Brian Nelson

How Have Some of Our Picks Fared?

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/278155-bearish-on-airlines-but-bullish-on-aerospace-a-good-bet Since we published our report May 19 that suggested AMR’s (AMR) equity is — for all intents and purposes — worthless, the stock has fallen almost 20%, much to the delight of those that bought at-the-money put options at that time. While we maintain that AMR Corp. does have option value (which is why it continues to trade above $0 per share), we think the deck is stacked against the carrier and believe there is more room for the firm’s stock price to fall, despite its current liquidity position. First, we believe the carrier’s fleet to be the most inefficient among legacy network peers. Second, we think its cost structure is among … Read more

What Does $150 Oil Mean for Airline Stocks? New 52-week Lows.

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277933-what-does-150-oil-mean-for-airline-stocks-and-the-airline-etf-expect-new-52-week-lows In “Get Ready for $150 Oil,” Barron’s predicts an oil shock will occur in spring 2012, with the black commodity reaching a record average monthly price of $150 per barrel, with spikes to $165 and $170 along the way. If this prognostication proves correct, airlines are in for a world of hurt. Before we get started on just how painful this shock could be, we invite airline stock speculators to take a read of our industry primer on the airline industry.  Jet fuel prices generally represent the largest component of an airline’s cost structure, and we estimate that for every $1 increase in the price of crude oil, it costs the global airline industry about $1.5 to $1.7 billion more. … Read more

Analyst Note: Hedge Positions of the Major Network Airlines

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We wanted to provide our subscribers with a brief snapshot of the 2012 hedge positions of the major airlines, should there be an oil price shock in spring 2012 along the lines of what Barron’s outlined in its cover story over the weekend.  United Continental (UAL) United Continental has only hedged 5% of its expected fuel needs for 2012 (Source: UAL’s 1Q 2011 10-Q). AMR Corp. (AMR) We don’t believe AMR has any material hedges for expected fuel consumption in 2012 (Source: AMR’s 1Q Earnings Release). US Airways (LCC) We believe US Airways to be completely unhedged for an oil price shock in 2012 (Source: LCC’s 1Q 10-Q). Delta (DAL) We do not believe Delta has a material hedge position in 2012 … Read more

IRAs, 401(k)s, & Other Retirement Plans: Taking Your Money Out

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Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: IRAs, 401(k)s & Other Retirement Plans: Taking Your Money OutBy Twila Slesnick and John Suttle. NOLO, 2011. 390 p. ISBN 978-1-4133-1393-2.Book Release Date: July 6, 2011 In the 10th edition of this NOLO guide, Slesnick (an Enrolled Agent who specializes in tax and investment planning) and Suttle (attorney and CPA) attempt to break down this complicated process into understandable pieces, complete with the legal and tax implications. Each chapter begins with an explanation of who should read … Read more

AMR’s Big Order to Pressure Cash Flow, Boeing in Precarious Position

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277628-amrs-big-order-to-pressure-cash-flow-boeing-in-precarious-position Shortly after we released our analysis of the fleets of the largest domestic carriers, The Wall Street Journal reported that AMR Corp. (AMR) is interested in ordering as many as 250 planes from either Boeing (BA) or Airbus (EADSY.PK). Our analysis, the summary graph of which we provide below, indicated that AMR is roughly on par with Delta (DAL) for having the oldest fleet (read fuel-inefficient) among the Big 4 domestic majors, so we view this move as inevitable. (Click chart to expand) The Wall Street Journal also indicated that the order value could be as high as $15 billion (comprising about 250 planes), and we suspect the new aircraft being evaluated will … Read more

How Profitable is Boeing’s 787 Dreamliner? Not Very.

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277504-how-profitable-is-boeings-787-dreamliner-not-very With Boeing’s (BA) 787 Dreamliner in the final stages of testing, we thought it would be helpful to clarify the profitability of this program (or perhaps more appropriate, the lack thereof), at least in its early stages. The growth potential of this program has been well-documented, but the 787 platform’s profitability will be nowhere near what management had expected before it experienced the first of many delays of its Dreamliner.  We think investors should be made aware of just how much leeway Boeing has in determining earnings, and why Boeing is one of the more difficult firms for the analyst community to get their arms around due to the lack of transparency. We believe Boeing will set the initial 787 accounting … Read more

Big 5 Sporting Goods Looks Extremely Undervalued, But Proceed With Caution

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277117-big-5-sporting-goods-looks-extremely-undervalued-but-proceed-with-caution If you read nothing else, consider these 3 points: Big 5 is disproportionately affected by unemployment in its key home states The company continues to grow slowly and conservatively Big 5 finds homes in niche markets that Dick’s (DKS) and The Sports Authority aren’t interested in What Big 5 does Big 5 is a small sporting goods retailer with 396 stores in 12 western states. The vast majority of its shops are concentrated in California and Nevada. They sell shoes, apparel, athletic gear, and accessories. For shoppers in bigger cities, one might find The Sports Authority or Dick’s Sporting Goods, as Big 5’s stores operate on a much smaller scale. The … Read more

Stumbles in Europe, Footwear, and Rising Input Costs Could Keep Shares of Under Armour at Bay

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277905-under-armour-solid-company-but-shares-are-significantly-overvalued  We wanted to provide subscribers with our thoughts on Under Armour (UA). Although we expect the company to follow Nike’s excellent results and post solid performance in its second quarter, the shares look significantly overvalued to us in the $75-$80 range. The risk-reward balance is not in investors’ favor at these levels. Apparel Remains Strong… If we can gather anything pertinent about Under Armour from Nike’s (NKE) earnings released Monday, we can see that athletic apparel, specifically in North America, is on fire. Year-to-date, Nike’s North American apparel sales are up 21%, including a second-quarter surge of 28%. This is consistent with the apparel growth we’ve seen at Adidas (ADDYY.PK) and Lululemon (LULU). Under Armour, with a smaller base than Nike, … Read more

Altria’s Dividend Yield is Quite Tempting

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Some readers may be surprised that (Altria) is a top performer for investors in the face of the onslaught of government restrictions and legal actions that have cost the firm tens of billions of dollars and threaten the cigarette manufacturer with bankruptcy. But in the capital markets, bad news for the firm often is transformed into good news for investors. Many shun the stock in the company and fear that its legal liability for producing a dangerous product–cigarettes–will eventually crush the firm. This aversion to the firm pushes down the price of (Altria’s) shares and raises the return to investors who stick with the stock. As long as the firm survives and continues to be very profitable, paying out a … Read more

28 Business Thinkers Who Changed the World

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Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: 28 Business Thinkers Who Changed the World: the Management Gurus and Mavericks Who Changed the Way We Think about Business By Rhymer Rigby. Kogan Page, 2011. 232 p. ISBN 978-0-7494-6239-0.Book Release Date: June 28, 2011 British journalist Rhymer Rigby tackles the lives of the most influential business thinkers in his latest work. Rigby (freelance journalist and contributor for the Financial Times) takes a journalistic approach, reporting on the lives and businesses of these 28 gurus without offering … Read more