Brian Nelson

Focus on a Rules-Based Process Not on Short-term Outcomes

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By Brian Nelson, CFA …you should be skeptical of what investment advice you use and who your sources are. (Investment gurus) give…seemingly solid advice in (their) columns, but (as) it turns out (their) stock picking skills don’t translate so well into the mutual fund industry… …Part of the problem is that you have no idea what they’re actual track record is or the conviction they hold on each recommendation they put out there. The talking heads have no idea what your risk profile and time horizon are. There’s a huge disconnect between financial predictions you read about or see on TV and your personal circumstances. That’s why it’s so important to focus on a rules-based process instead of short-term outcomes. It … Read more

Our Notes from Buffalo Wild Wings’ 2014 Analyst Day

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Notes Buffalo Wild Wings (BWLD) has been a great growth story. (1) Substantial unit growth opportunities remain across the US and Canada. The company’s vision is to be a growth enterprise of restaurant brands, with more than 3,000 restaurants worldwide. The firm’s growth strategy includes creating the ultimate guest experience in the US and Canada, growing Buffalo Wild Wings into an international, globally-connected brand, and building an enduring, diversified portfolio of brands, including PizzaRev. (2) Challenges: slow economic growth projections, consumer demands for more robust flavors and authenticity, and governmental pressures (minimum wages, tipped wages, and healthcare). (3) 2014 financial outlook: 2014 net earnings growth of 20%; relatively flat commodity costs (excluding traditional chicken wings); labor deleveraging, strong net earnings … Read more

Best Ideas Portfolio Holding Ford Puts Up Fantastic March Sales Numbers; Best in 8 Years!

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It seems like yesterday that we were “pounding the table” on scooping up shares of Best Ideas portfolio holding Ford (F). Of course, looking back, the transaction email alert was in May 2012 at just over $10 per share. Though that doesn’t mean much for new members, we think Ford is still a fantastic idea to gain exposure to pent-up demand related to the domestic auto recovery and global demand for auto adoption, especially in emerging markets. The speculative money is flowing into Tesla (TSLA), which to the firm’s credit is turning a lot of heads, but we think the “smart” money continues to be in Ford. Shares of Tesla are just too risky for even the most risk-seeking investor, and … Read more

Intuitive Surgical Soars!

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…A few years ago, I decided I wasn’t going to take on any more unreasonable, dangerous clients. I had too much responsibility to the households I was taking care of to allow a handful of lunatics distract me or goad me into investing behavior that I knew for a fact was stupid. Anyone who’s been in my line of work has likely reached a similar moment of clarity at some point. Or, at least, they will. A small but vocal minority of wealthy people in this world believe that because they’ve been successful in their career, this success ought to automatically translate to any endeavor they get involved with (think about a retired major league baseball player opening a fine … Read more

General Electric and Johnson & Johnson Shed Assets

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When dividend growth companies shed assets, the proceeds can be used for further dividend expansion. We like this quite a bit. General Electric (GE), a holding in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio, continues to streamline and optimize its portfolio of businesses. We’ve long held the belief that General Electric needs to simplify its business focus, a view that has been supported by its dividend cut in 2009. Global economic conditions and the credit crunch threatened GE Capital (GECC) at the time, and management’s moves since then have been to diversify away from its financial subsidiary. The industrial and finance conglomerate is far healthier than it was at the depths of the Great Recession in 2009, and the … Read more

Dividend Increases for the Week Ending March 28

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Below we provide a list of firms that raised their dividends during the week ending March 28. 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 Air Industries (AIRI): now $0.15 per share quarterly dividend, was $0.125. Banner Corp (BANR): now $0.18 per share quarterly dividend, was $0.15. City Holding Company (CHCO): now $0.40 per share quarterly dividend, was $0.37. DiamondRock Hospitality (DRH): now $0.1025 per share quarterly dividend, was $0.085 JPMorgan Chase & Co. (JPM): now $0.40 per share quarterly dividend, was $0.38. Kayne Anderson Energy (KED): now $0.51 per share … Read more

Dish Network May Finally Tie the Knot with DirecTV

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Though this shouldn’t have come as a surprise to Valuentum members, Bloomberg has reported that Dish Network’s (DISH) CEO Charlie Ergen has approached DirecTV’s (DTV) CEO Mike White about a merger. We have held DirecTV in the Best Ideas portfolio for some time, and here’s what we wrote just over a month ago on February 20: Competition continues to heat up, and Comcast’s (CMCSA) decision to merge with Time Warner Cable (TWC) creates a larger, formidable foe (see details here). However, it also increases the likelihood of a long-anticipated DirecTV-Dish Network tie-up. Though we acknowledge the risks related to a fast-changing industry landscape, our primary thesis on DirecTV is valuation-based. At the time of this writing, we think shares are … Read more

Apple’s iPhone 6: The Catalyst to Send Shares to Intrinsic Value

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We recently published an article on the irrational exuberance exhibited within small capitalization stocks. We think as the hype inevitably comes out of the small capitalization space in coming periods, this “speculative” capital, assuming some of it can cross cap restrictions, will flow into underpriced (yet growth-y) equities with extremely strong fundamentals, companies like portfolio holdings Apple (AAPL) and eBay (EBAY) that have tremendous upside potential. Carl Icahn is working diligently to reveal the significant underpricing of eBay in requesting a spin-off of PayPal to unlock value much like that of Yahoo (YHOO) unlocking value via its initial public offering of Alibaba. Yahoo’s shares have performed wonderfully in the wake of the Alibaba IPO. We think Icahn will inevitably get … Read more

Small Capitalization Stocks Officially in Bubble

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Tulip mania was a period in the 17th century during which prices for tulip bulbs reached irrationally high levels and then collapsed almost overnight. The picture to the right is a tulip, known as “the Viceroy”, as displayed in a Dutch catalog of the time. The picture serves as a reminder to us of the potential madness of crowds, perhaps no better popularized by Charles Mackay’s 1841 book Extraordinary Popular Delusions and the Madness of Crowds, which outlined such behavior: Many individuals grew suddenly rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot. Every one imagined that the passion for tulips would last … Read more