Why Tegra 4 Still Makes Nvidia A Bullish Play [View article]
What do you make of the difference in market capitalization? NVDA is only 10 billion versus QCOM at almost 110 billion. It seems like these companies have very different market penetration. There are corresponding differences in their revenue numbers. NVDA has 4 billion while QCOM has about 18 billion.
Buffett Eyes DaVita As A Long-Term Investment [View article]
I apologize for the confusion. The dividends on their statement of cash flows was to and from minority interests / joint ventures. They are not paid to the shareholders.
Aflac Inc. Revisited: Share Price Is Expected To Be Stable In 2012Q4 [View article]
I am not sure why an insurance company would be correlated with a transportation and furniture index. Are you sure you took the first difference of each time series? If you didn't, that would explain your spuriously good results.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
I think you have a real long-term worry. And you are asking a really deep question. Will the house of cards that the global central banks are building collapse? However, I don't that is a risk in the short term. There has been deflation or minimal inflation in Japan recently. You can find Japanese inflation statistics here: http://bit.ly/RhiI2L.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
baseballman24,
I thought you might like to know that two of Aflac's competitors issued debt recently. The comparable offerings were by Allstate (ALL) and Unum (UNM). Both ALL and UNM issued senior notes in the last few months. Both had maturities of 30 years (i.e. due in 2042). Allstate was at 5.2% and Unum was at 5.75%. Allstate was rated BBB+ by AM Best and Unum was rated BBB by AM Best.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
Thanks for the question.
Moody's came out with its rating of this issuance of subordinated debt at a rating of Baa1. This is an investment grade rating. The company's rating is higher. You are getting a higher yield for going down the capital structure.
This issuance matures in 2052. That is a 40 year maturity. Going out that long in maturity is probably longer than I would like. Rates are at abnormally low levels. It is probably a good ideas to invest in things with shorter maturities.
Consider The Distribution To Cash Flow From Operations Ratio For Infrastructure MLPs [View article]
I also was under the impression that there are tax implications. MLP wanted to pass through losses to offset the dividend income. This would enable investors to defer taxes. And give investors a lower cost basis that they would have to pay capital gains on later in the future. Therefore the incentives for them to generate "earnings" are different than an ordinary corporation. Is that true? I understand the tax issue from an investor perspective. But not really from the management's perspective. How do the tax issues factor in for the MLP?
Aflac's Attractive Fundamentals And Its Growing Value [View article]
salleeaz,
I want to give a little more detail on the capital expenditures you are looking for. Disclosures about capital expenditure do appear in a couple of place in the financial statements. But before I go on, the capital expenditures are not really considered material.
1) There is an accounting change in 2011. Costs associated with advertising (acquired and renewing insurance contracts) are allowed to be capitalized on a retrospective and prospective basis. You can find further information information in Note 1 of the financial statement in 2012. There accountants consider these changes to Net Income to be non-material. This usually means less than a 10% impact.
2) AFLAC has about $620 million in property plant and equipment. This didn't really grow between 2011 and 2010. However these changes would be capitalized as well. Please keep in mind that the investment portfolio is over 100 billion. The related capital expenditures seem immaterial.
Hi omaha. You can look on the LSTA website. A lot of their information requires a membership. Yet they do allow you to download the index values for free. You can download an excel file with the historical index values here: http://bit.ly/Qea6ak
Aflac's Attractive Fundamentals And Its Growing Value [View article]
One of the common ways listed on some financial websites is to compute free cash flow as:
EBIT(1-Tax Rate) + Dep + Amort - Change in Net Working Capital - Cap Exp.
This is a little cumbersome. Another simple way to calculate it is to take:
Operating Cash Flow - Cap Ex - Dividends.
Capital Expenditures usually arise from purchases of long-term physical assets. If the company has significant investments in factories, properties, or equipment, they will expense these items as assets with future long term benefits. Companies such General Electric have significant capital expenditures. This past year it total over $12 billion.
AFLAC is not a manufacturing compnay. AFLAC is primarily a financial company. The majority of its assets are investments in financial assets such as fixed income securities.
If you don't have access to a financial database which already calculates it for you, for these purposes, it is safe to assume it is zero. There is an easy way to check on Google. Check Google Finance's cash flow statement. AFLAC does not break out a separate line item for cap ex. It is listed as zero.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
I am not sure if there are plans to expand geographically. However, their sales growth can be mostly attributed to WAYS. It is a hybrid whole life insurance product. The product allows beneficiaries to convert into a fixed annuity, medical coverage, or nursing care at a predetermined age. Sales of this product grew by over 250% year-over-year.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
There are a few issues to consider. Some that come to mind are the impact of Japan's population on insurance demand, the low yields on the investments in Japan, and the appreciating Yen / Dollar exchange rate on earnings.
1) Japan's aging population contributes positively to the earnings growth of the company. Revenue seems to be expanding quite nicely in Japan.
2) The investment portfolio tries to match Japanese assets against Japanese policies. And US assets against US assets. This minimizes currency risk when paying off policies. However, yields on the investment portfolio (net investment income vs avg investment assets) lag behind some of its competitors. AFLAC has a yield of 3.5% while MetLife has a yield of 4.0%.
3) Currencies exchange rates have recently been working in favor of AFLAC.
Thank you very much for your comments and questions. This was a commentary on the cycle more than specifically about particular ETFs. I hope to address that question more specifically in the near future.
However, the loan market fundamentals impact all of these investments in very much the same way. It is very important not to look at historical returns and expect something similar to the past few years in the future. At the bottom of last cycle loans were traded below 0.50.
At current prices, these investments can not appreciate much. As the first "comment" points out, these investments are now quite close to par. In the most optimistic environment, these investments will continue to pull closer to par. Perhaps even go above par. However never much above 102 as the term of loans is typically around 4 years.
