ETP

The Dividend Cushion Ratio: Unadjusted Is Less Subjective, Adjusted Is More Subjective

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  Image Source: Mike Lawrence Question: I’m a subscriber. I’m looking at your Dividend Report for Enterprise Product Partners (EPD). It says your Valuentum Adjusted Dividend Cushion ratio for EPD is 1.8 (a ratio that includes future expected proceeds from capital raising endeavors in the coming years), but several lines below it says the Unadjusted Dividend Cushion ratio, which is your regular normal ratio (a ratio that does not include future expected proceeds from capital raising endeavors in the coming years), is 0.22. Please explain the difference between the two ratios, and what is considered a good ratio for the Unadjusted Dividend Cushion ratio, what is an excellent score, what is neutral and what is poor? Also, how much relative importance should … Read more

There Is Milk At The Store

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This article first appeared in the September edition of the High Yield Dividend Newsletter. For more information about this publication, please see here. “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” — Winston Churchill By Brian Nelson, CFA Very few of us could have imagined that we’d witness the bull market that began on that fateful day in March 2009 that might very well mark a generational low. In 2009, major investment banks around the globe were struggling to survive, and the fallout in the mortgage markets left the banks holding paper that nobody wanted to own, let alone buy. The global financial system … Read more

More First-Quarter Earnings Flying In: GM, Ford, Big Oil and More

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Image Source: General Motors GM’s dividend yield and valuation opportunity are incredible, while Microsoft’s free cash flow generation and solid net cash position speak to tremendous dividend strength. We liked what we saw out of Union Pacific during the first quarter, and you have to be aware of Big Oil’s bloated balance sheets. All of this and more included in this piece. By Brian Nelson, CFA It’s puzzling to think about, but with the first-quarter 2017 US GDP print today, April 28, coming in at just 0.7%, below expectations, one wouldn’t think the stock market is near all-time highs. Interestingly, in the report, too, the weakest area came from real consumer spending, which registered a pace of growth as poor … Read more

Midstreams Going C-Corp, Should SEC Disallow the Measure Distributable Cash Flow?

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Key Takeaways It’s important to differentiate the concept of enterprise free cash flow valuation and the idea of capital-market dependence. The uncertainty of the MLP business model remains, as it is clear operators are shunning the MLP business model preferring C-Corps instead. According to work from Global X Funds, now 40% of the energy infrastructure market cap consists of C-Corps, up considerably from just 15% at the end of 2014. Though many simplifications have come with implied distribution cuts, the primary reason for the rise in C-Corps across the midstream space has been the rationalizing of excess MLP valuations to enterprise free cash flow assessments. We encourage the SEC to consider disallowing the use of distributable cash flow, as it … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

Seeking Balance: What’s Happening in the Crude Oil and Iron Ore Markets

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Image Source: Sollven Melindo Commodity prices are notoriously volatile as the global markets often struggle to maintain a sustainable balance of supply-demand. Let’s take a look at some recent developments and coming events that are impacting the prices of crude oil and iron ore. By Kris Rosemann We’re not rushing to add any commodity-based exposure at the moment. We have some of course – but we’re not looking to add more to the newsletter portfolios. For starters, the iron ore pricing market appears to be setting itself up for another period of pain, and we’re preaching serious levels of caution for those considering the space as iron-ore prices have already begun to descend from the peak of the puzzling early-2017 … Read more

Valuentum’s Comprehensive Outlook for Crude Oil and Natural Gas Prices

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Let’s take a deep dive into the energy sector. The best dividend growth ideas, the most likely takeout candidates and more…

Creditor Risk Aversion Rises Considerably in Energy, Metals & Mining Sectors

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Not all is well with commodity producers. Moody’s (MCO) has been very quick to point out that “the latest plunge by base metals prices and the renewed slide (in) crude oil prices are more ominous for corporate credit than was the earlier plummet by crude oil prices amid relatively steady industrial metals prices.” The credit rating agency’s industrial metals price index has dropped more than 10% in the past 20 days ending July 9, reaching levels not seen since the depths of the Financial Crisis in 2009. Moody’s industrial metals price index has fallen an incredible 25% since the same time stamp last year, something we’ve been witnessing anecdotally. The International Energy Agency recently warned that the bottom in crude oil … Read more

In The Name of Our Independence and Integrity…For Goodness Sake

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Last week, an article was published that associated us with hedge funds, questioned our integrity as honest hard-working equity analysts with years of experience, dismissed our fantastic performance track record and Brian Nelson’s Chartered Financial Analyst designation, tarnished our independence as an equity research provider, and offered another author in free form the opportunity to misinterpret our completely independent and unbiased thesis and address it in ways of their preference, belittling our entire team at Valuentum and doing irreparable harm to our brand and image, in our vew. We were willing to let it go, but then another article ran in the print edition Saturday. First, let’s address the online piece, and the print piece subsequent to this. Valuentum’s thoughts … Read more