Brian Nelson

Buffett Doubles Down on USG; Teva Expected to Appoint New CEO; Crude by Rail Transportation Comes under Scrutiny

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The day after the New Year holiday was light with news, as expected, but there were three developments that we thought you should be aware of. We recently highlighted the third-quarter performance of USG (USG), the maker of wallboard under the SHEETROCK name, as it scored one of the highest ratings of a 9 on the Valuentum Buying Index in late October. Warren Buffett on Thursday announced that he has increased his stake in the firm, to 30.5% (more than double previously-reported figures). According to a recently-filed Schedule 13D/A, he now owns 43.4 million shares of the firm. USG continues to be significantly undervalued on the basis of our discounted cash-flow process, and we peg its fair value estimate north … Read more

Valuentum’s January Edition of Its Dividend Growth Newsletter!

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Dividend Growth Investors Face Unique Risks in 2014 by Brian Nelson, CFA With 2013 now in the rear-view mirror, we can happily say that the Dividend Growth portfolio significantly exceeded its goals of an annualized return in the mid- to- high-single digits for the year. We know that you’ve been a part of this journey in 2013, and we wanted to congratulate you as well. In fact, the successful year would not have been so without you, and we wanted to extend a big thank you for that. If you haven’t been a member for that long yet, we’re expecting an exciting 2014, too! For one, dividend growth investors are enjoying a time like no other in the history of the … Read more

Dividend Growth Investors Face Unique Risks in 2014

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With 2013 now in the rear-view mirror, we can happily say that the Dividend Growth portfolio significantly exceeded its goals of an annualized return in the mid- to- high-single digits for the year. We know that you’ve been a part of this journey in 2013, and we wanted to congratulate you as well. In fact, the successful year would not have been so without you, and we wanted to extend a big thank you for that. If you haven’t been a member for that long yet, we’re expecting an exciting 2014, too! For one, dividend growth investors are enjoying a time like no other in the history of the equity markets. The attractiveness of dividend growth investing as a style … Read more

Merger Chatter Heating Up for the New Year

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With corporate news slow as the New Year’s week unfolds, merger chatter has heated up to fill the void. On Monday, StreetInsider reported that the New York Times (NYT) may be catching the eye of a suitor. Chen Guangbiao, chairman of China Huangpu Renewable Resources Utilization Group Co, is reported to be interested in making a bid for the firm. The likelihood and the terms of an announcement, however, remain extremely vague, and we point to only one source. Newspaper outlets have certainly been of significant interest as of late, and the well-documented declines in newsprint circulation have done nothing to discourage buyers. For one, Amazon CEO Jeff Bezos recently acquired the Washington Post’s namesake earlier this year in what … Read more

Quiet Trading This Week

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If you haven’t yet read Part I of our Best Ideas piece, you can find it here. The holiday week was very quiet, as expected. However, a few news items did hit the wires that we’d like you to be aware of. First, we received word from ChannelAdvisor, a leading cloud-based e-commerce solutions provider, that same-store sales momentum across the e-commerce spectrum may have slowed in the third week of December. This runs counter to the strong data we’ve been receiving from the space through most of the holiday season. However, we believe the recent news release is something we’d categorize as “noise” (immaterial), especially given the significant date-shifting performed in the representation of the data. ChannelAdvisor had the following … Read more

Apple and Facebook Lead the Charge on Monday

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On Monday, official news of an Apple (AAPL)-China Mobile (CHL) iPhone deal sent shares of Apple soaring. We had highlighted initial reports of the announcement December 5, and we fully expect the new business to be a strong fundamental catalyst for the iPhone maker. China Mobile is the largest mobile operator in China by users, and even a low-single-digit conversion rate to the iPhone will move the deal at Best Ideas portfolio holding Apple. The iPhone 5s and iPhone 5c will be available in China Mobile and Apple stores across mainland China beginning January 17, 2014. We think consensus estimates for Apple’s earnings through the middle part of this decade are too low (on the basis of this transaction), and … Read more

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more

Oracle Steals the Headlines

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Last week was a busy week for Oracle (ORCL). On December 18, the tech giant reported fiscal second-quarter results that showed non-GAAP revenue advance 2% (up 3%, excluding the impact from the strengthening US dollar). Non-GAAP new software licenses and cloud software subscription revenues fell modestly (though it annualized a high-teens growth rate in the year-ago period), while non-GAAP new software license updates and product support revenues jumped 6%. Hardware Systems revenues, including hardware systems products and hardware systems support, were essentially unchanged. Non-GAAP operating income fell modestly on a still-very-healthy non-GAAP operating margin of 46%. Non-GAAP net income nudged 1% higher, but share buybacks bolstered non-GAAP earnings per share expansion to 9%, excluding the impact from a strengthening US … Read more

SoftBank Reported to Be Exploring a Deal for Sprint to Scoop Up T-Mobile

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On Friday, Bloomberg reported that SoftBank is exploring a deal for Sprint (S) to scoop up the majority of T-Mobile US (TMUS). The news outlet reported that SoftBank has discussed financing a bid with as many as six banks, including Credit Suisse, Mizuho, and Goldman Sachs. The banks are reported to be the same ones that backed the SoftBank-Sprint tie-up. According to Bloomberg’s sources: The plan would be to take control of T-Mobile by paying cash for the 67 percent stake owned by Deutsche Telekom AG…Sprint would then be integrated with T-Mobile, combining the third- and fourth-largest U.S. wireless carriers. Deutsche Telekom has said that it’s prepared to sell its $16 billion stake in T-Mobile, which has mostly been an … Read more

Nike’s Earnings Expansion Will Continue to Be Challenged

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On Thursday, Nike (NKE) reported strong fiscal second-quarter results. Revenue expanded 8% during the period (9% on a currency neutral basis), while diluted earnings per share from continuing operations nudged 4% higher, to $0.59 per share. Sales at its Nike brand expanded in every product type, geography and key category. Sales in its Converse brand advanced 11% on a currency-neutral basis thanks to strong performance in its largest owned markets. Though we liked that gross margins advanced 140 basis points in the period thanks to a mix of higher-margin products, higher prices, and lower input costs, selling and administrative expenses leapt 14%, exceeding the pace of revenue growth. Earnings before interest and taxes for the three months ended November 30, … Read more