>>> Perion Network (PERI) may not be a household name, but the ad tech company already has strong returns, up nearly 400% over the last three years. And it was the only ad tech stock to post a positive return last year.
Perion occupies a unique position in the ad tech space through its intelligent hub, which connects ad buyers and sellers to optimize ad buys and placements. The technology is based on machine learning and is highly scalable, allowing the company to earn higher margins as it grows.
The company also offers premium features like in-game ads during live events and a "connected cart" that allows retailers to update the products being advertised according to conditions like inventory and weather.
Perion is also a preferred partner of Microsoft's Bing, which could be an especially valuable relationship if the ChatGPT-powered version of Bing gains traction in search.
Perion's results speak for themselves. Revenue in the second quarter rose 22% to $178.5 million, and it continues to gain leverage with adjusted earnings per share jumping from $0.51 to $0.84.
The company is seeing solid growth in both search advertising and display advertising, driven by the Bing partnership, and growth in connected TV, which jumped 104% to $7.2 million in the quarter.
However, the best reason to invest in Perion might be its discount valuation, trading at a price-to-earnings ratio of just 13.5. There's still a lot of room for growth in ad tech, and if Perion continues to execute its strategy, the stock could be a big winner.
>>> Cintas Corporation (NASDAQ:CTAS)
5-Year Average Dividend Growth: 24.2%
Number of Hedge Fund Holders: 40
Cintas Corporation (NASDAQ:CTAS) is an American business services company that provides a wide range of products and services related to corporate uniforms, workplace safety, and facility services. In the past five years, the company has raised its dividends by 24.2% on average and maintains a 40-year streak of consistent dividend growth. The company's current quarterly dividend stands at $1.35 per share which offers a dividend yield of 1.08%, as of September 11.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q2 2023, 40 funds owned stakes in Cintas Corporation (NASDAQ:CTAS), up from 39 in the previous quarter. The overall value of these stakes is over $1.36 billion. Among these hedge funds, Impax Asset Management was the company's largest stakeholder in Q2.
>>> Marsh & McLennan -- These 3 Stocks Are Safe Bets in the Event of a Market Crash
In recent years, companies have dealt with a lot of uncertainty, including the pandemic, supply chain issues, capital market volatility, climate-related disasters, and geopolitical risks. It's in this environment where Marsh & McLennan thrives.
Marsh & McLennan advises companies on managing risks and connects companies with insurers to help protect against those risks. It also provides consulting services to companies to help deal with compensation and benefits, retirement plans, managing investments, and other workplace issues.
The consultant has seen solid business growth in recent years, led by its insurance brokerage business. Insurance is a product that will always be in demand, and its brokerage business is a steady source of cash flows that can help it weather challenging economic environments. The inflationary environment, in particular, has been a tailwind for its insurance brokerage business.
According to its Marsh Global Insurance Market Index, global commercial insurance prices have risen for 23 consecutive quarters. Marsh earns commissions and fees from insurers when it refers clients to them, and as insurance prices rise, so do its earnings. The company's risk and insurance services revenue has grown 11% through six months this year, helping total revenue increase by 8% compared to last year.
CEO Dan Glaser told investors that "when the world is unsettled, the demand for our services rises." He also pointed out that the company has grown its earnings per share during every recessionary period since 1962 -- making Marsh & McLennan another safe bet to own during a potential market crash.
10 stock ideas, based on the upward trajectory and steadiness of their 10 and 15 year charts -
Costco (COST) - Discount variety warehouse outlets (237 Bil) (Munger)
Pepsico (PEP) - Food and beverage (247 Bil)
Aon PLC (AON) - Fincl svcs, insurance (67 Bil) (Ireland) (Berkshire)
Arthur J. Gallagher & Co (AJG) Insurance services (49 Bil)
Cbiz Inc (CBZ) - Financial, insurance, advisory services (3 Bil)
Marsh & McLennan (MMC) - Insurance, services (96 Bil)
Cintas (CTAS) - Uniforms, maintenance services (50 Bil)
CACI Intl (CACI) - Diverse IT services (7 Bil)
CDW Corp (CDW) - IT solutions (27 Bil)
Synopsys (SNPS) - Electronics design automation software (67 Bil)
>>> Thomson Reuters to buy digital content management company Imagen
June 28, 2023
(Reuters) - Thomson Reuters will buy Imagen, a digital content asset management company, for an undisclosed price, to expand its agency business to new customers, the news and information company said on Wednesday.
