AIG

The Corporate Buyback Conundrum

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The above is a trailing 15-month chart of the broad market index, the S&P 500 (SPY). As you can see, the markets have gone nowhere fast. The fallout in the energy complex coupled with emerging market uncertainty and political unrest in the US is making for quite the choppy market environment. Interestingly, however, since the middle of last year, the Best Ideas Newsletter portfolio has quietly been distancing itself from this broad market benchmark, as strong performance from constituents coupled with a larger cash position in a generally weaker market have paid off. Where indexers focus on controlling costs instead of focusing on generating strong returns with relatively low turnover (and commission and tax implications), the strategy powering the Best … Read more

Excited About Putting Cash to Work…Eventually

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Investors are fretting over a lot of things as of late. China (FXI) announced January 19 that fourth-quarter GDP fell to 6.8%, with many noting that the measure was a 25-year low. Even if you believe that number, which may be a stretch in light of collapsing local stock markets in Shanghai and Shenzhen, the outlook can’t be much better. Steel mills across the country are reeling, and while published housing numbers don’t look that bad, we have a difficult time believing the Chinese banks are in good shape. HSBC (HSBC), Standard Chartered, and Citigroup (C) remain most exposed to what we would describe to be the growing likelihood of a contagion from weakening commodity-dependent sectors in the country. Intel … Read more

ICYMI: 5 Concerns About Impending Rate Hikes

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The first Fed rate hike in nearly a decade came and went December 16, putting an environment of ZIRP (zero interest rate policy) to an end, a policy that grew out of the Financial Crisis and the depths of the Great Recession late last decade. The Fed had paused plans to hike the federal funds rate for much of 2015 as a result, in our view, of getting a more informed read on the potential implications of emerging market developments–namely dislocations in the local Chinese equity markets (FXI) and recessionary conditions in Brazil (EWZ)–and the stock market crash (SPY) in the US in August that sent equities of some of the most well-known stocks including Apple (AAPL) and General Electric … Read more

Bond Issuance Has Ground to a Halt; Expect Negative 2016 GDP Impact

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The Fed is in a tight spot. We give Ben Bernanke and team a lot of credit for successfully delaying a prolonged global economic recession following the worst financial crisis of our generation late last decade, one that swallowed up such household names as GM (GM) and AIG (AIG), but such policies always come with unintended consequences. New Fed Chair Janet Yellen may have to deal with the true aftermath, and it’s been thrust upon her, perhaps unfairly. With interest rates on fixed-income products near the lowest they’ve been in history, retirees and near-retirees, after suffering significant capital losses during the Financial Crisis, have been lured into higher-yielding dividend-paying equities, the prices of some almost completely supported by debt-infused dividend … 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

A Tale of Two Companies: Duality in the Valuentum Buying Index

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We’re not much for pumping our own chest, and it’s never a good idea to argue by example, but when certain situations help prove our investment beliefs, we take notice. In this piece, let’s take a look at two firms that have been at opposite ends of our Valuentum Buying Index. At the high end of the scale we have American International Group (AIG). The firm has been rated a 9 on the VBI scale–which rates companies on a scale of 1-10–for years now. Our low-end example will be Lumber Liquidators (LL). While the firm’s poor rating may seem like an obvious call, the importance of our rating is based on timing, which will be expanded upon shortly. Let’s take … Read more

The Invincible S&P 500?

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This is the performance of the S&P 500 (SPY) since the March 2009 panic bottom. It’s incredible, to say the least. US stocks, as measured by the S&P 500 have more than tripled since the doldrums of the Financial Crisis, and for those of us that lived and breathed the markets during every day of the Financial Crisis, the lack of volatility and the ongoing, steady advance seemingly month after month during the past 6-plus years have been incredibly peculiar–and perhaps contradictorily–less-than-comforting. Any market that sets prices on the buying and selling behavior of a wide-variety of participants with differing views shouldn’t be so coordinated and one directional. It seems unnatural, or at the very least, unusual. While others are … Read more

AIG Still Our Best Idea in Insurance

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Members know that we’re not fans of the investment prospects of the insurance industry, but they also know that we have liked American International Group (AIG) for some time. We were saying that shares were attractive as early as November 2012, and we reiterated the opinion that AIG was our favorite idea in the insurance industry in November 2013. Today, the company registers a 9 on the Valuentum Buying Index, and . Shares closed at $53.80 each yesterday. AIG reported excellent third-quarter results that revealed outperformance relative to expectations on both the top and bottom lines. Third-quarter after-tax operating income advanced 23% to $1.7 billion, or $1.21 per diluted share (up from $0.96 in the year-ago period). AIG noted that … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more