The Wax Report - Week Ending 12/16/2016
Baseline equity research, all cap value, Long Only, Value
Contributor Since 2007
I manage Wax Ink, an equity research firm comprised of individual investors not licensed or registered with any government agency. I have been an all cap value investor and independent equity researcher for the past 30 years.
The unskillfully managed Wax Ink Portfolio was up 0.2% overall for the week.
By comparison, the Dow was up 0.4%, the Nasdaq was down 0.1%, the S&P 500 was down 0.1%, the Russell 2000 was down 1.8%, and the Volatility Index, commonly known as the VIX, was up 3.8%.
Year to date, the Wax Ink portfolio is down 20.8% on a per share held basis, the Dow is up 13.9%, the Nasdaq is up 8.6%, the S&P 500 is up 10.5%, the Russell 2000 is up 20.0%, and the VIX is lower by 33.0%.
Portfolio Summary
The portfolio breakdown is roughly 52% cash, 48% equities, and 0% bonds. The current value of portfolio cash on a per share basis is $25.41 and the current value of portfolio equities on a per share basis is $23.58, making the average per share price $48.99. The average baseline valuation estimate of all equities currently held in the Wax Ink Portfolio is $29.23 and the average market closing price of all equities held in the Wax Ink Portfolio is $25.82, making the current portfolio growth potential factor 11.68%.
Hydrocarbon Prices
Two numbers often watched by oil traders are the Crude Spread (Brent Crude less WTI Crude) as well as the Gulf Coast Crack Spread (two barrels of gasoline + one barrel of heating oil - three barrels of crude oil) / 3). These numbers are now apart of The Wax Report.
WTI Crude ended the week at $51.90, up 0.8%, while Brent Crude ended the week at $55.21, up 1.6%, creating a crude price spread of $3.31, a gain of 17.0%. Distillate RBOB Gasoline ended the week at $1.5571, up 3.3%, and Heating Oil ended the week at $1.6723, up 2.1%, moving the Gulf Coast 3:2:1 Crack Spread to $15.11, an increase of 10.9% for the week. Natural Gas ended the week at $3.42, up 8.8%.
Year to date WTI Crude is higher by 40.1%, Brent Crude is higher by 48.1%, Natural Gas is higher by 46.2%, RBOB Gasoline is higher by 22.5%, Heating Oil is higher by 48.5%, and the Gulf Coast 3:2:1 Crack Spread is higher by 10.9%.
Treasury and Bond Yields
The 5 Year Treasury ended the week at 2.05, up 9.6%, while the 10 Year Treasury ended the week at 2.57, up 5.3%. The 5 Year AAA Municipal Bond ended the week at 1.74, up 5.5%, and the 10 Year AAA Municipal Bond ended the week at 2.49, up 5.5%. Lastly, the 5 Year AAA Corporate closed the week at 2.24, up 6.7%, with the 10 Year AAA Corporate ending the week up 1.9% at $3.19.
Year to date the 5 Year Treasury is up 17.8%, the 10 Year Treasury is up 14.2%, the 5 Year AAA Muni is up 40.3%, the 10 year AAA Muni is up 16.4%, the 5 Year AAA Corporate is up 17.9%, and the 10 Year AAA Corporate is up 9.2%.
Fair Warning
Please remember that the minimum holding time for shares in the Wax Ink portfolio is 60 months (1825 days), and unless otherwise stated, I have no position in any stock mentioned in this report.
Baseline Valuation Estimates and Worksheets
Baseline Valuation Estimates are initial valuations which Accredited Investors, after completing their own due diligence, can either increase or decrease in accordance with their individual risk tolerance or investing philosophy.
Financial data used in the creation of each Baseline Valuation Estimate is the most recent SEC 10-K ANNUAL financial data as reported to the U.S. Securities and Exchange Commission.
Archived worksheets may be downloaded by going to the Worksheets page at the site and selecting an industry which will move you to all of the worksheets I have updated for the selected industry.
Worksheets
Worksheets were either created or updated during the week for the following companies.
Superior Energy Services, Inc. (NYSE: SPN) - FYE 12/2015
Gibraltar Industries, Inc. (NASDAQ: ROCK) - FYE 12/2015
A. Schulman, Inc. (NASDAQ: SHLM) - FYE 08/2016
Monsanto Company (New) (NYSE: MON) - FYE 08/2016
Baseline Valuation Estimates
Baseline valuation estimates are determined through fundamental analysis of the listed company's most recent annual financial information. Because these valuations are never exact, what is presented here is a baseline valuation range. Baseline valuation estimates were either created or updated during the week for the following companies:
Superior Energy Services, Inc. - $33-$38
Gibraltar Industries, Inc. - $20-$26
A. Schulman, Inc. - $11-$17
Monsanto Company (New) - $44-$47
Growth Only Valuation Estimates
Growth only valuations are determined utilizing current pricing levels, year over year earnings growth, dividend yield, the current PE ratio, and an earnings growth estimate. Because growth only valuations are EXTREMELY volatile, what is presented here is a single growth only valuation estimate. Growth only valuation estimates were either created or updated during the week for the following companies:
Superior Energy Services, Inc. - ($14)
Gibraltar Industries, Inc. - $47
A. Schulman, Inc. - $38
Monsanto Company (New) - $97
Investment Summaries
Investment summaries are determined based on fundamental valuation of the underlying equity AND a consider a minimum hold of 60 months (5 years). Investment summaries were issued during the week for the following companies:
Superior Energy Services, Inc. - Positive - the current baseline valuation and key performance indicators (KPIs) favor investment consideration at this time (Buy)
Gibraltar Industries, Inc. - Positive - the current baseline valuation and key performance indicators (KPIs) favor investment consideration at this time (Buy)
A. Schulman, Inc. - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)
Monsanto Company (New) - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)
Have a great week.
Wax
Wax Ink is a baseline equity valuation company not licensed or registered with any government agency
Copyright © 2016 Wax Ink
Supporting Documents
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.