Member Articles

Walgreens Builds Out Its Network

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Image Source: Mike Mozart Walgreens continues its quest to build out its network of pharmacies. The goal is to maintain the largest network in the US, which would make exclusion from a payer’s network very difficult. Let’s review the recently-revised terms of the deal to acquire a portion of Rite Aid, the third-largest pharmacy chain in the US. By Alexander J. Poulos The Quest to Expand the Network Walgreens Boots Alliance (WBA), under the very capable leadership of Stefano Pessina, is attempting to transform into a global pharmacy-led health and wellbeing provider. The genesis of the idea was initiated with the combination of Boots Alliance, a predominately UK-based pharmacy chain with Walgreens. Upon the consummation of the deal in 2014, … Read more

Dividend Increases/Decreases for the Week Ending June 30

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Below we provide a list of firms that raised/lowered their dividends during the week ending June 30. 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 8point3 Energy Partners (CAFD): now $0.2642 per share quarterly dividend, was $0.2565. China Southern Airlines (ZNH): now $0.638 per share annual dividend, was $0.53. Commerce Union Bancshares (CUBN): now $0.06 per share quarterly dividend, was $0.055. Darden Restaurants (DRI): now $0.63 per share quarterly dividend, was $0.56. First Bancorp (FNLC): now $0.24 per share quarterly dividend, was $0.23. General Mills (GIS): now $0.49 per share quarterly … Read more

Prepared Remarks From Nelson Exclusive Conference Call June 30

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Read President of Investment Research Brian Nelson’s prepared remarks for the yearly roundup conference call, held for Nelson Exclusive members. If you would like to subscribe to the Nelson Exclusive publication, please learn more about the publication here. The Nelson Exclusive publication does not reflect real performance. Performance is hypothetical and does not represent actual trading. Ladies and Gentlemen, Thank you very much for joining us on the first conference call for members of the Nelson Exclusive publication. The first year of the publication has surely been an exciting one for all involved. When I first wrote the introductory letter of the Nelson Exclusive on July 1, 2016, we were well-aware the market had laid down the gauntlet for this publication. … Read more

Malkiel Balks, Yellen Talks

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Let’s first address how research in the financial industry is becoming more and more open to combining value and momentum considerations. We’ll also cover a few takeaways from the stress tests and some ‘strong’ talk from Fed Chair Janet Yellen. By Brian Nelson, CFA It was 1973, and a Princeton economist by the name of Burton Gordon Malkiel had just published A Random Walk Down Wall Street, a book that would turn into one of the most influential studies in support of the efficient markets hypothesis. The book would suggest that asset prices typically exhibit signs of a “random walk,” and as a result, an investor could not consistently outperform market averages in part due to powerful reversion-to-the-mean tendencies. Three … Read more

The Financially-Healthiest Dividend Payers Yielding Over 2%

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By Brian Nelson, CFA There are a number of ways to evaluate the health of a company’s dividend. We think a minimum threshold for a company’s yield is par for the course in any income-oriented screen, and we think a reasonable dividend yield hurdle rate for this screen may be 2%. For stocks that make this cut, we want to find those that generate free cash flow at a pace that is far larger than the cash paid out as dividends and have a strong balance sheet to boot, or companies that have high Dividend Cushion ratios.   Enter stocks that have the highest multiplicative combination of their dividend yield and Dividend Cushion ratio. To develop this screen, consider excluding … Read more

The Biosimilar Revolution Remains Stymied

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Image Source: Express Scripts We remain intrigued by the potential of the upcoming wave of biosimilar versions of well-established specialty drugs. Even though we have been disappointed by recent FDA decisions, we feel it is inevitable biosimilars will enter the market. Let’s update readers on our thoughts. By Alexander J. Poulos Specialty Drug Spending The specialty drug space remains the fastest-growing portion of the overall drug spend in the US. In Medicare plans, however, the total dollars spent grew at a pace on par with inflation. The main reason for the subdued growth is the well-defined process of lower cost generic utilization. The average consumer is well-educated on the cost effectiveness of a generic alternative and shows little resistance to … Read more

Novartis Is Building a Significant Cardiovascular Franchise

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Image shown: The performance of Novartis since the beginning of 2014. One of the more interest times to consider speculating in the biotech/pharmaceutical space is in advance of the identification of the full potential of the clinical pipeline. Once investors recognize the full “value” of an entity’s pipeline, they often bid the company’s equity price higher well in advance of what traditional near-term fundamental metrics might indicate. The results recently released by Novartis have significantly solidified its clinical pipeline, in our view. Let’s take a look. By Alexander J. Poulos Canakinumab The path a molecule follows moving from the realm of theory through the various phases of clinical trials is often fraught with peril. Often, as the molecule is tested … Read more

Random Musings: Retail, REITs, BlackBerry, and More

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Image shown: Best Buy’s resiliency in the face of competition from Amazon. Let’s cover some recent news. By Brian Nelson, CFA The markets have been relatively flattish the past week or so, but that may not mean much. They could still be digesting some of the big gains thus far in 2017 before potentially staging their next move. At the close June 26, the SPDR S&P 500 Trust ETF (SPY), a proxy for the S&P 500 stood at $243.29. For some reason, I felt it important to make note of this level, as if it were an important one. Things have been very quiet for a long time now, and I get the feeling that an inflection point may be … Read more