Member Articles

Update on Teva and the Generics Market

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By Kris Rosemann Teva Pharmaceuticals (TEVA) closed its ~$40.5 billion acquisition of Allergan’s (AGN) Generics business Actavis August 3 after a long back and forth with regulators about the assets it was forced to unload. Nevertheless, the deal strengthens Teva’s position in key markets such as the US, Canada, Russia, and the UK while providing a new commercial presence in growth markets, specifically in the Asia-Pacific region. The generic pharma market remains very strong, in our view. The highest growing segment of the global generics market, “Growth Markets” shown in the image below, is expected to grow at a 10% compound annual growth rate (CAGR) in the period from 2015-2020. Over the same time period, the US generics market is … Read more

Microsoft Remains Committed to Returning Capital to Shareholders

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The above chart shows Microsoft’s annual dividend per share, excluding special dividends, from fiscal year 2003 through the current annualized dividend rate of fiscal 2017. Percentage increases for each fiscal year are on display as well. Dividends are classified in the fiscal year in which they were announced. By Kris Rosemann We have a few things to say about Microsoft (MSFT). Let’s begin this recap of some recent news with an excerpt from our most recent piece on the company, “Microsoft With Its Head in the Clouds? (July 2016)”: We’re doing well in both newsletter portfolios in part because we’re not taking on foolish risks in an overheated market, and we continue to feel that a reduction to the weighting in Microsoft in the … Read more

Cracker Barrel Rocks Back on Weak Guidance

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By Kris Rosemann Cracker Barrel’s (CBRL) fiscal fourth quarter results, reported September 14, came in at reasonably solid levels, but as we know, what really matters in the market is what lies ahead. The firm reported revenue growth of 3.7% from the year-ago period, thanks to comparable store restaurant sales increasing 3.2% and comparable store retail sales growth of 3.5%. Though traffic fell 1.2% on a year-over-year basis in the quarter, such weakness was more than offset by a 4.4% increase in average check as the average menu price rose 2.4%. The quarter marked Cracker Barrel’s largest outperformance in sales and traffic of its casual dining peers in fiscal 2016 despite the drop in traffic, as restaurant chains in the US … Read more

You Just Don’t Get It Or Do You?

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We talked about how the Best Ideas Newsletter portfolio has outdistanced a flat market since May 2015, the last time that the market was at present levels, but…it gets better. “In the five year period ended August 31, 2016, only 9.5% of actively managed large-cap domestic equity funds beat the S&P 500. Meanwhile, the Best Ideas Newsletter portfolio has generated nearly 33 points of outperformance since its inception in May 2011.” — Kris Rosemann ————— By Kris Rosemann At Valuentum, we have highlighted the potential for investors to beat the market, often chiding index-funds that are content to take individuals’ capital and collect a fee on assets that they are adding little value to. However, it appears that active money … Read more

Getting the Job Done

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By Brian Nelson, CFA The broader stock market has pretty much gone nowhere (not a technical term) since the spring of 2015, and investors are growing impatient. Well, maybe index investors mostly… Lofty earnings multiples on some of the most well-known stocks, Brexit uncertainty and concerns over systemic risk, emerging-market weakness (particularly in China and Brazil), and the list goes on and on as reasons why the markets have been “stuck” – also not a technical term. Long-term investors may not care, but with the broader S&P 500 (SPY) having tripled since the March 2009 panic bottom, they should at least be paying attention, in my view. After all, a haircut of 10%-20% on broader market prices or more wouldn’t … Read more

Apple’s Brand as Strong as Ever

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By Kris Rosemann Recent quarterly performance had some naysayers doubting the true power of Apple (AAPL). The second quarter of fiscal 2016 (calendar first quarter) marked the first decline in sales in a quarter in thirteen years due largely to pressure on iPhone sales, and the third quarter of the fiscal year continued the year-over-year sales weakness. As Apple hosted its company event September 7, shares remained under pressure as many anticipated ongoing weakness in demand for the iPhone, even with a new iteration being introduced. The declines continued in the days immediately after due in part to the firm’s decision not to release first-weekend estimates of pre-order sales volumes. Management indicated that it believes the measure is a meaningless … Read more

3D Printing: Can We Print Some Stability?

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Industrial bellwether and newsletter portfolio holding General Electric’s acquisition of two European 3D printing companies has brought the budding technology back to the fore of investor’s minds. Let’s take a look at some of the major players in the space as well as how the market may develop in coming years. By Kris Rosemann 3D printing may have once seemed like a technology we would only see in a futuristic sci-fi movie, but it is now a reality and has been so for some time. Though it will inevitably revolutionize the $12 trillion global manufacturing market and is one of the highest growth potential areas, plenty of questions remain surrounding the foundation of the industry that continues to be laid, … Read more

Starbucks’ China Business Leads Same-Sale Growth

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By The Valuentum Team Starbucks (SBUX) has unparalleled brand power, capturing customers’ hearts across the world! As owners of its equity know, the coffee giant has recently shifted its unit growth focus away from domestic expansion, to international growth (mostly in China and Japan). As we outlined in our late June piece, “Quick Update: Starbucks — What a Company,” 70% of the ~1,800 new stores expected to be opened in fiscal 2016 will be outside of the US. Starbucks’ China division’s comparable-store sales rose 7% in the third quarter of fiscal 2016 on a year-over-year basis, which was unable to keep global comparable-store sales above 5% as the company had done for the previous 25 consecutive quarters; global comparable-store sales … Read more

Potash-Agrium Deal Will be Subject to Growing Regulatory Scrutiny

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Image Source: Bruce Guenter By Kris Rosemann Suppressed crop prices and a supply glut have negatively impacted the financial performance of crop nutrient companies around the world and have helped spur a string of attempted mergers in the agriculture space. Seed giant Bayer’s (BAYRY) pursuit of rival Monsanto (MON) and ChemChina’s purchase of Syngenta (SYT) for $43 billion are two recent examples of consolidation attempts among major agricultural firms, the latter of which is expected to create the world’s largest supplier of pesticides and agrochemicals. Canadian firms Potash Corp (POT) and Agrium (AGU) had previously announced they were in preliminary merger talks and have now announced an agreement to combine forces in a merger of equals that will create a … Read more

The Quiet Analyst Speaks

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Image Description and Source: Mailslot for Cantor Fitzgerald, on the top floors of the WTC. The mailslot was located in a post office near the WTC site. The mailslots are with the Smithsonian Institution. Travis Wise. It’s 9pm Sunday, September 11, 2016. The day is a somber one. The 15th year passing of the tragic events of 9/11 were on everyone’s minds, and I can’t help but think specifically of Cantor Fitzgerald. The financial services company’s headquarters were on the 101st-105th floors of One World Trade Center, just a few floors above the impact zone of one of the hijacked airplanes. The firm lost 658 employees, over two thirds of its workforce, more than “any of the other World Trade … Read more