Britain-based Imagen, which owns the Screenocean video distribution platform, operates digital content libraries for sports, media and business companies including Premier League soccer and Major League Baseball.
Imagen will become a part of the Reuters News division.
The acquisition is part of a plan to serve more clients as they expand their streaming video businesses. "Our belief is that our agency business needs to evolve to be a tech-enabled content delivery (business)," Reuters President Paul Bascobert said in an interview.
"With the addition of Imagen, clients will have the ability to seamlessly add media asset management services to store, manipulate, permission, distribute and monetize all their visual content," Bascobert added in a prepared statement.
Reuters currently serves agency clients through Reuters Connect, which is a business-to-business content marketplace that licenses Reuters text, images and videos as well as news and content from more than 70 other providers that include the BBC, USA Today and China's CCTV.
The deal is the second announced this week. On Monday, Thomson Reuters said it agreed to buy Casetext, a California-based AI company that helps legal professionals conduct research, analysis and prepare documents using generative AI, for $650 million.
Thomson Reuters has said it has earmarked $10 billion for acquisitions and about $100 million per year in investments in AI capabilities.
Current Bill Gates portfolio (May 2023) -
Top 10 holdings (over 90%) -
31% - Microsoft (MSFT)
17% - Canadian Natl Railway (CNI)
16% - Berkshire (BRK>B)
15% - Waste Management (WM)
4% --- Deere (DE)
4% --- Caterpillar (CAT)
2% --- Ecolab (ECL)
1% --- Walmart (WMT)
<1% - Danaher (DHR)
<1% - Waste Connections (WCN)
>>> Ulta Beauty COO on record-breaking sales: ‘The whole store is hot’
by Edwin Roman
April 9, 2023
Inflation and slowing consumer spending on discretionary items haven't put the brakes on Ulta's (ULTA) momentum in the beauty category.
In its fiscal fourth-quarter earnings last month, the beauty retailer reported record annual revenue in 2022 that surpassed $10 billion for the first time in its 33-year history while its customer loyalty program reached an impressive 40.2 million members.
"The whole store is hot," Ulta Beauty COO Kecia Steelman told Yahoo Finance's Brian Sozzi at the 2023 Shoptalk Conference (video above). "But I would say one of the categories that we're really seeing that's coming through COVID that's really stuck is wellness. ... So we're seeing wellness stick, and we're also seeing [consumers] really lean in a little bit more to cosmetics, which is great."
According to Susan Anderson, analyst at Canaccord Genuity, Ulta's strength can be attributed to the strength of the category overall as well as factors specific to the retailer, such as its rewards program, omnichannel presence, and range of products and services across mass and prestige cosmetics, skincare, and wellness.
The beauty category has "continued to be strong into this year," Anderson told Yahoo Finance Live following her bullish Buy rating on Ulta stock. "I think that's only going to benefit Ulta."
"We also see them as a share gainer despite the higher growth category," added Anderson, who has a $622 price target on the stock. "We see them taking share from department stores, particularly as they roll out their prestige business further and then also add luxury such as Dior to their lineup of brands that they sell in the store."
Even as Ulta makes a push into more luxury segments, Steelman noted that the retailer is still attracting a broad range of consumers.
"What we're really pleased that we see is that the consumer across all income sectors is spending at a great pace," the COO said. "There's not one income sector that's outperforming another. So it's very consistent across the spectrum, and I think part of that is because we do offer everything in one place across all price points."
Ulta Beauty's momentum has given its collaborator Target (TGT) reason to celebrate as it saw a boost in makeup sales in the fourth quarter. The 350 Ulta shop-in-shops in Target stores have also incrementally boosted Ulta's sales and expanded its customer base.
"Target has over a hundred million customers in their loyalty program," Anderson said. "The next largest is probably Ulta. So it's definitely very large, but there's over a hundred million adult women in the U.S., so we think there's still opportunity for them to grow that loyalty program."
>>> Investing in Blue Chip Stocks
By Jon Quast
Jan 3, 2023
Blue chip stocks are the stocks of well-known, high-quality companies that are leaders in their industries. These companies have stood the test of time and are respected by their customers and their shareholders.
Investing in Blue Chip Stocks
Blue chip stocks are the stocks of well-known, high-quality companies that are leaders in their industries. These companies have stood the test of time and are respected by their customers and their shareholders.
Blue chip companies have solid business models and impressive track records of returns for investors. These returns often include regular and growing dividend payments, making blue chip stocks among the most popular for conservative investors. But even more risk-tolerant investors should consider buying blue chip stocks to better diversify their portfolios and provide some stability during turbulent stock market conditions.
