Brian Nelson

Throwing In the Towel on Intuitive Surgical

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Intuitive Surgical (ISRG) has admittedly been Valuentum’s worst call, and soon, it will be the only long position that will have been removed from the Best Ideas portfolio at a loss. We’ve been whipsawed around so much with this company that getting a pulse on the business has become near impossible. You can read about ‘The Curious Case of Intuitive Surgical…” here and our now-embarrassing note here about how happy we were to get back to even, but the final straw came in the past few weeks. We understand that the firm is navigating through a difficult market environment that was punctuated by the growing negative perception regarding robotic surgery, even if robotically-assisted minimally-invasive surgery is a favorable long-term trend … Read more

Big News in Big Pharma

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Pfizer Held Talks to Acquire AstraZeneca “Pfizer Inc. (PFE), the world’s biggest drugmaker, held informal, now-discontinued talks with AstraZeneca Plc (AZN) about buying the London-based maker of asthma and heart drugs, said two people familiar with the matter… …The companies aren’t currently negotiating, said the people, who asked not to be identified. One said the talks happened several months ago and there are no plans to resume. The discussions were first reported yesterday by London’s Sunday Times, whose unnamed bank and industry sources said New York-based Pfizer made a tentative approach about a takeover valuing AstraZeneca at more than 60 billion pounds ($101 billion).” (Source: Bloomberg) To continue reading >> Valeant and Activist Investor Bill Ackman Pursue Allergan “Canada’s Valeant … Read more

Restaurant Industry Update

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The fast-food (quick-service) breakfast wars have intensified. It has become a high-stakes game for all participants, and most have gone all-in to capture market share, to use poker parlance. The NPD Group, a leading global information firm, noted that the pace of expansion for fast-food breakfast across the restaurant industry has been a key bright spot, and executives across the industry are taking note: Quick service, which accounts for about 80 percent of total restaurant morning meals, showed the strongest increase in breakfast visits of all restaurant segments with a 4 percent increase in the year ending December 2013 period compared to year ago, reports NPD CREST, which every day tracks how consumers use restaurants and other foodservice outlets. Morning … Read more

The Cola Wars: Currency Headwinds Intensify; Snacks Looking Better

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We live in a thirsty world. Global non-alcoholic ready-to-drink (NARTD) consumption is expected to advance at nearly a 6% compound annual growth rate over the next four years. Since the beginning of this decade, NARTD retail value has increased by $135 billion, and the market is expected to grow by another $300 billion before the end of 2020. The global beverage industry is fueled by a number of global macro trends: 20% growth in urban population, 70% increase in personal expenditure per capita, 50% growth in middle class, and 1 billion teens today. Coca-Cola (KO) and Pepsi (PEP), which both reported results last week, are poised to benefit from these strong market demand trends, and Pepsi has a faster-growing snacks … Read more

Dividend Increases for the Week Ending April 18

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Below we provide a list of firms that raised their dividends during the week ending April 18. 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 CSX (CSX): now $0.16 per share quarterly dividend, was $0.15. Discover Financial Services (DFS): now $0.24 per share quarterly dividend, was $0.20. Donegal Group, Inc. (DGICA): now $0.1315 per share quarterly dividend, was $0.1275. Kinder Morgan (KMI): now $0.42 per share quarterly dividend, was $0.41. Kinder Morgan Energy Partners (KMP): now $1.38 per share quarterly dividend, was $1.36. LyondellBasell Industries (LYB): now $0.70 per share quarterly … Read more

Google’s First-Quarter Performance: Business as Usual

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On Wednesday, Google (GOOG) reported decent first-quarter results. The search giant’s revenue increased across-the-board on a year-over-year basis: Google properties revenue advanced 21%, network revenues increased 4%, while other revenues jumped nearly 50%. This is impressive year-over-year performance for any firm regardless of its size, but the market had expected even more from the Internet behemoth. What spooked investors a bit was that Google’s revenue declined across-the-board on a sequential basis (from the December quarter to the March quarter), representing somewhat of a divergence from recent historical patterns. Nonetheless, we put greater weight on the year-over-year numbers because they correct for seasonality. While we liked what we saw in the first quarter, the market is not necessarily incorrect in its … Read more

IBM Continues to Lose Its Luster

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Share buybacks are not always a good thing. We typically like a firm’s buyback program if it is executed at a level below that of the company’s cash-flow-derived intrinsic value estimate. The buyback activity at these levels creates value in the sense that the cash reduced on the balance sheet (as a result of the repurchases) is less than the positive impact of a lower share count (equity value is divided by shares outstanding to arrive at intrinsic value per share). Under a scenario where a company buys back stock above its intrinsic value estimate, management is effectively destroying shareholder capital – the cash reduced on the balance sheet (as a result of the repurchases) is more than the positive … Read more

Expect Abbott to Raise Its 2014 Outlook Soon

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We’ve always liked Abbott (ABT). The company has been one of the most successful companies for more than 125 years. The firm has leadership positions in a number of attractive markets such as ‘Diagnostics’ – where it is #1 in immunoassay diagnostics and #1 in blood screening – and ‘Nutrition’ – where it boasts brand names such as Similac, Ensure, and PediaSure, leading to its #1 worldwide position in both worldwide adult nutrition and US pediatric nutrition. The firm’s ‘Branded Generics’ segment has strong positions in emerging markets, while its ‘Medical Devices’ segment is #1 in drug-eluting stents, #1 in bare metal stents, and #1 in LASIK. Abbott continues to execute nicely. On Wednesday, Abbott reported solid first-quarter results. On … Read more

Another New High for GE’s Industrial Backlog!

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General Electric (GE) has taken a number of steps to position itself for future success, and reduced reliance on GE Capital Corp (GECC) remains a sound trajectory. Not only do we think that increased transparency and potential monetization of a portion of its far-reaching financial operations is a prudent idea (particularly given the recent lessons learned from the Financial Crisis), but the move also frees up the executive suite to focus on driving top-notch performance at its industrial operations. Clearly, we’re already seeing the potential of this “new GE,” and we like it very much. Image Source: GE On Thursday, GE reported excellent first-quarter results. One of the most important indicators of GE’s industrial business potential is the trend in … Read more

Intel Continues Its Move to $30 Per Share

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Frankly, it’s hard not to like Intel (INTC). The company dominates the microprocessor and chipset market, and while rivals can adapt quickly in the land of technology, continuous research and development keeps the firm a step ahead of the competition. If that weren’t enough, the company is simply a cash-flow machine, and its annual dividend payout is not only safe on the basis of the Valuentum Dividend Cushion score but also is poised to grow into the future. A strong competitive position, an attractive valuation, and a safe and growing dividend are a few qualities that make the company a Valuentum stock. It is held in both the Best Ideas portfolio and Dividend Growth portfolio. Intel’s goal is to be … Read more