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Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Tesla Moves Higher

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Image Shown: Tesla Inc saw its share price jump up after reporting solid third quarter earnings in late-October. By Callum Turcan On October 23, Tesla Inc (TSLA) posted third quarter 2019 earnings that were positively received by the market. Shares of TSLA moved up sharply higher on the news, and our fair value estimate remains at $259 per share of Tesla. We appreciate the automaker’s drive to eventually become consistently free cash flow positive but given the huge range in its estimated fair value (a product of the firm’s high operating leverage and the nascent nature of the mass market electric vehicle industry), we prefer other investment opportunities out there. Additionally, the top end of our fair value estimate range … Read more

General Motors’ Cost Savings Plan Still Intact

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Image Shown: Shares of General Motors moved higher after its third quarter 2019 earnings report as investors looked past the UAW strike and towards the future, particularly ongoing cost structure improvements. By Callum Turcan General Motors (GM), a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, reported third quarter 2019 earnings on October 29. As expected, its results were held down by the UAW strike in the US, which stretched from late in the third quarter (two weeks in September) to early in the fourth quarter (roughly four weeks in October). Please note that General Motors’ fourth quarter performance will also get dinged over the strike. Both sides came together and agreed to a new four-year … Read more

BREAKING: General Motors and the UAW Reach a Deal, Ending the Strike

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Image Shown: Shares of General Motors had come under fire over concerns regarding the extended UAW strike over the past several weeks, but with the strike now over, shares of GM may begin to converge back towards their intrinsic value. By Callum Turcan On Friday October 25, General Motors (GM) ratified a four-year deal with the United Automobile Workers union to end the 40-day long strike at its US factories, which had crippled the company’s North American operations. The deal covers ~46,000-48,000 unionized employees and has major ramifications for previous and future employees as well. General Motors is a holding in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios, and we continue to like the name. Shares of … Read more

Ford Provides an Update on Its Self-Driving Plans

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Image Source: Ford Motor Company – 2018 Annual Report By Callum Turcan On October 21, Ford Motor Company (F) published a blog post on Medium providing an update on its self-driving ambitions. Jim Farley, who was promoted to president of Ford’s ‘New Businesses, Technology & Strategy’ division effective May 2019 (previously Mr. Farley worked at Ford’s ‘Global Markets’ division), authored the Medium blog post. The company reiterated that the goal was to begin commercializing its autonomous driving investments starting in 2021 via a self-driving service, likely something akin to a fleet of taxi cabs with built-in autonomous driving equipment and software. Self-driving taxi cab services could in theory create substantial recurring revenue streams that are less cyclical than demand for … Read more

BREAKING: UAW-GM Reaches Deal, More Coming from Valuentum Soon…

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BREAKING: UAW-GM Reaches Deal, More Coming from Valuentum Later… please note that this note was written prior to the deal announcement today. Valuentum will have more to say about the deal soon. Image Shown: Shares of General Motors Company are beginning to recover as the company is reportedly getting closer to reaching a deal with the UAW, which would end a strike that is estimated to have cost the company over $1 billion according to some analysts. By Callum Turcan As the strike of ~46,000 United Automobile Workers (“UAW”) employees at US factories run by General Motors (GM) enters its second month, it looks like the chances for a breakthrough are growing. The Wall Street Journal reported that General Motors’ … Read more

General Motors and the Union Strike!

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Image Source: General Motors Company – IR Presentation By Callum Turcan A holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, shares of General Motors (GM) have come under pressure over the past month from the ongoing strike that involves roughly 46,000-48,000 of its workers (primarily in the US). So far, this strike has halted production at more than 30 General Motors facilities in the US and has negatively impacted operations at various auto parts suppliers as well. The walkout is now coming up on its second month if a deal isn’t reached soon. Talks between General Motors and the Union Automobile Workers (“UAW”) union reportedly took a turn for the worse over this past weekend (ended … Read more

Carvana Seeks to Disrupt an Enormous Market

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Image Source: Carvana Co. – IR Presentation By Callum Turcan Carvana Co. (CVNA) seeks to disrupt the used car and used light truck market in the United States as a leading e-commerce platform for used automobile sales. Perhaps best known for its “car vending machines” that are located in key metropolitan areas across the US, Carvana wants to fundamentally transform the way consumers buy, sell, and ultimately ascertain the proper value for used automobiles. Please note that Carvana does not pay out a common dividend at this time and is unlikely to do so in the foreseeable future given its negative free cash flows. Industry Overview The company noted that the US used auto sales market clocked in at $764 … Read more

Our Reports on Stocks in the Auto Making Industry

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Image Source: HRYMX Structure of the Auto Manufacturers Industry The auto manufacturers industry is characterized by high fixed costs, substantial operating leverage, and intense competition. Vehicle sales are impacted by general economic conditions, which are largely out of the control of participants, and by the cost of credit and fuel. Excess capacity, price discounting and other marketing initiatives can pressure the top line, while rising raw material and labor costs can squeeze the bottom line. Changing consumer preferences in type, model and fuel-efficiency can cause abrupt shifts in market share. The structural characteristics of the group are very poor. For our automaker coverage, please click here.

Trump “Tweet Storm” Reveals Increased Frustration with Fed, China

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— Markets are starting to look toppy. — By Brian Nelson, CFA — The markets are under heavy pressure Friday, August 23, as China escalated the trade war with new retaliatory tariffs on $75 billion worth of U.S. goods (soybeans and autos), including a 5% tariff on U.S. crude oil prices. Removing the Energy Select Sector SPDR (XLE) from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio August 14 looks to have been a savvy move. Following the much-anticipated speech from Fed Chairman Powell today, President Trump responded with a series of tweets that showed tremendous frustration with the current situation. Here is the Twitter thread, reproduced below: — As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or … Read more