Brian Nelson

Gilead Price-to-Fair-Value Convergence Underway!

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It’s a bird… It’s a plane… Nope, it’s Best Ideas Newsletter Portfolio holding Gilead Sciences (GILD) flying high in the months of May and June. For those that are new to the Gilead “story,” shares registered a 10 on the Valuentum Buying Index in September of last year, and while the near term has been a bit rocky, the company is now off to the races. The pharma giant was trading just over $100 at the end of April, and now, 10 days into the month of June, its share price is over $117 and climbing, a cool 17% move. Despite news being sparse on the company during the past few weeks, there are certainly a number of factors driving … Read more

No Fly Zone: Airlines’ Economic Profitability Still Unproven

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Image Source: Amy McTigue We’ve said it before, and we’ll say it again: the airline industry is not well-suited for long-term investors. The industry that we’re talking about is the airline industry and includes companies such as United Continental (UAL) and JetBlue (JBLU), not the aerospace industry and its constituents such as Boeing (BA) and Precision Castparts (PCP), which are involved in aircraft-making and have fantastic business models. More on commercial aerospace here >> Today, we’re reiterating our view that most airline stocks should be viewed as nothing more than boom-or-bust, speculative vehicles. Perhaps the biggest issue with airlines is that the factors that drive their revenue and costs are largely out of their control. In other words, an airline … Read more

I Need a CFA® Charter Holder in My Practice – Financial Advisor

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Financial advisors and individual investors are always looking for the best. I had a conversation with one of our most valued clients this week. I’ve withheld his name and firm for the sake of privacy. We talked extensively about the significant back-testing he performed in constructing a portfolio that was optimized for a number of dynamics. The portfolio he created performed significantly better than the broad market benchmark during the past decade, but most importantly, its maximum drawdown at the depths of the Great Recession was a mirror fraction of that of the S&P 500 (SPY), and the length to recovery was materially shorter than it took the broader market to get back on its feet. I was impressed with … Read more

Putting the American in American Pharoah?

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Image: American Pharoah at the start of the race at Belmont. Source: Diana Robinson Last year left a bad taste in the mouths of horseracing fans across the globe. California Chrome had come off two fantastic wins in the Kentucky Derby and Preakness Stakes in order to position itself for a chance to make history by becoming the first Triple Crown winner in 36 years! The last thoroughbred to take home such an honor was Affirmed in 1978. For those that may not follow the “sport of kings,” to win the coveted Triple Crown, a three-year-old horse must win the Kentucky Derby in Louisville on the first Saturday in May, the Preakness in Baltimore, Maryland, two weeks after that, and … Read more

The Global Pandemic of Cybercrime, Cyber Espionage and Cyber Warfare

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“The new generation of cyber-attacks on organizations, including large and small enterprises and governments worldwide, is characterized by an unprecedented escalation in the complexity and scale of advanced malware created by criminal organizations and nation-states. These modern attacks are built on dynamic, stealthy and targeted malware that penetrates defenses in multiple stages and through multiple entry points of an IT network. These highly targeted, “single-use” cyber-attacks easily circumvent legacy security solutions that rely on pattern-matching detection technologies. Additionally, because legacy solutions reference outdated signatures of past threats, they also generate a high number of false-positive alerts.” – Fireeye Annual Report, 2014 The statistics are striking. According to a 2011 survey of ~580 US IT experts by research center Ponemon Institute, … Read more

May US Auto Sales Cruise Past Expectations

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Key Takeaways The US auto market has recovered significantly since the depths of the Great Recession, posting its best monthly unit sales levels in May in a decade and possibly positioning itself to reach the highest level of annual unit sales since 2001. Consumer demand continues to shift from cars to light trucks and SUVs as pain at the pump eases. America’s best-selling truck, the Ford F-Series, is losing market share, but this may just be temporary as it ramps up production to meet “sky-high” demand. Chevy and Toyota are busy capitalizing on the weakness, however. Tesla may have the brightest future among any auto maker in theory, but how long will it take for its plans to be realized?  … Read more

eBay Is Over $60 Per Share, Breaking Out

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I wanted to update members on eBay (EBAY), but let’s cover some ground on the (V)aluentum (B)uying (I)ndex first. The Valuentum Buying Index, or VBI, rating system is not the easiest to understand. There are as many stock-selection methodologies out there as there are fund managers and financial advisors. We’re talking tens of thousands, if not more. What we focus on within the Valuentum Buying Index framework is what matters. You may hear a fund manager talk about ROE, for example. But what you may not know is that ROE is inferior to ROIC because the former considers an artificial and non-operating boost from the application of financial leverage. We talked about this in the four-part education workshop here. Firms … Read more

No Value Lost in PPL Spinoff

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Dividend Growth Newsletter portfolio holding PPL Corp’s (PPL) shares were adjusted lower earlier this week, as the firm officially completed the spinoff of its energy supply business June 1. The move completes PPL’s transition to a focus on regulated utilities in the US and UK. PPL’s spinoff, now trading under the name Talen Energy Corporation (TLN), also includes the addition of RJS Power of Riverstone Holdings. As previously announced, all of the common stock of Talen Energy will be distributed pro rata to PPL shareholders. PPL shareholders received ~.1249 shares of Talen Energy common stock for each share of PPL owned as of May 20. Fractional shares were not issued; instead they were aggregated and sold in the open market, … Read more

Medtronic On Track with Covidien Integration

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Image Source: U.S. Embassy Kyiv Ukraine Today, June 2, Dividend Growth Newsletter portfolio holding Medtronic (MDT) reported its first results including business from recently-acquired Covidien. The acquisition was successfully closed on January 26, early in the fourth quarter of the firm’s fiscal year 2015, and was worth nearly $50 billion. In its report, management presented results in a couple ways, one on a strictly-reported basis and the other on a constant-currency, comparable basis. The latter includes Covidien’s prior-year monthly results aligned to Medtronic’s fiscal quarters, which the company feels gives a more accurate picture of underlying performance and the success of the early stages of integration of Covidien. The strictly-reported basis, on the other hand, provides a better understanding of the … Read more

The US Economy Is Shrinking

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“The way you lose money in the stock market is to start off with an economic picture. I also spend fifteen minutes a year on where the stock market is going.” and “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes.” – Peter Lynch I’m not so much a Peter Lynch disciple as I am a logical thinker. According to the legendary fund manager, you have a total of three minutes to read this piece on broader economic activity, and then move on to more useful analysis.  There’s no time to waste! Peter Lynch was the manager of the Magellan Fund at Fidelity Investments through the late 1970s and during the 1980s, where … Read more