Diamond Offshore Works to Stay Afloat

Diamond Offshore is the offshore drilling company that is 53%-owned by Loews Corporation.  The company currently owns a fleet of 17 “floaters” (self-propelled drillships and semisubmersible rigs), four of which are currently cold-stacked. Continue reading

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Barrick Gold: A More Speculative Bet on Gold

Barrick Gold is the second largest publicly-traded gold producer, with an equity market capitalization of $11.6 billion.  Like its rival, Newmont Mining, Barrick is focused on reducing costs and improving operating efficiency to maximize free cash flow generation in this rangebound gold price environment.  The company has also reduced debt by $7.3 billion or 55.7% since the end of 2014. Continue reading

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Newmont Mining: A Safer Bet on Gold Mining

Based in the Denver, Newmont Mining Corporation (NEM) is the largest publicly-traded gold miner by equity market capitalization.  Its geographic segments include North America (the U.S.), South America (Peru and Surinam), Australia and Africa (Ghana).  Newmont’s share price rebounded sharply in 2016, outperforming its peer group, as new, more profitable mines came into production replacing those that were sold in 2014 and 2015.  The company continues to execute on its plan to increase production (mostly so far to replace developed reserves) and reduce production costs through targeted mine and mill expansion projects. Continue reading

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A Quick Look at the Price of Gold

These are tough times for investors in gold and even tougher times for investors in gold mining companies.  Since the beginning of 2011 (through Aug. 31, 2018), the price of gold, as measured by the continuous CME futures contract) has declined 15.1%.  Meanwhile, the two gold miner ETFs – GDX and GDXJ (the junior miners) – have lost 68% and 79% of their value, respectively. Continue reading

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Genworth Rate Increases a Potential Positive for GE

In its August 20th issue, Investment News reported that Genworth Financial had received approval from regulators in 22 states to raise costs (i.e. rates) an average of 58% on $160 million of its in-force long-term care policies this year.  The company had previously obtained an average 28% increase on $714 million of premiums in 2017 and a 38% hike on $719 million in 2016.  Genworth’s in-force LTC book had $2.65 billion of annual premiums at the end of the 2018 second quarter. Continue reading

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Notes from the Inbox . . . August 24, 2018

Here are the noteworthy items that crossed my desk during the week ended August 24, 2018: Continue reading

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A Process of Adjustment for the Homebuilders

2018 has been rough for homebuilding stocks.  The Lark Research Homebuilder Stock Index, which is an equal-weighted measure of the price performance of ten publicly-traded homebuilders, was down 19.9% year-to-date through August 3rd, far worse than the gains of 6.2% in the S&P 500 and 9.0% in the Russell 2000.
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GE Part 3: Contemplating GE Capital

Besides the recent weakness at Power and Oil & Gas, GE has been grappling with legacy issues at GE Capital.  Although it has been downsizing for more than a decade now – reducing its assets from $660 billion at the end of 2008 to $136 billion at June 30, 2018 – GE Capital still represents 40% of GE’s consolidated assets and it has not reported a profit since 2014. Continue reading

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GE Part 2: Assessing GE’s Value

On June 26, General Electric (GE) announced the outcome of its strategic review. Besides divestiture actions already announced, the company said that it will spin-off its Healthcare business over the next 12-18 months and distribute its 62.5% stake in Baker Hughes, a GE company (BHGE) over the next two to three years. Those actions would leave GE with three core businesses – Aviation, Power and Renewable Energy. Continue reading

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GE Part 1: 18Q2 Results

General Electric reported disappointing 2018 second quarter GAAP earnings attributable to shareholders of $736 million or $0.07 per share, down 30% from $1.03 billion or $0.10 per share last year.  Adjusted (Non-GAAP) EPS, according to the company’s definition, was $0.19 per share, down 10% from $0.21.  Non-GAAP EPS exceeded consensus estimates by a penny. Continue reading

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