Valuentum Mosaic Exclusive: Talks Between Yahoo and eBay Probable
December 10, 2014
Let’s put it this way: the combined eBay and PayPal entity presently listed under the ticker symbol eBay (EBAY) is cheap. The combined company is trading in the mid-$50s with a market capitalization of ~$69 billion at present, and we value its shares in the mid-$70s (a ~$90+ billion valuation). We’re not the only one, in case you think that, despite everything we seem to get correct, we’re off our rockers with this valuation. Stifel, for example, recently labeled $75 per share as an upside case for the company. eBay remains a holding in the Best Ideas portfolio, and the equity markets are simply getting the company’s valuation wrong, in our view. It is one of the few true bargains
Yum! Brands’ KFC in a Lot of Trouble
December 10, 2014
There was a time when Yum! Brands’ (YUM) KFC dominated the US chicken market, but those days are over. Privately-held Chik-fil-A’s roots date back to the 1960s in Atlanta, but the company has gradually become the largest (yes, the largest) quick-service chicken restaurant chain in the US, based on domestic annual sales over $5 billion (with over 1,850 locations in 41 states and Washington D.C.). Chik-fil-A’s sales levels are better than Popeyes’ (PLKI) comparatively-modest ~$200 million in revenue and Yum! Brands’ ~$3 billion in revenue at its entire US division. Very few investors know about privately-held Chik-fil-A’s continued success in the states, and the firm’s growth is not slowing. From Chik-fil-A’s adorable cow campaign, ‘Eat Mor Chikin,’ where self-interested cows
Verizon Warns, AT&T and Sprint Sell Off
December 9, 2014
The telecom services industry is in a pricing war, and we want no part of it. From outlining how AT&T’s (T) best dividend growth years are behind it (see its dividend report ) and revealing Verizon’s (VZ) potentially prohibitive debt load (see here) to Sprint’s (S) cutthroat pricing behavior and T-Mobile’s (TMUS) aggressive marketing, we’ve been pounding the table on how the telecom services industry is a mess right now. Verizon announced in a warning December 8 that the operating environment is not getting any better, and in our view, it may not for some time: As (Verizon) is accelerating the upgrades of high-quality customers to 4G, total retail postpaid disconnects are trending higher both sequentially and year over year
Prospect Capital Cuts Dividend
December 8, 2014
As is often the case, the larger the dividend yield the more risky the payout. I talk about this quite a bit in the video: ‘Dividends, Dividends, Dividends.’ Please have a look. All else equal, we tend to prefer cash-flow-based operating companies such as Microsoft (MSFT) rather than opaque, risky structures such as business development companies (BDC’s), where traditional fundamental analysis is less-informative. Sure enough, a dividend cut at Prospect Capital (PSEC) came in a warm holiday package today. The business development company announced that it will reduce cash dividends to shareholders to $0.08333 on a monthly basis with the following record and payment dates: 8.333 cents per share for February 2015 (record date of February 27, 2015 and payment
Dividend Increases for the Week Ending December 5
December 8, 2014
Below we provide a list of firms that raised their dividends during the week ending December 5. 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 Agree Realty (ADC): now $0.45 per share quarterly dividend, was $0.43. Alexandria REIT (ARE): now $0.74 per share quarterly dividend, was $0.72. Associated Estates Realty (AEC): now $0.21 per share quarterly dividend, was $0.20. Axis Capital Holdings Limited (AXS): now $0.29 per share quarterly dividend, was $0.27. C.H. Robinson Worldwide (CHRW): now $0.38 per share quarterly dividend, was $0.35. Cameco (CCJ): now C$0.10 per share quarterly
Are the Oil & Gas Markets Doomed?
December 4, 2014
Q: Are the oil and gas markets doomed? Valuentum’s Brian Nelson: In short, no. For one, if we thought the oil and gas space (XLE) were doomed, we would not be holding onto Chevron (CVX), Kinder Morgan (KMI), and Energy Transfer Partners (ETP) in the Dividend Growth portfolio. Instead, I think what we are witnessing in the oil and gas market is a flight to quality and balance-sheet strength. Our outlook for oil and gas equities has not changed before or after the recent fall in energy prices. Valuentum’s thesis accepts the fact that crude oil (USO) and natural gas prices will be extremely volatile, and that’s why we’ve gravitated toward firms such as Chevron, which has the strongest balance
Kinder Morgan: A Dividend Growth Investor’s Dream
December 4, 2014
Rich Kinder and I see eye to eye quite often. The riskiness of the master limited partnership (MLP) structure is not something to scoff at, especially in the face of declining crude oil prices. Kinder Morgan (KMI) will finalize the roll-up of its MLP subsidiaries come end of year, and we think holders of Kinder Morgan will literally reap dividends on the move. Yesterday brought news that the firm expects to declare dividends of $2 per share in 2015 and post $500 million of excess dividend coverage. The concept of excess dividend coverage is nothing new at Valuentum, as the Dividend Cushion focuses intensively on this very idea. The increase would represent a 16% move over the 2014 budget of $1.72 per share
Booyah! Jim Cramer Under Attack!
December 3, 2014
TheStreet’s director, major shareholder, and employee is under fire from an activist investor that has disclosed a near-9% stake. Per SEC Filing: J. Carlo CannellCannell Capital LLCP.O. Box 3459, 150 East Hansen Avenue, Jackson, WY 83001(307) 733-2284 Mr. James J. CramerDirectorTheStreet, Inc.14 Wall StreetNew York, NY 10005 Cannell Capital LLC – that twenty-two-year-old SEC-registered investment advisor which manages sundry accounts that collectively owned 8.95% percent of TheStreet,Inc. (“TST” or the “Company”) as of December 2, 2014 – hereby amends its filing position as regards TST from passive to active because certain matters of governance concern it. The structure of your relationship with TST leads these concerns. Allow me to review some facts. 1. The market capitalization of TST has
