Brian Nelson

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

Turn Off the TV

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By Brian Nelson, CFA Intrinsic value represents the conclusion to any and all stock research: What is the company worth? DCF valuation captures the expectations of a firm’s competitive advantages, growth prospects, strategic endeavors, and any other qualitative factor. No other process does this. Putting to numbers a plethora of advanced fundamental items in arriving at a fair value estimate is the cornerstone–and the most critical component–of any stock research analysis. Without an in-depth intrinsic-value assessment, research is but a story that has no ending.  — Brian Nelson, President, Valuentum Securities, 2011 Having worked on the buyside for a top-performing small-capitalization fund and on the independent/sell-side for a number of years in methodology development and optimization, I can tell you … Read more

Merger Activity Has Stepped Up Again as Stock Market Strengthens

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Let’s bring to your attention the many deals that hit the wires the past couple days. Siemens Announces Agreement to Acquire Dresser-Rand Takeover bid for Dresser-Rand has a total transaction value of $7.6 billion Acquisition strengthens Siemens’ portfolio for oil & gas industry Complementary regional footprint and product portfolio Siemens executes on its Vision 2020 with a decisive move to strengthen its core. The company has entered into an agreement with Dresser-Rand (DRC), which is listed on the New York Stock Exchange, to acquire all of the issued and outstanding common shares of Dresser-Rand by way of a friendly takeover bid. Siemens’ bid is unanimously supported by Dresser-Rand’s Board of Directors. The offer price is $83 per common share in … Read more

Question About the September Best Ideas Newsletter

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Q: I’m curious – how does BWLD go from a Valuentum 6 rating to a 3 with no earnings in the interim and price movement to the downside in the ensuing 30 day period? Was there a calculation error? Thank you for the question. The Valuentum Buying Index is not a step function tool (e.g. the score moves from 3 to 4 to 5). The Valuentum Buying Index considers a discounted cash flow process, a relative valuation process, and a technical/momentum assessment. It has components of both a value-based system and a momentum-based system. Any one of these parameters can influence a change in the rating, so there are a number of variables that can cause a multiple notch move … Read more

Dividend Increases/Decreases for the Week Ending September 19

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Below we provide a list of firms that raised/lowered their dividends during the week ending September 19. 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 Apollo Residential Mortgage (AMTG): now $0.44 per share quarterly dividend, was $0.42. Artesian Resources (ARTNA): now $0.2151 per share quarterly dividend, was $0.2119. Atlantic Tele-Network (ATNI): now $0.29 per share quarterly dividend, was $0.27. Blackstone Mortgage (BXMT): now $0.50 per share quarterly dividend, was $0.48. Covanta (CVA): now $0.25 per share quarterly dividend, was $0.18. Covidien (COV): now $0.36 per share quarterly dividend, was $0.32. Elmer … Read more

What Is Fat Pitch Investing?

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“I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” —Warren Buffett, Interview in Forbes magazine (1 November 1974) “The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” –Warren Buffett, 1999 Berkshire Hathaway Annual Meeting, … Read more

Potash Market: The Best Is Behind It

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It’s always sad when good things come to an end. In this case, it appears to be the global potash cartel…permanently. According to reports from the Wall Street Journal this week, the CEO of “Russian potash giant Uralkali JSC has no plans to restore a sales partnership with Belarus.” It appears that the prospects for reconciliation of the Belarusian Potash Company (BPC) have passed, and the global pricing cartel in the fertilizer ingredient is now a thing of the past. There are no plans for further talks at this time. Canpotex, which is comprised of Potash Corp (POT), the Mosaic Co (MOS), and Agrium (AGU), and the BPC collectively controlled about 70% of global potash exports. With the breakup of … Read more