TRGP

We Win Some, We Lose Some: Best Idea Exxon Mobil Expects Huge Cash Flow Growth in Coming Years

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Image: Exxon Mobil has been one of the biggest contributors of alpha to the Best Ideas Newsletter portfolio during 2022. Image: Valuentum By Brian Nelson, CFA Without a doubt, adding Exxon Mobil (XOM) to the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, and High Yield Dividend Newsletter portfolio in June 2021 was one of the biggest value-generating moves by our organization to generate “alpha” in 2022. Where other ideas such as Meta Platforms (META) and PayPal (PYPL) failed this year, Exxon Mobil and Chevron (CVX) helped to pick up the slack in 2022, and we’re pleased. Our alert from June 27, 2021: In the Dividend Growth Newsletter portfolio, we’re adding a 5-7% weight in ExxonMobil and a 3-4% weighting … Read more

2022 Showcased the Value of a Valuentum Membership

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In bull markets, almost everyone is a winner. But 2022 was different. This year was a big test for Valuentum, and we passed with flying colors. We delivered across the board during the year from ideas in the Exclusive publication and the efficacy of the dividend growth methodology to the resilience of high yield ideas and simulated Best Ideas Newsletter portfolio relative performance–despite setbacks from Meta Platforms, PayPal, and beyond. Tune in to the latest video installment from Valuentum. Thanks for listening! Tickerized for holdings in the SPY. ——————————————— About Our Name But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” … Read more

Market Whipsaw: Crypto Collapse and a Lower-than-Expected Inflation Print

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Image: Uncertainty in the cryptocurrency markets has surged with concerns over the liquidity of a key exchange. Investors are weighing the spillover effects of crypto with the view that the pace of inflation may have peaked. — By Brian Nelson, CFA — The U.S. equity market continues to be highly volatile as it whipsaws between concerns over the health and sustainability of cryptocurrency and optimism over lower-than-feared inflation readings. We maintain our bearish/defensive stance on equities, but at the same time, we continue to be “fully-invested” across the simulated newsletter portfolios in part because we don’t want to miss out on days like today, November 10, when the markets are soaring ~2.5%-5.5% depending on which index you are monitoring. We’re also … Read more

Understanding the Phenomenon of “Price Risk” in High Yield

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  Image Source: Julien Carnot We want you to learn about a unique risk innate to the high yield space like the back of your hand. We’ll explain the “information contained in prices” and talk about what you should be on the lookout for, the “avalanche effect.” Order the High Yield Dividend Newsletter here. — By Brian Nelson, CFA — I received a question from a dear member of ours, and I think it may be helpful that I share the response. The question had to do with why we may be ultra-cautious on high-yielding stocks that are facing considerable price declines. The risk described below makes the high yield space uniquely different than other equity strategies, in our view, … Read more

MLP Speak: A Critique of Distributable Cash Flow

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–> Handout 1: Pitfalls of Distribution Yield Analysis (pdf) –> Handout 2: Linking P/DCF to Enterprise Free Cash Flow Valuation (pdf) Let’s talk about a controversial metric that is used in master limited partnership (MLP) reporting. Just how useful is it, and should it be allowed? By Brian Nelson, CFA It’s been a few years since the fallout in the prices of most master limited partnerships (AMLP), but to me, it still feels like yesterday. We continue to have many concerns about the longevity of the business models of MLPs, and we maintain our view that the operating structure will be challenged over the long haul. New equity and debt funding (issuance) continues to, in part, fuel the distributions of most MLPs, … Read more

Distributing Truth on MLPs

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By Kris Rosemann The recent merger break-up fiasco at Energy Transfer Equity (ETE) and Williams Companies (WMB) has put the master limited partnership (MLP) conversation back into the spotlight, after the two entities were unable to finalize a merger that had been announced in fall 2015 and would have created the largest pipeline company in the US. The deal between Energy Transfer Equity and Williams was officially terminated by Energy Transfer Equity June 29 after a court ruled that the firm was legally able to walk away from the agreement when it was unable to deliver an opinion on the tax treatment of the transaction that was required by June 28. Williams has since stated that it will seek monetary … Read more

FAQ: Help Me Understand Your Research on MLPs

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FAQ: It looks like your fair value estimates and your adjusted Dividend Cushion ratios aren’t bad. What gives? A: Thank you for your question. The Valuentum process rests on uncovering undervalued companies that are trading at a discount to intrinsic value, but also ones that are supported by the market via strong technical and momentum indicators. The latter consideration is absent from most, if not all of the energy sector, including MLPs. MLPs themselves, however, have a nuanced valuation adjustment in our process that leads us to have significantly less conviction than in other areas. Pasted below is a slide deck that mentions that adjustment (i.e. we exclude growth capex, even though we feel that it is an integral part of … Read more

Master Limited Partnership Model Still At Risk

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Valuentum’s President Brian Nelson’s concerns regarding the master limited partnership business model became mainstream in June of this year. In his piece, “5 Reasons Why We Think Kinder Morgan’s Shares Will Collapse,” an article that itself may go down in history as one of the most timely pieces of research ever written–in light of Kinder Morgan’s (KMI) eventual collapse–Mr. Nelson said of the MLP space at that time: Most, if not all, MLPs report distributable cash flow (DCF), which does not in the calculation consider growth capex, an important driver behind the generation of increased cash flow from operations in the future. When MLPs report distribution coverage ratios, this particular calculation also backs out growth capex from the equation, instead … Read more

Dividend Increases for the Week Ending July 24

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Below we provide a list of firms that raised their dividends during the week ending July 24. 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 BancorpSouth (BXS): now $0.10 per share quarterly dividend, was $0.075. Bar Harbor Bankshares (BHB): now $0.255 per share quarterly dividend, was $0.25. Baylake Corp (BYLK): now $0.09 per share quarterly dividend, was $0.08. BBCN Bancorp (BBCN): now $0.11 per share quarterly dividend, was $0.10. B&G Foods (BGS): now $0.35 per share quarterly dividend, was $0.34. Chemical Financial (CHFC): now $0.26 per share quarterly dividend, was $0.24. … Read more