BRK.A

Buffett’s Berkshire, Corporate Buybacks on Pace for Record; Lithium, Steel Prices on the Move

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Image Source: Berkshire Hathaway, Shareholder Letter (2017). “Fifteen common stock investments at year end that had the largest market value.” “The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.” – Warren Buffett, Shareholder Letter (2017) By Kris Rosemann and Brian Nelson, CFA Simulated Best Ideas Newsletter portfolio holding Berkshire Hathaway’s (BRK.A, BRK.B) fourth-quarter results didn’t disappoint, and commentary from the Oracle of Omaha, Warren Buffett, was at its finest in the company’s Shareholder Letter. The letter was chock full of insights, from an emphasis on normalized earnings power, to buying stocks at a “sensible purchase price,” to warning about the dangers of “purchasing frenzy” with respect to M&A, … Read more

The Future for Independent Advisors and Planners Is…Stock Selection? What?

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Image Source: 401K Calculator By Brian Nelson, CFA The world is fast-changing, and the financial markets are changing even faster. One of the most influential writers in the blogosphere, Josh Brown (aka the Reformed Broker) wrote one of the most thoughtful pieces I’ve read in a long time last October, “Just own the damn robots.” The gist of the piece is that technology is taking jobs everywhere, and employees that are being displaced may be investing in the same companies that are displacing them as a form of insurance (investing in their “own destruction,” so to speak). It was a fresh read and a fascinating viewpoint. As a former director in Morningstar’s equity and credit department that headed up training … Read more

Rising Risk Free Rates Threatening Market, Removing CVS and Hanesbrands

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The most important variable to keep your eye on, the 10-year Treasury, is rising, and the long-term implications on equity values could be considerable. We don’t think the moves thus far have been too disruptive, but continued concerns over US tax receipts and infrastructure/defense spending could send sovereign yields roaring higher. As fourth-quarter earnings season marches on, let’s take a look at some meaningful recent quarterly reports. We’re also shedding two companies from the simulated newsletter portfolios. By Kris Rosemann and Brian Nelson, CFA The market continues to be on edge as it considers what the borrowing cost of US debt might be in the event of the next downturn, the timing the only uncertainty, now that it has significantly … Read more

Boeing!

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Image shown: Boeing’s shares have been rocketing higher of late!  We couldn’t be more pleased with how one of our best ideas for consideration has performed: Boeing! By Kris Rosemann Dividend Gowth Newsletter portfolio idea Boeing (BA) continues its tremendous share-price run of late, hitting all-time highs following its earnings report before market open January 31. The aerospace giant turned in 9% revenue growth on a year-over-year basis, while GAAP earnings per share doubled from the year-ago period to $5.18. Free cash flow remained robust in the full-year 2017, advancing to ~$11.6 billion from ~$7.9 billion in 2016. The company expects operating cash flow to climb to ~$15 billion in 2018 (up from $13.3 billion in 2017), and its revenue … Read more

Bank Valuations and We’re All Market Timers?

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President of Investment Research Brian Nelson dives into questions about why an enterprise free cash flow model is not used for banking and insurance entities, and offers up the idea that we all might be market timers. What do you think? Running time: ~14 minutes.

First Harvey, Now Irma

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Image Source: NASA Goddard Space Flight Center. NASA Sees Irma Strengthen to a Category 5 Hurricane. This visible light image of Hurricane Irma was captured by NOAA’s GOES East satellite as it strengthened to a Category 5 hurricane in the Central Atlantic Ocean on Sept. 5 at 7:45 a.m. EDT (1145 UTC). NASA and NOAA satellites have been providing valuable satellite imagery to forecasters at the National Hurricane Center, and revealed that Hurricane Irma has strengthened to a Category 5 hurricane on Sept. 5 around 8 a.m. EDT (1200 UTC). Credits: NASA/NOAA GOES Project. Hurricane season 2017 has not been kind to insurers.  By Brian Nelson, CFA What a disaster-of-a-hurricane-season 2017 is shaping up to be. Our hearts and thoughts go out to … Read more

North Korea and the Bomb

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Tensions between the United States and North Korea have heightened, and we may look to August 2017 as the dawn of yet another Cold War. The news has little impact on our thesis, however. Stocks generally remain overvalued, and some of them considerably. Let’s cover a few stocks in the news and reiterate our generally positive stance on defense contractors, two of our favorites recently highlighted in the Nelson Exclusive publication. Learn more about the Nelson Exclusive here. “North Korea best not make any more threats to the United States,” Trump said, arms crossed, from his golf resort in Bedminster, New Jersey, on Tuesday. “They will be met with fire and fury like the world has never seen.” – CNN, … Read more

ETF Analysis: Banks and Financials

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Please select the image below to download the report. Tickerized for ETFs under coverage and stocks included in the XLF.

Malkiel Balks, Yellen Talks

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Let’s first address how research in the financial industry is becoming more and more open to combining value and momentum considerations. We’ll also cover a few takeaways from the stress tests and some ‘strong’ talk from Fed Chair Janet Yellen. By Brian Nelson, CFA It was 1973, and a Princeton economist by the name of Burton Gordon Malkiel had just published A Random Walk Down Wall Street, a book that would turn into one of the most influential studies in support of the efficient markets hypothesis. The book would suggest that asset prices typically exhibit signs of a “random walk,” and as a result, an investor could not consistently outperform market averages in part due to powerful reversion-to-the-mean tendencies. Three … Read more

Random Musings: Retail, REITs, BlackBerry, and More

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Image shown: Best Buy’s resiliency in the face of competition from Amazon. Let’s cover some recent news. By Brian Nelson, CFA The markets have been relatively flattish the past week or so, but that may not mean much. They could still be digesting some of the big gains thus far in 2017 before potentially staging their next move. At the close June 26, the SPDR S&P 500 Trust ETF (SPY), a proxy for the S&P 500 stood at $243.29. For some reason, I felt it important to make note of this level, as if it were an important one. Things have been very quiet for a long time now, and I get the feeling that an inflection point may be … Read more