Rivals Gaining Ground Against B-Dubs?
April 27, 2016
By Brian Nelson, CFA It turns out that franchisees selling restaurants back to the franchisor is the red flag we knew it was. If you recall, Buffalo Wild Wings (BWLD) announced deal-related expenses related to the acquisition of more than 40 franchised locations in Texas, New Mexico, and Hawaii, “We’ll Be Looking to Add to B-Dubs Sometime after the Drop (October 2015),” and at the time, we were willing to give the restaurant the benefit of the doubt that this wasn’t the red flag it turned out to be. We were wrong. After all, if owning a B-Dubs is so hot, then why would the franchisee be looking to sell it back to the company, and why to the company?
Apple: Nowhere To Run, Nowhere To Hide
April 27, 2016
By Brian Nelson, CFA Today’s stock market is a difficult one. That Apple (AAPL) is selling off after disappointing fiscal second-quarter results is unfortunately no surprise to us, “Apple Will Go Lower… And It Will Be ‘Forced’ Into Acquisitions (January 2016).” There may be “nowhere to run, nowhere to hide” for market participants seeking full exposure to equities. Unfortunately, it’s no consolation to the reader that missed our profit-taking alert in Apple a few months ago, and our discussion to take even more shares off the table “Looking To Trim Apple… (December 2015).” In August 2015, we removed one third of the position in Apple from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio at $108.92 for a
Iron Ore Market Stability Still A Ways Off
April 25, 2016
Image Source: Peter Craven After an increase in iron ore prices in early 2016, some iron ore producers have warned that the rally may not be sustained, while others believe the beginning of a prolonged rebound may be in place. The Chinese economy (FXI), the largest consumer of iron ore in the world, remains in a transition phase while iron ore producers continue to increase production, with some producing at record levels. Many major suppliers are currently undertaking large investment projects that will create material production capacity growth in the future as well. Though we cannot deny the slight bounce in iron ore prices, we aren’t sure supply and demand rebalancing is right around the corner. Recent headlines may cause
Dividend Increases/Decreases for the Week Ending April 22
April 25, 2016
Below we provide a list of firms that raised/lowered their dividends during the week ending April 22. 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 American Water Works (AWK): now $0.375 per share quarterly dividend, was $0.34. Aspen Insurance Holdings (AHL): now $0.22 per share quarterly dividend, was $0.21. Canadian Pacific Railway (CP): now C$0.50 per share quarterly dividend, was C$0.35. Celanese (CE): now $0.36 per share quarterly dividend, was $0.30. Charles Schwab (SCHW): now $0.07 per share quarterly dividend, was $0.06. Citizens Financial (CFG): now $0.12 per share quarterly dividend,
GE Continues Transformation; Steady Growth at Honeywell
April 22, 2016
Shown: GE’s backlog of unfulfilled orders remains robust, a sign of durability and strength. Image Source: GE’s earnings presentation. We continue to be encouraged by the progress newsletter portfolio holding General Electric (GE) is showing in its GE Capital exit plan. The firm is now ahead of schedule on that plan, having signed $166 billion in asset sales and closed $146 billion of those sales. Its transformation is now ~80% complete, and it continues to pick up momentum in 2016. The company also submitted its application for de-designation as a systematically important financial institution (SIFI) on March 31. However, as GE continues its transformation, which includes the integration of recent acquisition Alstom, its reported results have become quite convoluted as
Since 2014: Microsoft Up ~50%; Alphabet Up ~30%, Visa Up ~40%
April 22, 2016
Image Source: Brandon Martin-Anderson The past few weeks have been difficult ones for the newsletter portfolios. Sure, we’ve had some great reports from Hasbro (HAS) and Union Pacific (UNP), but the broad performance of some of our high-profile holdings hasn’t been what we’ve grown accustomed to. We’ve been concerned about the market’s “fluff” for some time, but equities have been racing ahead in any case, mostly in light of expectations for ongoing delays in continued contractionary monetary policy by the Fed, so the sluggish reports weren’t exactly what we were looking for to end the week. On Friday, April 22, we were “hit” with three rather glum quarterly reports from Microsoft (MSFT), Google – now known as Alphabet (GOOG, GOOGL),
The Market – On Its Head
April 21, 2016
By Brian Nelson, CFA The sector/theme returns have almost been turned on their head as some of the worst performers in the first few weeks of 2016, namely materials (XLB), energy MLPs (AMLP, AMZ), and energy (XLE), have transformed into leaders through the latest data update, April 21. As we outlined in “Alerts: Adding More High-Quality Exposure, (April 2016)” the dividend “track record” growth craze is on, in our view, and yield-rich exposures from utilities (XLU) to the dividend-growth focus itself (SDY) have rallied more than 9% in the year thus far. The metals gold (GLD) and silver (SLV) have also proved to be good trades out of the gates thus far in 2016, up ~18% and 23%, respectively, though
It’s Kinder Morgan’s Fundamentals
April 21, 2016
Image Source: Kurtis Garbutt By Brian Nelson, CFA Skeptics: Kinder Morgan’s (KMI) fundamentals are the reason why the stock has cratered from $45 per share to under $20. Many investors that failed to pay attention to the financials continue to be in disbelief, looking for a scapegoat for their miscue. There’s never a good reason to be stubborn when it comes to investing. The very best quality any analyst can have is the ability to change one’s mind. I’ve taught this religiously for years, but why do many even seasoned investors have a difficult time admitting that they’ve been wrong? It’s only human nature. Let me explain what’s going on with Kinder Morgan. We first have to start with what
Alerts: Adding More High-Quality Exposure
April 20, 2016
The dividend growth “track record” craze continues to be on in a big way, and we can’t help but feel there are similarities to the outcome of the ‘Nifty Fifty’ craze in the late 1960s and 1970s as there might be to dividend growth investing today. For those that may not be familiar, the ‘Nifty Fifty’ was a group of “buy-and-hold” large cap stocks that were largely credited with driving the market to new heights during the early 1970s. Many called these stocks with stable earnings one-decision stocks — they were to be bought and held forever. We have believed for some time that the proliferation of dividend growth investing may very well have the same effect on today’s market,
Did You Know: Coca-Cola Is Shrinking; Intel Is Growing?
April 20, 2016
How fragile is this bubbly market? The long-anticipated Organization of the Petroleum Exporting Countries (OPEC) conference in Doha, Qatar, that would mark the beginning of the end for all of crude oil’s (USO) malaise came and went, and nothing happened. We’ve now had a series of rumors about the potential for production freezes that have driven crude oil prices from the mid-$20s to nearly $40 per barrel, but nothing fundamental has changed. The bump in crude oil prices since the bottom has been almost entirely speculative. Crude oil prices would jump on rumors, and then when the rumor would prove untrue, they wouldn’t give back the gains. It appears hopes, dreams and speculation with a dash of short covering have
