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  • 8% Yielding NorthStar Realty Finance Is Firing On All (Spin-Off) Cylinders
    Today, 7:42 AM NRF Comment!

    Summary

    • NorthStar Realty Finance reported strong fourth quarter results last week.
    • On an annualized 4Q 2014 CAD basis, NRF trades at less than 11x times CAD and at a 9.2% CAD yield.
    • Proposed spin-off of NRF's European real estate portfolio will unlock value and likely lead to higher public market valuations of the two entities.
    • Successful spin-off likely a catalyst for NorthStar Realty Finance AND NorthStar Realty Europe.
    • I might add NRF or NRE to my $100,000 income portfolio in 2015.
  • Barrick Gold: Will 2015 Be A Rebound Year?
    Yesterday, 9:04 AM ABX 7 Comments

    Summary

    • Barrick Gold lost 40% of its value in 2014 due to uncertainty in the commodity markets.
    • Barrick Gold adapts to a low price environment by cutting costs and reducing capex.
    • Management plans to reduce net debt by $3 billion in 2015.
    • Gold and copper miners like Barrick Gold should benefit from rising inflation and gold prices over time given the extreme flood of easy central bank money in recent years.
  • Building A $100,000 High-Yield Income Portfolio From Scratch, Adding Position 2: New Residential Investment Corp.
    Yesterday, 7:26 AM NRZ 32 Comments

    Summary

    • I added Prospect Capital to my new $100,000 high-yield income portfolio, or HYIP, two weeks ago.
    • New Residential Investment Corp. is the second investment making it into the HYIP.
    • In addition to a high, covered dividend, there is a chance of receiving special dividends.
    • New Residential's acquisition of Home Loan Servicing Solutions, Ltd. highlights that mortgage servicing assets are an attractive growth field.
    • I sleep well with 12% yielding New Residential in my HYIP.
  • J.C. Penney: What To Do After Today's Massacre
    Fri, Feb. 27 JCP 49 Comments

    Summary

    • J.C. Penney reported fourth quarter results yesterday that sent investors into a selling frenzy.
    • Shares were deeply in the red in after hours trading which doesn't bode well for today's trading start.
    • Investors panicked over J.C. Penney's earnings miss even though the retailer posted solid fourth quarter results AND exceeded its own 4Q 2014 comp guidance.
    • J.C. Penney's turnaround is still in progress, and I see continued upside potential.
    • I am buying J.C. Penney today to capitalize on a predictable knee-jerk market reaction, again.
  • Seadrill: Don't Worry, Seadrill Will Make It Through A Sector Downturn
    Thu, Feb. 26 SDRL 45 Comments

    Summary

    • Seadrill reported fourth quarter results on Thursday, which beat consensus estimates.
    • High economic utilization rates and a positive EBITDA trend suggest that Seadrill will make it through a sector downturn.
    • At just 4.3x forward earnings, Seadrill is priced for disaster.
    • A Seadrill investment affords investors with a high margin of safety and potentially asymmetric return potential in a recovery rally.
  • Independence Realty Trust: A Little Known Apartment REIT With A Juicy 7.9% Dividend Yield And Growth Potential
    Thu, Feb. 26 IRT 21 Comments

    Summary

    • Independence Realty Trust is a high-growth, high-yield investment in the attractive apartment REIT sector.
    • Outstanding revenue and total FFO growth underpin the REIT's long-term value.
    • Shares of Independence Realty Trust now yield 7.9%.
  • DryShips: Is This Finally The Bottom?
    Thu, Feb. 26 DRYS 11 Comments

    Summary

    • DryShips reported fourth quarter results yesterday.
    • DryShips benefits from strong year-on-year revenue and adjusted EBITDA growth.
    • A record low Baltic Dry Index hurts investor sentiment with respect to drybulk shipping companies.
    • A DryShips investment offers investors asymmetric return potential, but is not without risk.
    • Is DryShips bottoming out?
  • Chesapeake Energy: Panic Selling Is A Promising Buying Opportunity
    Wed, Feb. 25 CHK 9 Comments

    Summary

    • Chesapeake Energy reported fourth quarter results that missed the Street's expectations.
    • Lower budgeted capex and declining rig counts sent investors into a selling frenzy.
    • Balance sheet rationalization and capex reduction will pay off for Chesapeake Energy.
    • Panic selling is a buying opportunity for investors who don't only look forward to the next quarter.
  • Rio Tinto: Is The Worst Over?
    Wed, Feb. 25 RIO 2 Comments