So, in short, what are blue chip stocks? A blue chip stock is defined as a security that represents an equity position in a company that possesses most of the following characteristics:
An industry leader with a dependable business model.
A proven track record and strong reputation with consumers and shareholders.
A history of delivering strong returns over the long term.
Pays dividends to shareholders and regularly increases its payouts.
Even if you've never invested in the stock market, you'll recognize the names of many top blue chip stocks. These large-cap companies provide products and services that are part of daily life for billions of people across the globe. Here are some of the best blue chip companies on the market:
1. Apple (NASDAQ:AAPL) $2.14 Trillion
2. Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) $660.5 Billion
3. Coca-Cola (NYSE:KO) $271.7 Billion
4. Johnson & Johnson (NYSE:JNJ) $459.2 Billion
5. American Express (NYSE:AXP) $111.5 Billion
Apple (NASDAQ:AAPL) is one of the largest companies in the world, and it has pioneered advancements in the technology sector throughout its history. The company innovated with its Macintosh computers in the 1980s, made media portable with its iPods in the early 2000s, and its iPhones, iPads, and Apple Watches are ubiquitous today. In a world where consumers flock to the latest tech fads, Apple’s products engender notable loyalty from its customer base.
Apple also earns recurring revenue through its services, which include its iTunes, App Store, and streaming television businesses. Apple's market capitalization climbed above the $1 trillion mark in 2018 and then up to an unprecedented $2 trillion in 2020. On January 3, 2022, Apple once again made history by briefly climbing about the $3 trillion mark, though its market cap has declined along with many other NASDAQ companies in early 2022. Yet today, Apple remains the largest public company -- and the business is still growing.
2. Berkshire Hathaway
Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is a major player in the insurance industry, offering various lines of commercial and personal insurance through subsidiaries GEICO and Gen Re. But Berkshire also owns a diverse set of businesses such as restaurant chain Dairy Queen, railroad giant BNSF, and its Berkshire Hathaway Energy utility company. With such a broad range of businesses, the company has a reputation for safety and security, as well as consistent performance.
It’s important to note that Berkshire Hathaway is the only blue chip stock on this list that doesn’t pay a dividend. CEO Warren Buffett has one of the most impressive track records of market-beating returns in history and prefers to invest the company’s cash in lieu of paying dividends. That strategy has worked out great for shareholders so far.
Coca-Cola (NYSE:KO) has been a leader in the beverage industry for more than a century as its namesake soft drink spawned a global empire. Yet Coca-Cola has also changed with the times and now provides a much broader array of products, including juices, sports drinks, and bottled water tailored for more health-conscious consumers.
Coca-Cola particularly stands out for increasing its dividend. Its streak of consecutive annual dividend payment increases dates back to the early 1960s, a track record placing it among the top 10 dividend stocks on the market.
4. Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) is well-known for its popular consumer products, including baby shampoo, Band-Aids, and Tylenol pain reliever. But J&J is a true healthcare giant, making a wide array of medical devices to help doctors and other medical professionals perform life-saving procedures. Johnson & Johnson also has a vast pharmaceutical business and produces drugs such as the arthritis treatment Remicade, prostate cancer drug Zytiga, and psoriasis drug Stelara.
J&J is splitting into two companies by November 2023, and this is worth watching. One company will focus on consumer health products, considered the weaker segment of J&J’s business. The other will contain its highly regarded pharmaceuticals and medical devices segment.
5. American Express
Financial giant American Express (NYSE:AXP) is another blue chip stalwart to consider. It’s both a credit card company and a payments network. Its main revenue generators include credit card fees and transaction processing fees. The company is poised to increase both revenue streams with new users and higher transaction volume. It’s more than 170 years old, but it’s apparently staying relevant: More than half of new card accounts in 2021 were millennial and Gen Z consumers -- an encouraging sign.
American Express’s management believes it can expand profits at a double-digit pace in years to come, and it also plans to pay out roughly a quarter of its profits as shareholder dividends. It’s already raised its dividend by 20% in 2022 (as of June 2022). Ongoing earnings growth should lead to additional increases in future years.
