GE Sees Top In Real Estate?
April 10, 2015
Image Source: Jeff Turner Perhaps to no surprise to those following the General Electric (GE) story closely, the industrial conglomerate is looking to shed operations tied to the financial markets and work to reignite its moaty and cash-rich industrial businesses. We’ve long been fans of this strategic endeavor, and we’re not changing our tune now. On April 9, the Wall Street Journal reported that GE is “close to selling off most of its $30 billion in real-estate holdings,” and we view this as not only a natural extension of the company’s 75/25 industrial/financial goal, but also a de-risking maneuver in light of the possibility for meaningfully higher interest rates in coming years. We’ve previously made the case that rising net
Intel, A Disciplined Capital Allocator?
April 10, 2015
Image Source: Gareth Halfacree We fully applaud Intel’s (INTC) management for walking away from the deal with Altera (ALTR). Though we liked the transaction from a strategic standpoint, our view centered on the assumption that Intel could “pay up to ~$40 per share for the company…and still create value for existing shareholders.” With Altera’s shares trading north of $43 at present, Intel would have had to pay a sharp premium to market levels, perhaps in the $60s, to entice management. Bloomberg reported that Intel had offered as much as $54 per share, and in this light, we’re glad the company walked away. Even though we think the bid was too high, our opinion of the executive suite has been
Mylan’s Deal for Perrigo Boosts Teva
April 9, 2015
Image Source: epSos .de We outlined the case on Best Ideas portfolio holding Teva (TEVA) in our generics industry thesis here. The company was added to the portfolio July 24, 2013 at $41.22 per share. Teva Pharma’s shares are now trading north of $66 each, converging to our fair value estimate in just less than two years. With valuations stretched throughout much of our coverage universe, we’re going to continue to let this winner run. Driving the firm higher April 8 was news of Mylan’s (MYL) bid for Perrigo (PRGO) at a significant premium to the latter’s share price. Under the conditions of the non-binding proposal, Perrigo shareholders would receive $205 in a combination of cash and Mylan stock for
The Time to Consider Owning Alcoa Has Passed
April 9, 2015
Image Source: aushiker First-quarter earnings season is already upon us, with aluminum giant Alcoa (AA) kicking things off April 8. If there is one thing investors should know about Alcoa, buying the company’s equity nearly 7 years into an economic recovery is fraught with capital risk. No matter how much Alcoa’s business shifts to value-add from commodity-type metal, core demand will always be cyclical. There were a lot of good numbers in the Alcoa report. Revenue grew 7% thanks to organic expansion in automotive and aerospace, while net income came in at $0.28 per share. After-tax operating income of $191 million was a record for its ‘Engineered Products and Solutions’ division, while the same measure in its ‘Alumina’ segment doubled
3 Unique Qualities of Valuentum Members
April 7, 2015
Subscribing to a financial information and analytics service on the Internet is a giant leap for any investor. But there are a few qualities that we think make Valuentum’s service one the most valuable ones out there. Let’s walk through 3 unique qualities of members, and why they value us. I. They Understand That It Is Not Our Job to Agree With Them “There are two requirements for success in Wall Street. One you have to think correctly; and secondly you have to think independently.” – Benjamin Graham People tend to be attracted to others that think in many of the same ways as they do, and this is only a natural phenomenon. People like to form groups to serve
Dividend Growth Portfolio Transaction Alert
April 1, 2015
As previously outlined, we are adding a 3% position in the Energy Select Sector SPDR Fund (XLE) in the Dividend Growth portfolio to replace the recently-removed position in Chevron (CVX). The 20-page ETF report on the XLE and its peers can be downloaded . In the report, we outline our thoughts on the outlook for crude oil and natural gas prices and explain why the XLE tops our list of energy sector ETF ideas. As it relates to Chevron, we very much like the oil and gas giant, but we think the XLE will still position us to capture a potential recovery in crude oil prices but without exposing us to the individual capital budget decisions of any one major
Why Intel Wants Altera
March 30, 2015
In its biggest potential acquisition in history, newsletter portfolio holding Intel (INTC) is reportedly in talks to acquire Altera (ALTR), though deal terms have yet to be disclosed. We think Intel could pay up to ~$40 per share for the company on the basis of the high end of our fair value estimate range for Altera and still generate value for shareholders, though we wouldn’t expect Altera’s $2 billion revenue stream to be much of a needle-mover against Intel’s $50+ billion revenue base, at least initially. However, there are a few reasons why this would be a strategic win for Intel. Altera is one of the top standard cell ASIC (application-specific integrated circuit) suppliers in terms of revenue. Due to
Dividend Increases for the Week Ending March 27
March 30, 2015
Below we provide a list of firms that raised/lowered their dividends during the week ending March 27. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Artesian Resources (ARTNA): now $0.2183 per share quarterly dividend, was $0.2151. City Holding (CHCO): now $0.42 per share quarterly dividend, was $0.40. Gazit-Globe (GZT): now $0.46 per share quarterly dividend, was $0.45. Oxford Industries (OXM): now $0.24 per share quarterly dividend, was $0.21. Silver Bay Realty (SBY): now $0.09 per share quarterly dividend, was $0.06. UDR (UDR): now $0.2775 per share quarterly dividend, was $0.26.
Part IV: Nelson’s Notes on Berkshire Hathaway’s 2014 Newsletter
March 28, 2015
Notes from Valuentum’s Brian Nelson on Berkshire Hathaway’s newsletter. Part IV.
Part III: Nelson’s Notes on Berkshire Hathaway’s 2014 Newsletter
March 27, 2015
Notes from Valuentum’s Brian Nelson on Berkshire Hathaway’s newsletter. Part III.
