Member Articles

ICYMI: Never Been More Bullish Even as Buffett Dumps Airlines

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Image Source: IATA. Data Source: McKinsey & Company (IATA). Airlines haven’t been able to earn their estimated cost of capital for as long as we can remember. There have been hundreds of airline bankruptcies since deregulation in 1978. By Brian Nelson, CFA On Saturday, May 2, Berkshire Hathaway (BRK.A, BRK.B) reported expectedly weak first-quarter results. We won’t be ditching Berkshire Hathaway’s stock in the Best Ideas Newsletter portfolio so long as Uncle Warren is at the helm, but there were a couple takeaways from the report that we want you to be aware of (we’ll have another more extensive note focusing more exclusively on Berkshire coming out soon). The first big piece of news, something that should not be surprising … Read more

Disney’s Financials Will Eventually Rebound

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Image Source: Marc Levin By Callum Turcan On May 5, The Walt Disney Company (DIS) reported second quarter earnings for fiscal 2020 (period ended March 28, 2020) that beat consensus top-line estimates but missed consensus bottom-line estimates. The firm’s financial and operational performance has taken a hit from the ongoing coronavirus (‘COVID-19’) pandemic; however, in our view the firm will bounce back considerably once a COVID-19 vaccine becomes available (which isn’t a certainty, but a lot of companies are actively pushing forward with human clinical trials as we speak including this firm). We continue to like Disney with a modest weighting in the Best Ideas Newsletter portfolio. As an aside, Disney’s former CEO Bog Iger stepped aside recently and is … Read more

Best Idea PayPal Soars on Very Promising Outlook

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Image Shown: Best Ideas Newsletter portfolio idea PayPal is surging after a strong outlook that speaks to underlying strength of the “new” consumer in a post COVID-19 world. By Callum Turcan On May 6, one of our favorite companies PayPal Holdings Inc (PYPL) reported first quarter 2020 earnings. While PayPal missed consensus estimates on both the top- and bottom-line, investors looked towards the future and shares of PYPL rose sharply after the report on May 7. We continue to like PayPal as a near top-weighted holding in our Best Ideas Newsletter portfolio. Please note we increased the weighting of PYPL shares in that newsletter portfolio back on January 13, 2020 (link here) and further increased PayPal’s weighting in our Best … Read more

Gold Miner Newmont Continues to Shine

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Image Source: Newmont Corporation – First Quarter of 2020 Earnings IR Presentation By Callum Turcan On May 5, the gold miner Newmont Corporation (NEM) reported first quarter 2020 earnings that missed both consensus top- and bottom-line estimates which prompted shares to sell off modestly during the normal trading session that day, though shares of NEM have been on an epic bull run since the start of 2020. We continue to like Newmont as an idea in our Dividend Growth Newsletter portfolio with shares of NEM up ~48% as of this writing since joining the portfolio on January 13, 2020 (link here), before taking dividend considerations into account, while the S&P 500 (SPY) is down ~13% during this period before taking … Read more

BNP Paribas’ Shares Could Have Upside Potential

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BNP Paribas’ shares are trading at a fraction of tangible book. If the bank can contain its cost of risk through this cycle and produce double-digit returns on tangible equity on the other side of this crisis, shareholders would do quite well in such a scenario. That said, we point out that Europe is overtraded when it comes to banking, which pressures earnings power at even the stronger banks like BNP Paribas. We’re paying close attention to the key banking players in Europe to assess the likelihood of a global financial contagion that may accompany the global pandemic that has become COVID-19. By Matthew Warren BNP Paribas SA (BNPQF, BNPZY) reported relatively better results than many large global bank peers, … Read more

Berkshire Hathaway Prepares Itself for COVID-19

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Image Source: Berkshire Hathaway Inc – 2019 Annual Report By Callum Turcan Berkshire Hathaway Inc (BRK.A) (BRK.B) reported first quarter 2020 earnings on May 2, which due to significant unrealized losses in its investment portfolio (a product of the market swoon in the early months of 2020) the firm swung to a large loss on a GAAP basis. As Berkshire Hathaway’s leadership team has often noted, the 2018 accounting rule change that forces companies to recognize unrealized gains and losses in the income statement can make GAAP net income and GAAP diluted EPS figures near meaningless without digging deeper into the firm’s financials. For convenience and to better showcase its actual performance, Berkshire Hathaway also includes its ‘operating earnings’ within … Read more

Tyson Faces Operational Hurdles

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Image Source: Tyson Foods Inc – Second Quarter of Fiscal 2020 Earnings IR Presentation By Callum Turcan On May 4, the major meat and prepackaged food provider Tyson Foods Inc (TSN) reported second-quarter earnings for its fiscal 2020 (period ended March 28, 2020) that missed consensus estimates on both the top- and bottom-line, sending its shares sharply lower during the regular trading session that day. The ongoing coronavirus (‘COVID-19’) is hurting its production capabilities, in particular the operations of its meatpacking plants as numerous confirmed COVID-19 cases (that unfortunately includes fatalities) have emerged at those facilities and the facilities of its peers across the US, prompting many to close or scale back. For instance, Tyson was forced to temporarily close … Read more

Public Storage Currently Has the Financial Strength to Support Its Payout

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Image Source: Public Storage – 2019 Annual Report By Callum Turcan High Yield Dividend Newsletter portfolio holding Public Storage (PSA) reported its first quarter results for 2020 on May 1. The self-storage real estate investment trust’s (‘REIT’) core funds from operations (‘FFO’) per share grew by 2% year-over-year last quarter, hitting $2.58 per share, while its occupancy rate (as measured by its rentable square feet) grew by ~60 basis points year-over-year, reaching 93.1%. Public Storage was also able to push through marginal same-store rent increases, though rising operating costs (particularly property taxes, payroll expenses, and marketing expenses) chipped away at its margins last quarter. As of this writing, shares of PSA yield ~4.4%. Public Storage owns and operates self-storage facilities … Read more

COVID-19 Idea Apple Raises Dividend, Continues With Massive Share Repurchases

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Image Shown: Shares of Apple Inc have sharply rebounded since falling precipitously from the start of 2020 through March, keeping in mind we removed shares of AAPL from our newsletter portfolios back on January 13, 2020 (link here), when shares of Apple were trading well over $300 per share. We announced on March 17, 2020, that we like Apple as a way to ride out the ongoing coronavirus (‘COVID-19’) pandemic. By Callum Turcan Apple Inc (AAPL) reported earnings for its second quarter of fiscal 2020 (period ended March 28, 2020) that beat both consensus top- and bottom-line estimates. The company also pushed through a 6% sequential increase in its quarterly payout, bringing it up to $0.82 per share or $3.28 … Read more

Visa Reports That Global Spending Levels May Have Started to Stabilize in April

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Image Source: DeclanTM By Callum Turcan One of our favorite companies and a top-weighted holding in our Best Ideas Newsletter portfolio, Visa Inc (V), reported second-quarter earnings for fiscal 2020 (period ended March 31, 2020) which beat both consensus top- and bottom-line estimates. Going forward, while Visa’s very lucrative travel-related businesses (which includes payment processing and foreign currency transaction solutions) will take a hit from reduced travel worldwide due to the ongoing coronavirus (‘COVID-19’) pandemic, management is focused on controlling expenses to offset exogenous headwinds. Specifically, management noted that Visa would pull back on “discretionary spending especially related to personnel, travel, professional services, and marketing” which we appreciate. Outlook Commentary In the fiscal second quarter, Visa reported a 7% increase … Read more