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2017-04-27

2017-04-26

  • The Science of Hitting commented on The Science of Hitting's article 04-26 09:54
    Dividends Over Buybacks?
    One of my favorite new podcasts is “Invest Like the Best” (found it a few weeks ago, so I am still catching up). The host, Patrick...
    View all 8 comments
    The Science of Hitting 04-26 10:54
    • Jtdaniel,

      Fair enough. When they broke out the details, pretty amazing to see how attractive that business has been in the past few years. I've never done a deep dive on ESRX (have difficulty understanding the space), but valuation seems quite reasonable even if you back out Anthem. Retaining the business (even with the ~$1B annual price concession) would clearly be a positive development.
  • The Science of Hitting commented on The Science of Hitting's article 04-26 06:55
    Dividends Over Buybacks?
    One of my favorite new podcasts is “Invest Like the Best” (found it a few weeks ago, so I am still catching up). The host, Patrick...
    View all 6 comments
    The Science of Hitting 04-26 07:55
    • Jtdaniel,

      One problem with ESRX (as I see it): they have a stated leverage target that will require them to pay down debt in the near term as a result of losing Anthem. Besides that, do you think they would repurchase shares in a big way? Thanks!
  • The Science of Hitting commented on The Science of Hitting's article 04-26 06:53
    Dividends Over Buybacks?
    One of my favorite new podcasts is “Invest Like the Best” (found it a few weeks ago, so I am still catching up). The host, Patrick...
    View all 5 comments
    The Science of Hitting 04-26 07:53
    • Batbeer2,

      "I try to solve this problem by only buying stock of companies with CEOs who are very obviously much better capital allocators than myself. If that's the case then I don't want the dividend."

      You have a great skill for summing up what I've tried to say in hundreds of words in a single sentence. As always, thanks for the comment!

2017-04-25

2017-04-24

2017-04-21

  • The Science of Hitting commented on The Science of Hitting's article 04-21 12:11
    Some Thoughts on Wells Fargo
    Wells Fargo (WFC) reported first-quarter results last Thursday. I’m far from an expert on banks, but the valuation seems reasonable at current...
    View all 6 comments
    The Science of Hitting 04-21 13:11
    • Softdude2000,

      Let me take a shot. The majority of “Federal Funds Sold, Securities Under Resale Agreements and Other Short-Term Investment” held by Wells Fargo is "Interest-Earning Deposits". As noted in the 10-K, substantially all of these interest-earning deposits are held at the Federal Reserve.

      This has a big impact of NIM: In fiscal 2016, the average balance for these assets was ~$288 billion for Wells Fargo, with an average yield of just 0.51%. At the same time, this move lowers the overall risk profile of the assets on Wells Fargo's balance sheet. 

      I hope that helps! Let me know if you have any other questions / comments.

      P.S. This article from the San Fransisco Fed is a good discussion of this topic:

      http://www.frbsf.org/education/publications/doctor-econ/2013/march/federal-reserve-interest-balances-reserves/#_ftn3

2017-04-20

2017-04-18

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