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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

EXCLUSIVE ALERT: Addressing Kinder Morgan Energy Partners and the MLPs in General

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There’s one thing for sure about Valuentum: as a member, you get the truth, the whole truth, and nothing but the truth. That’s why our members love us! We’re completely independent and completely tied to your best financial interests. You know we’ve never been shy about outlining the risks related to MLPs – for one, you don’t have to look far to see this warning (source) on the front page of every one of their 16-page reports (at the bottom): Firms in the oil and gas pipeline industry own or operate thousands of miles of pipelines and terminals—assets that are nearly impossible/uneconomical to replicate. Most companies act as a toll road and receive a fee for transporting natural gas, crude … Read more

Tweeting on Thursday

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Thursday was jam-packed with news. Let’s jump to an abbreviated ‘Valuentum Take’ on each major news item in the spirit of Twitter’s (TWTR) 140 character limit. We don’t intend to do this too frequently, but we wanted to get our take out there in a timely fashion. We’re available for any questions. Tweeting on Thursday AK Steel $AKS issues strong outlook, but #steel industry far from attractive, among the worst in our coverage. Tibco $TIBX issues poor outlook, while Red Hat $RHT exceeds expectations, puts up strong billings growth; both firms fairly valued. Linn Energy $LINE back on track as SEC endorsement improves sentiment; we prefer $KMP and $ETP in DG portfolio. Darden $DRI to part with Red Lobster; core … Read more

Bakken Production Is Booming and Continental Resources Is a Winner

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 Key Takeaways: ·        Continental Resources is an oil and gas E&P with the largest shale position in the Bakken. ·        Production and proved reserves have significant room to grow. ·        A supermajor oil company like Exxon or Chevron could be interested in acquiring Continental. ·        We believe shares have 35% upside from current levels. Production of shale oil in the Bakken (1) continues to grow rapidly, and the long-term production fortunes in the region remain as positive as ever. Let’s take a look at Continental Resources (click ticker for report: ), a firm we believe has 35% upside from current levels and one that recently made our list of The 25 Cheapest Stocks on the Market. (1) The Bakken field … Read more

Distribution Coverage Deteriorates at Linn Energy

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Highly controversial oil producer Linn Energy (click ticker for report: ) announced mediocre second quarter results Thursday morning. Distributable cash flow (DCF) per unit declined 7% year-over-year to $0.65, even though net income rose 24% year-over-year to $1.47 per unit. Image Source: LINE 2Q 2013 Slides Among the most important metrics to watch at Linn Energy is its distribution coverage ratio. Not only is the shareholder base of Linn Energy highly interested in distributions, but the health of the firm is dependent on being able to generate cash flows to pay out distributions. If a firm’s cash flow is deteriorating, not only can the distribution be at risk, but the business itself could come under pressure. For its second quarter, … Read more

Energy Transfer Partners’ Distribution Growth Could Return

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Wednesday afternoon, Dividend Growth Newsletter portfolio holding Energy Transfer Partners (click ticker for report: ) announced solid second quarter results marked by nice growth in distributable cash flow (DCF). Because of its many acquisitions, revenue was significantly higher than the prior-year period at $11.6 billion, in-line with consensus expectations. Earnings per share were also significantly higher year-over-year at $0.53, which is also far better than consensus estimates. Ultimately, for a yield instrument like Energy Transfer Partners, cash flow metrics are far more important than headline numbers. After the Linn Energy (click ticker for report: ) distributable cash flow debacle, ETP has improved its distributable cash flow reporting, providing investors with DCF attributable to the partners of ETP. This excludes DCF … Read more

Linn Energy: SEC Sees Smoke…Is There Fire?

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Controversial independent oil and gas company Linn Energy (click ticker for report: ) announced Tuesday morning that the SEC has launched an informal inquiry into Linn and LinnCo (LNCO). As we previously outlined June 3, we have no interest in adding the company to the portfolio of our Dividend Growth Newsletter given the cloud of questions, poor internally-generated cash flow, and numerous downside risks. We’re retaining the firm on the watch list of our Dividend Growth Newsletter, however, as we continue to monitor developments closely. As always, our best dividend growth ideas are included in our Dividend Growth portfolio. We give credit to Linn’s management team for revealing the explicit details of the inquiry, stating in the press release: “The SEC … Read more

Revisiting the Real Risks of Linn Energy

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In recent months, energy producer Linn Energy (click ticker for report: ) has come under fire from the likes of Barron’s and hedge fund managers. The biggest issue for Linn bears, prior to the merger agreement with Berry Petroleum (BRY) was that the company issued unrealistic measures for distributable cash flow per share and for adjusted EBITDA. Both metrics are non-GAAP figures, which can sometimes raise a red flag—especially when a firm’s management team comes under pressure. Let’s take a look at Linn’s metrics and the issues swirling around the stock. Linn’s Metrics After the attacks on its metrics, Linn went on the offensive, providing a supplemental presentation elaborating on the company’s non-GAAP metrics. Source: Linn “Short Seller Response” The … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more

Dividend Growth Portfolio Modeling Made Easy!

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Empowering Dividend Growth Investors Do you or your clients have a dividend growth portfolio? If so, this model is indispensable. It’s the best tool out there to account for the quarterly reinvestment of growing dividends after adjusting for future equity price growth in a portfolio setting. This model will allow you to better plan for your and your clients’ retirement needs and has unmatched functionality. Plus, this tool has easy-to-follow instructions and is customized to provide deliverable print outs for you or your clients. Your firm’s logo can be added, too. To purchase Valuentum’s Dividend Growth Retirement Portfolio Model (Calculator), please click here! The model, built by Brian Nelson, CFA, sets out to do much more than what other simple dividend … Read more