June 2017 Spin-Off Compendium

One of the major deficiencies of equity management is that the basic risk classifications clearly do not validly reflect risk. The basic classifications are large-, medium, and small-capitalization stocks. This is based on empirical data that demonstrates that small-capitalization stocks exhibit greater return variability than large-cap stocks. Ergo, it is impossible to resist the conclusion … Continued

April 2017 Stahl Compendium

What is Value? The standard definitions are less than helpful. Many academics have settled on price-to-book value as an indicator, divvying up the investment universe into value and growth stocks based on this metric. This has become an important asset allocation and risk diversification tool. One expects, then, that the composition and returns of the … Continued

March 2017 Stahl Report on Lionsgate Entertainment

Lionsgate Entertainment Corp. recently completed the largest acquisition in its history, purchasing the John Malone-controlled Starz media company last December. This transaction is a logical one for both companies, and hardly surprising given the continued involvement of John Malone, one of the most astute investors of his generation. There are many more layers to this investment, … Continued

Interest Rates, Hedge Funds and the Rise of the Artificial Asset Class

It has been increasingly difficult, for a variety of reasons, for hedge funds to identify profitable short sale opportunities. The root cause of the most challenging of those obstacles is the persistent, artificially low interest rates engineered by the world’s central banks. Many market participants, then, are seeking an investment environment free from manipulative regulation. … Continued

Fixed Income Contrarian Compendium December 2015

The impact of indexation is not limited to the equity market. It is at least as pronounced in the bond market. The largest fixed income ETFs trade such large amounts every day that it is easy to imagine many scenarios that could trigger an illiquidity event. The inclusion rules of the various indexes appear likely … Continued

Global Contrarian Compendium June 2015

Carl Icahn, undoubtedly one of the greatest investors of all time, recently wrote an open letter to Apple Inc.’s management, proposing a share repurchase program, since he believes the shares are far too cheap. His analysis is quite uncomplicated; it merely deducts the company’s enormous balance sheet cash – which it doesn’t need to operate … Continued

Fixed Income Contrarian Compendium May 2015

The high yield bond market no longer exists – the high yield index pays 5.4%, before allowance for defaults – but there is a way to find high yield bonds and there is a way to create them. Featured companies: Cliffs Natural Resources Inc. (CLF), AK Steel Corp. (AKS), Pacific Drilling SA (PACD), and SandRidge … Continued

Spin-Off Research Compendium April 2015

Reviews the scale of recent exchange-traded fund flows in comparison to the size of the Federal Research quantitative easing program, discusses energy royalty trusts, addresses ETFs tracking the S&P 500 Index, and examines the decline in rig count. Featured companies: Armstrong World Industries (AWI), The Babcock & Wilcox Company (BWC), Barnes & Noble Inc. (BKS), … Continued

Devil’s Advocate Report Compendium March 2015

Discusses one of the ironies of the indexation phenomenon: while a basic assumption is that past returns are not indicative of future returns, back-testing is a standard step in the development of indexed products. Reviews the risks of a short sale in bonds given the current, shrinking inventory of bonds, considers the potential impact on … Continued

Electric Utilities: Perhaps not the Investment One Expects Dec 2014

Though many investors have allocated assets to the Utilities sector in search of yield in a low interest rate environment, we believe that the sector faces many risks, driven by a threat to demand. This white paper walks through many of the current risks we see to Utility sector stock valuations. Though we cannot predict … Continued

Contrarian Report Compendium December 2014

Considers valuation metrics for Google Inc., discusses Gold and Silver royalty trusts, and reviews fees and asset flows for BlackRock. Featured companies: Affiliated Managers Group (AMG), HFF Inc. (HF), CBRE Group, Inc. (CBG), Jones Lang LaSalle, Inc. (JLL), Live Nation Entertainment, Inc. (LYV).

Spin-Off Research Compendium November 2014

Discusses the spin-off anomaly, and the differences in characteristics between spin-offs in the past and those recently come to market. Highlights the local newspaper business as an area with spin-offs that have characteristics similar to those seen in the past. Featured companies: Time Inc. (TIME), Tribune Publishing Co. (TPUB), News Corp. – Class A (NWSA), … Continued

Global Spin-Off Research Compendium September 2014

Considers the impact of an organizational change at a major master limited partnership on the many indexes and ETFs that include this company, addresses the supermarket industry, discusses Procter & Gamble, and reviews recent fund flows. Featured companies: Reckitt Benckiser Group Plc. (RB/ LN), Crompton Greaves Ltd. (CRG IN), Reliance Communications Ltd. (RCOM IN), BHP … Continued

Spin-Off Research Report Compendium July 2014

Reviews a recent article by Nobel laureate Robert C. Merton about the importance of focusing on income needs rather than volatility or asset levels in retirement planning, compares the valuation characteristics of exchange-traded funds tracking emerging markets indexes to those tracking major domestic indexes, and discusses historical profit margins at utilities and brand name companies. … Continued

