SPY

January 5-9: The Week That Was – Drowning in Crude

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By Brian Nelson, CFA The first full week of 2015 was a wild one! Monday and Tuesday brought some hefty losses to the indices, but the middle of the week helped recover most of the ground, only to give some of it back Friday. When all was said and done, however, the S&P 500 still closed comfortably above 2040, a huge leap from just 5-6 years ago. We’re still enjoying the good times, with economic data still coming in relatively sanguine. Like a frog in water, the markets are just waiting for the next shoe to drop, and the Federal Reserve is doing all that it can to assure investors that the Yellen-put is there to prop up the markets should … Read more

Historic Oil Deal Reached

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Image Source: Chevron Corporation (CVX) – March 2020 Security Analyst Meeting Presentation By Callum Turcan Over the Easter holiday weekend, members from the Organization of Petroleum Exporting Countries (‘OPEC’), non-OPEC members that are part of the OPEC+ group (countries that in the recent past have joined forces with OPEC to curtail global oil supplies in a formal manner), and non-OPEC members outside of the OPEC+ group such as Brazil (EWZ), Canada (EWC), and the United States (SPY) came to an agreement to cut their collective oil output by north of 10 million barrels per day. Global oil and other raw energy resource prices (USO, BNO) have been simply demolished year-to-date due to a combination of demand destruction from the ongoing … Read more

Our Thoughts on Chevron Buying Noble Energy

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Image Shown: An overview of Chevron Corporation’s all-stock acquisition of Noble Energy Inc that was announced in July 2020. Image Source: Chevron Corporation – July 2020 Noble Energy Acquisition Presentation By Callum Turcan On July 20, Chevron Corporation (CVX) announced it was acquiring Noble Energy Inc (NBL) through a $5.0 billion all-stock transaction, or $13.0 billion when factoring in net debt and the book value of non-controlling interests. Shareholders of Noble Energy will receive approximately 0.12 share of Chevron for each share of Noble Energy. At the time the deal was announced, shareholders of NBL were receiving a ~12% premium based on the ten-day average closing stock prices. Chevron intends to issue ~58 million shares to cover the deal, keeping … Read more

Cisco Rallies Big Time!

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Image shown: Performance of the S&P 500 (SPY) since August 2017. As US equities continue their newly-found volatility, let’s take a look at some recent earnings reports and other developments around the markets. Cisco, the workhorse of both simulated newsletter portfolios, put up a fantastic report and upped its dividend. Berkshire continues to love Apple, and we maintain the view that the 10-year Treasury rate may be the greatest determinant of how well stocks perform in the coming decades. Airlines, garbage stocks, the “gas tax,” and more. By Kris Rosemann and Brian Nelson, CFA Do you know how happy it makes us to say that Cisco (CSCO) has been a staple of both the simulated Best Ideas Newsletter portfolio and … Read more

ALERT: Facebook at All-Time Closing Highs

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“I’m completely baffled by Facebook’s pricing action, and I still think this one will again return to new highs.” — Nelson, December 20, 2018, with shares trading at ~$130 each. Shares of Facebook registered an all-time closing high of $218.30 per share January 9, 2020. By Brian Nelson, CFA We lost so much business at Valuentum because of our call on Facebook. Let’s talk about it. Facebook (FB) has been one of our best calls since it was added as an idea to the Best Ideas Newsletter portfolio. Facebook was first added to the Best Ideas Newsletter portfolio in late January 2016, and on a price-basis, it has more than doubled since then, outerperforming the S&P (SPY) by about 40 percentage points. … Read more

S&P 500 Poised to Make New Highs…Again?

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The equity markets have welcomed a strong earnings season thus far, but valuation risk and tail uncertainties remain, not the least of which is the possibility of failed tax reform in the US. By Brian Nelson, CFA Money is cheap, and investors are partying like its 1999 all over again. The latest move on the trading vehicle for the S&P 500, the SPDR S&P 500 ETF (SPY) is yet again approaching new highs. We like the ongoing momentum in the stock market, something that we outlined in our “shocking” predictions for 2017, but we continue to reiterate our cautious stance, not only with respect to underlying valuations but also as it relates to the possibility of failed tax reform in … Read more

Top-Weighted Visa Leaps to Mid-$160s, More Earnings Reports

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Top-Weighted Visa Leaps to Mid-$160s, More Reports Image: Visa (V) has been the top-weighted idea in the Best Ideas Newsletter for as long as we can remember. In December 2017, when we migrated to weighting ranges for ideas in the newsletter portfolio, the company’s “weight” was 8.6%. The image above shows its performance relative to the S&P 500 (SPY) since then. Source (pdf). — In alphabetical order by ticker symbol: GOOG, LLY, GE, GM, IR, LL, MA, MCD, MRK, PFE, TXRH, WDC — Alphabet (GOOG, GOOGL): Shares of Alphabet, the parent of Google, reported first-quarter performance April 29 that may have revealed weakness in the revenue story at the search giant. The miss was rather large on the top line during the quarter, but … Read more

Update: COVID-19 Vaccine Race

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Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan The ongoing coronavirus (‘COVID-19’) pandemic has devasted the global economy (though things are starting to improve) and has fundamentally altered daily human life. According to a draft report from the World Health Organization (‘WHO’), there were 29 COVID-19 vaccine candidates undergoing clinical trials as of August 13 along with 138 other candidates undergoing preclinical evaluation. It is a race against the clock. Unfortunately, as of this writing on August 18, there have been ~170,000 COVID-19-related deaths in the US alone according to data from the US Centers for Disease Control and Prevention (‘CDC’). We are optimistic that one of the many “shots on … Read more

SEC Approves Financial Weapon of Mass Destruction and More Earnings Reports

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Let’s talk about quadruple-leveraged ETFs, Apple’s and Altria’s earnings reports, Coach’s fundamental improvement, Gilead’s fall from grace, IBM’s ongoing deterioration and more. By Brian Nelson, CFA Well, it is what it is as they say. In our ETF research and analysis, we consistently warn readers about the long-term price erosion dynamics of ultra-leveraged ETFs (of the double and triple variety), vehicles that we have emphasized are for “day traders,” not long-term investors. Believe it or not, however — we received news May 3 that the SEC approved a request to now list quadruple-leveraged ETFs, what we describe to be “financial weapons of mass destruction.” Yikes. You read that correctly–quadruple-leveraged exchange traded funds, ones that mimic the movement of the index … Read more