So we are the point in the cycle, where credit spreads are compressing. They are currently approximately in the neighborhood of 700 bps depending of which assets are included. In the last cycle, these credit spreads decline all the way to approximately 200 bps. This could mean that dividends on these instruments could be cut significantly. This would depend on the credit situation and how popular loans become with investors.
As pointed out briefly above, credit conditions have worsened a little since last year. The speculative grade default rate is around 3%. In the last cycle, default rates stayed below 2% for an extended period of several years. This led to the dramatic spread compression (of around the 200 bps level). So I don't expect dividends to fall nearly as much as the last time around.
Thank you for that information. It really does depend on which categories you are reviewing. I quoted information in the Standard and Poors publication, "Will This Time Be Different For The U.S. Speculative-Grade Cycle?" The link is the following: http://bit.ly/UAoFLu
Why Tegra 4 Still Makes Nvidia A Bullish Play [View article]
Buffett Eyes DaVita As A Long-Term Investment [View article]
Buffett Eyes DaVita As A Long-Term Investment [View article]
Aflac Inc. Revisited: Share Price Is Expected To Be Stable In 2012Q4 [View article]
Aflac's Attractive Fundamentals And Its Growing Value [View article]
Aflac's Attractive Fundamentals And Its Growing Value [View article]
I thought you might like to know that two of Aflac's competitors issued debt recently. The comparable offerings were by Allstate (ALL) and Unum (UNM). Both ALL and UNM issued senior notes in the last few months. Both had maturities of 30 years (i.e. due in 2042). Allstate was at 5.2% and Unum was at 5.75%. Allstate was rated BBB+ by AM Best and Unum was rated BBB by AM Best.
Hope that helps.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
Moody's came out with its rating of this issuance of subordinated debt at a rating of Baa1. This is an investment grade rating. The company's rating is higher. You are getting a higher yield for going down the capital structure.
This issuance matures in 2052. That is a 40 year maturity. Going out that long in maturity is probably longer than I would like. Rates are at abnormally low levels. It is probably a good ideas to invest in things with shorter maturities.
Consider The Distribution To Cash Flow From Operations Ratio For Infrastructure MLPs [View article]
Aflac's Attractive Fundamentals And Its Growing Value [View article]
I want to give a little more detail on the capital expenditures you are looking for. Disclosures about capital expenditure do appear in a couple of place in the financial statements. But before I go on, the capital expenditures are not really considered material.
1) There is an accounting change in 2011. Costs associated with advertising (acquired and renewing insurance contracts) are allowed to be capitalized on a retrospective and prospective basis. You can find further information information in Note 1 of the financial statement in 2012. There accountants consider these changes to Net Income to be non-material. This usually means less than a 10% impact.
2) AFLAC has about $620 million in property plant and equipment. This didn't really grow between 2011 and 2010. However these changes would be capitalized as well. Please keep in mind that the investment portfolio is over 100 billion. The related capital expenditures seem immaterial.
I hope that gives you a clearer picture.
Leveraged Loan Update [View article]
The index value as of 10/5/12 was $96.02
Aflac's Attractive Fundamentals And Its Growing Value [View article]
EBIT(1-Tax Rate) + Dep + Amort - Change in Net Working Capital - Cap Exp.
This is a little cumbersome. Another simple way to calculate it is to take:
Operating Cash Flow - Cap Ex - Dividends.
Capital Expenditures usually arise from purchases of long-term physical assets. If the company has significant investments in factories, properties, or equipment, they will expense these items as assets with future long term benefits. Companies such General Electric have significant capital expenditures. This past year it total over $12 billion.
AFLAC is not a manufacturing compnay. AFLAC is primarily a financial company. The majority of its assets are investments in financial assets such as fixed income securities.
If you don't have access to a financial database which already calculates it for you, for these purposes, it is safe to assume it is zero. There is an easy way to check on Google. Check Google Finance's cash flow statement. AFLAC does not break out a separate line item for cap ex. It is listed as zero.
Aflac's Attractive Fundamentals And Its Growing Value [View article]
Aflac's Attractive Fundamentals And Its Growing Value [View article]
1) Japan's aging population contributes positively to the earnings growth of the company. Revenue seems to be expanding quite nicely in Japan.
2) The investment portfolio tries to match Japanese assets against Japanese policies. And US assets against US assets. This minimizes currency risk when paying off policies. However, yields on the investment portfolio (net investment income vs avg investment assets) lag behind some of its competitors. AFLAC has a yield of 3.5% while MetLife has a yield of 4.0%.
3) Currencies exchange rates have recently been working in favor of AFLAC.
Leveraged Loan Update [View article]
However, the loan market fundamentals impact all of these investments in very much the same way. It is very important not to look at historical returns and expect something similar to the past few years in the future. At the bottom of last cycle loans were traded below 0.50.
At current prices, these investments can not appreciate much. As the first "comment" points out, these investments are now quite close to par. In the most optimistic environment, these investments will continue to pull closer to par. Perhaps even go above par. However never much above 102 as the term of loans is typically around 4 years.
So we are the point in the cycle, where credit spreads are compressing. They are currently approximately in the neighborhood of 700 bps depending of which assets are included. In the last cycle, these credit spreads decline all the way to approximately 200 bps. This could mean that dividends on these instruments could be cut significantly. This would depend on the credit situation and how popular loans become with investors.
As pointed out briefly above, credit conditions have worsened a little since last year. The speculative grade default rate is around 3%. In the last cycle, default rates stayed below 2% for an extended period of several years. This led to the dramatic spread compression (of around the 200 bps level). So I don't expect dividends to fall nearly as much as the last time around.
I hope that helps a little.
Leveraged Loan Update [View article]