Latest Research

Is J.C. Penney A Value, Or A Value Trap?

By Saibus Research - 13th January 2013

We have been following J.C. Penney Company Inc. (JCP) off and on since 2011 because Bill Ackman had taken a position in JCP and because Ackman was influential in recruiting Ron Johnson away from Apple Retail (AAPL) in order to become JCP’s new CEO to succeed Myron Ullman, who was JCP’s CEO from 2004-2011. Although we demurred from taking a stake in JCP, we were intrigued by the idea of JCP’s willingness to “shake things up” as its EPS peaked in FY...

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Supervalu Is Still A Super Value Even After Cerberus Deal

By Saibus Research - 13th January 2013

We are pleased to announce that after more than four months of merger rumors and speculation, SUPERVALU (SVU) has announced a strategic deal involving an investment consortium led by private equity firm Cerberus Capital Management. On January 10th, Cerberus and its investment partners announced that it would pay $100M in cash and assume $3.2B in SVU debt in order to acquire SVU’s Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores, as well as the related in-store pharmacies supporting these stores. Cerberus had...

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Nokia’s Shares Are Benefiting From Irrational Exuberance

By Saibus Research - 13th January 2013

Despite the fact Nokia Corporation (NOK) issued a pedestrian performance forecast for its Q4 2012 and Q1 2013 results on January 10th, investors bid its shares up by 19% anyway. Maybe they felt that Nokia’s performance couldn’t sink any further. While we think that Nokia’s fundamental business operating performance probably can’t decline any further from its lows achieved in 2012 and while we believe that Nokia’s not likely to suffer a near-term bankruptcy, we believe that Nokia’s shares are benefiting from...

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Verizon Is Fairly Valued And Investors Should Wait For 10%-20% Pullback

By Saibus Research - 13th January 2013

We published our report analyzing and evaluating Verizon Communications’ (VZ) ability to pay its lofty 4.7% dividend yield in September. We were pleased that our report was recognized for the high level of quality analysis and research that went into it. Based on some information that was provided to us by our readers, we decided to follow that report with a report analyzing and evaluating Verizon against Vodafone PLC (VOD) in order to determine which firm was the best way to play Verizon Wireless’s strong performance....

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Avoid Paying Taxes The Warren Buffett Way

By Saibus Research - 13th January 2013

We own a position in Berkshire Hathaway (BRK.B) (BRK.A) because it is run by investing legend Warren Buffett. Although it will not generate the same ~20% compounded annual returns it generated over the next 50 years that it generated over the last 48 years, we agree with hedge fund millionaire and Obama donor Whitney Tilson that Berkshire is undervalued by at least 25% and we analyzed and evaluated how Berkshire’s $1.2B buyback has resulted in a de facto floor on...

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Investment Ideas of the Week 01-06-13

By Saibus Research - 6th January 2013

Top 5 ideas of the week:  Apple (AAPL) We think that Apple Inc’s (AAPL) late CEO Steve Jobs said it best about Google Inc. (GOOG) when he said “Our lawsuit is saying Google you bleeping ripped off the iPhone, wholesale ripped us off.’ Grand theft! I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank (as of 2011), to right this wrong. I’m going to destroy Android, because...

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Sprint Is 2012′s Top Telecom Turnaround Story

By Saibus Research - 6th January 2013

We like that the telecom industry offers investors a number of different opportunities for potential turnaround investments. Investors can choose from wireline turnaround companies like FairPoint Communications (FRP), telecom equipment providers like Alcatel-Lucent (ALU), smartphone vendors like Nokia Corporation (NOK) and Research in Motion (RIMM) or wireless service providers like Sprint Nextel (S). The bad news for us was that we were long-time legacy Nextel shareholders and we had lost 70% on our position. The good news was that it only...

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Cerberus Thinks Supervalu Is A Super Value

By Saibus Research - 6th January 2013

We are pleased to read that merger speculation involving SUPERVALU Inc. (SVU) is more than idle chatter and that significant progress is being made with strategic deal talks involving Cerberus Capital Management LP. According to a recent report from Bloomberg, Cerberus is nearing a deal to acquire some of SUPERVALU’s assets and become a shareholder in the new SUPERVALU Inc., according to three people familiar with the matter. The parties have agreed to the framework surrounding the deal and are expecting to unveil it...

