CENX

In the News: General Mills, Realty Income, Energy Transfer

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General Mills makes a big deal, Realty Income delivers, while Energy Transfer tries to battle back to even. By Kris Rosemann US Secretary of Defense Jim Mattis came out in support of recommendations from the Commerce Department for targeted tariffs on steel and aluminum. While the Defense Department recognizes that imports of low-cost steel (SLX) and aluminum resulting from unfair trading practices undermine national security, it also warns that more broad action could irritate allies. President Trump has until April to decide whether or not to take action on the recommendations from the Commerce Department for tariffs up to 24% and 7.7% on foreign steel and aluminum, respectively. Consumer food product giant General Mills (GIS) made a splash before the … Read more

Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value

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President of Investment Research Brian Nelson defines the concept of universal value and shows how quantitative statistical methods are inextricably linked to those of fundamental, financial, business-model related analysis. Value does not exist in respective process vacuums! Value is universal. Find out why. Running time: ~10 minutes.  Tickerized for Valuentum’s stock and ETF coverage universe. Transcript Hi this is Brian Nelson from Valuentum Securities, and this is the tenth edition of a series that I call “Off the Cuff,” where I get in front of the camera and I talk for ten minutes. This is what we have to talk about today. We have to talk about this concept: The Theory of Universal Value. Value does not exist in vacuums … Read more

Valuentum’s 3 Breakthroughs in the Field of Finance and More

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Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more

Alcoa Continues Swoon, Revises Aerospace 2016 Outlook to 6%-8% Expansion

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Image Source: Boeing; image source: Alcoa Alcoa (AA) kicked off first-quarter 2016 earnings season April 12, but nobody reading our work should have much interest in shares. Our $10 fair value estimate for the company explains the lack of opportunity, and we laid in out in no uncertain terms in April 2015 that we thought, “The Time to Consider Owning Alcoa Has Passed.” Even a few months before that write-up, we said the aluminum giant was trading at a peak multiple on peak earnings, a classic valuation “no-no,” and since that time, shares of Alcoa have fallen more than 40%, “Alcoa Kicks Off Fourth Quarter (2014) Earnings Season:” From our Jan 13, 2015 article: Would we ever considering owning Alcoa … Read more

Alcoa Disappoints in Third Quarter, China Weakness Prevalent

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Alcoa (AA) no longer is the industrial bellwether it once was as the global economy migrates more toward a service orientation, but the aluminum giant still has its hands in a lot of end markets. The company’s third-quarter results, released October 8, showed revenue falling 11% on a year-over-year basis, and modest net income of $0.07 per share, excluding special items. Acquisition and divestitures muddied the waters, but the general take was a negative one. The company is doing the best it can to migrate away from the volatility of its lower-margin operations, focusing its efforts on value-add operations, and while it is making progress, the company remains tied to the broader economic environment and the pricing pressures that inevitably … 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

Alcoa’s 4Q Earnings Fall Short of Expectations

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Aluminum giant Alcoa’s (AA) fourth-quarter results, released Thursday, left much to be desired. Revenue fell more than 5% from the same period a year ago, as a huge non-cash goodwill impairment charge tied to legacy smelting operations pushed earnings deep into the red. Though on an adjusted basis the firm generated net income of $40 million, or $0.04 per share, the performance was terrible and showed how weak aluminum prices, which were 7% lower than the year-ago period, can punish results. The aluminum giant earned $0.06 per share on an adjusted basis in last year’s period. At the end of the quarter, Alcoa noted that 57% of its revenue and 80% of its segment profits came from value-add businesses (Engineered … 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

Alcoa’s Third Quarter Results Reflect Focus on Cash Management

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Leading aluminum and alumina producer Alcoa (click ticker for report: ) posted decent third-quarter results Tuesday afternoon. Revenue declined 1% year-over-year to $5.7 billion, modestly above consensus estimates. Earnings per share, adjusted for special items, surged to $0.11 from just $0.03 during the same period a year ago. Free cash flow during the quarter was negative $36 million, a $3 million improvement year-over-year. Focus on Cash Management Image Source: AA In our view, an owner’s earnings aren’t found on the income statement, but rather on the statement of cash flows. Alcoa agrees, and as such, the firm has focused extensively on improving its cash operations, targeting breakeven performance in seasonally-weak quarters. Thus far, Alcoa has achieved better-than-anticipated productivity gains while … Read more

Shares of Our Favorite Miner South32 Skyrocketed During Past Year

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Image Shown: South32, an idea in our ESG Newsletter portfolio and one of our favorite miners, put up tremendous financial performance during the first half of fiscal 2022 as it capitalized on surging realized prices for its commodities sales. Image Source: South32 – First Half of Fiscal 2022 IR Earnings Presentation By Callum Turcan Shares of the American depository receipts (‘ADRs’) of one of our favorite miners, South32 (SOUHY), have put up tremendous performance during the past year. According to data provided by Yahoo! Finance, shares of SOUHY are up over 50% during the past year on a price only basis while the S&P 500 (SPY) is up ~9% on a price only basis during this period as of late … Read more