AIG

New Highs: Intel Makes Splash in Mobile; AIG Scooping Up Underpriced Shares

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At the Computex conference in Taiwan late last week, Best Ideas portfolio holding Intel (INTC) revealed the most energy-efficient processor in history — its Core M line of processors. The goal of the Core M, which is based off of the Core i3, i5, and i7 processors, is to enhance processor performance (with less power consumption) in mobile products, and we think the firm will make a big splash with the new chip. Picture: The first 14nm fanless mobile PC reference design from Intel; it has a 12.5 inch screen that is 7.2mm thin with keyboard detached and weighs 670 grams. The design is based on Intel’s next generation 14nm Broadwell processors. Named the Intel Core M processor, it delivers … Read more

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more

The Dichotomy of Airlines and Aerospace

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On Monday, top insurance idea AIG (AIG) announced that it would sell International Lease Finance Corporation (ILFC) to aircraft leasing firm AerCap Holdings (AER) for $5.4 billion, consisting of $3 billion in cash and the balance in newly-issued AerCap common shares. Though we think ILFC was one of the crown jewels of AIG’s business particularly considering the prospects for global air travel demand in coming years, the price is fair and opportunistic, especially since AerCap is risking its investment-grade status to facilitate the deal. We don’t think better terms could have been had by either party, given financial constraints, and shares of both entities are moving higher on the news. The combined AerCap-ILFC will be #2 on the world stage … Read more

AIG Still Trades at a Meaningful Discount to Book Value

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On October 31, AIG (AIG) reported third-quarter net income of $2.17 billion and diluted earnings per share of $1.46, compared to $1.9 billion and $1.13 per share in the same period a year ago. Pre-tax income in the firm’s insurance operations were solid during the quarter, with ‘AIG Property Casualty’ and ‘AIG Life and Retirement’ advancing 33% and 38%, respectively, from the same period a year ago. Third-quarter after-tax operating income attributable to AIG came in at $1.42 billion, or $0.96 per share, compared to $1.62 billion, or $0.99, in last year’s quarter. Net income exceeded after-tax operating income as a result of valuation allowance releases associated with deferred tax assets (a non-core boost). Image Source: AIG Though we would … Read more

The Mortgage Refinancing Boom Could Be Ending

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Early Wednesday morning, the Mortgage Banker’s Association (MBA) announced that refinancing activity declined 20% from one week earlier. Adjusted for the Labor Day weekend, total mortgage applications dropped 13.5% from the previous week. Consistent with the dramatic upward movement in interest rates, refinancing activity is down 71% since it peaked during the week of May 3, 2013. Why Do We Monitoring Refinancing Activity? When homeowners refinance, a couple outcomes can occur that pump more dollars into the economy. First, with a refinanced mortgage, owners may choose to take equity out of the home, allowing for large purchases like vehicles or even home remodeling. CoreLogic recently reported that 2.5 million more residential properties have returned to positive equity in the second quarter … Read more

Buffett Proves Berkshire Is More Than an Index

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For years, skeptics have labeled the company essentially an index, but Warren Buffett’s Berkshire Hathaway (BRK.A) reported fantastic second-quarter results Friday afternoon. Revenue jumped 16% year-over-year to $44.7 billion, easily exceeding consensus expectations. Operating earnings were also strong, growing 5% year-over-year to $2,384 per share, also better than consensus estimates. The Oracle’s favorite metric, book value per share, is up 7.6% year-to-date to $122,900. Insurance On a segment basis, insurance underwriting profits were a tad weaker than the year prior, down 14% year-over-year to $530 million. Of course, underwriting is a notoriously volatile business because the timing of catastrophic events is inherently unpredictable. The year-to-date trend is positive, as profits have more than doubled. Still, the long-term trend remains the … Read more

AIG Beats Estimates; Shares Remain Attractive

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Thursday afternoon, insurance giant AIG (click ticker for report: ) reported it swung to a profit for its third quarter. The company earned after-tax operating income of $1.00 per share, compared to a loss of $1.58 per share during the third quarter of 2011 and consensus estimates of $0.86 per share. Equally impressive, book value increased 10% sequentially to $61.49 per share. However, the US Treasury’s 15.9% stake in the company continues to weigh on the firm’s stock price performance, as the timing of share sales remains uncertain. Regardless, AIG’s operating performance is far more important to the company’s long-term return outlook than US Treasury sales, in our view. Performance, though relatively strong based on headlines numbers, was a mixed … Read more

Stay the Course; This is Not Lehman II, S&P Downgrade Meaningless

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As we had indicated a few weeks ago, investors should turn off the political news related to the debt ceiling debate, and we now encourage investors to stay the course with their investment strategy, despite the media’s attempt to amplify yet another containable crisis. When we first published our report suggesting that there was no cause for worry about the debt-ceiling deadline, we received quite a number of questions about how we could be so confident. Well, first of all, there is a degree of common sense: 1) the President could take it upon himself to invoke the use of the fourteenth amendment, which indicates that the US must make good on all of its debts and 2) politicians had already lived through the mistakes … Read more

Reflecting on Recent Report Updates: Favorites in an Overheated Market and Other Themes

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It’s been some time since we’ve updated members on our recent fair value estimate updates. Let’s take a look at the opportunities that exist in some of our favorite portfolio holdings, as well as some key themes driving recent fair value estimate changes across our coverage universe. By Kris Rosemann and Brian Nelson, CFA The frothiness of the market has shown little regard for historical valuation norms, and the number of stocks moving to a 1 or 2 on the Valuentum Buying Index is growing as valuations become stretched across our coverage universe. For the first time in Valuentum’s history, there is now not one stock that registers a 9 or 10 (a top rating) on the Valuentum Buying Index. … Read more

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good

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Valuentum’s President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds. Transcript: << Valuentum’s Best Ideas On behalf of the Valuentum team, I’d like to present to you our prepared remarks for the Valuentum Exclusive conference call for 2021. It is both an honor and a privilege to share our team’s work with you, and I personally am very grateful for your continued interest … Read more