Member Articles

Hasbro Heads into Holiday Season with Record Quarter

by

“…the highlight of the firm’s portfolio was its performance in the ‘Girls’ product category, where revenue leapt 57% in the quarter and 48% in the first nine months of 2016 on a year-over-year basis. The Disney Princess and Frozen product lines remain the core drivers of such strong performance, with ancillary growth coming from the Dreamworks’ Trolls as well as the Baby Alive and Furby product lines.” – Kris Rosemann By Kris Rosemann Dividend Growth Newsletter portfolio holding Hasbro (HAS) reported one of the most successful quarters in company history October 17. The firm registered company records in quarterly revenue and earnings as each of its major operating segments generated sales growth. US and Canada revenue advanced 16% on a … Read more

This Just In: Netflix’s Stock Is Volatile!

by

Key Takeaways Netflix unit subscriber growth is not accelerating, having flattened through the first nine months of 2016 (12 million net additions). The current market capitalization of Netflix implies the company must grow consolidated operating earnings by 8-fold to be considered fairly valued. The content cost thesis is a well-traveled one, but the market is missing the vast overhead expenses (marketing, G&A) related to Netflix’s business, which punish earnings and are excluded from segment profit calculations often used in buy side valuations. Netflix’s sources of upside: pricing leverage, contribution margin improvement, a potential buyout, and new ancillary business lines: advertising, licensing, consumer products, etc. We continue to believe shares of Netflix are vastly overpriced, with a beta-driven sell-off the catalyst … Read more

Are MLP Structures Phony?

by

“What the parent has done in this example is financially engineer the future distribution stream and capital structure of a brand new distribution-paying entity with effectively no new capital or assets at all. The parent is just standing behind the subsidiary reinforcing its investment-grade borrowing capacity, which supports the distribution that supports the equity price, which provides incremental equity capital that can also be used to support the distribution and so on.” — Brian Nelson, CFA By Brian Nelson, CFA Using a hypothetical example of an MLP and its parent, let’s explain how MLP stock value can essentially be created from “nothing.” The following example is purely hypothetical and for educational purposes only. Let’s say the parent holds a pristine … Read more

Breaking the Bank…

by

Image Source: Tony Webster By Brian Nelson, CFA Financial institutions (XLF, KBE) are unique entities. In good times, the growth of pre-tax pre-provision earnings and return on equity often have more influence over banking entities’ stock prices than anything else, but in bad times, the health of their loan/derivative books and the strength of their capital bases are the most important factors when it comes to buying and selling activity. Throw in outsize leverage, huge derivatives books, and market psychology, and you have, in my opinion, still one of the riskiest sectors out there. As followers know, we don’t like firm-specific exposure to the banking sector. We perform valuation exercises on banks in a rather straightforward way, using a residual … Read more

Dividend Increases/Decreases for the Week Ending October 14

by

Below we provide a list of firms that raised/lowered their dividends during the week ending October 14. 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 Ameren (AEE): now $0.44 per share quarterly dividend, was $0.425. Brown & Brown Insurance (BRO): now $0.135 per share quarterly dividend, was $0.1225. Cantel Medical (CMN): now $0.07 per share semi-annual dividend, was $0.06. Eaton Vance (EV): now $0.28 per share quarterly dividend, was $0.265. Gladstone Land (LAND): now $0.0425 per share monthly dividend, was $0.04125. Healthcare Services (HCSG): now $0.185 per share quarterly dividend, was … Read more

I’m Proud of You

by

Image Source: Jim Makos “If you’re asking why you’re NOT getting a lot of email transaction alerts related to the newsletter portfolios, you’re finally recognizing the secret to portfolio outperformance: we don’t trade a lot, and we like to get our selections correct…the first time! Isn’t that how it’s supposed to be? Our best ideas for consideration are always included in the newsletter portfolios themselves. They’re in there.” – Brian Nelson, CFA Brian Nelson, CFA When I pat our team on the back by showcasing Valuentum’s performance, you have to know that I envision you doing as well or better. You’re a member. You mean the world to us. That’s why I’m excited about the performance Valuentum puts up. Because … Read more

Video: An Overview of Our 16-page Stock Research Reports

by

Can’t view the video walk-through of our 16-page reports on your mobile device? Download the Puffin Web Browser App from Apple free. Click here. Unable to display content. Adobe Flash is required.

Where I Went Wrong on Gilead

by

Image Source: torbakhopper By Brian Nelson, CFA Our trade(s) in the Best Ideas Newsletter portfolio with respect to hepatitis-C juggernaut Gilead (GILD) is (are) not something I’m proud of. I know the Best Ideas Newsletter is performing fantastically, and we continue to outdistance the broad market benchmark, but I’m not satisfied unless I get everything right, even though this is an unattainable goal. Here’s what happened. I was enamored by Gilead. The pharma giant had found a cure for hep-C. It was a free-cash-flow generating behemoth, and its balance sheet was solid. What I did not anticipate was just how easily its patent on Harvoni/Sovaldi could be circumvented and how the economics would be truncated, both with respect to volume … Read more

The Times They Are a-Changing

by

This article was first published September 2013. It has not been updated. It has been republished to recognize the Nobel Prize in Literature being awarded to Bob Dylan October 13, 2016. Image Source: Mikko Tarvainen Come writers and critics Who prophesize with your pen And keep your eyes wide The chance won’t come again And don’t speak too soon For the wheel’s still in spin And there’s no tellin’ who That it’s namin’ For the loser now Will be later to win For the times they are a-changin’. — Bob Dylan – Times They Are a-Changin I was reading an article the other day that had come to the conclusion that stock funds will get more asset flows (read: be easier … Read more