Bigger list of blue chips
Investors have a sizable number of blue chip stocks to choose from. Here’s a list of 20 other top blue chip stocks:
Lockheed Martin (NYSE:LMT)
Honeywell International (NASDAQ:HON)
Procter & Gamble (NYSE:PG)
JPMorgan Chase (NYSE:JPM)
UnitedHealth Group (NYSE:UNH)
Northrop Grumman (NYSE:NOC)
Home Depot (NYSE:HD)
Goldman Sachs (NYSE:GS)
Investing in blue chip companies
Blue chip stocks are smart choices for investors of all kinds. Beginning investors are likely familiar with the products and services of blue chip companies. Familiarity with a company makes stock buying more comfortable, and it’s exciting to become a partial owner of a business you know. Meanwhile, long-time investors will have seen blue chip stocks rise to the top over the long haul, outlasting their weaker rivals and finding ways to stay relevant and keep growing even as their industries change.
Investors of all experience levels can appreciate the stability and reliability that blue chip businesses give to shareholders. Many of these companies pay substantial dividends and have payout growth streaks that have earned them a spot among the illustrious ranks of the Dividend Aristocrats and Dividend Kings.
Hands-off investing with blue chip funds
Investors may also want to consider exchange traded funds (ETFs) and mutual funds. These blue chip funds bundle multiple blue chip stocks into a single security, offering a simple way to diversify across many high-quality stocks. These investment vehicles also tend to be less volatile than individual stocks, which can be particularly appealing for people who are retired or nearing retirement. Blue chip funds can also be a good fit for younger investors who are seeking the defensive advantages of diversification or who don’t have the time needed to adequately research individual stocks.
Old Dominion - >>> 3 Top Trucking Stocks Under Heavy Accumulation
by Lucas Downey
February 6, 2023
Here are three companies under heavy accumulation.
Old Dominion Freight Line Inc. (ODFL) Analysis
First is the less-than-truckload hauler Old Dominion Freight Line (ODFL). The trucking stock is up 30% in 2023.
Healthy institutional accumulation has likely helped lift the shares higher, which you can see via the MAPsignals chart below. Since November there’ve been 6 unusually large volume inflows (green bars):
With a 12-month forward P/E of 30.8, shares could be attractive after a pullback. According to FactSet, the company is estimated to earn $13.30 per share in fiscal year 2024.
One thing is for sure, the shares have been in demand lately.
Knight-Swift Transportation Holdings Inc. (KNX) Analysis
Next up is Knight-Swift Transportation (KNX) which is another trucking company that operates in 3 segments: trucking, logistics, and intermodal. At MAPsignals, we believe in following large institutional flows. With the stock gaining 18% in 2023, we believe healthy accumulation is part of the story.
Since late November there’ve been 8 days where the stock jumped in price alongside outsized volumes. That can mean there’s institutional interest:
The 12-month forward P/E is pegged at 15.2X according to FactSet. Also, the company is expected to earn $4.64 per share in fiscal year 2024.
This unusual trading action suggests investors are expecting upside for the company in 2023.
Schneider National Inc. (SNDR) Analysis
The number 3 trucking firm racing higher this year is Schneider National (SNDR). This company provides transportation and logistics services. The market cap is just over $5.2 billion.
The stock has been an outperformer recently, jumping 26% in 2023. Notably, the shares have seen 4 large accumulation signals since November:
There’s no question the stock could be extended at these levels. However, this is one of the most in-demand trucking stocks according to MAPsignals research.
Strong sector leadership could mean there’s more upside for the group in 2023.
ODFL, KNX, & SNDR represent 3 of the top trucking stocks so far in 2023. Healthy institutional accumulation signals make these stocks worthy of extra attention.
ZTS, ODFL, TSCO, ASML - >>> 4 Top Stocks With High Dividend Growth to Buy in 2023 and Hold Forever
By Josh Kohn-Lindquist
Jan 28, 2023
Undeniable trends in semiconductor chips and veterinary care should buoy ASML and Zoetis.
Old Dominion's earnings per share have spiked eightfold over the last decade.
Tractor Supply's surprisingly strong rewards program highlights its customer loyalty.
While high-yield dividend stocks generate more excitement than the lower yielders, dividend growth stocks may be better for buy-and-hold-forever investors. That's because many high yields are unsustainable. And the remaining group that is well-funded can often only afford tiny payout raises -- just enough to keep their annual dividend increase streak intact.
With this in mind, let's focus on four fast-growing dividends that may offer more long-term passive income potential than their high-yield counterparts. Posting annual dividend growth rates between 25% and 46% since 2018, ASML (ASML -2.41%), Old Dominion Freight Line (ODFL 4.55%), Tractor Supply Company (TSCO -0.46%), and Zoetis (ZTS -1.82%) could make sense for investors looking to maximize their future passive income.
