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  • Accounting Armageddon: Should You Dump Your American Realty Stake And Run For The Hills? [View article]
    A few positives stand out for me in this episode, despite the whole affair being avoidable if they had been more diligent in the first place:
    * There is a strong whistle blower policy in ARCP and people believe it works (at least one person did)
    * The Board takes up all complaints of whistle blowers and acts on them promptly
    * They hire independent forensic audit team of global repute immediately to ascertain the truth (not some local audit firm to save costs)
    * Once findings are in, they immediately act to sack the erring people (no matter how high up they are)

    These are signs of decent corporate governance, at least for me. This, combined with just 3 cents of AFFO adjustment (and a penny adjusted as per GAAP EPS), tells me that the market reaction is a 'tempest' in a tea cup. Though I did not have new funds to add at these prices, I am willing to give ARCP one more chance and will continue to hold it in my portfolio (despite the paper loss). GLTA.
    Oct 30 08:12 AM | 10 Likes Like |Link to Comment
  • Why Dividends Matter: An Interview With Lowell Miller [View article]
    Butterfly, it seems to me that a simple way to quantify what you are saying is to compound the dividends for each year since 1929 with the assumption of constant stock price as of 1929. All reinvestments of dividends can be assumed to be at stagnant stock price as of the original investment. In other words, remove the combination variable's (price appreciation's) impact in the entire time period. It would be interesting to see in that case how PURE dividend compounding would compare with Dividend + Price Appreciation compounding. If you or anyone else has done this, it would be good to see the data. I did this as a theoretical exercise in to see the impact (see link), but don't have actual data to compare it with. http://seekingalpha.co...
    Oct 30 06:29 AM | Likes Like |Link to Comment
  • Discover feels the love from consumers [View news story]
    Impressive. Now, if only the market can give the same love as consumers by giving DFS the same P/E multiple as AmEx....
    Aug 31 03:00 AM | 1 Like Like |Link to Comment
  • Deere & Co.: Plowing Its Way To Lower Prices [View article]
    Good points bigx. I analyzed the same conditions and came to the conclusion that $86 is not a bad price to enter into a long DE position with intent to hold for 2 years minimum. Funny how the same analysis leads to different conclusions for different people.
    Aug 19 11:13 AM | Likes Like |Link to Comment
  • Here's The Alarming Table Kinder Morgan Doesn't Want You To See [View article]
    Aren't you comparing entirely different companies in different industries? Surely, Cisco's (and others listed in the table) have industry dynamics that are markedly different from KMI's. Also, none of them are in the 'toll operator' business of an essential commodity which is also growing in global demand. Infrastructure companies will always have a lot of debt, so they should be evaluated on the difference in ROA versus long-term cost of debt. As long as this spread is sustainably positive, KMI will do fine over the long run and can increase dividends while servicing the debt as well.
    Aug 12 12:16 PM | 19 Likes Like |Link to Comment
  • Kinder Morgan scrapping MLP structure in $44B deal [View news story]
    If you own KMR in an IRA, you will get 16.5% unrealized gains that you can immediately cash in with no tax impact at all. In my view, selling now may not be the best for long-term investors because I see the 16.5% premium as a 'compensation' by management to KMR shareholders to 'endure' slightly lower dividends in KMI, which, by the way (at 10% growth annually as projected), will catch up within a year or two to what you were getting with KMR. Think of it as getting paid upfront for slightly lower dividend yield in KMI in the next 1-2 years. So, it is a win for KMR holders in my view.
    Aug 10 11:55 PM | 3 Likes Like |Link to Comment
  • Why I Bought Walgreen On This 15% Alliance Boots Pullback [View article]
    On balance, looks like a good decision by Walgreens though investors didn't like it. I read somewhere that nearly 23% of their US revenues comes from Medicare/Medicaid reimbursements so they are a beneficiary of our subsidy program in healthcare for seniors. Also, being a very visible consumer brand, it is smart to be in the consumers' good books on 'responsible corporate citizenship'.
    Aug 7 05:34 AM | 2 Likes Like |Link to Comment
  • McDonald's Vs. Chevron: All Dividend Yields Are Not Created Equal [View article]
    Have french fries with coke at MCD and fill up a tank of CVX gas just in case the electricity runs out?
    Aug 6 12:42 AM | 3 Likes Like |Link to Comment
  • Retirement Strategy: The ETF Only Portfolio Vs. Buy The Dips Portfolio: Update For July [View article]
    VYM has 0.13% expense ratio and other dividend ETFs also have similar ratios. This doesn't seem to explain the difference in income between the ETF versus the portfolio of underlying stocks? Could the ER ratios be wrong or is there a cash drag in ETFs (possibly to provision for redemptions)? It would be helpful if you or others can share any analysis done for the income/yield variance.
    Aug 5 05:46 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    "To me, so far, a satisfactory algebraic expression of the Financial Statements in a value neutral Total Return equation is still elusive".

