Member Articles

Our Reports on Stocks in the Medical Devices Industry

by

Image Source: U.S. Embassy Kyiv Ukraine Structure of the Medical Devices Industry The medical devices industry is heavily regulated and characterized by rapid technological change. Firms have been forced to compete on price due to economically-motivated buyers, consolidation among healthcare providers, and declining reimbursement rates. Healthcare reform measures have put additional pressure on procedure rates and market sizes. Still, firms can gain advantages by developing products with differentiated clinical outcomes or by creating patent-protected technology. Since most constituents hold important patents or trade secrets, we tend to like the group. We’ve optimized our health care coverage, the reports of which can be found here.

Our Reports on Stocks in the Energy Equipment & Services Industry

by

Image Source: Sollven Melindo Structure of the Energy Equipment Industry The energy equipment industry is heavily tied to the exploration and production (upstream) expenditures of oil and gas producers across the globe. Many industry constituents participate in a number of different market segments to offer a complete range of products/services to customers. The fortunes of the group are levered to energy prices (crude/natural gas), as higher prices make drilling projects more attractive and increase the demand for oilfield equipment and services. However, falling prices have an opposite effect, creating long boom and bust cycles. We’re neutral on the structure of the group. We’ve reallocated our resources to optimize our energy coverage. See here.

Alert — Chinese Stocks Hit the Skids

by

Image Source: Michael Vadon We don’t think US and China are anywhere close to any sort of meaningful trade agreement, regardless of what you hear from the White House. The latest move in this high-stakes trade war by the US may be to de-list Chinese stocks. This actually happening seems surreal given the implications on U.S. investors, but given weakness in US-listed Chinese names, the market is factoring in some probability of this occurring. By Brian Nelson, CFA On September 27, news hit the wires that indicated the White House is evaluating ways to curtail US investors’ “portfolio flows into China,” and that may include de-listing Chinese stocks on U.S. exchanges. Although the development comes amid the view that discussions … Read more

Dividend Increases/Decreases for the Week Ending September 27

by

Below we provide a list of firms that raised their dividends during the week ending September 27. 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 American Express (AXP): now $0.43 per share quarterly dividend, was $0.39. American Tower (AMT): now $0.95 per share quarterly dividend, was $0.92. Artesian Resources (ARTNA): now $0.2496 per share quarterly dividend, was $0.2459. BancFirst (BANF): now $0.32 per share quarterly dividend, was $0.30. City Holding (CHCO): now $0.57 per share quarterly dividend, was $0.53. CSB Bancorp (CSBB): now $0.28 per share quarterly dividend, was $0.26. DENTSPLY … Read more

Hold ‘em or Fold ‘em?

by

Let’s talk Cardinal Health, Hanesbrands, Ford and Verint in this piece. Our best ideas are ideas in the newsletter portfolios. Unlike other widely followed strategies, the Valuentum strategy likes to capture the entire pricing cycle on an idea. We don’t “operate” in ideas only below the ‘undervalued’ line, but we like to let our winners run to when they are overvalued and showing signs of technical/momentum deterioration. By Brian Nelson, CFA The most important quality of a Valuentum investor is patience. Once we add an idea to the newsletter portfolios, we don’t remove it once it starts to approach the lower bounds of the fair value estimate range. We generally don’t remove it at our fair value estimate either, and … Read more

Nike Posts a Solid Quarter and Issues Strong Guidance

by

Image Shown: Shares of Nike popped on September 25 after reporting a strong first quarter for fiscal 2020 and issuing favorable guidance for the full fiscal year. By Callum Turcan Nike (NKE) reported earnings for the first quarter of its fiscal 2020 (ended August 31) on September 24 and investors clearly liked what they saw. The sportswear company’s GAAP revenues climbed 7% year-over-year to $10.7 billion, a growth rate that would have been 10% on a constant currency basis given ongoing strength in the US dollar. Sales in the Greater China region rose by 27% year-over-year on a constant-currency basis, complemented by strong growth in EMEA (up 12% on a constant currency basis) and the Asian Pacific region (up 13% … Read more

Best Ideas Newsletter Portfolio Holding PayPal Can Thrive in a Post-eBay World

by

Image Source: PayPal Holdings Inc – IR Presentation By Callum Turcan We continue to like Best Ideas Newsletter portfolio holding PayPal Holdings (PYPL) as a way to gain exposure to the very attractive payment processing and financial technology industry, complementing our top-weighted Visa Inc (V) holding. Our fair value estimate stands at $125 per share of PYPL, and we love its ability to generate shareholder value (indicated by PayPal’s Very Attractive Economic Castle rating). The company does not pay out a common dividend at this time, however; if PayPal did, it could be a significant one given its strong free cash flows. From 2016-2018, PayPal’s annual free cash flows averaged $3.0 billion as the firm is very capex-lite (relatively speaking, … Read more

The Orthodontics Industry Is Getting Disrupted

by

Image Source: SmileDirectClub Inc – S-1 SEC Filing By Callum Turcan SmileDirectClub (SDC), the teledentistry startup that makes 3D-printed clear aligners which are a cheaper alternative to braces (albeit with drawbacks when compared to the traditional braces route), went public this September at $23/share. The stock has come under pressure since then over concerns regarding its mounting losses. What makes SmileDirectClub different than traditional orthodontics practices is that customers don’t necessarily need to go into an office to get these types of services. The company has its SmileShops where customer’s teeth can be scanned in-store within half an hour, or offers remote impression kits that are shipped to the customer’s house and then shipped back. Another important consideration is that … Read more

Jim Chanos Attacks DaVita and Throws Shade at Warren Buffett

by

Image Shown: DaVita Inc is a midsized kidney dialysis company with strong free cash flows. However, the company is coming under fire from famed short seller Jim Chanos who recently threw shade at Warren Buffett. Image Source: DaVita Inc – IR Presentation By Callum Turcan Fabled short seller Jim Chanos was in the news on September 19 when he announced he was short DaVita Inc (DVA), a kidney dialysis company, at the Delivering Alpha conference. What made this news particularly noteworthy comes down to Berkshire Hathaway Inc (BRK.A) (BRK.B) having a significant stake in DaVita. We must stress here that Berkshire’s ~24% equity stake in DaVita’s outstanding shares isn’t needle moving; the stake is worth ~$2-2.5 billion. Warren Buffett didn’t … Read more

Our Reports on Stocks in the Medical Instruments Group

by

Image Source: Christian C Structure of the Medical Instruments Industry The medical instrument industry is heavily regulated and characterized by rapid technological change. Firms have been forced to compete on price due to economically-motivated buyers, consolidation among healthcare providers, and declining reimbursement rates. Healthcare reform measures have put additional pressure on procedure rates and market sizes. Still, firms can gain advantages by developing products with differentiated clinical outcomes or by creating patent-protected technology. Since most constituents hold important patents or trade secrets, we tend to like the group. We’ve optimized our health care coverage, the reports of which can be found here.