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Tesla Motors And SolarCity Have Innovative Financing Models

By Saibus Research - 6th January 2013

We previously published our research report on how Tesla Motors (TSLA) was racking up losses, burning through cash as if it was an arsonist and its production difficulties. We recalled how the company was burning through so much money it had to seek fresh equity capital through the sale of nearly 8M shares of stock as part of a secondary stock offering at the end of Q3 2012. Fortunately for Tesla Motors’ electric vehicle evangelists, Tesla Motors was able to raise $222M...

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Duke Energy CEO James Rogers’ Retirement Is Addition By Subtraction

By Saibus Research - 6th January 2013

We have published three reports analyzing and evaluating Duke Energy (DUK). Our first report compared Duke Energy against Wisconsin Energy (WEC) and we concluded that Wisconsin Energy was a better performing utility and it didn’t have to offer nearly $1B in concessions to the utility regulators in order to acquire Progress Energy. Our next two reports compared Duke Energy against utility powerhouse Southern Company (SO) and we concluded that even though Duke Energy performed better in H1 2012 than Southern, Southern had brighter investment prospectsgoing...

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Apple’s Still A Better Value Than Google

By Saibus Research - 6th January 2013

We think that Apple Inc’s (AAPL) late CEO Steve Jobs said it best about Google Inc. (GOOG) when he said “Our lawsuit is saying Google you bleeping ripped off the iPhone, wholesale ripped us off.’ Grand theft! I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank (as of 2011), to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go...

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Investment Ideas of the Week 12-31-12

By Saibus Research - 30th December 2012

Top 5 ideas of the week:  Exelon (EXC) Exelon Corporation’s (EXC) bulls have long touted the company because of its Exelon Generation LLC wholesale power generation subsidiary and because of its large concentration of nuclear power plants as part of its power generating assets. Exelon’s stakeholders need to realize that may have held true in 2008 but isn’t as applicable now. Exelon’s risk profile has changed over the last 5 years thanks to its Constellation Energy Group Inc (CEG) in...

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Alcatel-Lucent: Can This Telecom Equipment Titan Turn Itself Around?

By Saibus Research - 30th December 2012

Although we don’t have a position Alcatel-Lucent (ALU), we know people who do and because Alcatel-Lucent is so cheap, we have kept a loose tab on it over the last couple of years. Alcatel-Lucent was formed in 2006 by the merger of the French telecom equipment firm Alcatel with the U.S. based telecom equipment maker Lucent Technologies. The company’s share price has gone down by over 90% since its 2006 merger due to consolidation in the telecom sector causing headwinds...

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Will Nokia’s Recent Asset Sales Pay Dividends For Investors?

By Saibus Research - 30th December 2012

We have been following Nokia Corporation (NOK) off and on since 2000 and we considered investing it in 10 years ago when we bought our first cellular phone. We reconsidered it earlier this year when it was trading near US$6/share and we ended up taking a pass at that time. Nokia’s sales volumes have been sagging since 2010 (when Stephen Elop became its new CEO) and because it has been burning cash this year, it had to cut its euro-denominated...

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Research In Motion Shareholders Should Take Their Profits While They Still Can

By Saibus Research - 26th December 2012

Research in Motion’s (RIMM) stakeholders can celebrate the fact that the company’ Q3 FY2013 adjusted loss of $.22 per share ($114M) was less than the $142M incurred in Q2 2013 and the $192M incurred in Q1 2013. RIMM even had a GAAP profit of $9M ($.017/share), which was better than the $235M loss ($.45/share) in the prior quarter. The company benefited from a $226M recovery of income taxes accrued during the quarter. RIMM’s stakeholders should not read too much in...

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Exelon’s Risk Profile Has Changed Thanks To Constellation And Fracking

By Saibus Research - 26th December 2012

Exelon Corporation’s (EXC) bulls have long touted the company because of its Exelon Generation LLC wholesale power generation subsidiary and because of its large concentration of nuclear power plants as part of its power generating assets. Exelon’s stakeholders need to realize that may have held true in 2008 but isn’t as applicable now. Exelon’s risk profile has changed over the last 5 years thanks to its Constellation Energy Group Inc (CEG) in 2012 as well as the advent of hydraulic fracturing serving...

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Can Nokia Pull Ahead Of Research In Motion?

By Saibus Research - 26th December 2012

We previously compared Nokia Corporation (NOK) against Research in Motion (RIMM) back in September and we were able to conclude that while Nokia has no chance in catching up to the Android-iOS smartphone operating system duopoly, at least it has a decent chance of outperforming Research in Motion. While Nokia World’s Lumia Launch may have been another flop by Stephen Elop, at least it released the Nokia Lumia Windows Phone 8 smartphone devices in early November whereas RIMM won’t even release its BlackBerry...

