Member Articles

ETE-ETP Rollup and Implied Distribution Cut

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We continue to believe that the MLP business model may be a goner, and the recent ETE-ETP rollup is the latest example. Though new capital may come into the space on expectations that there will be premiums in unit-for-unit rollup deals, most of the combinations are coming with implied distribution cuts. By Brian Nelson, CFA On August 1, Energy Transfer Equity (ETE) announced that it would roll up Energy Transfer Partners (ETP) in a unit-for-unit merger exchange. Energy Transfer Equity’s incentive distribution rights (IDRs) in Energy Transfer Partners will be eliminated, and the deal is scheduled to close in the fourth quarter of 2018. Energy Transfer Partners unitholders will receive 1.28 common units of Energy Transfer Equity for each common … Read more

Walmart’s US Comps Impress; Guidance Raised

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Walmart continues to aggressively target innovation in its operations to keep pace with Amazon, and its impressive fiscal second-quarter results led management to raise its full-year guidance for multiple metrics. By Kris Rosemann Global retail giant Walmart (WMT) is working hard to stay in front of consumers as online rival Amazon (AMZN) continues to disrupt traditional retail, “Amazon Powers Ahead; Continues to Disrupt Grocers,” and it appears to be doing a fine job. Total revenue at Walmart in its fiscal 2019 second quarter grew 3.8% from the year-ago period thanks in part to impressive comparable sales growth of 4.5% in the US, which was driven by 2%+ growth in both traffic and ticket. Net sales at Walmart International advanced 4% … Read more

On Diversification

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Diversification is one of the most important components of equity investing. By Brian Nelson, CFA I wanted to touch base briefly today to see how everyone is doing, and how we can continue to make our website better. We’ve been getting a lot of great feedback on the ability to download our data in Excel and create your customized screens. Instead of having to click on a number of the web pages on the website to access the screens, all you have to do is download the Excel file, and use the standard sorting functionality in it. Let us know if you think we need to host a walk through of how to use the Excel screener. We think it … Read more

Dividend Increases/Decreases for the Week Ending August 17

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Below we provide a list of firms that raised their dividends during the week ending August 17. 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 Apollo Global Management (APO): now $0.43 per share quarterly dividend, was $0.38. Apollo Senior Floating Rate Fund (AFT): now $0.098 per share monthly dividend, was $0.096. Apollo Tactical Income Fund (AIF): now $0.107 per share monthly dividend, was $0.104. Atrion (ATRI): now $1.35 per share quarterly dividend, was $1.20. CAE (CAE): now $0.10 per share quarterly dividend, was $0.09. Carpenter Technology (CRS): now $0.20 per share … Read more

Cisco Turns in Record Quarterly Revenue; Fair Value Raised

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Image Source: Cisco Systems Positive momentum in simulated newsletter portfolio idea Cisco’s business transformation continued in its fiscal 2018 fourth quarter as the company turned in the highest quarterly revenue in its history and growth accelerated yet again. We’ve raised our fair value estimate for shares. By Kris Rosemann Simulated newsletter portfolio idea Cisco (CSCO) continues to make progress in its business transformation, and its fiscal 2018 fourth quarter report, released August 15, revealed another quarter of positive top-line momentum as total revenue grew 6% from the year-ago period to a quarterly company record of $12.8 billion. Highlighting the progress of the business transition in the quarter was a 1 percentage point increase in recurring revenue as a percentage of … Read more

The Inflating Index Fund Bubble

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Image Source: Mac.Else von Berlin The investment industry is changing fast, and we’re happy to be an instrument for change. We’ve been clamoring to make index funds free for a long time, and we’re glad to see it finally happen. Let’s cover the implications of indiscriminate buying regardless of price with the observation that the number of publicly-traded companies is vastly shrinking. How long will the inflating index fund bubble last? By Brian Nelson, CFA Those that know Valuentum know that we stand up for the individual investor, and we work our tails off to make sure that we get the individual investor the very best of information and informed judgment. The CFA Institute via its Enterprising blog showcases a … Read more

The Berkshire Breakout

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Image shown: Berkshire Hathaway’s shares have broken out following the release of its second-quarter 2018 results. We continue to believe Berkshire Hathaway belongs in the simulated Best Ideas Newsletter portfolio. Warren Buffett and Charlie Munger have more flexibility to pursue share buybacks, and we’d be flat-out surprised if Berkshire were to buy Southwest outright. Berkshire’s cash balance continues to grow, and we think a stake in Facebook might be the best opportunity for a part of the equity security allocation. By Brian Nelson, CFA Berkshire Hathaway (BRK.A, BRK.B) reported solid second-quarter results August 4 that sent the stock roaring higher, and B-shares of the equity are now but a stone’s throw away from all-time highs of ~$218, trading at ~$206 … Read more

Is It Time for Booking Holdings to Stop Issuing Quarterly Guidance?

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Image shown: Booking Holdings share price performance in recent years. Note the magnitude of share price volatility around quarterly earnings reports. Shares of simulated Best Ideas Newsletter portfolio idea Booking Holdings faced pressure following its second quarter earnings report August 9 as it issued conservative third quarter guidance that disappointed investors. This has become a common occurance for Booking Holdings.  By Kris Rosemann Simulated Best Ideas Newsletter portfolio idea Booking Holdings (BKNG) turned in a solid second quarter report August 9 as total revenues came in at $3.5 billion, a nearly 20% increase from the year-ago period, and gross travel bookings grew 15% on a year-over-year basis to $23.9 billion in the quarter. Adjusted EBITDA leapt 35% from the comparable … Read more

Dividend Increases/Decreases for the Week Ending August 10

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Below we provide a list of firms that raised their dividends during the week ending August 10. 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 2 Global (JCOM): now $0.425 per share quarterly dividend, was $0.415. Atlantica Yield (AY): now $0.34 per share quarterly dividend, was $0.32. Badger Meter (BMI): now $0.15 per share quarterly dividend, was $0.13. Barclays (BCS): now $0.1276 per share semi-annual dividend, was $0.1095. Black Stone Minerals (BSM): now $0.3375 per share quarterly dividend, was $0.3125. Blue Hills Bancorp (BHBK): now $0.20 per share quarterly dividend, was … Read more

Eli Lilly Bursts Higher, Fair Value Estimate Under Review

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We continue to be impressed with the recent developments at Eli Lilly as the company is poised to radically ramp sales growth potential in the event the commercialization of new products and its late-stage pipeline come to fruition. By Alexander J. Poulos Key Takeaways The share price of Eli Lilly has performed wonderfully of late as the company reported a beat-and-raise quarter thanks in large part to sales growth in newer products. Lilly scored a key patent win for its oncology mainstay Alimta, thus ensuring a steady revenue stream. With a patent win protecting Alimta, Lilly is in good shape to weather the revenue hit from a generic version of Cialis entering the market. We suspect Lilly will be able … Read more