Posts by Building Benjamins
Video: Debt Ceiling Theatre – US Debt Crises in the Future
Reducing Social Security and Medicare politically impossible. The Federal Reserve restarting QE (Quantitative Easing) and buying the US debt to keep rates down. QE is the most likely choice and will be wildly inflationary. Recession seems to have started in the second quarter. QE will most likely be used to restart the economy once the recession has caused enough pain.
Read MoreALB: Doubling In Size Inside a Decade
• Second largest Lithium producer in the world.
• 3 Expansion opportunities within the next decade, expecting global lithium demand to surge by 275% by 2030.
• Favorable pricing above $20/kg has made >100 locations viable for expansion.
• Global focus on electrification creating surge in demand for Lithium.
Video: AT&T has 6.3% Dividend Yield. Stock Pullback Provides a Good Entry Point for Dividend Investors
AT&T (symbol T) has streamlined its business by divesting AT&T TV, Warner Media, and DirecTV. Fiber expansion and streamlined business combined with cost improvements of $6 billion in run rate should drive improved profitability. However, we do have concerns about the debt level and the company’s ability to reach its FY25 goals. AT&T offers income generation and an option on the expectations that a streamlined business will produce better profitability which should drive near-term earnings improvements even though the secular long-term growth potential is very modest.
Read MoreVideo: Silvercrest Asset Management SAMG: 4.3% Yield, Sustained Growth in a Difficult Market
SAMG is a stable company with a solid business model in a difficult industry. Its focus on ultra-high net worth is the best area of the industry. OCIO, Institutional and International give SAMG some nice runways for growth. We believe in management and that SAMG provides a stable dividend distribution that will grow over time. We believe the stock is undervalued.
Read MoreEconomic and Market Review April
Economic and Market April April 30, 2023 Continuing Weakness in Banking Sector Concern over additional bank failures has created ongoing uncertainty for equity and bond markets, as the collapse of First Republic Bank this past month has become the second-largest bank failure ever, with $229 billion in assets and over $100 billion in deposits. Federal…
Read MoreVideo: Caution not Complacency. Debt Crises, First Republic, Credit Crunch, Fed to 5.25%, QT, Down Earnings
Treasury Secretary Janet Yellen indicated the US Federal Government might be out of money by June 1 requiring extraordinary measures. This means not all expenses are paid unless Congress acts to increase the debt ceiling. The Debt Crises is a result of out of control spending by the Federal Government starting at the Great Financial Crises in 2008 and leaping further during COVID. Nearly $32 Trillion in US Federal debt, $35 Trillion in unfunded Medicare liability and $22 Trillion in unfunded Social Security liability. This is in comparison to total US Economy of $25 Trillion in 2022.
Read More6.3% Dividend Yield for a Refocused AT&T
• 6.3% Dividend Yield.
• TV and Media business units have been divested.
• Fiber and cellular 5G are the focus.
• Pullback in price marked an attractive entry point for dividend-seeking investors.
• Fiber expansion offers a growth opportunity.
JNJ’s Reliable Dividend of 2.9% with Steady Growth
• 2.9% yield with 60 consecutive years of dividend increases.
• Spending 15% of revenue on R&D, over 50 drugs in the 5-year approval pipeline. Strong blockbuster portfolio, with 3 novel therapies expected to be approved in FY23.
• Spin-off of consumer segment, repositioning primary JNJ business unit to be more pharmaceutical and medical device oriented.
• Potential settlement on the horizon for Talc lawsuit, the independent legal unit reportedly has the 75% of claimants required for bankruptcy to move forward.
Video: QT Restart, Credit Crunch. $400 Billion Added to the Balance Sheet After SVB Failure
• SVB (Silicon Valley Bank) crises created a $550 billion of deposit withdrawals from small and medium banks creating a credit crunch.
• The Fed announced the BTFP (Bank Term Funding Program). The Fed provides one year loans to all depository institutions in exchange for treasuries at par value even when market value has declined.
•This ballooned the balance sheet from the QT (Quantitative Tightening) low of $8.34 trillion on March 8th, to $8.73 trillion on March 22nd.
•The credit crunch is just beginning.
ONSemi Sweet Spot for High Growth with Fab-Light Model
• Double Digit Secular Grower with Reasonable Valuation
• $16.6 billion in backlog, with $2.5 added in 4Q22.
• Divesting from low-margin industries and fabs, trading top line revenue for investing in high-margin products in markets with less competition.
• SiC (silicon carbide) leader, producing higher margin wafers in fewer facilities.
• Repurchasing $3 billion in shares to FY25, with $698 million in 1Q23. Targeting 50% FCF return to shareholders.