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Todd Kenyon, CFA  

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  • The Right And Wrong Way To Analyze Earnings [View article]
    I looked at your article - not sure how to reconcile your assertion that eps estimates have declined, vs Cam's graph above which seems to indicate they are trending up or at worst leveling off. Different data sources? In any case I spend little time trying to predict market movements. But I am interested in behavioral aspects and interpretation of data/graphs. I often find that folks see what they want to see (i.e., confirmation bias) where someone with the opposite view could just as easily use the same graph to support their argument. So I always look at graphical data from both sides (Munger's "always invert") to see whether it REALLY supports a conclusion. I would agree Doc that the data in your article appear to indicate that analysts are using increasingly higher multiples in their forward price targets.
    Sep 21, 2015. 04:29 PM | Likes Like |Link to Comment
  • Are Wages Killing Wal-Mart? No, That Is Hyperbole [View article]
    I would agree with your Sam's comment based on my local store. I have been going for years and many of the employees have been there for some time- even the guys collecting the carts in the parking lot. The nearby WMT store however seems to have much greater turnover, although I do not go there as often so perhaps not a fair comparison. It does have the stocking, staffing and cleanliness issues often cited here. Long WMT (for some time now).
    Sep 21, 2015. 12:46 PM | 2 Likes Like |Link to Comment
  • The Right And Wrong Way To Analyze Earnings [View article]
    You could interpret the recent price action, as illustrated in the last chart, as presaging a downturn in forward eps estimates. If in fact prices would continue to trend down, and then analysts revise forward eps estimates lower, this would look much like the 2007/8 downturn. If that period is a guide, next stop would be 1750 on the S&P.
    Sep 19, 2015. 01:09 PM | Likes Like |Link to Comment
  • At What Price Is Big Oil A Bargain? [View article]
    PEAK OIL! WE are DOOMED! The world can only produce 88M barrels a day and we need at least 90M. T. Boone Pickens says so every day on CNBC. Oh wait - that was LAST year. My Bad. OIL GLUT! Oil cos are DOOMED! We will all soon drown in our own excess oil. Now I got it.
    Aug 20, 2015. 02:48 PM | Likes Like |Link to Comment
  • PayPal: Be Your Own Pal, Do Not Pay Too Much [View article]
    V and MA have NO credit risk. They just collect a toll on payment volumes. The banks take the risk. PLEASE get this straight. Your growth assumptions for PYPL are WAY too aggressive for any true value investor.
    Jul 23, 2015. 12:13 PM | 2 Likes Like |Link to Comment
  • The $936 Million Quirk In Bank Of America's Earnings [View article]
    It has to do with the fact that they are taking an asset, cash, and purchasing a business with it for some premium over book value. So that is simply goodwill. But in banks the acquired core deposits go on the liability side of balance sheet, and the offsetting asset is an intangible - the "value" of core deposits. These are existing core deposits at the acquiree, so presumably the acquirer has slapped a value on these based on projected life of those deposits and the value that can be extracted from them over their lifespan. Hence just they are amortized. The question is, does the value really decline with time?
    Jun 16, 2015. 05:25 PM | Likes Like |Link to Comment
  • Wendy's And The Plan For Growth [View article]
    Dsav: excellent commentary, thanks. Agree completely.
    Jun 16, 2015. 11:39 AM | Likes Like |Link to Comment
  • Why Would Anyone Buy McDonald's Here? [View article]
    While I still hold some MCD bought long ago, I am considering my options here. I agree it is always good to buy and hold in times of negativity, but that assumes the negativity leads to low temporary valuations. MCD is not particularly cheap right now. If the price starts reflecting the negativity (perhaps because rising rates make the div less attractive and/or a market dislocation occurs) the stock could go notably lower. Then I will be looking to buy more.
    Jun 10, 2015. 03:25 PM | Likes Like |Link to Comment
  • Wells Fargo: Warren Buffett's New Favorite Stock Is Undervalued By 50% [View article]
    I will agree with and add to the previous commenters questioning your model assumptions. They are correct that you cannot assume a stable growth rate larger than the growth of the overall economy, as this model is a perpetuity calculation. So as previously stated, your model predicts WFC will become the entire economy. On a more basic level, the high 6% growth rate assumption combined with the ridiculously low 6.5% cost of equity results in a valuation of ~200x the dividend (div/6.5%-6%). When you get a multiple like that for a giant company in a stodgy industry, it should raise a very large red flag.
    Jun 8, 2015. 11:10 AM | 3 Likes Like |Link to Comment
  • IBM Services Versus Accenture: A By The Numbers Comparison [View article]
    Very good article - this is the way to look at companies as opposed to getting bogged down in quarterly number minutae. Great comment thread as well. I do own some IBM from much lower prices, and have been circling around buying some more (although I really would like to see some kind of market dislocation before buying anything). The arguments here certainly bolster the case for buying IBM.
    Jun 1, 2015. 09:06 AM | 1 Like Like |Link to Comment
  • Deere Investors, I've Found Your Inflationary Hedge [View article]
    Well as I said in my post I would use 10%. I also don't believe beta has anything to do with true risk=permanent loss of capital, not to mention performance risk=inadequate long term returns. Hence I pick the rate of return that I would feel comfortable receiving over the long term and then look for a discount to the resulting valuation. Since I don't think rates will be this low for the long term, I will also not base discount rates (i.e., risk free rate + equity risk premium) on current ultra-low rates but use more of a historical average.
    May 27, 2015. 10:55 AM | Likes Like |Link to Comment
  • Deere Investors, I've Found Your Inflationary Hedge [View article]
    Nice report up until the dcf discount rate. Way too low for a cyclical equity. You are basically saying that your base valuation will earn you a return of 5.4% if you pay that price and the cash flows pan out as you predict. I would need at least 10% with a sizable margin of safety below whatever that 10% valuation is.
    May 26, 2015. 05:05 PM | Likes Like |Link to Comment
  • This Is What You Need To Know About Annaly Capital [View article]
    Long-time NLY owner. Typically this is the time to buy NLY - the market has largely priced in interest-rate fears, big negativity in the sector. The time to sell is usually when it gets to the high-teens and a noticeable premium to book. Over the cycle if you've held you have historically done well. But there is the issue - the Wellie factor. I always had confidence that Mike F had seen it all before and knew how to deal with most any scenario. Now with the new comp structure and no more Mike, I am re-evaluating. I agree with Ray that Wellington has not instilled confidence, and this is a company that needs good management to prosper.
    May 11, 2015. 09:32 AM | 4 Likes Like |Link to Comment
  • Updating My Investment Thesis On McDonald's [View article]
    MCD should NOT try to add healthy fare or "adapt" to modern tastes. The scariest thing I have heard recently is that they are adding kale to the menu in CA. RIDICULOUS! People don't and never will go to MCD for health. Convenience, salt, sugar, fat. Feel-good flavors fast. They CREATED this category, hence they should streamline their efforts, stick to their core offerings. And yes, store-level management is a big issue. Wrong orders, dirty heads, dingy stores should not be tolerated. Their key assets are their key locations and ubiquitous availability. Not to mention their brand and the associated experience. FOCUS there MCD - please.
    May 8, 2015. 12:08 PM | 4 Likes Like |Link to Comment
  • Time Warner Is Growing A House Of Value [View article]
    If you are comparing EV to earnings, you must use Earnings before Interest (and account for the interest tax benefit).
    May 4, 2015. 10:41 AM | Likes Like |Link to Comment