Member Articles

MLPs Hit 52-Week Low

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Enterprise valuation is paramount. In June 2015, Valuentum released its bearish case to Barron’s on Kinder Morgan (KMI) and the MLPs. This was no small call. Since then, on a price basis, the MLP ETF (AMLP) is down more than 50%, while the S&P (SPY) is up roughly 60% (orange line). Read more about this story in Value Trap. Award-winning book that recently earned acclaim from the prestigious Next Generation Indie Book Awards! Blue Ink Review Notable Book and Readers’ Favorite 5 Stars! Wall Street doesn’t know it has a problem. Index and quantitative investors have been free-riding on the backs of active managers for years, but growth in price-agnostic trading may finally have reached the tipping point. Brian Nelson, … Read more

Cole Haan Files to Go Public

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By Callum Turcan Maker of footwear, handbags, sunglasses, and various other accessories Cole Haan Inc (TBD:CLHN) has filed to go public. One thing that makes this planned IPO particularly interesting is that Cole Haan was free cash flow positive in both fiscal 2018 (period ended June 2, 2018) to fiscal 2019 (period ended June 1,2019), generating $35 million and $38 million in free cash flows, respectively. The firm plans on trading on the NASDAQ Global Select Market, run by Nasdaq Inc (NDAQ), under the ticker CLHN. Additionally, please note that after the planned IPO, funds advised by British private-equity firms Apax Partners LLP and Apax Partners are expected to continue to own a “majority… of the shares eligible to vote … Read more

Newmont Posts a Great Earnings Report

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Image Shown: A look at Newmont Corporation’s asset base, which is heavily centered on the Americas and Australia, with some exposure to West Africa as well. Image Source: Newmont – Fourth Quarter and Full-Year 2019 IR Earnings Presentation By Callum Turcan On February 20, gold miner Newmont Corporation (NEM) reported a fourth quarter and full-year earnings report for 2019 that pleasantly surprised, with shares of NEM up sharply after the report during the trading session that Thursday. Back on January 13 (link here), we added a modest weighting of NEM shares to our Dividend Growth Newsletter portfolio as part of our pivot to more defensive names given rising exogenous headwinds to the global economy. While Newmont’s top-line marginally missed consensus … Read more

Our Reports on Stocks in the Personal Services Industry

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Image Source: Mike Mozart Structure of the Personal Services Industry The personal services industry is composed of a variety of firms, including those catering to man’s inescapable certainties: death and taxes. The funeral home/cemetery industry is charaterized by a large number of local-owned, independent operators, and pricing competition is intense. Death service firms sell fixed-price pre-need funeral contracts, which add uncertainty to operations if future costs are higher than expected. Tax service firms face price competition from independent tax preparers and CPAs, and initiatives to simplify tax-return preparations could hurt future performance. We’re neutral on the group. We’ve optimized our coverage. For related reports, please click here.

SmileDirectClub Comes Under Fire

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Image Shown: SmileDirectClub Inc has come under tremendous regulatory fire of late, which has aggressively pressured shares of SDC. By Callum Turcan We covered SmileDirectClub Inc (SDC) back in September 2019 shortly after its IPO in this article here. Since going public at $23 per share (the unconventional orthodontics company’s shares fell aggressively during their first day of trading), shares of SDC have tanked with an eye towards growing regulatory concerns and related obstacles. In our conclusion we noted that: While SmileDirectClub’s growth trajectory is quite intriguing, we prefer to wait until we get a better idea of the regulatory landscape the start-up faces and what its financial performance will look like now that it’s a public entity in the … Read more

Walmart Reports Fourth Quarter Results, Raises Dividend

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Image Source: Valuentum By Brian Nelson, CFA On February 18, global brick-and-mortar retail bellwether Walmart (WMT) reported mixed fourth-quarter fiscal 2020 results (ends January 31, 2020) that showed revenue advancing 2.1% and non-GAAP earnings per share of $1.38 missing the consensus forecast. We await the filing of the firm’s 10-K to roll our valuation model forward, but we do not expect to make any material changes to our fair value estimate at this time, which stands at $109 per share. The stock is trading hands at ~$118 per share at the moment. Walmart’s US comparable store sales growth, on a two-year stacked basis, came in at 6%, which is solid in our view, but the most recent quarterly pace (+1.9%) … Read more

Newmont Updates Investors Ahead of Earnings

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Image Source: Newmont Corporation – January 2020 IR Presentation By Callum Turcan Back on January 13 (link here), we added Newmont Corporation (NEM) to our Dividend Growth Newsletter portfolio with a modest weighting as part of our shift towards more defensive names in light of rising exogenous headwinds to global economic activity. Some important considerations include Newmont increasing its quarterly payout to $0.25 per share from $0.14 per share, which is expected to be declared at the level in April 2020 (the fourth quarter of 2019 dividend, as management puts it, will be paid out in March 2020 at $0.14 per share). As of this writing, Newmont would yield ~2.2% at the new annualized dividend rate. We like Newmont’s dividend … Read more

Digital Realty Starts 2020 Off Right

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Image Source: Digital Realty Trust Inc – Fourth Quarter and Full-Year 2019 IR Earnings Presentation By Callum Turcan On February 13, the data center real estate investment trust (‘REIT’) Digital Realty Trust Inc (DLR) reported fourth quarter and full-year earnings for 2019 after the market close. The firm’s top-line marginally missed consensus estimates as its funds from operations (‘FFO’) per share modestly beat consensus estimates. Shares of DLR marched up 4% on February 14 as investors priced in the FFO per share beat and recent events. We continue to like shares of DLR as a holding in our Dividend Growth Newsletter portfolio. As of this writing, Digital Realty yields ~3.3%. Earnings Overview and a Tough 2019 The REIT’s FFO per … Read more

Our Reports on Stocks in the Building Materials Industry

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Image Source: Scott Structure of the Building Materials Industry The building materials industry is made up of firms that produce a wide range of materials for use in new/remodeled housing and commercial/industrial construction projects. Demand for and the prices of building materials are very cyclical/volatile and are tied to general economic conditions, including the level of housing starts, existing home sales, and floor-space growth, all of which are beyond the control of industry participants. As a result of the housing bust, significant production overcapacity still exists for some materials, resulting in ongoing pricing pressures. We don’t like the structure of the group. We’ve optimized our building materials coverage, the reports of which can be found here.

Our Reports on Stocks in the Gaming & Hotels Industry

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Image Source: Erin Pettigrew Structure of the Gaming & Hotels Industry The gaming industry is heavily regulated and particularly sensitive to discretionary spending. Significant future gaming revenue growth will come from the Asian markets, especially Macao. Possession of a gaming subconcession by the Chinese government is an advantage, though competition remains intense among existing Macao rivals. The hotels industry is highly competitive, with over 900 lodging management companies in the US alone. Demand for hotel rooms is very cyclical, and fluctuations in both occupancy rates and revenue per available room (RevPAR) should be expected. We’re generally neutral on the structure of the group. We’ve dropped coverage of stocks in the Gaming & Hotels industry.