While ASML's lithography technology -- using light to make patterns on the silicon wafers used in semiconductor chips -- is undeniably complex, its investment thesis is far more straightforward. Do you believe the need for semiconductor chips will grow over the next few decades?
If you answered yes, ASML's dominant leadership position in its niche might make it a classic buy-and-hold-forever investment. Holding a monopoly with its bleeding-edge extreme ultraviolet (EUV) lithography system and a roughly 80% share of the more mature deep ultraviolet (DUV) market, ASML is of paramount importance to the semiconductor industry.
Thanks to this dominant positioning, the company has averaged a 26% free cash flow (FCF) margin across the last decade. With this incredible cash generation, ASML handsomely rewards its shareholders, as evidenced by its annual dividends skyrocketing 1,600% from its first payment in 2008.
In fact, using the last 12 months' figures, ASML could triple its 0.8% dividend and still have excess free cash flow. Going forward, ASML plans to make quarterly dividend payments, as opposed to their semi-annual payments in the last few years. This is great news for dividend reinvestment plans as they will now receive ASML shares at various price points throughout the year via its quarterly payouts.
As countries weigh becoming more technologically independent, the company's lithography systems should continue to see healthy demand. Trading at 27 times FCF, ASML brings incredible dividend growth potential at a reasonable price.
2. Old Dominion Freight Line
Boasting a total return north of 1,200% over the last decade, less-than-truckload (LTL) hauling specialist Old Dominion Freight Line has smashed the market.
Almost exactly as it sounds, LTL hauling consists of picking up partial loads from multiple locations and delivering them to one or many drop-offs. While far more complicated than traditional truckload hauling, this complexity acts like a moat for Old Dominion. With nearly 11,000 tractors, 43,000 trailers, 24,000 employees, 255 service centers, and linehaul dispatchers and software needed to coordinate everything, successful new entrants to the industry are rare.
Equally as important for investors, Old Dominion's operations are best in class. Consider its profit margin and return on invested capital (ROIC) -- a measure of a company's profitability from its debt and equity -- compared to its LTL peers.
Thanks to this outsized profitability, Old Dominion decided to initiate a dividend in 2017 and has raised it by 284% in the years since. Though the company's dividend yield of 0.4% may seem diminutive, it only amounts to 9% of its net income -- leaving an incredible runway for future increases.
To top everything off, Old Dominion's price-to-earnings (P/E) ratio of 27 is well below the 40 level it often saw in 2022. Posting 43% earnings per share (EPS) growth through the first three quarters of 2022, Old Dominion looks more enticing than ever.
3. Tractor Supply Company
With 27 million members in its Neighbor's Club rewards program, Tractor Supply and its 2,100 stores are a dividend growth success story in the footsteps of Home Depot and Lowe's. Since 2010, Tractor Supply has boosted its quarterly dividend payments from $0.035 per share to $0.92 today, an increase of over 2,200%. Buoyed partly by these dividends, the company has outpaced the market over the last five years.
So how exactly does Tractor Supply do it with behemoths like Home Depot and Lowe's in its backyard? In the simplest terms, it's by being the rural version of its giant peers. Consider that almost half of the company's sales come from its livestock and pet category. Through this niche offering, Tractor Supply draws millions of farmers, ranchers, and even suburban gardeners to its stores with its adjacent, yet quite distinct, product offering and hometown feel.
Once in the company's ecosystem, these customers often sign up for its rewards program and become loyal members. For example, since the pandemic's start, Tractor Supply saw 19 million new customers -- 55% of which became repeat purchasers.
The shares trade at just 23 times earnings, and the company's 1.8% dividend only uses 35% of its total net income. Raising its last dividend by 77%, Tractor Supply makes for a fascinating dividend-growth selection to hold forever.
In a recent survey by The Human Animal Bond Research Institute and Zoetis, 86% of pet owners and veterinarians said they would pay whatever was necessary for extensive vet care. While it is sad to consider any adverse outcomes concerning our beloved pets, the fact remains that Zoetis and its array of pet and livestock vaccines and medicines should only continue growing in importance.
In fact, since going public via a spinoff from Pfizer in 2013, Zoetis posted a total return of nearly 500%. Over the last five years, the company has almost tripled the returns of the S&P 500 Index despite falling by 19% in the previous year.
In the $45 billion animal health industry, Zoetis generates 61% of its sales from companion animals (cats and dogs) and 39% from livestock. Boasting a leadership position in pets, cattle, and swine (not to mention North America, Latin America, and Asia -- geographically speaking), the company maintains a portfolio of over 300 products.
