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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

AIG Still Trades at a Meaningful Discount to Book Value

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On October 31, AIG (AIG) reported third-quarter net income of $2.17 billion and diluted earnings per share of $1.46, compared to $1.9 billion and $1.13 per share in the same period a year ago. Pre-tax income in the firm’s insurance operations were solid during the quarter, with ‘AIG Property Casualty’ and ‘AIG Life and Retirement’ advancing 33% and 38%, respectively, from the same period a year ago. Third-quarter after-tax operating income attributable to AIG came in at $1.42 billion, or $0.96 per share, compared to $1.62 billion, or $0.99, in last year’s quarter. Net income exceeded after-tax operating income as a result of valuation allowance releases associated with deferred tax assets (a non-core boost). Image Source: AIG Though we would … Read more

The Mortgage Refinancing Boom Could Be Ending

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Early Wednesday morning, the Mortgage Banker’s Association (MBA) announced that refinancing activity declined 20% from one week earlier. Adjusted for the Labor Day weekend, total mortgage applications dropped 13.5% from the previous week. Consistent with the dramatic upward movement in interest rates, refinancing activity is down 71% since it peaked during the week of May 3, 2013. Why Do We Monitoring Refinancing Activity? When homeowners refinance, a couple outcomes can occur that pump more dollars into the economy. First, with a refinanced mortgage, owners may choose to take equity out of the home, allowing for large purchases like vehicles or even home remodeling. CoreLogic recently reported that 2.5 million more residential properties have returned to positive equity in the second quarter … Read more

Dividend Increases/Decreases for the Week May 13

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Below we provide a list of firms that raised their dividends during the week ending May 13. 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      Alerus Financial Corporation (ALRS): now $0.18 per share quarterly dividend, was $0.16. Algonquin Power & Utilities (AQN): now $0.1808 per share quarterly dividend, was $0.1706. Birchcliff Energy (BIREF): now CAD 0.02 per share quarterly dividend, was CAD 0.01. Black Stone Minerals (BSM): now $0.40 per share quarterly dividend, was $0.27. Brookline Bancorp (BRKL): now $0.13 per share quarterly dividend, was $0.125. Bunge (BG): now $0.625 per … Read more

Raising Our Fair Value Estimate on Berkshire Hathaway, Our Thoughts on the Insurance Industry

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Image Source: AIG Competitive Structure of the Insurance Industry Constituents in the insurance industry earn revenues primarily from insurance premiums, policy fees from life insurance/investment products, and income from investments. Operating expenses consist of policyholder benefits and claims incurred, interest credited to policyholders, commissions and other costs of servicing products, as well as general business expenses. An insurer’s profitability is dependent on its ability to price and manage risk on insurance and annuity products, to manage its portfolio of investments effectively, and to control costs through expense discipline. The insurance industry is highly competitive, with rivals numbering in the thousands–including stock companies, specialty insurance organizations, life insurers, mutual companies, other underwriting firms, and banks. Though risk-acceptance criteria, product pricing, and … 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

Why We Don’t Like Dividends of Banking Firms: 4 Very Good Reasons

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Untermyer: Is not commercial credit based primarily upon money or property? Morgan: No, sir. The first thing is character. Untermyer: Before money or property? Morgan: Before money or anything else. Money cannot buy it … a man I do not trust could not get money from me on all the bonds in Christendom. –Mr. JP Morgan’s testimony before the Pujo Committee (questioning from Samuel Untermyer), 1912-1913 Reason #1: A Bank Run Is Always Possible Though the history of banking dates back to as early as 2000 BC in Babylonia, the makings of the present-day banking system in the US really didn’t take hold until the beginning of the 20th century. Some financial historians may argue for a later date, but we … Read more

How to Think About Corporate Tax Reform

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Dividend Increases/Decreases for the Week Ending May 8

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Below we provide a list of firms that raised their dividends during the week ending May 8. 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 Agree Realty (ADC): now $0.60 per share quarterly dividend, was $0.58. Algonquin Power & Utilities (AQN): now $0.1551 per share quarterly dividend, was $0.1410. Ameriprise Financial (AMP): now $1.04 per share quarterly dividend, was $0.97. B2Gold (BTG): now $0.02 per share quarterly dividend, was $0.01. Baxter (BAX): now $0.245 per share quarterly dividend, was $0.220. Brookfield Infrastructure (BIPC): now $0.485 per share quarterly dividend. Century Next … Read more

Dividend Increases/Decreases for the Week of November 4

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Below we provide a list of firms that raised their dividends during the week ending November 4. 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                Air Lease (AL): now $0.20 per share quarterly dividend, was $0.18. Amcor (AMCR): now $0.1225 per share quarterly dividend, was $0.1200. American Financial (AFG): now $2.00 per share special dividend, was $0.63. AmerisourceBergen (ABC): now $0.485 per share quarterly dividend, was $0.460. Arbor Realty Trust (ABR): now $0.40 per share quarterly dividend, was $0.39. ARC Resources (ARX:CA): now CAD 0.15 per share quarterly dividend, was … Read more