Blue-Chip Investing vs. Value Investing: An Illustration

I gravitated towards high-quality dividend stocks because you only have to make a decision once and the ownership process is satisfying in the same way that planting an oak tree on the family farm and watching it grow for decades is satisfying.

Imagine if, around 2002, you learned that McCormick controls 40% of the spice market. You checked out the company’s history and saw that it has a conservative balance sheet, double-digit profit margins, and a dividend history that doesn’t miss a beat. You figure that people will continue to put salt and pepper, among so many others, on their food.

So you buy x number of shares. Well, guess what happened from 2002-2018. Profits grew from $1.26 per share to $4.96 per share, and the dividend grew from $0.42 to $2.08 per share. Literally every year, the profits and and dividends have grown. How do you not love that? Read the rest of this article!

Dover’s Apergy Spinoff: What To Know

Shareholders of Dover Corp. as of April 30, 2018 shall, effective May 9, 2018, receive 1 share of Apergy stock (APY) for every 2 shares of Dover stock (DOV) that they own pursuant to a tax-free spinoff that was announced in February.

Dover is an industrial powerhouse. Apergy is an upstream oil sector equipment manufacturer. Before we discuss the specifics of this transaction, let us take a brisk walk through the history books of corporate America first.

The book “Private Empire” tells the tale of Exxon’s rise in developing countries around the world throughout the 20th century. Exxon, which was the successor to John Rockefeller’s prized Standard Oil of New Jersey spinoff after the United States Supreme Court broke up the colossal Standard Oil, inherited the best managerial talent after the spinoff. When reading about how Exxon’s management team systematically rebuilt Exxon into a juggernaut all over again, I kept … Read the rest of this article!

Warren Buffett and Apple Stock: Drowning In Cash

Sometimes, the news item that the finance media fixates on is, in reality, the biggest news item of all. The news story that Buffett has bought an additional 75 million shares of Apple stock, supplementing the position of 166 million million shares that Berkshire Hathaway owned as of the annual report, bringing the total ownership position in the iPhone-maker to just a little over 241 million shares.

What I have not seen reported is how the immense Apple cash position relates to Buffett’s investment–i.e. Apple is sitting on $285 billion in cash while Apple is divided into just a tad over 5 billion shares outstanding, meaning that each share of Apple that you buy contains $57 in cash.

Buffett, who has expended a little over $30 billion of Berkshire’s resources to buy shares of Apple now worth around $45 billion, has “look-through” pro-rata portion of Apple’s cash position in the Read the rest of this article!

Valeant’s Wise Name Change to Bausch Health

I was thinking about the news earlier today that Valeant Pharmaceuticals, the Canadian healthcare company that saw its stock price rise from $24 to $263 in the span of four years before cratering to a low of $8 in 2016, will change its corporate name to Bausch Health Cos. in July 2018.

This is clearly a no-brainer good move for the company. Brand names and intellectual property exist to serve you. If people pay a premium because of how they regard your brand, you should hold onto it for dear life (I cringe when I see investors throw away generations of good-will to name a business after themselves or to announce that a new sheriff is in town, as it throws away portions of the pricing power and customer base that had been acquired over time).

Conversely, if your brand has a negative value, and people don’t want to associate Read the rest of this article!