Brian Nelson

Pay Attention!

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I just wanted to send a quick reminder out there because frankly this is amazing, and I’m very, very concerned readers aren’t focusing on the right things. First, I wanted to start with a couple examples. Example 1: If you pull up a 16-page report and, let’s say, it is dated from late April, and the company had registered a 9 on the index and shares were trading $24 at the time. If the stock is now in the mid-$30s, your response should be: “Wow, the stock registered a 9 and now has advanced significantly. The methodology really highlighted this one.” Your response should not be that the report is dated from April. Micron Tech (MU). Excerpt Micron Report, page … Read more

This Just Feels Different…Mr. Brown

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We think the correction is coming. Here are 7 reasons why we plan to reduce exposure to cyclicals and add some protection to the portfolios. By Brian Nelson, CFA I hope you don’t mind my using baseball analogies. Baseball and investing are perhaps the only two endeavors where if you get more than half right, you’re at the top of the list. In any case, you don’t have to be a big baseball fan to appreciate the similarities. I used an example with Ted Williams in this piece about fat pitch investing, but there’s another analogy that is worth sharing. I’ve been to the Louisville Slugger Museum and Factory Tour a few times in the past couple years. My little … Read more

Yikes! Brazil’s Real Plunges; Protests in Hong Kong

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Recession worries in Brazil (EWZ) sent the Brazilian real to a five-year low after poll results showed President Dima Rousseff gaining a lead over candidate Marina Silva, according to Bloomberg. Dropping a couple percent versus the US dollar today, its biggest one-day drop in three years, the Brazilian real has fallen more than 10% during the third quarter. Many had hoped a new government would spur economic growth in the country. The Brazilian economy is an important one, a component of the faster-growing BRIC nations, and many firms in our coverage universe are dependent on its resilience. This could potentially compound problems in Latin America, with Argentina defaulting on its debt earlier this year. Fundamentals at PetroBras (PBR), Gol Linhas … Read more

Dividend Increases/Decreases for the Week Ending September 26

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Below we provide a list of firms that raised/lowered their dividends during the week ending September 26. 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 CSB Bancorp (CSBB): now $0.19 per share quarterly dividend, was $0.18. Hersha Hospitality Trust (HT): now $0.07 per share quarterly dividend, was $0.06. Hingham Institution for Savings (HIFS): now $0.28 per share quarterly dividend, was $0.27. International Bancshares (IBOC): now $0.27 per share semi-annual dividend, was $0.25. Lockheed Martin (LMT): now $1.50 per share quarter dividend, was $1.33. OGE Energy (OGE): now $0.25 per share quarterly … Read more

Wow…Nike. Wow. Innovation Brews Growth.

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Home to some of the strongest brands on the planet, Nike (NKE) is simply a fantastic company. Brand value is quantifiable through the company’s ability to monetize it in the form of future free cash flows, but while the company’s future free cash flows don’t justify scooping up shares at present levels of ~$90 per share, fundamentals at the company have never been stronger. Nike’s fiscal 2015 first quarter results, released September 25, were nothing short of impressive. Revenue jumped 15%, while diluted earnings per share leapt 27% during the period. A shift in mix to higher-margin products, higher average selling prices and continued growth in its higher-margin direct-to-consumer business drove the firm’s gross margin higher. A lower tax rate … Read more

Starboard and Yahoo

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The Marissa Mayer hype has been exciting and refreshing. But with Mayer and the executive suite having done little to turn around the core operations of Yahoo (YHOO), and more recently snubbing talks about tying the knot with AOL (AOL), the time may be ripe for a shakeup. Activist investor and investment management firm Starboard Value thinks so. In an open letter to Mayer and the board of directors of Yahoo, Starboard Value announced that it has acquired a significant ownership stake in the beleaguered, and once-relevant, Internet portal.  Starboard outlined a case for Yahoo to monetize the company’s non-core minority equity investments (Alibaba, Yahoo Japan) in a tax-efficient manner and tie-up with AOL, which itself has been on the … Read more

Ugly Week Thus Far on Wall Street

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By Brian Nelson, CFA What does straight up look like, you may ask? Try the S&P 500 (SPY) since the fourth quarter of 2011. Today marked the largest sell-off in stocks since July 31 of this year. The Dow fell 1.5% to 16,952, the S&P 500 dropped 1.6% to 1966.27, and the Nasdaq tumbled 1.9% to 4,456.75. The S&P 500 tripped below its widely-followed 50-day moving average, and the large cap index is now back to levels reached months ago. All 30 Dow components fell during today’s trading session, with only a handful keeping the losses to less than a percent. Did you remember to build an arc like Bill DeShurko? What more does the market have to prove? The … Read more

Gaming Troubles: Macau Gaming Revenue Under Pressure

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Gambling in Macau, the Las Vegas of China or the “Monte Carlo of the Orient,” continues to fall, with September likely marking the fourth consecutive month of declines. According to some estimates, the gaming revenue drop in September will be in the double-digits. There are several issues plaguing Macau and driving uncertainty for many of the operators. Casino City Times perhaps said it best in their piece: Macau mired in cold streak: The mainland Chinese government is on an anti-corruption crusade, which has frightened off some high-end customers. Meanwhile, new visa restrictions implemented by Beijing have slowed visitation from neighboring provinces. A smoking ban on mass-market gaming floors will be implemented Oct. 6, adding uncertainty to revenue trends. Also in … Read more

Biggest News of the Day: Hasbro Beats Mattel and Jakks Pacific for Frozen Dolls

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Mattel (MAT) could have been thought of as a lock to win a new merchandising agreement with Disney (DIS) to sell the princess dolls of Elsa and Anna from the blockbuster animated movie Frozen. After all, Mattel is widely-known for its dominance in the doll category thanks to its Barbie line-up. If not Mattel, surely it would be Jakks Pacific (JAKK), who currently sells a variety of Disney fairies dolls, playsets, dress-up and accessories. But both of these companies lost out to Habro (HAS), which today landed a new strategic merchandising relationship with Disney Consumer Products and Frozen Properties beginning in 2016. We think this news is huge and further supports our valuation and dividend thesis on the Dividend Growth … Read more

Don’t Fire Your Stock Picker!

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2014 has been an interesting year. According to S&P Capital IQ Fund Research, “80% of running large-cap mutual funds have underperformed the S&P 500 in 2014.” The S&P SPDR (SPY) is simply not an easy index to beat, though we’ve been able to do so in the Best Ideas portfolio since inception. To nobody’s surprise, many investors have been lured to indexing thanks in part to the promise of mediocrity. But even for a tried-and true indexer (a Boglehead), it is quite valuable to keep a good stock-picker handy. Think about the boost from just adding a few shares of Best Ideas portfolio holding Apple (AAPL) or Altria (MO), or from completing the round trip in Baidu (BIDU) from buy … Read more