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Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out

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By Callum Turcan Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy … Read more

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April … Read more

ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline

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ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline — — In this 40+ minute video jam-packed with must-watch content, Valuentum’s President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He’ll talk about which companies Valuentum likes and why, and which areas he’s avoiding. This and more in Valuentum’s 2020 Exclusive conference call.   Note: This video was originally published August 2, 2020.    To watch the video >>   The Theory of Universal Valuation —– Valuentum members have access to our 16-page stock reports, … Read more

Energy Earnings Roundup: CVX and XOM

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Image Source: Exxon Mobil Corporation – 2020 IR Presentation In ticker by alphabetical order: CVX, XOM By Callum Turcan Several integrated oil and gas companies recently reported earnings for the final quarter of 2020, and as expected, these were brutal reports. The coronavirus (‘COVID-19’) pandemic weighed negatively on global demand for raw energy resources (crude oil, natural gas, natural gas liquids), refined petroleum products (gasoline, diesel, kerosene), and certain petrochemicals last year which created massive headwinds for the oil and gas industry across the board. Subdued raw energy resources pricing and lackluster refined petroleum product demand were the two big obstacles for the industry as those dynamics severely weakened the economics of upstream (involved in the extraction of raw energy … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more

ConocoPhillips Is Buying Concho Resources

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Image Shown: An overview of the pro forma asset base of ConocoPhillips and Concho Resources Inc. Please note that Concho Resources’ main operations are in the Permian Basin in West Texas and Southeastern New Mexico, a region that ConocoPhillips seeks to grow its exposure to. ConocoPhillips has an expansive upstream portfolio with operations worldwide, though its North American position is set to become a much larger part of its company-wide profile. Image Source: ConocoPhillips – ConocoPhillips & Concho Resources Transaction Announcement IR Presentation By Callum Turcan On October 19, ConocoPhillips (COP) announced it was acquiring Concho Resources Inc (CXO) through an all-stock deal. If the deal goes through as planned, each share of CXO will be exchanged for 1.46 shares … Read more

Our Thoughts on the Potential Acquisition of Concho Resources by ConocoPhillips

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Image Source: ConocoPhillips – November 2019 Annual & Investor Meeting Presentation By Callum Turcan According to Bloomberg, the super-independent ConocoPhillips (COP) is currently talking with Concho Resources Inc (CXO) about acquiring the company. We do not expect that such a deal will come with a significant premium, and furthermore, and we expect that such a deal will likely be funded with equity. Our reasoning is underpinned by recent M&A activity in the oil patch, such as the all-stock acquisition of Noble Energy by Chevron Corporation (CVX) through a ~$5 billion deal that was completed in early-October. That deal involved Chevron paying a ~12% premium (based on ten-day average closing stock prices) at the time of the announcement, though please note … Read more

Our Thoughts on the Oil & Gas Industry

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Image Shown: Crude oil prices, measured by the WTI benchmark, plummeted during the initial phases of the COVID-19 pandemic and have yet to fully recover. Declines in global crude oil prices have depressed prices for natural gas, natural gas liquids, and liquified natural gas as well. We expect that it will take some time for the oil and gas industry to truly recover, and hefty net debt loads combined with onerous dividend obligations are making that a very tough task. Juicy dividend yields are a sign of the headwinds facing the oil and gas industry and are not a sign of strong underlying strength in those firms that are paying out generous dividends. By Callum Turcan Raw energy resources prices … Read more

Dividend Increases/Decreases for the Week October 2

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Below we provide a list of firms that raised their dividends during the week ending October 2. 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 American Financial (AFG): now $0.50 per share quarterly dividend, was $0.45. Bank OZK (OZK): now $0.275 per share quarterly dividend, was $0.273. Boise Cascade (BCC): now $1.60 per share supplemental dividend, was $0.10. Caledonia Mining (CMCL): now $0.10 per share quarterly dividend, was $0.085. Conagra Brands (CAG): now $0.275 per share quarterly dividend, was $0.212. Glacier Bancorp (GBCI): now $0.30 per share quarterly dividend, was $0.29. … Read more

ICYMI — News Brief: FDX, CBRL, ADBE, XOM

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Image Source: Exxon Mobil. The dichotomy in the global economy remains. Restaurants such as Cracker Barrel continue to struggle mightily while those tied to e-commerce proliferation such as FedEx are thriving. Those with strong recurring revenue business models such as Adobe continue to do well, and we remain bearish on the outlook for the energy sector and point to the increased likelihood of Exxon Mobil cutting its payout. By Brian Nelson, CFA FedEx Reports a Blowout Quarter On September 15, FedEx Corp (FDX) reported better-than-expected fiscal first-quarter 2021 results, with revenue, operating income, operating margin, net income and diluted earnings per share up substantially from the same period a year ago. The company noted that volume growth was robust in … Read more