DTV

Performance Update: The Valuentum Buying Index

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Note: A more recent analysis of the Valuentum Buying Index rating system can be accessed at the following link: /Value_and_Momentum_Within_Stocks_Too A version of this article was published October 26, 2013. By Brian Nelson, CFA We periodically update the performance results of the Valuentum Buying Index (VBI), the stock-selection methodology that drives idea-generation within the Best Ideas portfolio. The academic studies of the Valuentum Buying Index can be accessed here (white paper) and here (AAII). The latest iteration of the performance, dated September 3, 2014, continues to showcase the strong sorting mechanism embedded within the investing framework, particularly when the index is coupled with qualitative oversight and portfolio management skill. Sorting winners from losers is what the Valuentum Buying Index has been designed to … Read more

Earnings from 5 Dividend Growth Giants

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Let’s evaluate the recent quarterly results of five traditional dividend growth plays. Please be sure to access the 16-page reports and dividend reports of the firms included in this article. If you are interested in receiving the valuation models of companies, please let us know. Coca-Cola (KO) There are few companies fundamentally stronger than Coca-Cola. The firm boasts a number of competitive advantages: its brands, financial strength, distribution system, global reach, and a deep executive bench. It has raised its dividend in each of the past 50+ years, and we expect dividend growth to continue at a high-single-digit annual pace for the foreseeable future. Though the strength of Coca-Cola’s competitive position is undeniable, we don’t expect the ‘cola wars’ with … 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

Valuentum Interim Newsletter Update

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Summary Best Ideas, Dividend Growth Portfolio Holding Apple Crosses Above $600! Best Ideas, Dividend Growth Portfolio Holding Altria Keeps Marching Higher! Removing DirecTV from Best Ideas Portfolio  June Edition of Dividend Growth Newsletter to Be Released June 1 Dear Member, We’d like to share a few updates today. First of all, we are very pleased with Apple’s (AAPL) recent stock-price performance. As you know, Apple is the largest weighting in the Best Ideas portfolio and one of the largest positions in the Dividend Growth portfolio. We’re very excited about the acceleration of the company’s iPhone 6 launch, and we think the firm is worth north of $700 on the basis of our discounted cash-flow analysis. View its landing page here. … Read more

Merger Mania: AT&T Ties the Knot with DirecTV; Pfizer Ups Offer for AstraZeneca; Siemens Complicates Matters for GE

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Over the weekend, AT&T (T) and DirecTV (DTV) entered into a definitive agreement  in which AT&T will acquire DirecTV in a cash-and-stock transaction for $95 per share on the basis of AT&T’s Friday closing price. In light of this announcement, we plan to remove DirecTV from the Best Ideas portfolio early next week, recording a significant gain from the $55 per share cost basis in the portfolio. We trust you are very happy with this news. Though some investors will choose to hang onto shares in the event that AT&T’s equity increases before DirecTV is de-listed from the exchange (thereby driving DirecTV’s shares higher), we’re comfortable taking the hefty per-share profit on the pay-TV provider very soon and not waiting … Read more

ALERT: AT&T Reportedly Planning to Offer Fair Value to Buy DirecTV; We Think a Higher Offer Is in the Cards

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On Monday, Bloomberg reported that AT&T (T) is in advanced talks to acquire all of the outstanding shares of DirecTV (DTV) for as much as ~$100 each, almost precisely at our $99 per share cash-flow-derived fair value estimate of DirecTV’s equity. We had previously outlined the strong case for a suitor to offer a price north of $99 per share for the pay-TV provider, and we believe that a higher offer price may be required to seal this deal for a couple reasons. First, the reported offer price, as is, represents essentially the fair value of DirecTV on a standalone basis, excluding any synergies and cost-savings that would accrue to the combined entity. DirecTV shareholders are entitled to a portion … Read more

ALERT: DirecTV Pops After Close

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<< DirecTV’s Valuation Thesis, May 1 << DirecTV’s First Quarter Analysis, May 6 According to Reuters citing sources from Dow Jones, DirecTV (DTV) is working with advisers on a possible merger with AT&T (T). Shares have advanced to nearly $90 in after-hours trading, converging to our $99 per share fair value estimate. DirecTV is a holding in the Best Ideas portfolio, where we house all of our best ideas. DirecTV’s landing page >>  More details to come!

DirecTV Shines in First Quarter; Merger Talk Icing on the Cake

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We profiled pay TV provider DirecTV (DTV) earlier last week (click here), branding it as a Valuentum stock, and the firm’s first-quarter performance, released today, helped to support our view on shares. The company surpassed 38 million total subscribers in the quarter (including Sky Mexico, which is accounted for using the equity method), while adjusted operating profit before depreciation and amortization (OPBDA) advanced 7% on an adjusted basis. The firm’s free cash growth was excellent during the period, jumping 25%, to $886 million. Though traditional free cash flow (cash from operations less capital expenditures) is different than enterprise free cash flow (free cash flow to the firm), they are highly correlated. The strong cash flow performance in the quarter offers … Read more