The Valuentum Analyst team digs deep into the logical fallacy that paved the way for index funds, and the very real risks investors take while driving with their hands off the wheel looking only through the rear-view mirror. Summary Please read the first 3 minutes of the presentation (there is no audio at the beginning). Pause the program if you require more time to read. If you still don’t see the FALLACY that paved the way for the creation of index funds, be sure to comment below. The last 10 minutes of the program comprises a discussion by the Valuentum team of active versus passive. Looking forward to a good discussion. Please be sure to view the transcript below if
PayPal: The Way of the Future
October 23, 2016
Image Source: PayPal “As a customer champion and a leader in financial technology, our goal is to provide simple, affordable, secure, and reliable financial services and digital payments that enable the hopes, dreams, and ambitions of millions of people and businesses around the world, including those who have been underserved by the traditional financial system. This focus and clarity enabled us to achieve strong growth across every key aspect of our business in 2015. For the year, revenue increased 19 percent* to $9.24 billion, and our total payment volume reached $282 billion, an increase of 27 percent. We also generated $1.8 billion in free cash flow.” – PayPal’s 2015 Annual Report By Brian Nelson, CFA Best Ideas Newsletter portfolio holding
Tough Times for Rails
October 21, 2016
Key Takeaways: The North American railroad industry is oligopolistic in nature, and we love the barriers to entry and pricing strength that come with it. North American railroad operators have been hit by volume declines across a wide range of end markets. Currency movements and global economic concerns aren’t helping matters. Union Pacific remains our choice for exposure to the space. Though others present interesting opportunities as well, we think the firm’s operating ratio has the most upside from current levels in addition to it having some attractive market positioning. “…we’re not thrilled by the performance of Union Pacific since it was added to the Best Ideas Newsletter portfolio, but the railroad industry offers such a strong fundamental backdrop that
Cloud Lifting Microsoft Shares Toward All-Time Highs
October 21, 2016
“…Microsoft flexed its free cash flow generating muscles in the first quarter of fiscal 2017. The software giant reported free cash flow of just under $9.4 billion, an increase of nearly 25% from the year-ago period despite capital expenditures jumping approximately 60%. Such strong free cash flow generation helped the firm advance its net cash position, excluding long-term equity and other investments of ~$10.5 billion, to an impressive $62.2 billion, up from $59.8 billion at the beginning of the quarter.” – Kris Rosemann By Kris Rosemann Microsoft (MSFT) reported a strong quarter October 20, both in terms of financial performance and in terms of ongoing momentum in the transformation of its business. Non-GAAP revenue, which takes into account revenue deferrals
Pharma Momentum Builds for Johnson & Johnson
October 21, 2016
Image Source: J&J By Kris Rosemann Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio holding Johnson & Johnson’s (JNJ) third quarter report October 18 was an impressive display of the success of its new product launches and the strength of its ‘Pharmaceutical’ business, which it expects is only just heating up. Johnson & Johnson is a long-time holding in the Dividend Growth Newsletter portfolio and was recently added to the Best Ideas Newsletter portfolio in January 2016 as a diversified pharma replacement for the more speculative Gilead (GILD), “Alerts: High-grading! GILD–>JNJ; EBAY–>FB (January 2016),” “The J&J-Gilead Trade-off Update (July 2016).” We see no reason to adjust our positions in Johnson & Johnson in either newsletter portfolio following the solid
After-Hours: MSFT +5.9%, PYPL +4.6%
October 21, 2016
A holding in the Dividend Growth Newsletter portfolio and a holding in the Best Ideas Newsletter portfolio are indicated up after hours October 20. You may remember us taking some profits on Microsoft (MSFT) following its deal to acquire LinkedIn (LNKD), but did you know the company has been the prime example of our cash-flow-based dividend methodology for years? Microsoft was added to the Dividend Growth Newsletter portfolio at inception at a tender price of ~$26 per share. Our roughly 2.5% current weighting (yes, it is still one of our favorite dividend growth ideas!) is indicated up in after-hours trading, now to all-time highs near $61 per share, even past those of the dot-com bubble days! We’re not going to
Hasbro Heads into Holiday Season with Record Quarter
October 20, 2016
“…the highlight of the firm’s portfolio was its performance in the ‘Girls’ product category, where revenue leapt 57% in the quarter and 48% in the first nine months of 2016 on a year-over-year basis. The Disney Princess and Frozen product lines remain the core drivers of such strong performance, with ancillary growth coming from the Dreamworks’ Trolls as well as the Baby Alive and Furby product lines.” – Kris Rosemann By Kris Rosemann Dividend Growth Newsletter portfolio holding Hasbro (HAS) reported one of the most successful quarters in company history October 17. The firm registered company records in quarterly revenue and earnings as each of its major operating segments generated sales growth. US and Canada revenue advanced 16% on a