Riding this success, Zoetis has grown sales and EPS by 9% and 13%, respectively, over the last three years. Over this same time, the company raised its dividend by 25% annually and now yields 0.9% with a small payout ratio of 26%. Thanks to the megatrends working in its favor and its steady growth, Zoetis trades at a rich 37 times earnings but makes for an outstanding dividend growth stock.
>>> The Hershey Company (HSY), together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, meat snacks, bars and snack bites, mixes, popcorn, and protein bars. The company provides its products primarily under the Hershey's, Reese's, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily's, SkinnyPop, Pirates Booty, Paqui, Dot's Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company was founded in 1894 and is headquartered in Hershey, Pennsylvania.
Some 2022 performance comparisons for various stocks -
Paypal ------------------ down 76%
Meta --------------------- down 68%
Intel ---------------------- down 55%
Tesla --------------------- down 54%
Amazon ----------------- down 50%
Alphabet ---------------- down 33%
Microsoft ---------------- down 25%
Apple --------------------- down 18%
Meanwhile many conservative 'all-weather' stocks have held up great -
PepsiCo ------------------------- up 8%
McDonalds ---------------------- up 3%
Coca Cola ----------------------- down 2%
Johnson + Johnson ----------- down 2%
Procter + Gamble ------------- down 7%
Other conservative long term stocks -
ExlService ------------------------- up 27%
RLI Corp ----------------------------up 23%
O'Reilly Automotive ------------- up 18%
Automatic Data Processing --- up 12%
Waste Connections ------------- up 7%
Lockheed Martin ----------------- up 6%
Gartner ----------------------------- up 4%
Waste Management ------------- up 3%
Travelers --------------------------- up 2%
Republic Services ---------------- up 2%
Cintas -------------------------------- up 1%
Raytheon -------------------------- down 3%
Factset Research ---------------- down 4%
American States Water --------- down 4%
Service Corp ---------------------- down 5%
NextEra Energy ------------------ down 8%
Jack Henry & Assoc ------------- down 9%
Aon ---------------------------------- down 10%
>>> ResMed Inc. (RMD) develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME)to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; and HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies. The company markets its products primarily to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force in approximately 140 countries. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.
>>> Keurig Dr Pepper Inc. (KDP) operates as a beverage company in the United States and internationally. It operates through Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages segments. The Coffee Systems segment manufactures and distributes various finished goods related to its coffee systems, K-Cup pods, and brewers, as well as specialty coffee. This segment sells its brewers through third-party distributors and retail partners, as well as through its website at keurig.com. The Packaged Beverages segment engages in the manufacture and distribution of packaged beverages of its brands; contract manufacturing of various private label and emerging brand beverages; and distribution of packaged beverages for its partner brands. The Beverage Concentrates segment manufactures and sells beverage concentrates primarily under the Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, Vernors, Snapple, Mott's, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco, and Mr and Mrs T mixers brands. This segment also manufactures beverage concentrates into syrup. The Latin America Beverages segment manufactures and distributes carbonated mineral water, flavored carbonated soft drinks, bottled water, and vegetable juice products under the Peñafiel, Clamato, Squirt, Dr Pepper, Crush, and Aguafiel brands. The company serves retailers, bottlers and distributors, restaurants, hotel chains, office coffee distributors, and end-use consumers. Keurig Dr Pepper Inc. was founded in 1981 and is headquartered in Burlington, Massachusetts.
Occidental - >>> Warren Buffett Not Expected to Bid for Control of Occidental Following Stake Boost
Green light to buy up to 50% of oil company enables Berkshire to avoid bumping up against FERC-imposed limit
Occidental shares are up 146% for the year, boosted by a rally in the price of oil.
The Wall Street Journal
By Akane Otani, Christopher M. Matthews and Cara Lombardo
Aug. 21, 2022
Warren Buffett’s bid to boost his big stake in Occidental Petroleum Corp. OXY even further isn’t expected to serve as a prelude to a full takeover of the resurgent energy company by the widely watched billionaire, at least for now.
In a regulatory filing Friday, the Federal Energy Regulatory Commission said that Mr. Buffett’s Berkshire Hathaway Inc. BRK.B had received permission to buy up to 50% of the driller’s shares. The news stoked speculation that Berkshire could be gearing up to acquire Occidental.