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These Value Managers Think Pitney Bowes Will Continue Delivering Value To Shareholders

By Saibus Research - 25th December 2012

Although we have demurred with regards to taking a position in Pitney Bowes Inc. (PBI) until February 2013 at the earliest, we can see why a number of notable institutional investors currently hold a position in the company. We have been attracted to PBI’s dividend yield, which is approaching 14% and we can see that its free cash flow yield based on its TTM free cash flows of $450M is 23% (34.6% based on its forecasted FY 2012 FCFs of...

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Investment Ideas of the Week 12-24-12

By Saibus Research - 23rd December 2012

Top 5 ideas of the week:  Scripps Networks Interactive (SNI) We recommend Scripps Networks Interactive (NYSE SNI) as an Accumulate based on strong revenue and profit growth from lifestyle media content business and ample free cash flows, Fair Value Price of $69.04 per share.  Xerox Corp (XRX) We have been following Xerox Corporation (XRX) since the middle of January largely because David Einhorn (Greenlight Capital) had purchased 17M shares of the company in Q4 2011. We have stepped up our coverage of Xerox in...

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Oracle: Software Powers The Internet As Well As Oracle’s Bottom Line

By Saibus Research - 20th December 2012

We have been following Oracle Corporation (ORCL) off and on for the last 13 years and we have seen its shares transition from a go-go growth-oriented tech company into a more-value-oriented business-enterprise software company. We remembered Oracle’s old tagline about how “software powers the Internet.” We can see by Oracle’s performance that software powers Oracle’s top and bottom lines, even after taking into account its 2010 blockbuster acquisition of Sun Microsystems. Oracle gets 73% of its revenues from its software solutions, 12%...

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Will Armour Residential’s Repurchase Program Offset Its Dividend Reduction?

By Saibus Research - 19th December 2012

On Monday December 17th, ARMOUR Residential REIT Inc (ARR) had good news and bad news for investors. The bad news is that it had to cut its monthly dividend by 11% from $.09/share to $.08 per share and this will take effect in January 2013. The good news is that it attempted to soften the blow for investors by including a share repurchase authorization of $100M. This represented 5% of Armour’s market cap as of December 18th but investors were displeased to...

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Will Nokia’s New Lumia Phones Live Up To Investor Hopes And Hype?

By Saibus Research - 19th December 2012

Nokia Corporation (NOK) released its Lumia 920 and Lumia 820 smartphone devices on November 2nd, and the good news about this was that it was only six weeks after Apple (AAPL) released its iPhone 5 smartphone device on September 21st. Unlike Apple, we didn’t see anyone camping out in front of AT&T (T) in order to get their hands on Nokia’s new devices. Nokia’s Lumia 920 and 820 run on Microsoft’s (MSFT) Windows Phone 8 operating system and are exclusive to AT&T...

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American Capital Agency Maintained Its Dividend, Unlike Annaly

By Saibus Research - 19th December 2012

Although American Capital Agency’s (AGNC) salad days have passed it by, this isn’t due to anything that could be laid at the feet of the company’s management. We believe that American Capital Agency’s CEO Malon Wilkus has created one of the finest income-oriented investment vehicles with his American Capital Ltd (ACAS) company, as well as its two most well-known mortgage real estate investment trust vehicles AGNC and American Capital Mortgage (MTGE). American Capital Agency was founded in 2008 and in...

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Is Xerox A Value Trap For Investors?

By Saibus Research - 18th December 2012

We have been following Xerox Corporation (XRX) since the middle of January largely because David Einhorn (Greenlight Capital) had purchased 17M shares of the company in Q4 2011. We have stepped up our coverage of Xerox in October as the company’s shares were trading at a 30% discount to book value. However, we are most certainly aware that just because a company’s shares are trading at a low price to book value does not automatically make it a great value....

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Hewlett-Packard Shouldn’t Be Buying What Frank Quattrone Is Selling

By Saibus Research - 18th December 2012

When we saw that Hewlett-Packard’s (HPQ) had to take an $8.85B write-down for its purchase of Autonomy PLC, we weren’t surprised that Frank Quattrone was Autonomy’s lead banker during its sales process. The deal was the second largest deal that Quattrone had advised on, behind only Motorola Mobility’s $12.9B sale to Google (GOOG). Oracle (ORCL) claimed that Quattrone and Autonomy CEO Mike Lynch met with Oracle’s President and HPQ’s former CEO Mark Hurd in an attempt to sell Autonomy to...

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