XLE

What’s on the Valuentum Team’s Mind?

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Let’s get the Valuentum team’s thoughts on recent developments. No changes to newsletter portfolios. Last Friday, August 16, Bank of America (BAC) CEO Brian Moynihan said in a Bloomberg interview, “We have nothing to fear about a recession right now except for fear of recession.” We sat down with the Valuentum team to get their thoughts. Let’s go around the horn. Callum Turcan: Interesting take, and I get why he thinks that way. The feedback loop of recession fears prompting businesses to invest less which in turn hurts consumer spending by weakening wage growth/employment growth rates thus leading to additional reductions in business investment. However, I think we are past the point of fear being the main enemy. Poor industrial … Read more

Alert: Markets Weakening, Raising Cash

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Image Shown: In our December 26, 2018, note to members, we moved the simulated Best Ideas Newsletter and simulated Dividend Growth Newsletter portfolio to “fully invested” from a cash “allocation” of 30% and 20%, respectively at the high end of the range. We are raising cash today. — This article was emailed to members here. — Alert: Markets Weakening, Raising Cash — Notification: Removing the Energy Select Sector SPDR (XLE) and the Financial Select Sector SPDR (XLF) from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. —Hi everyone, — It looks like it’s shaping up for another ugly and volatile day in the markets. — There are myriad risks as we near the end of this now-decade long bull market: … Read more

Join the Conversation on the Market Plunge

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The Valuentum team shares its thoughts on the recent surge in volatility and collapse in interest rates amid a trade and currency war between two of the largest economies in the world, the US and China. No changes to the newsletter portfolios at this time. During the past few days, the US (SPY, DIA) and China (FXI, MCHI) have escalated a trade war, turning it into a currency war, the latter allowing its yuan to drop to lower levels against the U.S. dollar. The US has now labeled China a “currency manipulator,” and China has responded by suspending U.S. agricultural purchases. China is one of the largest buyers of U.S. agricultural goods. The Valuentum team builds on its previous conversation … Read more

Oil Major Second-Quarter 2019 Earnings Roundup

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Image Source: Exxon Mobil Corporation – IR Presentation By Callum Turcan Earnings Coverage by Ticker: BP, COP, CVX, RDS.A/RDS.B, TOT, XOM Let’s look at the Oil Majors that have recently reported earnings. BP’s Upstream Operational Execution Remains Strong On July 30, BP plc (BP) reported non-GAAP flat year-over-year underlying replacement cost profit of $2.8 billion in the second quarter of 2019. Marginal reductions in operating income from its upstream and downstream segments were offset by a reduction in corporate-level expenses. BP owns a 19.75% stake in Rosneft (OJSCY) which saw earnings move lower in the second quarter by an estimated ~25%. Unlike its peers who generally reported significant weakness at their downstream operations (refining, petrochemicals, marketing, and retail operations), BP’s … Read more

In the News: Second-Quarter Earnings Season Begins

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Second-quarter earnings season is upon us. The markets aren’t expecting much growth. Core industrial names may not fare well, but thus far, big pharma is solid. We’re not making any changes to the newsletter portfolios. By Brian Nelson, CFA We’re off to the races with second-quarter earnings season. The markets aren’t expecting much, with the consensus for S&P 500 (SPY) companies to experience a 3% earnings decline, according to FactSet. If this happens, this would mark the first time S&P 500 companies, in aggregate, would have posted year-over-year declines since the first half of 2016. The markets have rallied considerably since then, and despite the strong earnings expansion aided in part by corporate tax cuts, the 12-month forward P/E ratio … Read more

Checking Out ARAMCO, Saudi Arabia’s Sleeping Giant

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Image Source: Trending Topics 2019 By Callum Turcan Recent events have piqued our interest in the actions of Saudi Arabian Oil Company, better known as ARAMCO (ARMCO), the giant in charge of the Gulf nation’s hydrocarbon industry. Saudi Arabia is reportedly restarting ARAMCO’s IPO according to comments made by the Saudi Energy Minister, reviving a plan the country had previously put on ice primarily due to expectations that the company wouldn’t fetch a high enough valuation to suit the needs of the Kingdom. Many view ARAMCO as the most valuable company in the world, but whether this is a USD$2 trillion company or not is in the eye of the beholder (many see that target as overly ambitious, as do … Read more

New Highs! The December Call Has Been Well-Rewarded

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Image shown: Valuentum’s Dividend Growth Newsletter portfolio. Since inception, the newsletter portfolio has *never* had a constituent that experienced a dividend cut. We moved to weighting ranges beginning in 2018.   “The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.” – Warren Buffett (2018) By Brian Nelson, CFA While others are celebrating, we know better. This market could come down upon itself like nothing else. But for now. We breathe a sigh of relief. A company, Valuentum, that emphasizes the importance of timing and then delivers on that cold December 26 day to move to all-in in the newsletter portfolios is something remarkable (see image below). We cannot go back to … Read more

Chevron’s Permian Opportunity, Outsize Dividend Yield

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Image Source: Chevron Corporation – IR Presentation By Callum Turcan Last year, the storied energy giant Chevron Corporation (CVX) produced 2.9 million barrels of oil equivalent per day on average and the company ended 2018 with 12.1 billion BOE in proved reserves on a net basis. Chevron’s upstream production base climbed by 13% from 2016 to 2018 while its proved reserves increased 8% during this period, led by growth at its Permian Basin operations. Management intends on growing Chevron’s downstream presence to support rising Permian crude oil volumes. We would like to draw attention to Chevron’s Permian operations as we see that having an outsized influence on its growth trajectory. Shares of CVX yield 3.8% as of this writing and … Read more

Energy Earnings Roundup

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Image Source: Exxon Mobil Corporation – First quarter 2019 earnings presentation By Callum Turcan Energy earnings season is upon us and several major oil & gas companies have just reported their first quarter results. Global crude pricing benchmarks tanked during the last three months of 2018 and only partially recovered during the first three months of 2019, which depressed upstream raw energy resource realizations for those with a large liquids production base (meaning those that produce more natural gas liquids, crude oil, and condensate than “dry” natural gas). Chevron Corporation (CVX): The energy giant posted EPS of $1.39 during the first quarter, down from $1.90 in the same period last year. Weaker realized raw energy resource prices offset a 7% … Read more

Chevron Joins the Ranks of Exxon Mobil and Shell After Buying Anadarko

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Image Source: Chevron Corporation – IR presentation Chevron is buying Anadarko. Chevron will have to show that the projected operational synergies and related capital intensity reductions actually materialize through this acquisition, as execution risk is very material in the oil & gas world. We will be monitoring the industry as further consolidation is possible with interest rates remaining low for the time being and in light of oil prices moving sharply higher since January. By Callum Turcan Energy stocks moved upwards last Friday, April 12, on the news that Chevron Corporation (CVX) is purchasing Anadarko Petroleum Corporation (APC) for $33.0 billion in a cash and stock deal, for a total enterprise value of $50.0 billion when taking debt into consideration. … Read more