Analysts have said Occidental’s oil business would complement Berkshire’s existing energy holdings, which include utilities, natural gas and renewables. Mr. Buffett has a warm relationship with Chief Executive Vicki Hollub and has publicly praised her efforts to turn the company around after its acquisition of Anadarko Petroleum Corp. and her plans to pay down debt and increase dividend payouts.
But Mr. Buffett hasn’t informed Occidental of any plans to acquire a controlling stake in the company, according to people close to the matter. Given Mr. Buffett’s well-known aversion to hostile deal making, it would be out of character for him to make a bid without sounding out the company’s executives and directors first.
Owning such a big stake—Berkshire is Occidental’s largest shareholder—gives him major influence over the company already, and acquiring control could cost him a hefty premium to the current share price. The stock closed Friday at $71.29, up nearly 10% on the news, giving the company a market capitalization of about $66 billion.
Why would Berkshire seek out permission to buy more of Occidental, then?
For one, it was close to running up against FERC-imposed investing limits.
Filings show Berkshire currently has a 20% stake in Occidental. It also has warrants to purchase another 83.9 million common shares and 100,000 shares of preferred stock that pay a hefty dividend—both of which it acquired after helping Occidental finance its 2019 acquisition of Anadarko.
If Berkshire were to exercise the warrants, its stake would rise to roughly 27%. That would have exceeded the 25% limit FERC allowed for before Friday’s ruling.
“This is not a company that’s going to raise regulators’ hackles,” said Cathy Seifert, an analyst for CFRA Research.
It should also give Berkshire breathing room in case share buybacks or other company moves decrease the amount of shares outstanding, thus increasing its percentage stake.
There are other reasons to doubt a Berkshire takeover of Occidental is imminent.
One of them is price, said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business.
So far, Berkshire has bought virtually all of its Occidental shares at a price in the range of $50 to $60, Mr. Kass said. The highest price Berkshire paid was $60.37 in July, according to filings.
Mr. Buffett is a well-known bargain-hunter, so it is difficult to imagine Berkshire rushing to buy more Occidental shares at the current price, Mr. Kass said. The shares are up 146% for the year, boosted by a rally in the price of oil, compared with an 11% decline for the S&P 500.
People familiar with deliberations at Occidental said the company’s leadership believes Mr. Buffett might consider making an offer if oil prices fall, bringing down Occidental’s stock price. If Mr. Buffett made an offer the company viewed as fair, a majority of the Occidental’s board would likely approve presenting it to shareholders, one of the people said.
Mr. Buffett didn’t respond to a request for comment. An Occidental spokesman declined to comment.
Mr. Buffett is currently represented as a passive shareholder in Occidental, based on the so-called 13G filing he has on record with the U.S. Securities and Exchange Commission. If he were to change his intentions and hold meaningful discussions with the company about a full-on takeover, he would likely need to change his filing to a 13D, which is required by large shareholders who intend to get actively involved in the running of a company.
Taxes could also play a role in Mr. Buffett’s bid for a bigger minority stake in Occidental. Corporations with a stake of at least 20% in another company are eligible to deduct 65% of dividends received, up from the standard 50%.
Berkshire’s 20% stake also allows it to include a proportionate share of Occidental’s earnings in its own results. That could give its earnings a multibillion-dollar boost annually, based on analyst estimates of Occidental’s earnings. Before the most recent purchases, disclosed this month, Occidental fell below the 20% threshold for both benefits.
Since Berkshire started buying Occidental shares in February, Mr. Buffett has had a friendly and collaborative relationship with Ms. Hollub, and the pair speak regularly, according to people familiar with the matter.
When Mr. Buffett bought another slug of Occidental shares this spring, he called Ms. Hollub to let her know about the transaction, according to one of the people. Ms. Hollub was driving at the time and pulled over to take the call, the person said.
Mr. Buffett’s message was simple: “Keep doing what you’re doing,” he told Ms. Hollub.
Berkshire’s growing ties with Occidental have an unexpected link to Mr. Buffett’s earliest days of investing.
At age 11 in 1942, Mr. Buffett made his first investment: three shares of Cities Service’s preferred stock. Forty years later, Occidental went on to acquire the oil company, which Ms. Hollub had just joined the year before.
Mr. Buffett’s investment in Occidental this year shows his first stock purchases “coming full circle 80 years later,” Mr. Kass said.
Occidental - >>> Here’s Why Warren Buffett Loves Oil Giant Occidental Petroleum
August 19, 2022
Famed investor Warren Buffett is steadily snowballing a stake in Occidental Petroleum Corp. in what could end up being his biggest-ever acquisition. His Berkshire Hathaway Inc. on Friday won approval to buy as much as 50% of the shares. Some investors believe it’s a step toward a full takeover, which may end up costing more than $50 billion.
