MSFT

We’re At New Highs Again

by

The taper came and went, and the markets don’t seem to care. The S&P 500 notched yet another high this week. The correction that we warned about came and went as well, almost as if market forces created such an event just to move higher. From my experience, the market, at the present moment, is trading almost purely on technicals. For example, once we touched the 10% official mark of a correction, we started to move higher, and once the markets started to move higher, the move accelerated. Consecutive gap ups following pull-backs have become the norm. This market has become almost a pure technical market, where traders and moving averages are taking precedent over fundamentals. This won’t last forever. The … Read more

October Dividend Growth Newsletter Introduction

by

Dear Member, The month of September represented some tough sledding for the markets, and we think things will get worse before they get better. If you missed our write up on the seven reasons why we think we’re due for a fall, please be sure to catch up on the piece here. We made a number of changes to the Dividend Growth portfolio since the release of the previous edition of the newsletter. Let’s make sure you didn’t miss anything. For one, yesterday, we added S&P 500 SPDR put option contracts to the portfolio to protect the large gains. Specifically, we added protection in the form of 5 put option contracts on the S&P 500 (SPY), with November 22 expiration … Read more

What Is Fat Pitch Investing?

by

“I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” —Warren Buffett, Interview in Forbes magazine (1 November 1974) “The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” –Warren Buffett, 1999 Berkshire Hathaway Annual Meeting, … Read more

Microsoft Just Hiked Its Dividend 11%!

by

After the market closed Tuesday, the top holding in the Dividend Growth portfolio Microsoft (MSFT) raised its dividend 11%, to $0.31 per share on a quarterly basis. Though we try to be as modest as possible, we think it’s not an exaggeration to say that ‘we hit the ball out of the park’ with the call on Microsoft — not only in making the controversial decision to add it to the Dividend Growth portfolio (when the consensus was convinced it was ‘dead money’) but also in retaining the stock as the portfolio’s largest weighting for the past several months. Microsoft was added to the Dividend Growth portfolio at $25.96 per share at the beginning of 2012, and shares closed yesterday … Read more

We Could Have Done Better with Hewlett-Packard

by

In investing, there are always trade-offs, and one of the challenges we face as a publisher is being crystal clear about this. For example, within the personal computer (PC) supply chain, we held the view that PC demand stabilization would be a key driver behind price-to-fair value convergence among a number of participants. But while we were pounding the table on Intel (INTC) and Microsoft (MSFT) for much of the past few years, we were less-enthused about the prospects of a turnaround at Hewlett-Packard (HPQ). Since the inception of the Best Ideas portfolio, May 2011, Microsoft’s shares (yellow) have surged 80%+, Intel’s shares (orange) have jumped more than 45%, while Hewlett-Packard’s shares (bottom line) have been roughly flat (bottom line). … Read more

Earnings from 5 Dividend Growth Giants

by

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

RE: Silly Rabbit, Dividends Do Matter…

by

From: Brian Nelson, CFADate: July 21, 2014 12:47 pmTo: Readers of ‘Silly Rabbit, Dividends Do Matter…’ and ‘Dividends Don’t Matter…’ — Seeking Alpha  There is truth to both — that dividends do matter and that dividends don’t matter. For valuation experts, and in the context of a free cash flow to the firm (FCFF) model, the only thing that matters is what a firm generates in enterprise free cash flow (FCFF), not how that enterprise free cash flow leaves the business, per se (1). I’ll list the many different definitions of cash flow at the bottom of this memo. When calculating intrinsic value, dividends and/or distributions do not matter to valuation (other than when a dividend and/or distribution is paid, the … Read more

Microsoft to Slash 18,000 Jobs

by

Quick and agile – that’s what new Microsoft (MSFT) CEO Satya Nadella is looking to embed in the firm’s culture with a sweeping announcement that it will realign its workforce. In a memo to employees, the company revealed the largest layoffs in its corporate history, targeting the reduction of the size of its overall workforce by up to 18,000 jobs. The work toward synergies and strategic alignment on its recently-acquired Nokia (NOK) Devices and Services operations is expected to account for 12,500 job cuts, comprising both professional and factory workers. The vast majority of employees will get the pink slip over the next 6 months. Though it is never pleasing to hear that workers are losing their jobs, from an investment standpoint, … Read more

Valuentum Economic Castleâ„¢ Rating Update

by

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