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Nat Stewart

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  • Stericycle: A Diamond In The Waste [View article]
    Very strong company. The question is valuation.
    Sep 11 10:19 PM | Likes Like |Link to Comment
  • Hedgeye Report On Kinder Morgan Fails To Impress [View article]
    So I am also perplexed by the way some people are starting every comment with the word, "so". I first noticed it about a year ago when I it was done on an analyst's call by the CEO of a power company. It seemed odd to me that someone with such a title would be saying, "So, we made that investment in Brazil..."

    If you are forming an old and cranky club, maybe I can pre-buy my membership?
    Sep 11 06:38 PM | 5 Likes Like |Link to Comment
  • Hedgeye Report On Kinder Morgan Fails To Impress [View article]
    I thought the hedgeye report made a fairly compelling case The question to me: Is this business model legal, ethical, and sustainable? There is a difference between "not liking" how they operate and there being a serious legal, ethical, or sustainability problem.

    Outlining supposed problems with the IDR structure was the weakest part of the report. Basically, the IDR creates two security types: One focused on current yield, the other on growth. Which one is better at any given time depends on investor preferences and valuation.

    Also, the MLP structure has been fantastic in that it has allowed the very rapid development of needed energy infrastructure - a tremendous boon to the US economy. That should not be forgotten.
    Sep 11 10:57 AM | 11 Likes Like |Link to Comment
  • Hedgeye Report On Kinder Morgan Fails To Impress [View article]
    MLPs are vulnerable because they access capital markets frequently. When the L.P. units get trashed, it raises their cost of capital, which harms the underlying business.

    In other words, the short arguments can create events which actively make the short case more compelling. Kind of a George Soros Reflexivity effect.
    Sep 11 10:48 AM | 5 Likes Like |Link to Comment
  • Hedgeye Report On Kinder Morgan Fails To Impress [View article]
    My understanding is they don't trade themselves, just sell subscriptions to their research. If their model is to give a first look at their research to paying customers, then to release the reports publicly, they are deliberately creating trading opportunities for subscribers, which will allow them to sell more subscriptions. That Is my understanding of what they are doing.
    Sep 11 10:46 AM | 3 Likes Like |Link to Comment
  • Apple's Historical Announcement Returns And Margin Of Safety [View article]
    I was interested in the technical price part of your article.

    One way to analyze these things is to compare the return around the event you are analyzing with the average holding period return in the same instrument. For example, compare the one week before the announcement to the average one week return in apple stock during the evaluation period. You can then apply a statistical test to evaluate the odds such a deviation results from random chance, or is likely to be significant.
    Good article.
    Aug 30 07:50 PM | Likes Like |Link to Comment
  • Undervalued Philip Morris Offers A 4% Yield Backed By Strong Buybacks [View article]
    You can't understand the value of these long term fixed-rate financings without taking account of what will happen in time do to even moderate inflation. With a rate of inflation similar to what we have had over the past 20 years, a principal amount due in 20 years will lose about 40% of its real value. With regards to the interest payments, the effective interest rate (do to tax effects plus current inflation) is far lower than the nominal rate. So long it is amply covered by cash flows with a conservative margin, these financings are a major steal for equity owners, and I mean that literally.
    Aug 30 03:13 PM | 1 Like Like |Link to Comment
  • Utilities - Today's Best Bond Alternative [View article]
    Hi Cranky,

    "The inverse price relationship is not a given, but it is historically what has occurred over longer periods? "

    No, it is not a given, in in my opinion should not be counted on. The inverse relationship only developed in the 2000's after a long period of mild positive correlation. The negative correlation has broken down considerably in 2013.
    Aug 30 12:28 PM | Likes Like |Link to Comment
  • 3 High-Yielding Stocks In An Uptrend [View article]
    There is 100% risk that GNI will cut it's dividend payment. The trust expires in April of 2015, as described here:

    A very similar stock but with a longer life (50+ years, I estimate) is MSB, which I wrote about here:
    Aug 29 05:42 PM | Likes Like |Link to Comment
  • National Research Corporation: Follow The Incentives [View article]

    You are making all these hypothetical statements about what he might or might not do, then wonder "how it could be legal".

    Well, he has not done those things! The share class issue itself and the motives behind it are actually fairly straightforward, as demonstrated by this article.

    Why a guy with a good business, majority control, very wealthy, by all accounts an upstanding CEO in terms of shareholder value, would suddenly in the back half of his career choose to become a master stock manipulator, etc, basically put at jeopardy his long, hard one reputation - to me it just does not make sense. This guy has a track record. A massive deviation is possible but not probable. I am a betting man and I have to say I bet against that outcome.

    I believe that ultimately we will find that there is not a deep or hidden scheme. It is what it is.
    Aug 29 03:45 PM | 1 Like Like |Link to Comment
  • National Research Corporation: Follow The Incentives [View article]
    Very nicely done.
    Aug 29 11:10 AM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Michael, it is likely that they use a quantitative model on their dividend screen that is correct or helpful (hopefully) over a large number of calls or suggestions, but do to the nature of that approach might miss specific facts in specific circumstances. Perhaps the person they have trying to explain the distinction here is not sure how to do it or has not done so yet. That is my guess.
    Aug 26 07:07 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    . Great article, very informative. I admit though, (and only tangentially related to your article) it burns me up to read about American companies that have had their investments nationalized and then expect to only get a fraction on the dollar. It would be nice if we had the balls to commandeer the assets then to require full compensation for lost revenue plus punitive damages.
    Aug 25 07:14 PM | Likes Like |Link to Comment
  • Lorillard Undeterred By Uncertainty In Tobacco Industry [View article]
    Couldn't the story also (hypothetically) go the other way? For example, "evil corporations are targeting the black community with menthol cigarettes" or something like that.
    Aug 22 07:01 PM | 2 Likes Like |Link to Comment
  • Weyerhaeuser Is Irrationally Cheap With Powerful Catalysts [View article]
    No, the return is not really that low. You would need to use dividend adjusted data to understand the total return. Even beyond the $26.47 special dividend payed in 2010, the company has paid out significant dividends over the years.
    Aug 21 09:31 AM | Likes Like |Link to Comment