Valuentum’s June Edition of Its Best Ideas Newsletter
June 16, 2013
Why Valuentum’s Email Transaction Alerts Are Worth Paying Attention To, by Brian Nelson, CFA Valuentum subscribers have noticed that we’ve been quite busy as of late, adding protection to our portfolio in the form of a broader-market put option and taking some large profits in Astronics (ATRO) and eBay (EBAY). In last month’s edition, we highlighted our best-in-class hit rate–meaning that a large percentage of the firms we added to the portfolio are outperforming the broad market benchmark. But there are a couple ways of looking at our performance–the first is relative outperformance versus the market since inception, which is at 28 percentage points. Investors duplicating our portfolio are enjoying this outperformance. Another way of looking at our track record,
Why Valuentum’s Email Transaction Alerts Are Worth Paying Attention To
June 15, 2013
Valuentum subscribers have noticed that we’ve been quite busy as of late, adding protection to our portfolio in the form of a broader-market put option and taking some large profits in Astronics (ATRO) and eBay (EBAY). We’ve highlighted our best-in-class hit rate–meaning that a large percentage of the firms we added to the portfolio are outperforming the broad market benchmark. But there are a couple ways of looking at our performance–the first is relative outperformance versus the market since inception, which is at 28 percentage points. Investors duplicating our portfolio are enjoying this outperformance. Another way of looking at our track record, however, is to evaluate the performance of additions to the portfolio on the long side (purchases) since inception–i.e.
Asset Divestitures Progress at Best Ideas Portfolio Holding Rio Tinto
June 14, 2013
Image Source: Rio Tinto Due to concerns about economic growth in China and the corresponding impact on demand for iron ore, the broader mining sector has been under pressure during the past few months. Mining giants are looking to shed small or unproductive assets in order to strengthen balance sheets. Best Ideas Newsletter holding Rio Tinto (click ticker for report: ) made progress Thursday, shedding its Eagle project in the upper peninsula of Michigan for $325 million. The buyer is Canadian-based Lundin Mining Corp, which will take over the project that began 3 years ago and is approximately 55% complete. Eagle wasn’t a bad asset, as it is located in the US, is in an advanced stage of development, and
Dividend Hikes for This Week Included Caterpillar and Target
June 14, 2013
Below we provide a list of firms that upped their dividends for the week ending June 14. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Firms Raising Their Dividends This Week Alexandria Real Estate Equities (ARE): now $0.65 per share quarterly dividend, was $0.60. Caterpillar (CAT): now $0.60 per share quarterly dividend, was $0.52. Heico Corp (HEI): now $0.07 per share semi-annual dividend, was $0.06. Oil-Dri Corporation of America (ODC): now $0.19 per share quarterly dividend, was $0.18. Target Corp (TGT): now $0.43 per share quarterly dividend, was $0.36.
Is BHP Jumping Into the Potash Market?
June 13, 2013
Earlier this week, rumors intensified regarding mining giant BHP (click ticker for report: BHP) and the firm’s prospective entry into the potash market. Because demand for potash (see image below) tends to be a bit more stable than the company’s other resources (namely iron ore), we can see why BHP would be interested in entering the market. Image Source: Potash As it is currently structured, the potash market is dominated by a few large players, namely Canpotex and Belarus Potash Company. Canpotex is comprised of Potash Corporation (click ticker for report: ), Mosaic (click ticker for report: ), and Agrium (click ticker for report: ), while the Belarus Potash Company (BPC) represents the Russian equivalents. These two producers form a
Does ShopHouse Justify Chipotle’s Valuation?
June 13, 2013
Key Takeaways: · Chipotle’s internal growth is slowing. · Chipotle’s ShopHouse concept is expanding, but we think it could divert attention from the core business. · We could open a bearish position in Chipotle in the portfolio of our Best Ideas Newsletter. After its price finally came down to earth in late 2012 (falling to under $250 from over $400 per share), shares of quick-serve burrito restaurant Chipotle (click ticker for report: ) have rocketed back toward the $400 level. Shares have jumped 23% year-to-date, even though the company’s same-store sales growth totaled just 1% in the first quarter. Shares now trade at a premium to our fair value ($338 per share is the high end of our fair value range). With comparable
Cooper Tire & Rubber Receives a Generous Takeover Bid
June 13, 2013
Early Wednesday morning, American tire company Cooper Tire & Rubber (CTB) announced that it agreed to be acquired by India-based Apollo Tyres for $35 per share ($2.5 billion) in cash. Not only did we peg Cooper’s fair value at $35 per share, the firm also appeared on our list of The 25 Cheapest Stocks on the Market over $10, perhaps marking one of our best stock calls thus far this year. Apollo paid a 43% premium over the previous day’s closing price, right in line with our above-market fair value estimate. We think Apollo’s offer was fair, and we think the newly-combined entity will be a stronger company. Fears of Cooper’s heavy pension obligations and concerns about intense competition from
Lululemon’s CEO Departure: Sell-off Justified?
June 12, 2013
Luxury athletic apparel maker Lululemon (click ticker for report: ) announced strong first-quarter results Monday that were obscured by the announcement of CEO Christine Day’s departure. We doubt anyone on the Street saw this announcement coming (as evidenced by the large sell-off), and we are a bit surprised at the timing. Although the company has had some quality control issues during the past few months, and we’ve seen the firm chase demand (not have enough inventory), we don’t think Day was at all forced out. She’s presided over a boom in the company’s revenue and profitability over the past five and a half years. Still, Day’s “personal reasons” for leaving come at a strange intersection. Many growth investors believe Day
First Solar Is Wise to Raise Capital
June 12, 2013
First Solar’s Wild Ride Without question, solar modules and systems maker First Solar (click ticker for report: ) has been among the most controversial stocks in our coverage list during the past few years. The stock recently popped back above the $50 level on positive earnings guidance for 2014 and 2015, after nearly falling into the single digits last summer. Though we’ve recently increased our fair value estimate for the solar maker to $47 per share (at the time of this writing) as we’ve warmed up to its mid-decade outlook (which looked better than what we had previously anticipated), management made a wise (and opportunistic) decision to raise equity capital at current levels via the announcement of a secondary offering yesterday.
iOS Gets a Facelift: Apple’s Worldwide Developers Conference
June 11, 2013
Day 1 has passed at Best Ideas Newsletter holding Apple’s (click ticker for report: ), and we were hit with a barrage of news. The most pertinent issue of the day was the introduction of iOS 7, the iPhone and iPad’s new operating system. It is the first major overhaul of iOS, and it signals the company is serious about bringing positive changes. In addition to a new mobile operating system, Apple unveiled iTunes Radio, a streaming music service to compete with the likes of Pandora (click ticker for report: ) and Spotify. Lastly, the firm unveiled its newest Mac Pro—one of the most innovative products we’ve seen from the company in the last year. iOS 7 Image Source: Apple
