Just before President Nixon ended the Bretton Woods system in the early 1970s, the price of one troy ounce of gold, in dollar terms, was raised in two steps from $35 to $42.22. Nixon essentially devalued the dollar. What is interesting is that it was only four short decades ago when our country’s monetary authorities … Read more
Paychex reported quarterly earnings yesterday after the close. Upon review of the company’s 8-K filing with the SEC, we remain very comfortable with the company’s fundamentals and its ability to cope with a difficult operating environment. The main headwinds facing the company include tepid employment growth and historically low interest rates. Lack of employment growth … Read more
Last week, on September 22, Microsoft raised its dividend by 23% to $0.16 per share per quarter, implying a yield of 2.5%. This increased the stock’s yield into territory that is meaningfully north of the market average of 2.0% for the S&P 500. The stock actually dropped on this news. This new dividend rate still … Read more
Quarter-to-date, the market is up almost +12%: At the same time, yields on U.S. 10-Year Treasurys dropped from 3.0% to 2.5%: Not surprisingly, volatility has collapsed as the markets have rallied: The one factor that connects these three charts is the U.S. dollar. Over the past two years, a stronger U.S. dollar signifies an avoidance … Read more
We first initiated our portfolio position in Enterprise GP Holdings back in May of 2008. We were attracted to the company’s general partner stake in Enterprise Products Partners as well as its minority interest in Energy Transfer Equity, the general partner of Energy Transfer Partners. These combined companies control pipelines and infrastructure that stretch across … Read more
Rex Tillerson, the CEO of ExxonMobil, keeps a low profile. In fact, there is no picture of Tillerson in his official corporate biography as there is for other top company executives. Which is not necessarily a bad thing–we have an aversion to the egotistical CEO whose picture appears on the cover of the annual report … Read more
On August 31st Exelon announced the purchase of Deere & Company’s wind development unit for a little more than $1,170 a kilowatt along with tax credits and projects already under development: Exelon News Release Many power plants, not just wind, now sell for below replacement cost due to low wholesale power demand. However, existing wind … Read more
We find it quite interesting and definitely compelling that equities of well-financed U.S. multinationals are selling at some of the lowest valuation in years, if not decades. Many of these U.S. multinationals now outyield the 10-year Treasury note. While academics teach that lower interest rates imply higher price-earnings multiples, many of our portfolio blue chip … Read more
Medtronic’s performance year-to-date has been nothing short of awful. Last week the company reported a disappointing first fiscal quarter, with declines in key businesses segments that were worse than expectations. Although we believe the net impact at most warrants a slight reduction in our estimate of intrinsic value, the market saw fit to clip 11% … Read more
With Exelon’s stock down a little more than 12% on the year, we thought it would be helpful to quickly outline our investment thesis behind our investment. Exelon operates the largest nuclear power fleet in the U.S. and is the third-largest in the world. Exelon generates power for more than 6 million homes in Illinois, … Read more