Siemens-Mitsubishi Consortium Looking to Spoil General Electric’s Deal
June 15, 2014
“A tendency for the winning bid in an auction to exceed the intrinsic value of the item purchased. Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item’s intrinsic value. As a result, the largest over-estimation of an item’s value ends up winning the auction.” – The Winner’s Curse (Investopedia) On Friday, Reuters reported that Siemens (SI) and Mitsubishi (MSBHY) are finalizing a joint offer for Alstom’s energy operation, a unit currently under formal agreement to be purchased by General Electric (GE) for $13.5 billion (€9.9 billion) enterprise value and $3.4 billion (€2.5 billion) of net cash — totaling $16.9 billion (€12.35 billion). The news
Intel Leaps to $30 Per Share; PC Demand Stabilizing
June 13, 2014
Intel (INTC) is one of the most-followed firms on Valuentum’s website, and for good reason: the company is a holding in the portfolio of the Best Ideas Newsletter and pays out a lofty 3.3% annualized dividend yield at present levels. For our new members, our best ideas are always included in the Best Ideas portfolio and Dividend Growth portfolio. We first highlighted Intel in the August 2011 edition of our Best Ideas Newsletter and added shares to the portfolio in September 2011 at just under $20 each. Though a 50% move upward to its current price is noteworthy, Intel has also paid a nice ~3% annual dividend yield along the way. We attribute the recent acceleration in the firm’s price
Analyst Job Preservation and the Conflicts of Interest That Prevail
June 13, 2014
“I’d rather lose half of my clients than lose half of my clients’ money.” – Jean-Marie Eveillard (First Eagle Global) I think very few investment research firms other than Valuentum can say that they are truly free from conflicts of interest. As shown in the excerpt from FINRA attached at the end of this article, there are at least five sources of analyst conflict of interest: investing banking relationships, analyst compensation, brokerage commissions, buy-side pressures, and ownership interests. No matter how much you may want to believe that sell-side equity research, or research provided by companies such as Morgan Stanley or Goldman Sachs, is free from conflicts of interest, it simply is not. Valuentum prides itself on being one of
Assessing Materiality of 5 Relatively Poor Incremental Data Points from eBay
June 12, 2014
eBay (EBAY) has one of the strongest business models on the market today. The firm uniquely benefits from a network effect in its auction business and a secular trend toward consumer online consumption in its payments business, PayPal. Recent same-store sales performance has also been solid, albeit slowing, in recent periods. According to ChannelAdvisor same-store sales growth at eBay came in at 11.5% in May, down from 14% in April. eBay retains a vibrant Economic Castle. Before we start walking through the five relatively poor incremental data points from eBay, we need to make a couple things clear. First, we hold eBay in the portfolio of our Best Ideas Newsletter, and we do not expect to make any changes to
The M&A Environment Remains Robust
June 9, 2014
Let’s take a look at a few deals that hit the wires recently – some proposed, some speculated. Analog Devices (ADI) Scoops Up Hittite Microwave (HITT) Norwood, MA (06/09/2014) – Analog Devices, a global leader in high-performance semiconductors for signal processing applications, and Hittite Microwave Corporation, an innovative designer and manufacturer of high performance integrated circuits, modules, subsystems and instrumentation for RF, microwave and millimeter wave applications, announced that the two companies have entered into a definitive agreement whereby ADI will acquire Hittite for $78 per share in cash. The closing price of Hittite’s common stock on June 6, 2014 was $60.56 per share. This agreement reflects a total enterprise value for Hittite of approximately $2 billion. ADI expects to
Dividend Increases for the Week Ending June 6
June 9, 2014
Firms Raising Their Dividends This Week Avago (AVGO): now $0.29 per share quarterly dividend, was $0.27. CatchMark Timber Trust (CTT): now $0.125 per share quarterly dividend, was $0.11. FEI Company (FEIC): now $0.25 per share quarterly dividend, was $0.12. Helmerich & Payne (HP): now $0.6875 per share quarterly dividend, was $0.625. UnitedHealth Group (UNH): now $0.375 per share quarterly dividend, was $0.28. >>Last week’s dividend increases.
New Highs: Intel Makes Splash in Mobile; AIG Scooping Up Underpriced Shares
June 8, 2014
At the Computex conference in Taiwan late last week, Best Ideas portfolio holding Intel (INTC) revealed the most energy-efficient processor in history — its Core M line of processors. The goal of the Core M, which is based off of the Core i3, i5, and i7 processors, is to enhance processor performance (with less power consumption) in mobile products, and we think the firm will make a big splash with the new chip. Picture: The first 14nm fanless mobile PC reference design from Intel; it has a 12.5 inch screen that is 7.2mm thin with keyboard detached and weighs 670 grams. The design is based on Intel’s next generation 14nm Broadwell processors. Named the Intel Core M processor, it delivers
Beige Book: Expansion in All 12 Districts
June 6, 2014
<< Source All twelve Federal Reserve Districts report that economic activity expanded during the current reporting period. The pace of growth was characterized as moderate in the Boston, New York, Richmond, Chicago, Minneapolis, Dallas, and San Francisco Districts, and modest in the remaining regions. Compared with the previous report, the pace of growth picked up in the Cleveland and St. Louis Districts but slowed slightly in the Kansas City District. Consumer spending expanded across almost all Districts, to varying degrees. Non-auto retail sales grew at a moderate pace across most of the country: Although improved weather generally gave a boost to business, lingering wintry weather in the Northeast continued to weigh on sales in parts of the Boston and New
Valuentum’s June Edition of Its Dividend Growth Newsletter!
June 2, 2014
Strong Performance Continues by Brian Nelson, CFA The month of May was another great month for dividend growth investors, and we trust you continue to be very happy with the performance of the Dividend Growth portfolio (please see page 5). The next couple weeks for portfolio holding Apple (AAPL) will be busy. The iPhone-maker’s Worldwide Developers Conference is this week, and we’re expecting some big needle-moving announcements (please see page 16). Shares have rallied to ~$630 each at the time of this print, and we continue to anticipate material upside on the basis of the company’s fundamentals and cash flow. Investors should expect Apple’s previously-announced 7-for-1 stock split to go into effect June 9. The firm currently yields ~2% (not stellar
More Excitement from Apple
May 31, 2014
Apple’s (AAPL) Worldwide Developers Conference (WWDC) is just around the corner (June 2-6), and we would expect the iPhone-maker’s equity to face some volatility during the conference and as it heads into the expected 7-for-1 stock split, which will go into effect June 9. Given all the moving parts in the next couple weeks, we plan to release an updated 16-page report on Apple the week after the split, or the week of June 16, so please be sure to stay active on our website for the update. On a split-adjusted basis, members should expect our valuation of the iPhone maker to come in at just over $100-$105 each (roughly in-line with its current $715 per share estimate, unadjusted for
