DTV

Why Valuentum’s Email Transaction Alerts Are Worth Paying Attention To

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Valuentum subscribers have noticed that we’ve been quite busy as of late, adding protection to our portfolio in the form of a broader-market put option and taking some large profits in Astronics (ATRO) and eBay (EBAY). We’ve highlighted our best-in-class hit rate–meaning that a large percentage of the firms we added to the portfolio are outperforming the broad market benchmark. But there are a couple ways of looking at our performance–the first is relative outperformance versus the market since inception, which is at 28 percentage points. Investors duplicating our portfolio are enjoying this outperformance. Another way of looking at our track record, however, is to evaluate the performance of additions to the portfolio on the long side (purchases) since inception–i.e. … Read more

What Did We Learn About Apple from the All Things D Conference?

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During the past few weeks, Apple (click ticker for report: ) has re-entered the market’s collective psyche in a big way. First, CEO Tim Cook was grilled by congress over how the company skirts US income taxes. While Apple broke no laws, the company still got targeted for its complex tax avoidance structure. We think this news couldn’t be any less material, especially since literally thousands of other companies use similar tactics. In our view, Apple was singled out because it’s one of the largest companies in the world. The hearing is nothing more than a silly sideshow, and we doubt it will amount to anything more than a few weeks of headlines. On the other hand, Cook spoke on … Read more

DirecTV Posts Solid Growth Across Geographies

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Best Ideas Newsletter holding DirecTV (click ticker for report: ) posted solid first quarter results this week as higher ARPU in the US and strong subscriber additions in Latin America drove solid revenue growth. Revenues increased 8% year-over-year to $7.6 billion, which modestly exceeded consensus estimates. Adjusted earnings surged 34% year-over-year to $1.43 per share, smashing consensus expectations as the company continued to lower its share count. Over the past year, DirecTV has shrunk its float by 15%. Free cash flow dipped to $710 million from $952 million during the same period ago, but management noted that was mostly attributable to unfavorable working capital timing in the US. On a geographic basis, we were incredibly pleased with the performance of … Read more

Ergen Chooses Sprint Over DirecTV

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Monday morning, satellite TV provider Dish Network (click ticker for report: ) made a bold offer to merge with the United States’ third largest cellular carrier, Sprint (click ticker for report: ). The deal represents a valuation premium to SoftBank’s offer $20.1 billion offer for 70% of shares, and we believe Sprint’s board must consider the superior offer, which equates to $4.76 per share in cash and $2.24 per share in Dish stock, valuing Sprint at $25.5 billion. CEO Charlie Ergen is no stranger to bold moves, and many believe he’s had his eye on Sprint for a some time. Although we thought a DirecTV (click ticker for report: ) merger was more likely to occur, the Sprint deal makes … Read more

A Dish/DirecTV Merger Would Be Golden

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After a potential acquisition target of DirecTV (click ticker for report: ) was taken off the market, chatter of a DirecTV-Dish Network (click ticker for report: ) merger has escalated. The big obstacle, in our view, would be anti-trust hurdles, and given recent trends in US anti-trust regulation, that could be difficult to defeat. However, let’s take a look at what could happen if regulators allow it. Increased Leverage Over Content Creators One of the consistent themes we’ve been hitting on over the past year in the media space has been the rising cost of content. Netflix (click ticker for report: ), Coinstar (click ticker for report: ), Amazon (click ticker for report: ), Hulu, cable, and satellite are all … Read more

Sprint, Dish, Clearwire, and SoftBank: The Saga Continues

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Key Takeaways: ·        The entire Sprint/Clearwire/Dish/SoftBank situation is very complicated. ·        We believe SoftBank’s offer makes more sense for Sprint’s near-term future. ·        However, we like the well-rounded package that a combined Sprint/Dish entity would be able to offer consumers over the long haul, and we tend to have faith in skilled managers like Dish’s CEO Ergen. ·        In any case, we think the saga will eventually result in a winner’s curse—whoever wins the battle for Sprint will likely have paid too much! ·        Ideas o       One industry in particular would be highly in favor of SoftBank’s deal with Sprint—the networking equipment makers. If Sprint receives a huge capital infusion from a SoftBank deal, network upgrade spending would accelerate. Cisco (CSCO) is our favorite fundamental idea … Read more

The Best Ideas for 2014 and Beyond: Part I

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The Valuentum Buying Index, our stock selection methodology, identifies firms that are 1) undervalued on a discounted cash-flow basis (e.g. three-stage fully-populated valuation model with complete financial statements), 2) undervalued on a relative value basis versus peers and the firm’s closest competitors, where applicable, and 3) just starting to show interest by investors as measured by technical/momentum indicators, providing the mechanism to drive a firm’s price to its fair value. Without the latter component, investors have a heightened risk of holding an underpriced stock for an extended period of time, one that may turn out to have little prospects for eventual price-to-fair-value convergence. Once a firm is added to the Best Ideas portfolio or Dividend Growth portfolio, generally with a Valuentum … Read more