Member Articles

Freeport-McMoRan’s Outlook Improves Considerably

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Image Source: Freeport-McMoRan Inc – February 2020 IR Presentation By Callum Turcan Global copper, gold, and molybdenum miner Freeport-McMoRan Inc (FCX) suspended its quarterly common dividend in March 2020 and provided a revised outlook for the full-year in April 2020 due to the coronavirus (‘COVID-19’) pandemic hampering both commodity prices and its operational performance. One of those hurdles involved the Peruvian government imposing restrictions on its Cerro Verde mine in March 2020 (as part of COVID-19 containment efforts), a copper mine that Freeport-McMoRan owns a ~54% stake in. Another hurdle involved the collapse in commodity prices earlier this year (though gold prices have held up quite well in 2020). First, let us provide some background before highlighting why Freeport-McMoRan’s outlook … Read more

Tesla Surges on Promising Production Report

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Image Shown: Shares of Tesla Inc have more than tripled year-to-date, as of this writing, due to growing optimism about the electric vehicle and battery maker’s long-term growth outlook. By Callum Turcan On July 2, Tesla Inc (TSLA) provided an update on the number of electric vehicles it produced and delivered during the second quarter of 2020, when its domestic manufacturing capabilities were hit the hardest by the ongoing coronavirus (‘COVID-19’) pandemic. This report likely acted as the catalyst for the latest run up in shares of TSLA as its technicals have “gone parabolic” of late. Production Update During the second quarter of this year, Tesla reported that it produced ~82,300 vehicles (including ~6,300 of the more expensive Model S/X … Read more

Berkshire Hathaway Expands Its Bet on North American Natural Gas

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Image Shown: A look at the Cove Point LNG export facility in Maryland, one of half a dozen that are currently operational in the US. Image Source: Dominion Energy Inc – February/March 2018 Fixed Income Investor Meetings Presentation By Callum Turcan On July 5, Berkshire Hathaway Energy, a majority-owned subsidiary of Berkshire Hathaway Inc (BRK.A) (BRK.B), announced it was acquiring natural gas pipeline and storage assets along with an equity stake in a liquified natural gas (‘LNG’) export facility in Maryland from Dominion Energy Inc (D). This deal is valued at $9.7 billion by enterprise value and is expected to close by the fourth quarter of 2020. We continue to like Berkshire Hathaway in the Best Ideas Newsletter portfolio. Berkshire … Read more

FedEx Indicates Its Outlook Is Improving

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Image Shown: An overview of FedEx Corporation’s revenue generation by business segment in fiscal 2020. Image Source: FedEx Corporation – June 2020 IR Presentation By Callum Turcan On June 30, FedEx Corporation (FDX) reported fourth quarter fiscal 2020 earnings (period ended May 31, 2020) that beat both consensus top- and bottom-line estimates. Shares of FDX rallied during normal trading hours on July 1 as the air freight and logistics company’s outlook looked better than feared. Management did not provide full year guidance for fiscal 2021 given the uncertainties created by the ongoing coronavirus (‘COVID-19’) pandemic. During the firm’s latest quarterly conference call FedEx noted (emphasis added): “The economic outlook is highly uncertain making forecasting incredibly challenging. Around the world, we … Read more

Interview with Valuentum’s Callum Turcan

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Callum Turcan helps head up Valuentum’s research product and is co-editor of the company’s newsletters. We sat down with Callum to get his thoughts on new developments in the market and economy. Let’s kick things off with his thoughts on the recent Berkshire/Dominion deal. Callum: Interesting deal with Dominion (D) and one that likely fits in with Berkshire Hathaway’s (BRK.A/BRK.B) long-term utility/infrastructure strategy in North America. Berkshire has steadily grown its wind power generation business over the past decade, but until battery storage technology progresses further (with an eye towards the need for serious cost reductions), natural gas will continue to be used to meet electricity demand when wind turbines are operating at reduced capacity (and in general, as new … Read more

Lululemon Athletica Buys MIRROR

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Image Source: Lululemon Athletica Inc – First Quarter Fiscal 2020 Quarterly Financial Supplements By Callum Turcan On June 29, Lululemon Athletica Inc (LULU) announced it was acquiring home fitness company MIRROR for $500 million in cash. MIRROR sells ~$1,500 (before taxes and installation fees) screens that come with a camera and speaker system that allow users to participate in at-home workouts assisted by trainers/videos. That offering comes with a $39 per month digital subscription which allows the user (or users, up to six people per household) to access on-demand and live workout sessions, and additionally, personal training sessions cost up to $40 each. Overview Lululemon first invested in MIRROR back in mid-2019 and will run the firm as a standalone … Read more

Dividend Increases/Decreases for the Week Ending July 3

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  Below we provide a list of firms that raised their dividends during the week ending July 3. 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 Austral Gold Limited (AGLDF): now AUD 0.009 per share dividend. Bank OZK (OZK): now $0.2725 per share quarterly dividend, was $0.2700. Caledonia Mining (CMCL): now $0.085 per share quarterly dividend, was $0.075. HarborOne Bancorp, Inc. (HONE): now $0.03 per share quarterly dividend. MFA Financial, Inc. 6.50 PFD SER C (MFA.PC): now $0.5326 per share quarterly dividend. MFA Financial, Inc. PFD SER B (MFA.PB): now $0.9375 … Read more

Macy’s Builds Liquidity and Cuts Costs to Stay Afloat

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Image Shown: Our fair value estimate range for shares of Macy’s Inc is quite wide at $1-$9 per share, relatively speaking, as the retailer’s outlook remains troubled due to its large net debt load and the ongoing pandemic. In the event Macy’s can reopen its physical stores in the near-term while maintaining recent gains seen at its digital operations, its revenues might rebound convincingly. Should Macy’s be forced to close its physical stores again for a prolonged period of time to contain the ongoing pandemic, that would likely drain its recently enhanced liquidity position and put a tremendous amount of stress of its financials going forward. Thus Macy’s has a relatively wide range of fair value outcomes, and represents the … Read more

July Dividend Growth Newsletter

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“The COVID-19 pandemic has all but shown it’s not the economy, or next quarter’s earnings, or last year’s book-to-market ratio or last year’s P/E ratio that drives market prices and returns; it’s enterprise valuation. Read about the duration of value composition in Value Trap.” — Brian Nelson, CFA — To add our new options commentary to your membership, please register here ($500/year). — Hi everyone!  — Trust you are doing great. I thought we could all share in on a little chuckle with this meme of Mr. T. I’ve been working for years and years explaining how important enterprise valuation, or the discounted cash flow process, is to understanding stock market prices and returns, and how most valuation ratios such as the P/E ratio, for example, … Read more

Update on Valuentum’s Research — No PPP for Us

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Image Shown: The NASDAQ 100 (NDX) remains resilient, and we remain bullish on the equity markets for the long run. — Hi everybody! — Trust you are doing well.  — First of all, I wanted to let you know that our small publishing firm is not taking any of the Payment Protection Program (PPP) money. We’re not interested in any bailouts, and we want our customers to know that if we’re going to be highlighting investment ideas on our website, that we know how to run a business and to anticipate the downside.  — Many an RIA has taken out PPP money, and frankly, it just doesn’t sit well with me. Financial advisors should have been prepared, just like they prepare for … Read more