Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
They haven't rejected it yet--they rejected the idea that Schulze needed their permission to make a bid. Of course, it turns out that Schulze knew the law better than the board did, and they have given him permission to conduct due diligence, and whatnot.
A no would be negative, of course. But my investment thesis doesn't rest on the buy out. It rests on the belief that Best Buy still has mind share and its the only specialty electronics retailer.
I think the board is being pressured from a lot of angles, so whatever happens they will at least consider the bid seriously--which probably bodes well, in the short term, for the stock.
The most recent time (I believe) that WDC commented on dividends is when they had $11 dollars of cash per share two years ago. An analyst asked:
"I am just wondering if you could push a little more in terms of what your priorities are in terms of buyback versus potential dividend versus acquisitions?"
Tim Leyden (Chief Operating Officer) replied: "In terms of the balance sheet and stuff, we built a strategy, as John mentioned in his remarks, our prime focus right now is to evaluate strategic opportunities both in the HED as well as in adjacent markets. And we will use our cash and our borrowing capacity to accomplish that. And once we have previewed all of these opportunities and solution that we can find anything appropriate, we will evaluate the best way of returning money to the shareholder and that could be in home or share buyback."
I didn't look too hard but--according to my brief search--that is the most recent commentary on the matter. (See transcript here: http://bit.ly/S2HcPq)
Also, WDC's acqusition of HGST was larger in price than STX's acquisition of Samsung's HDD division ($4.7 billion to $1.4 billion) and WDC used more cash for it than did Seagate. So... now that they have made one of their last major acquisition (who else are they going to buy?), maybe--if they have an excess of cash--we will see them initiate a dividend.
I thought about your question when I was writing the article but I never got around to solving it. Good question though.
The consolidation was prompted by a desire for better economics--and as both parties watched the other grow larger through acquisitions, they had to grow larger themselves. So their actions probably spurred each other to some degree. And both companies believe their is a rising demand for HDDs--including, solid state drives.
Top line grow is a good question because unit growth will likely continue but their will be price pressure pushing down the average selling price down--therefore, it will depend on the mix of those two effects. I suspect their will be continued top line growth.
The Retirement Portfolio: American Express - Best In Class [View article]
Hey, ya, their dividend yield is only 1.4%. But I they have a lot of room to grow it, and with the share buybacks their will also be share price appreciation. I understand what you mean, but I do consider it a retirement holding--if one still has a few years to retirement.
And if it doesn't cut it for your metric, then do what you have to do. But, because the dividend is behind** in growth, and because of the strength of the company, I believe they will eventually catch up to their historical rate of capital return. As AXP notes, they have returned an averaged of 64% of capital generated to shareholders since 1994. At their present TTM FCF they are returning only 7.3% of FCF to shareholders in dividends.
All this is to say that dividends could increase substantially because they are behind in dividend growth and well below their average rate of returning capital to share holders.
Anyways, thanks for the comment--I'll try and make articles written about retirement holdings appropriate to the distance one has till retirement, this one was written with the "near future retiree in mind" --specifically, a family member of mine--rather than a person already relying on dividend income.
** I meant that dividend growth is behind net income growth, see here: http://bit.ly/N09Rlb
The Retirement Portfolio: American Express - Best In Class [View article]
That is at your discretion: I think the prices today are fair-to-undervalued prices but, obviously, if there was a pull back in the shares, or a correction in the market generally, the stock would becoming increasingly attractive.
The Retirement Portfolio: American Express - Best In Class [View article]
See the last section. The dividend is 1.4% in the short term--but this isn't about the short-term, its about where the dividend WILL BE in 5 or 10 or 15 years.
The Retirement Portfolio: American Express - Best In Class [View article]
Hey, ya I agree about social media. Just so ya know, that quote was from their 10-K, so American Express itself sort of understates the importance of their closed-loop network, I definitely don't. Cheers!
To #2, yes. But if they produce the barrels sooner in time you will (1) get them a probably a lower oil price than the long-term oil price (so that is a negative) and (2) getting them sooner in time means a smaller discount due to time (so that is a positive). Either way, one has to focus entirely on the present value of the dividends since once the fields are finished the units will be worth exactly $0.
To #1, you can't use the same thinking because Sandridge is a going concern with rather complex ownership interests with its trusts and partnerships--also, it is not paying dividends, so you would valued it in a different manner. Further, one has to consider Sandridge's debt and share issuance's when considering buying the common. To value Sandridge you have to think of the oil assets, the timing of the retrieval of those assets, and the overall expenses per boe, all net of Sandridge's present and future obligations.
I wouldn't compare royalty trust units with bonds, however, since with a bond you receive the principle back whereas a royalty trust unit will just diminish to zero. Of course, with Sandridge's royalty trusts, they have an average estimated life time significant enough to enter into the units, and back out of the units before the fields start to really deplete.
52-Week Low: An Opportunity In Staples Shares [View article]
The analysts are always behind because their careers are better served by following the herd than by stating an independent opinion. But I agree, these prices are cheap.
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
Ah thank you! They do, I should have done net debt. But I should say, its not as much as they had this time last year or last quarter. (I wrote about their poor cash from operations last quarter here: http://seekingalpha.co... )
Cash and cash equivalents, Aug 4, 2012: $680 Cash and cash equivalents, July 30, 2011: $2,079
Good comment thanks. I'll try and do net debt when appropriate. If I did net debt in the figures and calculations in the article above, it makes Best Buy look better.