Here’s why Occidental is attractive to Berkshire:
Inflation looks to be the mega-trend for the first half of the 2020s and crude oil is one of the best natural hedges out there. Russia’s invasion of Ukraine and a lack of investment in new oilfields over the past five years have hit supplies, leading to stagnant production profiles everywhere from OPEC to US shale. Meanwhile, demand for fossil fuels has been strong coming out of the pandemic even as governments push for a switch to clean energy.
With investments across the energy sector from utilities to solar power, Buffett claims to be a realist in the debate around fossil fuels. “People that are on the extremes of both sides are a little nuts,” he said at a Berkshire shareholder meeting in 2021.
Buffett first invested in Occidental in 2019 when the oil company was in a bidding war with Chevron Corp. to buy its crosstown Houston rival, Anadarko. Occidental CEO Vicki Hollub flew to Omaha, Nebraska, on the company’s Gulfstream V and convinced Buffett to add $10 billion to her war chest. It was enough to swing the deal and Chevron pulled out soon after. In exchange, Buffett got preferred shares yielding 8% annually plus warrants to buy more common stock at $59.62 apiece. Today, with Occidental at $71.29, those warrants would turn a profit of more than $900 million if exercised.
Initially the Anadarko deal was a disaster because it loaded up Occidental’s balance sheet with more than $30 billion of additional debt right before the pandemic. Occidental’s market value went from $50 billion before the 2019 transaction to less than $9 billion toward the end of 2020 as oil prices crashed.
But on the flip side, this created a good value play for Buffett. When crude turned around late last year and was supercharged by Russia’s invasion of Ukraine, Occidental was best-placed to benefit. The stock is the best performer in the S&P 500 this year, up more than 140% compared with the index’s 11% decline.
“Oxy started this year heavily indebted with massive oil exposure,” said Bill Smead, who manages $4.8 billion at Smead Capital Management Inc. and is a top 20 shareholder in Occidental. Soaring crude prices mean “they’re now paying off that debt and gushing cash. It’s the best of all worlds.”
Too much cash has been Berkshire’s biggest investing challenge over the past few years. The conglomerate had about $105 billion on hand at the end of June. It is expected to generate about $8 billion in free cash flow each quarter for the next five years, according to Greggory Warren of Morningstar Research Services LLC. Inflation at the highest in 40 years is a great incentive to put that money to work.
Occidental would work better as a subsidiary of Berkshire than a stock holding “given the volatility that exists in the energy/commodity markets,” Warren said. “This could end up, though, evolving into a slow-motion takeover where Berkshire buys up to the stakes that FERC allows it to acquire until it can acquire Oxy whole.”
Occidental is not only one of the biggest producers in the Permian Basin, the largest US oilfield, but it also has one of the lowest costs with an oil price of just $40 a barrel needed to sustain its dividend. West Texas Intermediate currently trades at about $90 a barrel. Hollub has reined in the “drill-baby-drill” mentality that characterized shale for the first decade of its lifespan and is now prioritizing profits over production. Free cash flow hit a record $4.2 billion in the second quarter.
The Anadarko purchase may have been expensive, but it allowed Occidental to lift its land holdings in the Permian to 2.8 million acres, 14 times the size of New York City’s five boroughs combined. It also added steady, cash-flowing assets in the Gulf of Mexico and Algeria.
Buffett has a good personal relationship with Hollub, which began at the 2019 meeting in Omaha, brokered by Bank of America Corp. CEO Brian Moynihan. This year, the veteran investor praised Hollub after reading a transcript of Occidental’s Feb. 25 earnings conference call in which she pledged financial discipline even as oil prices were rising.
“I read every word, and said this is exactly what I would be doing,” Buffett told CNBC’s Becky Quick in “Squawk Box” in March. “She’s running the company the right way.”
Inflation Reduction Act
The oil industry mostly criticized the Inflation Reduction Act that President Joe Biden signed into law this month. The $437 billion legislation “discourages needed investment in oil and gas” and offers “the wrong policies at the wrong time,” the American Petroleum Institute said.
But Hollub was surprisingly upbeat, calling the bill “very positive.” That may have something to do with its expansion of tax credits for carbon capture, of which Occidental is a leading proponent. The company has plans to build the world’s biggest direct air capture plant which will command a tax credit of as much as $180 for each ton of carbon sucked out of the air.