CSX

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

by

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

Calendar Fourth Quarter Earnings Roundup: IBM, GE, PG, UNP

by

Image Source: texasfeel Let’s get our thoughts on calendar fourth-quarter performance from a few giants in their respective industries. By Kris Rosemann and Brian Nelson, CFA International Business Machines IBM’s (IBM) stock is now back above the $170 per-share mark after falling below $120 per share just a little over a year ago. Five-year performance of the equity, however, still remains terrible, with shares of IBM languishing around the price they were changing hands at the beginning of 2012. Warren Buffett’s association with the stock has a lot of investors excited, but we think the Oracle of Omaha may be a bit too optimistic on this one. Year-over-year revenue at IBM has been under considerable pressure for some time, and … Read more

Tough Times for Rails

by

Key Takeaways: The North American railroad industry is oligopolistic in nature, and we love the barriers to entry and pricing strength that come with it. North American railroad operators have been hit by volume declines across a wide range of end markets. Currency movements and global economic concerns aren’t helping matters. Union Pacific remains our choice for exposure to the space. Though others present interesting opportunities as well, we think the firm’s operating ratio has the most upside from current levels in addition to it having some attractive market positioning. “…we’re not thrilled by the performance of Union Pacific since it was added to the Best Ideas Newsletter portfolio, but the railroad industry offers such a strong fundamental backdrop that … Read more

Railroad Merger Talks

by

Canadian Pacific (CP) is back on the hunt for consolidation. After regulators shot down a proposed deal for CSX (CSX) last year, the firm is reportedly in preliminary talks with Norfolk Southern (NSC) concerning a merger that could be worth more than $24 billion. The fact that there are so few railroad operators in the US suggests that a deal will be very difficult to get past regulators, and if a deal does in fact get done, it will likely be the last of its size in the industry. The two companies have complimentary cargo markets and little geographical overlap, in our birds’ eye view of their respective route networks. Norfolk Southern generates 22% of its revenue in intermodal shipments, … Read more

Bellwether Snapshot: Walmart, Boeing, CSX

by

Alcoa (AA) kicked off third-quarter earnings season with a wimper, which had been preceded by Yum! Brands’ (YUM) doozy of a showing. Incremental news impacting the expected performance of Walmart (WMT), Boeing (BA), and CSX (CSX) hasn’t been great either. Investors continue to write off weakness as “normal,” even “macroeconomic” as if it doesn’t matter, pointing to the transient nature of a struggling global economy suffering from a slowdown in the pace of growth in China and weakness in export-dependent countries, not the least of which is Brazil, as somehow a “good thing,” but it may not matter. The trajectory of expectations of future free cash flow generation is being impacted, and so are fair value estimates as a result, … Read more

Video: Are Economic Moats Priced Into Stock Prices? — You Bet They Are

by

President of Equity Research Brian Nelson debunks the myth that the economic moat is not included in stock prices. Length: ~8 minutes. Tickerized for firms in the Morningstar Wide Moat ETF (MOAT), as of October 14, 2015. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I wanted to talk about an important concept and answer an important question. Is Warren Buffet’s economic moat priced into stock prices? Before I answer that question, I think we need to define a couple things. Return on invested capital is a measure of a business’ performance. It’s calculated as earnings before interest divided by net new investment, which is a measure of return on new invested capital. So what is the return the … Read more

Railroads Reveal Economic Concerns in the US

by

Valuentum wrote a comprehensive outlook on the coal industry and railroads in this July 2013 piece here, and to a very large degree, the piece couldn’t have told the future better. Not only did we warn against the most heavily-leveraged coal producers, including James River, Arch Coal (ACI) and Walter Energy, but we threw cold water on the entire coal industry altogether. James River and Walter Energy subsequently filed for bankruptcy. We pointed to economic and political pressures making coal a less viable utility option in the US, as we stated that heightened competition in the US export market would make met coal a less attractive proposition. Since the publishing of the piece, coal operators have suffered immensely. The Market … Read more

Dividend Increases for the Week Ending April 17

by

Below we provide a list of firms that raised their dividends during the week ending April 17. 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 Blackstone Group (BX): now $0.89 per share quarterly dividend, was $0.78. CSX (CSX): now $0.18 per share quarterly dividend, was $0.16. Discover Financial Services (DFS): now $0.28 per share quarterly dividend, was $0.24. Donegal Group (DGICA): now $0.135 per share quarterly dividend, was $0.1315. Fidelity Southern (LION): now $0.10 per share quarterly dividend, was $0.09. General Motors (GM): now $0.36 per share quarterly dividend, was $0.30. … Read more

Part I: Nelson’s Notes on Berkshire Hathaway’s 2014 Newsletter

by

Hi all, It has taken me a few weeks to get a chance to read the annual newsletter of Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B), and this year’s installment was not a disappointment. For me personally, there’s not a lot of incremental insights that are gleaned, but I like reviewing the newsletter because the annual installment is invaluable for new investors, especially those looking to learn about the markets and how to think about them. What I’ll do below and in future parts is pull out a sentence or paragraph from the annual report and add to it or comment on it in order to provide further perspective. It should make for some great conversation. I’m not sure how many … Read more