Contrarian Research Report Compendium June 2014

Considers the recent performance and relative valuations of the S&P 500 Index and the Russell 2000 Index and the cash flows into and out of the investment products that track them and discusses land companies as a hedge against inflation. Featured companies: World Fuel Services Corp. (INT), Tredegar Corp. (TG), American Homes 4 Rent (AMH), … Continued

Fixed Income Contrarian Compendium May 2014

Discusses the impact of decoupling on the utilities industry, developments in solar energy and the potential results for electric utilities, as well as factor investing in the context of the utilities and solar industries. Featured companies: Nuance Communications, Inc., Toll Brothers Inc., SEACOR Holdings Inc., and Ryland Group Inc., as well as an update on … Continued

Owner-Operators Mar 2014

Our investment process is focused on identifying companies with the potential to create shareholder value over an extended investment horizon. One of the most compelling predictive attributes for outperformance is owner-operator management, where a principal or owner (frequently a founder) is directly involved in the management of a company AND has a significant portion of … Continued

Spin-Off Research Report Compendium February 2014

Considers the actions taken by corporations to reduce their risk profile, namely increasing their cash balance and liquidity ratios, discusses some companies with more leverage in the balance sheet, and reviews U.S. corporate, mortgage, and Treasury debt levels since 1980. Featured companies: Kimberly-Clark Corp. (KMB), Exelis Inc. (XLS), Simon Property Group Inc. (SPG), and Starwood … Continued

Fixed Income Contrarian Research Report Compendium December 2013

Discusses the continued search for yield by investors, some of whom are turning to emerging markets investments as a result and reviews closed-end funds as a potential source of yield. Featured companies: Ally Financial Inc., LMP Corporate Loan Fund Inc. (TLI), Brookfield Real Estate Services Inc. (BRE), and Texas Competitive Electric.

Contrarian Research Report Compendium October 2013

Considers predictive variables in the context of Real Estate Companies, discusses real estate owners with investment management businesses, and reviews the contraction of mortgage debt levels as well as the premium at which municipal bonds trade as compared to Treasuries. Featured companies: Smith & Wesson Holding Corp. (SWHC), Biglari Holdings, Inc. (BH), Denny’s Corp. (DENN), … Continued

Fixed Income Contrarian Research Report Compendium September 2013

Discusses issues related to interest rate risk, reviews a selection of closed end municipal high-yield bond funds, and compares a municipal bond portfolios to a mixed fixed income portfolio. Featured companies: Nuveen Short Duration Credit Opportunities Fund (JSD), Nuveen Michigan Quality Income Municipal Fund (NUM), Millicom International Cellular S.A. (MIICF), Lamar Media Corporation (LAMR)

Contrarian Research Report Compendium April 2013

Discusses the methodology used to construct growth and value indexes, questions the use of quantitative criteria in the absence of qualitative assessment in assigning growth or value labels, compares the spending levels allocated to education and to advertising, and examines the MLP industry. Featured companies: Booz Allen Hamilton Holding Corp. (BAH), Boardwalk Pipeline Partners, LP … Continued

Devil’s Advocate Compendium September 2012

Discusses the impact of the low interest rate environment on fixed income investors and examines data regarding the funded/unfunded status of pension plans as well as the discount rates assumed by companies in calculating the present value of their post-employment benefit obligations. Stocks covered: Lockheed Martin Corp. (LMT), Huntington Ingalls Industries Inc. (HOO), United States … Continued

Fixed Income Contrarian Research Report Compendium August 2012

Discusses the credit crisis of 2012, the risks of Financial Preferred stocks, and U.S. Bond market tradable debt statistics. Featured companies: American International Group, Inc. (AIG), CenturyLink, Inc. (CTL), Arch Coal Inc. (ACI), Vanguard Extended Duration Treasury ETF (EDV).

Stahl Report Compendium May 2012

Examines the profit margins of companies in the S&P 500 Index, private equity valuations, and the decline in fundamental company research. Featured companies: Archer Daniels Midland (ADM), Tiffany & Co. (TIF), American International Group, Inc. (AIG), TE Connectivity Ltd. (TEL).

Bits & Pieces March 2012

Highlights companies with significant investments in other publicly-traded companies, including Brookfield Asset Management (BAM) Henderson Land Development (12 HK), and WPX Energy, Inc. (WPX).

Devil’s Advocate Compendium January 2012

Discusses the business of indexation and its impact on stock prices, low price to book value stocks, and statistics related to the Federal Deposit Insurance Corporation (FDIC). Stocks covered: McDonald’s Corp. (MCD), Procter & Gamble (PG),DST Systems, Inc. (DST), iShares Barclays TIPS Bond Fund (TIP).