    Summary

    • Rio Tinto reported poor 2014 results two weeks ago, which included a 9% decrease in underlying earnings.
    • The earnings slump is the result of retreating iron prices.
    • Rio Tinto reacted by cutting back on investment spending and bringing down costs.
    • Anti-cyclical investors might want to consider Rio Tinto at a forward earnings multiple of 9.4x.
  • Telefonica: High Dividend Visibility, A 5%+ Yield, And Share Buybacks Make This Telecom Worth Considering
    Wed, Feb. 25 TEF 7 Comments

    Summary

    • Telefonica reported solid revenue growth for 2014, but is even more optimistic for 2015 and 2016.
    • Great revenue outlook, dividend visibility, and resuming share buybacks substantially enhance Telefonica's value proposition.
    • Telefonica's shares now yield approximately 5.5% in US-$ terms.
    • Telefonica's 2015/6 guidance likely to be a strong catalyst for Telefonica's shares.
  • Annaly Capital: Solid Q4 Results Support The Bullish Case, But Don't Wait For A Fed-Induced Sell-Off
    Wed, Feb. 25 NLY 7 Comments

    Summary

    • Annaly reported solid fourth quarter results yesterday.
    • The mortgage REIT grew book value 1.8% sequentially, outpacing growth at rival firm AGNC.
    • Stable core earnings and high core returns on equity support a bullish case.
    • Annaly now trades at a whopping 19% discount to net asset value.
    • Are you waiting for a mortgage REIT sell-off when the FED announces rate hikes? Don't hold your breath.
  • BHP Billiton: A Buy, Hold Or Sell At $49?
    Tue, Feb. 24 BHP 11 Comments

    Summary

    • BHP Billiton reported weak interim results, which were defined by commodity price declines and plunging earnings.
    • The mining company produced some successes in increasing productivity and controlling costs, but those measures were not sufficient to counter falling prices.
    • Cost controls and productivity gains will be determining themes in the near-term.
    • BHP targets to internally create $4 billion in value for shareholders until 2017.
    • Is BHP Billiton a buy, hold or sell at $49?
  • Hartford Financial Services: A Strong P&C Business And A Focus On Buybacks
    Mon, Feb. 23 HIG 1 Comment

    Summary

    • Hartford Financial Services is an undervalued, well-run property and casualty insurance company.
    • The company reported robust year-over-year increases in core earnings and book value.
    • Hartford's value is underpinned by a strong P&C business and management's focus on share buybacks.
    • I see further upside potential for Hartford Financial Services in 2015 and beyond.
  • Cheniere Energy: Are We Going To See New 52-Week Highs Soon?
    Mon, Feb. 23 LNG 14 Comments

    Summary

    • Cheniere Energy's long-term value depends on the successful completion of the Sabine Pass and Corpus Christi liquefaction projects.
    • LNG demand growth outside the U.S. offers Cheniere Energy attractive export opportunities.
    • Cheniere Energy reported stable fourth quarter and full-year revenues, which go a long way in the energy sector.
    • Positive news flow with respect to project progress/completion likely to be a positive catalyst for Cheniere Energy's shares in 2015.
  • Building A $100,000 High-Yield Income Portfolio From Scratch, Adding Position 1: Prospect Capital
    Mon, Feb. 23 PSEC 173 Comments

    Summary

    • I am establishing a real-money, public high-yield income portfolio whose value will be build up to $100,000.
    • Candidates for the high-yield income portfolio, or HYIP, must meet a set of investment criteria, which I lay out in the article.
    • The focus is on securing a steady, hopefully rising dividend flow, while capital growth is a secondary goal.
    • The first position added to my HYIP is Prospect Capital, which meets all my investment criteria.
    • Prospect Capital's excessive book value discount is just too good to ignore.
  • MetLife: An Undervalued Insurance Business Destined For 50% Valuation Growth
    Mon, Feb. 23 MET 6 Comments

