Here Comes the Correction
July 7, 2015
The S&P 500 (SPY) has been stuck in neutral for most of 2015, and we’re not surprised. The forces against a further advance have been mounting for some time. Not only are valuations stretched on some of the strongest business models, but global economic growth remains sluggish, perhaps punctuated by falling gross domestic product in the US during the first quarter of the year. But that is not all that is ailing the global equity markets as of late. Nothing short of a 1929 US-equivalent stock-market crash in China (FXI) is currently ensuing, and the government is doing all that it can to prop up the markets to ensure stability. The Shanghai Shenzhen 300 Index has fallen an incredible 30%
eBay – PayPal Split
July 2, 2015
Under previous but subsiding pressure from Carl Icahn and other shareholders, eBay (EBAY) announced last September that it would separate its payments business PayPal in July of this year. Now that July is here, we wanted to remind members of the split and explain what it means for the holdings in the Best Ideas Newsletter portfolio. On July 17, eBay shareholders will receive one share of PayPal under the ticker PYPL for each share of eBay owned. We will be launching coverage of PayPal shortly after it becomes an independent, publicly-traded company. The separation of eBay and PayPal will make eBay leaner and more efficient while greatly increasing the potential for expansion of PayPal within the booming mobile payments market.
Kinder Morgan’s Fair Value: $29 Per Share
June 30, 2015
Summary We are initiating institutional equity research coverage of Kinder Morgan (KMI) with a fair value estimate of $29 per share and a Very Poor dividend safety rating. Valuentum has received significant attention in recent weeks following President Brian Nelson’s articles that collectively offered 10 reasons why we expect shares of Kinder Morgan to collapse. We believe prevailing conflicts of interests from brokerage research houses and credit rating organizations have created a debt-infused stock bubble propped up by a “circular flow of unsubstantiated support.” In this article, we provide the backbone of our estimates in calculating Kinder Morgan’s intrinsic worth to further the discussion for investors. ———- We are initiating institutional equity research coverage of Kinder Morgan with a fair value
Why Does Valuentum Only Respond to Member Questions?
June 29, 2015
Why Does Valuentum Only Respond to Member Questions? The answer is obvious: We always put our members first. “Our research and track record speak for itself. Random and inappropriate comments from anonymous people (robots?) on other websites should not influence your opinion of us…at all. If it has, then the ‘haters’ and ‘Internet trolls’ are winning.” Let’s explain how we always put members first in a recent email exchange. The following has been edited for clarity and to remove names mentioned in the correspondence. ———- Valuentum: FWIW, as a paid subscriber and big fan, your response on other websites on the KMI articles 1) frankly sucks, and 2) has shaken my opinion of Valuentum. For better or worse, your lack of
Maintaining Our Small Position in HCP
June 29, 2015
Dividend Growth Newsletter portfolio holding HCP’s (HCP) shares have been under pressure as of late, and we’re not happy about it. Part of the reason we were drawn to HCP, and we posit that many others were lured by the same attribute, was that it is the only REIT that is included in the coveted S&P 500 Dividend Aristocrats index. At the time it was added in 2012, there were only 50 companies in all that fit the bill of 1) a market capitalization in excess of $3 billion and 2) a track record of raising their dividends in each of the past 25 years. Though HCP’s fundamental quality has deteriorated since we added it, some of the share price
Dividend Increases for the Week Ending June 26
June 28, 2015
Below we provide a list of firms that raised their dividends during the week ending June 26. 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 Disney (DIS): now $0.66 per share semi-annual dividend, was $1.15 annual dividend. Harman (HAR): now $0.35 per share quarterly dividend, was $0.33. Herman Miller (MLHR): now $0.1475 per share quarterly dividend, was $0.14. John Wiley & Sons (JW.A): now $0.30 per share quarterly dividend, was $0.29. Kayne Anderson Midstream/Energy Fund (KMF): now $0.51 per share quarterly dividend, was $0.5025. Matson (MATX): now $0.18 per share quarterly dividend,
Dear member,
June 27, 2015
We have been blown away by the attention we’ve received from our warning on Kinder Morgan’s (KMI) valuation and dividend health. Our duty as an independent research provider has never been held in higher esteem as we outlined the prevalent hazards that reside both with sell-side research inundated with conflicts of interest and credit rating assessments that are paid for by the company. Independence will always trump biased analysis, and investors of all types have applauded us for this. We thank you. But being in the spotlight is nothing new for us. In the short history of the Dividend Cushion methodology, we have called in advance the dividend cuts on a few dozen equities: SeaDrill (SDRL), SuperValu (SVU), Roundy’s (RNDY),
Nike Is Just Too Pricey of a Stock
June 26, 2015
Everybody loves Nike, and that’s why its equity is trading at too high of a price. We think there are better values elsewhere.
Interest Rates: REITs vs. Financials
June 25, 2015
Since the peak of the Financial Crisis, the yield on the 10-year Treasury, a proxy for the risk-free rate within the valuation context, has been in a steady decline (see image above), but a strong bounce in rates since February continues to have the market on edge. Often moving in relation to Treasury yields are REITs and financial firms, though in opposite directions. Generally speaking, as interest rates rise, REITs experience selling pressure as investors opt for higher-yielding risk-free assets, while the opportunity to generate higher spread income is augmented with higher rates, sparking potential buying across the banking universe. The Fed continues to mull its options with how to build a “stimulus” cushion in advance of the next impending
