Master Limited Partnership Model Still At Risk
December 7, 2015
Valuentum’s President Brian Nelson’s concerns regarding the master limited partnership business model became mainstream in June of this year. In his piece, “5 Reasons Why We Think Kinder Morgan’s Shares Will Collapse,” an article that itself may go down in history as one of the most timely pieces of research ever written–in light of Kinder Morgan’s (KMI) eventual collapse–Mr. Nelson said of the MLP space at that time: Most, if not all, MLPs report distributable cash flow (DCF), which does not in the calculation consider growth capex, an important driver behind the generation of increased cash flow from operations in the future. When MLPs report distribution coverage ratios, this particular calculation also backs out growth capex from the equation, instead
Dividend Increases/Decreases for the Week Ending December 4
December 7, 2015
Below we provide a list of firms that raised/lowered their dividends during the week ending December 4. 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 Montreal (BMO): now C$0.84 per share quarterly dividend, was C$0.82. C.H. Robinson Worldwide (CHRW): now $0.43 per share quarterly dividend, was $0.38. Canadian Imperial Bank of Commerce (CM): now C$1.15 per share quarterly dividend, was C$0.84. Canadian Western Bank (CBWBF): now $0.23 per share quarterly dividend, was $0.22. Citizens Holding (CIZN): now $0.24 per share quarterly dividend, was $0.23. CoreSite Reality (COR): now $0.53
Leading Investors to Water…
December 6, 2015
“Entrepreneurs are never satisfied. They want to do things better. They strive for perfection and use all the ingenuity to their command to achieve it.” – J.W. Marriott Company Name Symbol YTD % Outperform? Apple AAPL 7.84 Y Alibaba BABA -18.37 N Altria MO 18.75 Y Cisco CSCO -1.2 N eBay EBAY 24.26 Y Financial Select SPDR XLF 1.52 N General Electric GE 20.66 Y Gilead Sciences GILD 10.41 Y Google (now Alphabet) GOOG 46.07 Y Google (now Alphabet) GOOGL 46.84 Y Health Care ETF XLV 6.02 Y Intel INTC -3.73 N SPDR S&P Bank ETF KBE 9.25 Y Republic Services RSG 10.09 Y Rio Tinto RIO -31.07 N Teva Pharma TEVA 16.12 Y Union Pacific UNP -32.46 N Utilities
Alibaba Pops; Kinder Morgan Drops; Chipotle Flops
December 5, 2015
A discounted cash-flow process is your best friend. Not only does it allow you to identify the substance of a company’s balance sheet, what it owns (similar to what you have in your own savings account less all debt), but it also encourages a focus on the future free cash flow stream of the entity (much like your salary after expenses, for example). Intrinsic value estimation provides the backbone behind the conviction that an investor gains in either sticking with an idea or throwing in the cards. You can perform discounted cash flow analysis, too. Let’s walk through a few examples to help explain this concept. In mid-September, shares of Alibaba (BABA) had been in a tailspin, with investors
Future Free Cash Flow to Drive Medtronic’s Dividend
December 4, 2015
Medtronic (MDT), a core holding in the Dividend Growth Newsletter portfolio, reported strong results in its fiscal second quarter, performance released December 3. All of its segments delivered revenue growth in the quarter on a comparable, constant-currency basis, which includes comparable results from Covidien’s businesses. Total revenue grew 6% on a comparable, constant-currency basis, to $7.1 billion, which is a 62% increase from Medtronic’s reported results in the prior-year period. Medtronic posted strong growth in the US and non-US developed countries across the world of 4% and 6%, respectively, as well as 11% growth in emerging markets. The Greater China, the Middle East & Africa, Latin America, India, and Southeast Asia regions all grew revenue at a double-digit pace on
Moody’s Downgrades Credit Outlook on Kinder Morgan
December 2, 2015
An integral part of the Valuentum thesis on Kinder Morgan has now come to fruition. For those that listened to us, we saved them half of their capital.
Creed, Apple, and the Fitbit
November 30, 2015
By Brian Nelson, CFA Hanging out in malls on Thanksgiving isn’t really our thing at Valuentum, but what we’re hearing thus far is that “Thanksgiving shopping was a bust.” It even felt as though tourism was down a bit as traditional near-impassable auto traffic was surprisingly absent in at least one key family destination, the gateway to the Smokies in Gatlinburg, Tennessee, and maybe keeping travelers from commuting through the city of Chicago was the potential for riots following the release of the dash cam video allegedly showing a police officer shooting a youth 16 times in November of last year. My trip from northern Illinois to Gatlinburg, Tennessee, and back was rather uneventful, not that I am complaining about
Dividend Increases/Decreases for the Week Ending November 27
November 30, 2015
Below we provide a list of firms that raised/lowered their dividends during the week ending November 27. 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 Becton, Dickinson (BDX): now $0.66 per share quarterly dividend, was $0.60. Capital City Bank (CCBG): now $0.04 per share quarterly dividend, was $0.03. Citizens Community Bank (CZYB): now $0.07 per share annual dividend, was $0.05. Ferrellgas Partners (FGP): now $0.5125 per share quarterly dividend, was $0.51. Hormel Foods (HRL): now $0.29 per share quarterly dividend, was $0.25. Laclede Group, Inc. (LG): now $0.49 per share quarterly
Reading and Videos for the Thanksgiving Holiday
November 27, 2015
Must read: Understanding the CFA Designation Must watch: Explaining the Valuentum Buying Index Must read: Why Valuentum Buying Index Ratings Matter Must watch: A Glimpse Into Valuentum’s DCF Valuation Process Must watch: Do You Know What You Don’t Know? Must read: The Best Way to Use the Valuentum Process Must read: Best Ideas Portfolio Performance Audit Must read: Focus on a Rules-Based Process Must read: What Causes Fair Value Estimates to Change? Must read: Resetting Your Mental Model Must read: Introducing the Economic Castle Rating Must read: Deriving Forecasts in Valuation and Dividends Must read: Investing’s Odd Couple: Value and Momentum Must watch: The Crash of 1929 Must read: How Members Use Valuentum’s Investment Services Image Source: Art4TheGlryOfGod
Value Opportunities Not To Be Found In Footwear Market
November 24, 2015
Athleisure, a term used to describe athletic-inspired leisure apparel, has been a source of strength for retailers in recent quarters and has found a solid niche in the heart of consumers. Athletic-casual wear has become a popular style choice and continues to be more accepted in a wide variety of social situations. The footwear market is following a similar trend. The dominant player in athletic footwear in the US is Nike (NKE); there are no ifs, ands, or buts about it. The Nike Free franchise–that’s only one of its running shoe franchises–recently eclipsed the $1 billion annual sales rate, which makes it bigger than 7 of the 10 largest shoe brands in the US. With well over $18 billion in