    Thanks, migdu. I share your views. A reason why this is elusive is because stock prices don't follow neat algebra as we would like. Since dividends are company driven, the market has time after hearing about declared dividend to decide on what share price growth to give a company compared to an identically earning company that doesn't give out any dividends. I made the assumption that the market 'deducts' the dividend yield from that year's share appreciation rate, which while sounds okay as a 'value neutral' theory, is not what one observes with DG stocks in practice. Many studies show that low yielding (2-4% yield) dividend growth companies outperform the index on total return basis. I am not able to understand the theoretical basis for this, but there seems to be solid empirical evidence in long-term investing horizons covering both bull and bear markets. Maybe that's why DGI has strong advocates? Of course, this is also valuation driven, so maybe same comparison has parallels with value stocks versus growth stocks.
    Aug 4 08:12 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    Thanks Hardog. It's not that I don't believe in DGI, rather I do, but I wanted to check the theoretical basis proposed by the 'dividends don't matter' crowd. Only if the intrinsic value reduces by the same amount of dividend yield - a contentious assumption - does their theory hold good. If not, DGI is a superior strategy.
    Aug 1 12:35 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    Let's agree to disagree, varan. Just for further clarity, I want to add that leave alone dividend premium, the article takes the opposite view. It grants the principal notion of the 'dividends don't matter' crowd, which is that dividends reduce intrinsic value, and this reduction appears as reduced appreciation of shares (corresponding to dividend yield) even if the underlying earnings growth in both companies (dividend payer A and no-dividend B) are constant. Thanks for reading and commenting and taking so much interest to study the data in the tables as well.
    Jul 31 02:40 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    No, it is not Varan. While revising the draft, I reconsidered your point and came to the conclusion that the dividend-payments and market appreciation are unrelated factors. The former is in company control and latter is not. I agree the difference is marginal but the main point of the article is that 'Dividends don't matter' advocates are correct ONLY if their main assumption that dividends reduce intrinsic value holds good. That's what scenario 1 shows by practically same final outcomes. However, as explained in the latter section, practical experience suggests that this is NOT the case. Otherwise, companies have no incentive to issue and grow dividends if they know market will extract a penalty for dividends in the form of reduced future appreciation of share prices.
    Jul 31 01:42 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    Thank you Butterfly. You are indeed right that there is a Excel formula copy/paste error. Thanks for pointing it out. I have revised the tables and sections for clarity and resubmitted for publication.

    I request all readers to ignore the above and consider on the new version being published. Thanks.
    Jul 30 04:55 AM | Likes Like |Link to Comment
  • If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior? [View article]
    Thanks, SDS for your valuable inputs. In the article, I have already mentioned 'other considerations' considering reality of market behavior when it comes to both dividend stocks and growth stocks. The main point of the article is that even assuming a reduction in intrinsic value (by the amount of dividend), a dividend paying stock can deliver better returns over growth-only stock, under full reinvestment and when tax rates remain benign. From what I have read, many DG stock analysts when comparing with broad indexes don't seem to consider the full impact of compounding of dividends over long periods. They make a big difference as you rightly point out. Thanks, KRV
    Jul 29 11:41 PM | Likes Like |Link to Comment
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