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
I personally don't think that stock prices are instructive, only accounting figures and statistical information are instructive. Meaning, share prices cannot confirm or deny the correctness of my hypothesis, especially in the short run.
Prices can change for all sorts of reasons. I image some people were speculating that Dick Schulze having his way would send the stock price even higher--and when it didn't, they bailed. Those people who moved the share price probably don't care about Best Buy or even know its operating history--they were probably just speculating on the short term direction of the share price.
Further, to be honest, approximately 65% of the trades are made by a computer algorithms anyways, so its hard to judge anything as a pure human reaction in the short term when computers make up such a huge portion of equity trades.
Also, ya, if the share price fell and Schulze could make out with a better price and the upside wouldn't be as great. But at current levels it would probably still be a 20%+ premium...and also I don't really think Schulze would lower his stated bid given its publicity.
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
A no would be negative, of course. But my investment thesis doesn't rest on the buy out. It rests on the belief that Best Buy still has mind share and its the only specialty electronics retailer.
I think the board is being pressured from a lot of angles, so whatever happens they will at least consider the bid seriously--which probably bodes well, in the short term, for the stock.
Western Digital: The Duopolist [View article]
The most recent time (I believe) that WDC commented on dividends is when they had $11 dollars of cash per share two years ago. An analyst asked:
"I am just wondering if you could push a little more in terms of what your priorities are in terms of buyback versus potential dividend versus acquisitions?"
Tim Leyden (Chief Operating Officer) replied: "In terms of the balance sheet and stuff, we built a strategy, as John mentioned in his remarks, our prime focus right now is to evaluate strategic opportunities both in the HED as well as in adjacent markets. And we will use our cash and our borrowing capacity to accomplish that. And once we have previewed all of these opportunities and solution that we can find anything appropriate, we will evaluate the best way of returning money to the shareholder and that could be in home or share buyback."
I didn't look too hard but--according to my brief search--that is the most recent commentary on the matter. (See transcript here: http://bit.ly/S2HcPq)
Also, WDC's acqusition of HGST was larger in price than STX's acquisition of Samsung's HDD division ($4.7 billion to $1.4 billion) and WDC used more cash for it than did Seagate. So... now that they have made one of their last major acquisition (who else are they going to buy?), maybe--if they have an excess of cash--we will see them initiate a dividend.
I thought about your question when I was writing the article but I never got around to solving it. Good question though.
Western Digital: The Duopolist [View article]
Top line grow is a good question because unit growth will likely continue but their will be price pressure pushing down the average selling price down--therefore, it will depend on the mix of those two effects. I suspect their will be continued top line growth.
Western Digital: The Duopolist [View article]
Yahoo! Finance:
STX: http://yhoo.it/Q4Ci0S
WDC: http://yhoo.it/OuYhw7
The lower the share price in proportion to earnings, the higher the yield.
The Retirement Portfolio: American Express - Best In Class [View article]
And if it doesn't cut it for your metric, then do what you have to do. But, because the dividend is behind** in growth, and because of the strength of the company, I believe they will eventually catch up to their historical rate of capital return. As AXP notes, they have returned an averaged of 64% of capital generated to shareholders since 1994. At their present TTM FCF they are returning only 7.3% of FCF to shareholders in dividends.
All this is to say that dividends could increase substantially because they are behind in dividend growth and well below their average rate of returning capital to share holders.
Anyways, thanks for the comment--I'll try and make articles written about retirement holdings appropriate to the distance one has till retirement, this one was written with the "near future retiree in mind" --specifically, a family member of mine--rather than a person already relying on dividend income.
** I meant that dividend growth is behind net income growth, see here: http://bit.ly/N09Rlb
The Retirement Portfolio: American Express - Best In Class [View article]
The Retirement Portfolio: American Express - Best In Class [View article]
52-Week Low: An Opportunity In Staples Shares [View article]
The Retirement Portfolio: American Express - Best In Class [View article]
SandRidge Permian Trust's Quarterly Disbursements Looking To Exceed Estimates [View article]
To #1, you can't use the same thinking because Sandridge is a going concern with rather complex ownership interests with its trusts and partnerships--also, it is not paying dividends, so you would valued it in a different manner. Further, one has to consider Sandridge's debt and share issuance's when considering buying the common. To value Sandridge you have to think of the oil assets, the timing of the retrieval of those assets, and the overall expenses per boe, all net of Sandridge's present and future obligations.
SandRidge Permian Trust's Quarterly Disbursements Looking To Exceed Estimates [View article]
52-Week Low: An Opportunity In Staples Shares [View article]
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
Why?
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
Cash and cash equivalents, Aug 4, 2012: $680
Cash and cash equivalents, July 30, 2011: $2,079
Good comment thanks. I'll try and do net debt when appropriate. If I did net debt in the figures and calculations in the article above, it makes Best Buy look better.
Best Buy: Wall Street's Opinion Or Main Street's Opinion? [View article]
Prices can change for all sorts of reasons. I image some people were speculating that Dick Schulze having his way would send the stock price even higher--and when it didn't, they bailed. Those people who moved the share price probably don't care about Best Buy or even know its operating history--they were probably just speculating on the short term direction of the share price.
Further, to be honest, approximately 65% of the trades are made by a computer algorithms anyways, so its hard to judge anything as a pure human reaction in the short term when computers make up such a huge portion of equity trades.
Also, ya, if the share price fell and Schulze could make out with a better price and the upside wouldn't be as great. But at current levels it would probably still be a 20%+ premium...and also I don't really think Schulze would lower his stated bid given its publicity.