    Summary

    • Similar to AIG, MetLife is substantially undervalued.
    • MetLife has made great progress after the Great Recession to return to its long-term profitability trend.
    • MET's book value per share has grown 17% in 2014, yet the insurance company trades at an excessive discount to book value.
    • MetLife offers investors a very attractive risk/reward ratio and limited downside risk.
  • Deere & Company: Should Investors Run For The Hills After Terrible 1st Quarter Results?
    Mon, Feb. 23 DE 5 Comments

    Summary

    • Deere & Company reported terrible first quarter results last week.
    • As expected, the equipment maker reported terrible results, particularly in its Agriculture and Turf segment.
    • 2015 sales outlook remains extraordinarily weak.
    • In the absence of any powerful catalysts, I will continue to stay on the sidelines.
  • 2015 Will Be A Transitional Year For Linn Energy
    Mon, Feb. 23 LINE 15 Comments

    Summary

    • Linn Energy reported fourth quarter and full-year results on Thursday.
    • Year-over-year revenue increases were largely driven by derivative gains.
    • Net cash shortfall highlights the necessity to cut back on distributions and capital expenditures.
    • 2015 will be a transitional year for Linn Energy and unitholders.
    • I expect Linn Energy's units to trade like an option in 2015. Volatility is opportunity.
  • Linn Energy: Surging Short Interest In The Energy Sector The Best Contra Indicator Of All Time?
    Thu, Feb. 19 LINE 22 Comments

    Summary

    • Bespoke Investment Group published a very interesting chart about peaking short interest in the energy sector last week.
    • The question is how this chart needs to be interpreted.
    • In my opinion, peaking short interest is a bullish signal that implies outsized return potential.
    • Never follow the herd.
  • Vanguard Natural Resources: Why I Don't Care About The Distribution Cut At All
    Thu, Feb. 19 VNR 11 Comments

    Summary

    • Vanguard Natural Resources announced on Tuesday that it was going to cut its common unit distribution.
    • VNR's units lost 5% of their value yesterday as a result of the distribution cut.
    • Vanguard Natural Resources follows the example of other high-yield energy investments like Linn Energy.
    • Units of Vanguard Natural Resources now yield 8.3%.
    • Vanguard Natural Resources has a lot of potential for capital appreciation and remains a Strong Buy.
  • Realty Income: Excellence Has A Name
    Thu, Feb. 19 O 3 Comments

    Summary

    • Realty Income reported outstanding fourth quarter results.
    • Realty Income saw increases in revenues, FFO, same store rents, and even improved on already high occupancy rates.
    • Realty Income expects FFO per share to grow by at least 3.5% in 2015.
    • Realty Income now yields 4.31%.
  • Exxon Mobil: Don't Sell Your Stake Just Because Warren Buffett Did
    Wed, Feb. 18 XOM 84 Comments

    Summary

    • Warren Buffett dumped his stake in Exxon Mobil in the fourth quarter of 2014.
    • The market is likely to interpret the sale as a negative vote on energy companies.
    • Exxon Mobil is a free cash flow champ and will make it through a cyclical sector downturn.
    • Weaker trading in Exxon Mobil as a result of Warren Buffett's sale is a buying opportunity.
  • CYS Investments: A 13%+ Yielding Mortgage REIT Nugget Worth Considering
    Tue, Feb. 17 CYS 6 Comments

    Summary

    • CYS Investments reported good fourth quarter results last Wednesday.
    • The mortgage REIT grew book value per share 3.6% sequentially and 13.6% year-over-year.
    • Despite such accomplishments, CYS Investments continues to trade at an extraordinarily high net asset value discount.
    • Historically low P/B ratio suggests that investors could benefit from capital gains in the years ahead.
  • Northstar Realty Finance: A 9% Dividend Gem That Long-Term Income Investors Need To Consider
    Tue, Feb. 17 NRF 17 Comments

    Summary

    • Northstar Realty Finance is a very interesting high-yield commercial REIT alternative.
    • A growing Healthcare portfolio will allow NRF to capitalize on the megatrend of increasing senior healthcare demand.
    • The REIT has a history of increasing dividends.
    • At 10.84x 2014 CAD, and 9.33x 2015 CAD, Northstar Realty Finance is not too expensive.
  • Philip Morris: A 5% Dividend Nugget With An Intrinsic Value Of $100+
    Tue, Feb. 17 PM 19 Comments

