BRY

How Some Members Use Valuentum’s Investment Services

by

By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are … Read more

2022 Oil & Gas Market Update: “The Outlook for Crude Oil Prices Remains Quite Bullish”

by

Transcript Hello, this is Callum Turcan, Associate Director of Research at Valuentum Securities. WTI and Brent have pulled back moderately from recent highs, though near-term futures remain just above $100 per barrel which is well above levels seen last year. As of early July, both WTI and Brent are in backwardation, meaning spot prices are trading at a higher price than later dated future contracts. In other words, the trajectory of future crude oil prices is expected to have a downward slope. Please note that backwardation does not mean that things are going to rapidly deteriorate for the global energy complex, as this dynamic is due to global oil inventories steadily declining over the past two years or so. Backwardation … Read more

Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out

by

By Callum Turcan Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy … Read more

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

by

Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process

by

With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company’s revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There’s a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Distribution Coverage Deteriorates at Linn Energy

by

Highly controversial oil producer Linn Energy (click ticker for report: ) announced mediocre second quarter results Thursday morning. Distributable cash flow (DCF) per unit declined 7% year-over-year to $0.65, even though net income rose 24% year-over-year to $1.47 per unit. Image Source: LINE 2Q 2013 Slides Among the most important metrics to watch at Linn Energy is its distribution coverage ratio. Not only is the shareholder base of Linn Energy highly interested in distributions, but the health of the firm is dependent on being able to generate cash flows to pay out distributions. If a firm’s cash flow is deteriorating, not only can the distribution be at risk, but the business itself could come under pressure. For its second quarter, … Read more

Linn Energy: SEC Sees Smoke…Is There Fire?

by

Controversial independent oil and gas company Linn Energy (click ticker for report: ) announced Tuesday morning that the SEC has launched an informal inquiry into Linn and LinnCo (LNCO). As we previously outlined June 3, we have no interest in adding the company to the portfolio of our Dividend Growth Newsletter given the cloud of questions, poor internally-generated cash flow, and numerous downside risks. We’re retaining the firm on the watch list of our Dividend Growth Newsletter, however, as we continue to monitor developments closely. As always, our best dividend growth ideas are included in our Dividend Growth portfolio. We give credit to Linn’s management team for revealing the explicit details of the inquiry, stating in the press release: “The SEC … Read more

Revisiting the Real Risks of Linn Energy

by

In recent months, energy producer Linn Energy (click ticker for report: ) has come under fire from the likes of Barron’s and hedge fund managers. The biggest issue for Linn bears, prior to the merger agreement with Berry Petroleum (BRY) was that the company issued unrealistic measures for distributable cash flow per share and for adjusted EBITDA. Both metrics are non-GAAP figures, which can sometimes raise a red flag—especially when a firm’s management team comes under pressure. Let’s take a look at Linn’s metrics and the issues swirling around the stock. Linn’s Metrics After the attacks on its metrics, Linn went on the offensive, providing a supplemental presentation elaborating on the company’s non-GAAP metrics. Source: Linn “Short Seller Response” The … Read more

Dividend Increases/Decreases for the Week of August 4

by

Below we provide a list of firms that raised their dividends during the week ending August 4. 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 States Water (AWR): now $0.43 per share quarterly dividend, was $0.40. Artisan Partners Asset Management (APAM): now $0.61 per share quarterly dividend, was $0.50. Atlas Energy Solutions (AESI): now $0.20 per share quarterly dividend. Bank7 (BSVN): now $0.21 per share quarterly dividend, was $0.16. Berry (BRY): now $0.14 per share quarterly dividend, was $0.12. BP (BP): now $0.4362/ADS dividend, was $0.3966. BTS Group … Read more

Dividend Increases/Decreases for the Week of November 8

by

Below we provide a list of firms that raised their dividends during the week ending November 8. 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                          Air Lease (AL): now $0.22 per share quarterly dividend, was $0.21. Aker BP (AKRBF): now $0.600 per share quarterly dividend, was $0.174. American Financial (AFG): now $4.00 per share special dividend, was $0.80. Arch Capital (ACGL): now $5.00 per share special dividend. Artesian Resources (ARTNA): now $0.3014 per share quarterly dividend, was $0.2955. Atmos Energy (ATO): now $0.87 per share quarterly dividend, was $0.81. … Read more