Member Articles

Reiterating Our $229 Fair Value Estimate for Berkshire Hathaway

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Image Shown: Shares of Berkshire Hathaway Inc Class B are moving on upwards. Berkshire Hathaway Inc reported third quarter 2020 earnings this past Saturday, November 7. The insurance and industrial conglomerate reported that its GAAP income almost doubled year-over-year as its investment portfolio reported large gains. However, that masked pressures at some of Berkshire Hathaway’s myriad businesses as the company navigated the storm created by the ongoing coronavirus (‘COVID-19’) pandemic. Berkshire Hathaway continued to generate significant free cash flows during the first nine months of 2020, and we are reiterating our fair value estimate of $229 per share of Berkshire Hathaway Class B shares. By Callum Turcan On November 7, Berkshire Hathaway Inc (BRK.A) (BRK.B) reported third quarter earnings for … Read more

Public Storage Continues to Shine

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Image Shown: Shares of Public Storage have recovered from the depths of the COVID-19 pandemic and have been on an upward climb over the past few months.   By Callum Turcan On November 4, Public Storage (PSA) reported earnings for the third quarter of 2020. As expected, headwinds created by the coronavirus (‘COVID-19’) pandemic weighed on its financial performance during this period; however, that did not stop the self-storage real estate investment trust (‘REIT’) from being very free cash flow positive. The long-term outlook for the self-storage industry in metropolitan areas in the US and elsewhere remains quite promising given the desire for households to maximize living space within their housing unit at a given budget. We include shares of … Read more

CubeSmart Is One of Our Favorite REITs

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Image Source: CubeSmart – October 2020 Deluxe Storage Transaction IR Presentation By Callum Turcan On November 5, the self-storage real estate investment trust (‘REIT’) CubeSmart (CUBE) reported third quarter earnings for 2020 that missed consensus top-line estimates but beat consensus funds from operations (‘FFO’) estimates. The REIT’s financial performance has taken a hit from the ongoing coronavirus (‘COVID-19’) pandemic, though CubeSmart adjusted by launching its contactless online rental program SmartRental back in April. Furthermore, after suspending its normal schedule for rental rate increases earlier this year, CubeSmart resumed those increases in June and July. CubeSmart has also since resumed its normal delinquency process, on a jurisdiction by jurisdiction basis. We include shares of CubeSmart as a holding in our High … Read more

Garbage Hauler Republic Services Doesn’t Disappoint in Third Quarter

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Image: Republic Services By Brian Nelson, CFA We like the garbage hauler space given the relative stability of its operations and the pricing power that emanates from landfill and disposal capacity. Garbage must eventually go somewhere, and those that own the disposal capacity are the ones that can control the value chain. The municipal solid waste industry in the United States is an oligopoly, dominated by the Big 3, Waste Management (WM), Republic Services (RSG), and Waste Connections (WCN). We include Republic Services in the Dividend Growth Newsletter portfolio. On November 5, Republic Services reported third-quarter results that showed the resilience of the firm’s business model. The trash taker’s adjusted EBITDA margin expanded 230 basis points, while it delivered double-digit … Read more

Cat or Deere or Neither?

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Image: Deere equipment. Deere’s stock has been a high-flyer during the past several months. By Brian Nelson, CFA The SPDR S&P Metals and Mining ETF (XME) measures a broad swath of entities tied to the metals and mining sector, weighting names such as Cleveland Cliffs (CLF), United States Steel (X), Arconic Corp (ARNC), Worthington Industries (WOR), and Freeport-McMoran Inc. (FCX) near the top. It also includes one of our favorite miners, Newmont Corp (NEM), but we generally don’t like the metals and mining space, more generally. Year-to-date, the sector is down ~17% and ~11% during the past 12 months; meanwhile, the S&P 500 is up ~7% year-to-date as it has advanced ~12% during the past 12 months. Metals and mining … Read more

Follow Up on Our Call on Ameresco

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Image Shown: Since we highlighted Ameresco Inc back in August, shares of AMRC have continued to surge higher. We caution that recent trading activity has been quite volatile, due primarily to the ongoing election count process in the US. By Callum Turcan Back in August 2020, we published a note on Ameresco Inc (AMRC), which provides a comprehensive slate of energy services for its clients (link here). Given that the various services Ameresco provides is quite broad, here is an overview of some of those offerings from our previous article (lightly edited): Ameresco offers a slate of comprehensive energy services that primarily involve designing, engineering, and installing projects at its client’s operations. That includes upgrading the heating, cooling, ventilation, and … Read more

Another Great Day for Best Ideas Newsletter Portfolio Holdings!

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Image: The holdings in the Best Ideas Newsletter during the trading session November 5. We continue to pound the table on our best ideas. By Brian Nelson, CFA The votes keep coming in for the Presidential Election of 2020, and it is a very high probability that Democratic nominee Joe Biden will become the next President of the United States. We don’t expect incumbent Donald Trump to go down without a fight however, and while we anticipate a bunch of news headlines in the coming weeks about recounts in battleground states, accusations of voter fraud, and the like, we also expect a peaceful transition of power once the dust settles. With many news outlets projecting Joe Biden will win the key … Read more

UnitedHealth Remains on Our Radar for Dividend Growth Newsletter Portfolio

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Image: On a price-only basis, from the beginning of 2008, UnitedHealth’s shares have advanced ~600%, while the S&P 500 has increased ~150%. The measurement period covers both the Obama and Trump administrations. By Brian Nelson, CFA UnitedHealth Group (UNH) is a name that we don’t dedicate a lot of resources to, as we tend to prefer diversified exposure to the healthcare arena in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio via the Healthcare Select Sector SPDR (XLV)–UnitedHealth Group is a ~8% weighting in the ETF at the time of this writing. Nonetheless, this Dow Jones Industrial Average (DIA) component has been under material accumulation of late based on its pricing action. Year-to-date, on a price-only basis, … Read more

Amazon’s Fair Value $4,000+ at the High End of the Range

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Image: Amazon By Brian Nelson, CFA We recently wrote a note about how lucky Amazon (AMZN) is to even be in existence today, “The Role of Luck in Investing and How To Think About It:” As investors, we underestimate the role of luck in a company’s long-term success. In February 2000, a month before the dot-com market crash, a fledgling Amazon raised $672 million in convertible notes to European investors. If the company hadn’t done so, there’d likely be no Amazon today, and one of the wealthiest men in the world, Jeff Bezos, might have just been a mere footnote in stock market history. Amazon would have been insolvent in 2001-2002 just like many of its other dot-com peers. That’s … Read more

General Motors Playing Catch Up

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Image: Hummer EV. According to General Motors’ website, the Hummer EV will be a “zero emissions, zero limits all-electric supertruck.” By Brian Nelson, CFA Most of the headlines focused on General Motors (GM) the past couple months had to do with its relationship with flailing electric heavy truck maker Nikola (NKLA). With GM’s executive suite largely distracted from the goings on at Nikola, Tesla (TSLA) has quietly changed the game in the bread-and-butter pickup heavy duty pickup truck market with last year’s launch of the company’s Cybertruck (view the unveil here). Investors will be hearing more about the Cybertruck soon. From our perspective, General Motors is playing catch up. It took Tesla’s successful launch of the Cybertruck in November 2019 … Read more