    Summary

    • Philip Morris reported disappointing fourth-quarter results, which were defined by continuous top line challenges and currency headwinds.
    • The cigarette maker is deeply undervalued even if dividend growth slows over time.
    • Based on conservative dividend growth rates, I estimate that Philip Morris is worth $100+ per share.
    • Shares still yield 4.83% and provide investors with reliable and recurring income.
    • Long-term income investors will benefit from an increasing yield on cost, too.
  • Vanguard Natural Resources: Buying When Blood Is In The Streets?
    Tue, Feb. 17 VNR 35 Comments

    Summary

    • Vanguard Natural Resources is a very interesting income vehicle for investors with a contrarian tilt.
    • VNR's units have lost 40% of their value in the last twelve months.
    • Crude oil has likely bottomed out, which suggests that investors will see some capital gains in addition to a very juicy dividend yield.
    • Leading, well-managed energy companies like Vanguard Natural Resources should be winners in a recovery rally.
    • Buying when 'blood is in the street' was the best investment advice I have ever gotten.
  • The Charles Schwab Corporation: Why You Should Consider Selling This Investment Services Firm
    Mon, Feb. 16 SCHW 10 Comments

    Summary

    • Charles Schwab is a cyclical investment services firm that does well when investors are optimistic about the stock market.
    • Though Charles Schwab is successful in attracting client assets, its valuation is cause for concern.
    • Charles Schwab now trades at 3.6x book value and 18.6x earnings, which are very rich multiples.
    • With stock market indices trading near record highs and Charles Schwab reporting record results in 2014, the potential for outsized valuation growth is limited.
  • Seadrill: Another Buying Opportunity Reveals Itself As Investors Lose It Over Petrobras Contracts
    Mon, Feb. 16 SDRL 19 Comments

    Summary

    • Seadrill reported on Friday that it will remove $1.1 billion in order backlog as it believes some of its Petrobras contracts won't be concluded.
    • Seadrill is the latest victim in an unfolding corruption scandal at Brazilian oil company Petrobras.
    • The decline in order backlog is not good news, but not as bad as the market makes it out to be.
    • I trust that Seadrill will find alternative uses for its two semi-submersibles, the West Taurus and the West Eminence, in due time.
    • Long-term investors could use Friday's sell-off to buy Seadrill at less than 5x estimated 2015 earnings.
  • 3 Takeaways From AIG's Fourth Quarter, 48% Upside Still Possible
    Fri, Feb. 13 AIG 40 Comments

    Summary

    • American International Group reported weak fourth quarter results yesterday.
    • Investors learned that AIG is still struggling with underwriting losses in its Property & Casualty business.
    • One-time losses relating to balance sheet management hurt AIG in the most recent quarter.
    • AIG should lead the way and go full in on share repurchases.
    • If AIG's share price just 'catches up' to book value, investors face 48% upside potential.
  • American Realty Capital Properties: Will Corvex Management's Activist Campaign Pay Off?
    Thu, Feb. 12 ARCP 35 Comments

    Summary

    • American Realty Capital Properties' Board of Directors is taking heat from activist investor Corvex Management L.P.
    • The fund now holds a 7.7% stake in American Realty Capital Properties.
    • Corvex Management has issued a public letter, urging ARCP's Board of Director's to become more shareholder friendly.
    • Will Corvex Management succeed in pushing for change?
  • Mosaic: Potash Industry Rebound Should Lead To Juicy Valuation Growth In 2015
    Thu, Feb. 12 MOS 10 Comments

    Summary

    • Mosaic reported strong fourth quarter earnings on Wednesday.
    • Mosaic profited from excellent results in its potash segment.
    • Fundamentals in the potash business are clearly improving.
    • Inventory build-ups and demand growth could translate into rising potash prices in 2015.
    • Rising prices and improving investor sentiment could be major catalysts for valuation growth.
  • Fifth Street Finance Corp.: A Strong Buy After The Company Cut Its Dividend
    Wed, Feb. 11 FSC 47 Comments

    Summary

    • Fifth Street Finance reported weak quarterly results on Monday, which caused the stock price to plunge.
    • Fifth Street Finance also announced a 35% dividend cut, which brings the new monthly dividend to $0.06 per share -- starting in March 2015.
    • Results weren't great by any measure, but its likely that investors overreact to Fifth Street Finance's earnings release.
    • Extremely high net asset value discount makes Fifth Street Finance an interesting BDC play.