Member Articles

Valuentum Moving to “Neutral” on Kinder Morgan

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Valuentum is moving to neutral on Kinder Morgan (KMI). An updated 16-page report will be available on our website Monday morning. On June 11, 2015, we published an article “5 Reasons Why We Think Kinder Morgan’s Shares Will Collapse” when shares of the pipeline giant were trading at ~$40. Without reaching out to us first for questions or comments, Barron’s picked up the scoop, and on websites in which we frequently publish a small sample of our content including Seeking Alpha, Valuentum was repeatedly blasted and “attacked” for its unique and differentiated view. Many of our members were appalled by the public (and anonymous) commenters because our members have been aware of our fair value estimate on Kinder Morgan since … Read more

The Walking Dead?

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At 453.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. – Summary of Weekly Petroleum Data for the Week Ending August 7, 2015 The oil & gas energy complex is nearing a state of panic, if it isn’t already in one. We’ve been talking about the glut of energy resource supply for many months now, and our impeccable positioning in the newsletter portfolios long before the collapse in prices is well known. Kinder Morgan (KMI) had been a relative outperformer in the Dividend Growth Newsletter portfolio until we removed it at $40 per share a couple of months ago. The same had been true with … Read more

Big Pharma Earnings Continued…

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Amgen (AMGN) Amgen’s second-quarter results, released July 30, were a sight to see. Total revenue advanced 4% versus the second quarter of last year thanks to strength in Enbrel (etanercept), Prolia (denosumab), Sensipar (cinacalcet), Kyprolis (carfilzomib) and XGEVA (denosumab). Adjusted operating income and adjusted earnings per share leapt 10% and 8% in the quarter thanks in part to the strong top-line performance but also solid adjusted operating margin improvement (~+2 percentage points). Free cash flow generation was also fantastic, with the firm hauling in $2.7 billion in the measure compared to $2.1 billion in the second quarter of 2014. Keys to the Quarter: Investors should keep an eye on its blockbuster Neulasta/NEUPOGEN performance, which faced sales pressure in the quarter, … Read more

Cisco Pops; Valuation, Dividend, and Chart Look Great!

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Communications networking giant Cisco (CSCO) is off to the races August 13 after posting a better-than-feared quarterly earnings report for the fiscal fourth period, ending July 25. Cisco has been one of the more recent additions to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio, with shares added just above $26 each in late November after registering a 9 on the Valuentum Buying Index. The company is now trading ~$29 per share, and its chart has never looked better, with shares breaking through a multi-month healthy downtrend. To put this idea into perspective, a strong 10% share-price pop since November coupled with a growing dividend stream is quite nice in today’s “flat” market.  Cisco’s shares yield ~3%, and … Read more

Major Automakers Lead July Sales Charge

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Key Takeaways –> The three months from May-July mark the best three month stretch in terms of vehicles sold in the US since August-October 2000. –> Truck and SUV demand remains high. Ford is gaining momentum as the F-Series nears full supply, and GM trucks continue strong sales growth. Honda set a July record for truck and SUV sales. –> The safety of connected vehicles and advanced auto technology has come into question recently. Fiat Chrysler has been hit by the largest safety fine in the industry’s history after failing to recall millions of vehicles. The US auto market continues on its pace for the best year in the past decade. A seasonally adjusted annual rate (SAAR) of 17.55 million … Read more

How Large Will Alibaba Be in 2035… That’s the Right Perspective

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We’re not happy with Alibaba’s (BABA) share price performance. It has been one of our rare losers in the Best Ideas Newsletter portfolio. Our thesis on Alibaba continues to be a long-term one, however, and unless China enters a 20-year bear market, never again reaching the heights of yesteryear, we’re not worried about it. But that said, we’re not oblivious to the near term and may lighten up on the dwindling position in hopes that a better, lower price can be established. We won’t do so without emailing an alert first, which is standard practice with newsletter constituents. We won’t harp on Alibaba’s fiscal first-quarter results, released August 12, which showed revenue advancing nearly 29% and earnings coming in a … Read more

The “Fully Invested” Argument May Only Make Sense…

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…if stock market indices always go up over the long haul. Speaking the obvious… We often receive questions from new members about why we have such large (30%+) cash positions in both newsletter portfolios. Some believe it to be a mistake because they have been taught that “timing the market” and/or assessing overall market valuations is a fool’s errand. For most all investors, it is generally accepted that staying “fully-invested” is a good idea. But let’s take the recent example of Warren Buffett’s Berkshire Hathaway (BRK.A) buying Precision Castparts (PCP). The latter is certainly not a new company, having been around since the late 1940s, and Buffett has admittedly known about the metal bender for some time. So, then, why … Read more

3 Anomalies Across Pipeline Equities

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Kinder Morgan’s Credit Should Be Junk Status The corporate’s investment-grade credit rating does not add up. On a reported basis, adjusted for impairments, our estimate for Kinder Morgan’s (KMI) leverage is 7 times annualized first-half EBITDA, nearly a half turn greater than that of perhaps its closest peer Energy Transfer Equity (ETE), which is rated Ba2/BB/BB (Stable) by the credit rating agencies. That’s two full notches below the lowest level of investment grade and Kinder Morgan’s credit rating, despite Kinder Morgan’s dividend obligations being $350 million more during the first half of this year alone (~$750 million annualized) relative to Energy Transfer Equity, and its absolute level of debt standing above any other on this list. Kinder Morgan’s plans to … Read more

Rio Tinto Focused on Cutting Costs

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Best Ideas Newsletter portfolio holding Rio Tinto (RIO) has been under significant pressure as global macroeconomic weakness and challenges facing the mining industry have not been kind to the company. The iron ore giant is focused on cutting costs as never before amid the turmoil in the global commodities markets, where some commodity prices have fallen to levels not witnessed since the Global Financial Crisis. China’s equity market collapse and the uncertainty in the Eurozone as it relates to the Greece debt negotiations haven’t helped. Ongoing flawless cost control will remain vital for Rio, as we expect the global surplus of iron ore to continue to prevent a strong recovery in iron ore prices, at least in the near term. … Read more

Dividend Increases/Decreases for the Week Ending August 7

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Below we provide a list of firms that raised/lowered their dividends during the week ending August 7. 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 International Group (AIG): now $0.28 per share quarterly dividend, was $0.125. AmTrust Financial Services (AFSI): now $0.30 per share quarterly dividend, was $0.25. Aqua America (WTR): now $0.178 per share quarterly dividend, was $0.165. Atrion (ATRI): $0.90 per share quarterly dividend, was $0.75. Carlisle (CSL): now $0.30 per share quarterly dividend, was $0.25. Chemed (CHE): now $0.24 per share quarterly dividend, was $0.22. Colony Financial … Read more