This week, Durig’s weekly bond review takes another look at a Canadian company that focuses on children’s content and brands. You may not have heard of WildBrain (formerly DHX Media), but you may know some of its beloved characters, which includes the Peanuts gang, Teletubbies, Inspector Gadget and the Degrassi franchise. WildBrain released its first quarter results for fiscal year 2020 (three months ending September 30, 2019). The company’s wildly successful YouTube Channel, WildBrain Spark, has continued its outstanding growth from the past few quarters. Along with the great news on WildBrain Spark, there were other wins in the quarter as well (see bullets above).
This week, Durig reviews one of the largest publicly traded hospital companies in the United States. Community Health Systems (NYSE:CYH) has spent the past few years paring down its portfolio of hospitals with an eye to retain those locations that are most profitable. The results of these divestitures are starting to be seen and the company has now put up two consecutive quarters of positive growth. In its most recent quarter results, one can see that same-store metrics tell a compelling story, especially in the competitive healthcare sector (see bullets above).
A year-end performance review of Durig’s Portfolio Solutions, designed to help you earn income, covering some of the key benefits that each can provide. The following portfolios will be reviewed in this article:
- Fixed Income 2 (FX2) Managed Income Portfolio
- Dividend Aristocrats – High Dividends & Growth Over Time
- Income Aristocrats – Multi-Asset Income Portfolio
- Dogs of the Dow – High Blue Chip Dividends
- Dogs of the S&P 500 – Blue Chip Dividends
Fixed Income 2 (FX2) Managed Income Portfolio
Following the success of it’s Dogs of the Dow and Dogs of the S&P 500 Portfolios, we now take an in-depth look at the latest addition to our portfolio of investment solutions, the Income Aristocrats Portfolio. A remarkably well diversified portfolio, the income aristocrats effortlessly blends three different portfolio strategies (Fixed Income 2, Dogs of the S&P 500, and the Dividend Aristocrats) into an excellent vehicle for generating cash flow.
For this week’s bond review, Durig looks at an issuer that provides services to banks and retailers around the world. Diebold Nixdorf (NYSE:DBD) provides end-to-end services, software and hardware for the banking and retail industries. Diebold has spent all of 2019 implementing its DN Now program, designed to increase efficiencies, decrease costs, and improve margins. With the release of its third quarter results, it appears as if the company is making progress towards these goals (see bullets above).
For this week’s bond review, Durig looks at a chemical company created by a DuPont spinoff in 2015. Chemours Company (NYSE:CC) is a global leader in the manufacturing of fluoroproducts, chemical solutions, and titanium technologies. It is one of the leading global producers of titanium dioxide (used in paints, coatings, plastics, cosmetics and food), as well as the creator and producer of Opteon™, an award winning environmentally sustainable refrigerant. Highlights from the company’s second quarter results include: (see bullets above).
Many employers today offer retirement plans to their employees, very commonly set up as a 401k plan. These retirement plans can be an excellent way for investors to build their retirement with help from their employer, but there are many pitfalls to be had if the plan administrator does not understand what to watch out for.
This week, Durig takes another look at the number two grocer in the United States. Albertsons has made a significant turnaround in the past few years after its purchase of Safeway stores in early 2015. With its most recent quarterly results, the company has now logged seven consecutive quarters of identical store sales growth. In addition, the company’s online grocery sales grew by 40% year-over-year, a massive win for this traditional brick and mortar retailer. (Other results from its Q2 results, see bullets above)
This week, Durig looks at an energy company that is making the transition from its historical focus on natural gas to be more focused on oil production. Chesapeake Energy (NYSE:CHK) has been making strides this year to transition towards a more oil focused production portfolio. Chesapeake has already increased oil in its production portfolio from 17% in 2018, to 24% as of the end of the second quarter. The company estimates it will exit 2019 with oil representing 26% of its production. Oil is a higher margin product, so Chesapeake is already seeing the fruit of its decision (see bullet points above).
Durig takes an in-depth look at it’s newest addition to its portfolio of investment solutions, the Income Aristocrats. An extremely diversified portfolio, the income aristocrats seamlessly blends the Fixed Income 2, Dogs of the S&P 500, and the Dogs of the Dow strategies into an income generating machine.
This week, Durig looks at the auto industry to focus on a manufacturer who supplies components to many of the industry’s leader auto makers. American Axle & Manufacturing (NYSE:AXL), a leading supplier of driveline technology, recently released its second quarter results. The company registered solid free cash flow, net cash from operations and improving EBITDA and EBITDA margins (see bullets above).
This week, Durig Capital takes a look at a unique oil and gas producer. Reviewed several times in the past, most recently in May of 2019 following the company’s release of their Q1 Results, California Resources Corporation (NYSE:CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. And, it sells all of it oil production in the state of California, which, as a state, represents the 5th largest economy in the world. The company recently signed its third major joint venture agreement, which will allow the company to add production and revenue with no initial capital cost to CRC. In addition to this great news, CRC also posted some excellent results from its second quarter (see bullet points above).
Once in a great while you find or learn something that is so unbelievably good, that you have to hear or read it over and over again, often from different sources or perspectives, before the truth of it actually starts to sink in and really make sense. Perhaps it’s that initial bewilderment that has served to curb much of any demand from the fixed income markets for this otherwise “golden” opportunity. Fortunately, this is great news for those that eventually arrive at a deeper understanding of why these Gran Colombia Gold bonds are so darn good… and it is why these bonds are well deserving of overweighting in our high performing FX2 fixed income portfolios.
This week, Durig Capital takes a look at an industrial designer, manufacturer and marketer of aftermarket parts for light vehicles, commercial trucks and other industrial uses. Tenneco (NYSE:TEN) is on track and getting ready to create two market leading companies after its landmark acquisition of Federal-Mogul late last year. Its second quarter results tell the story of a company working diligently to grow its business, even among some industry slowdowns (see above).
Tenneco’s 2024 bonds have a yield-to-maturity of just about 7.85%. This is a fantastic yield, especially when investors can’t even get 2% from the current 30-year U.S. Treasury bond. In light of this and the company’s solid Q2 performance, these bonds are ideal for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, the aggregated performance of which is shown below.
Do you want more income? If your answer is yes, we have excellent news for you! Durig’s FX2 Portfolio has a lifetime track record of historical outperformance of its peer benchmarks while generating extremely high levels of fully customizable income options, something that no mutual fund can offer, all within your own separately managed account.
This week, Durig Capital takes a look at a company that provides compression services and equipment for the oil and gas industry. With the demand increasing for takeaway capacity from oil and gas fields around the country, CSI Compressco’s services become even more valuable and essential. The company had a fantastic second quarter, with record setting utilization, increased revenues and adjusted EBITDA.
Second quarter overall utilization came in at a record setting 89.1%.
Revenues increased by 36% over second quarter 2018.
Adjusted EBITDA increased 22% over first quarter and 41% year-over-year.
Outstanding interest coverage of 2.2x.
This week, Durig Capital look again at the parent company of a long-time, beloved family entertainment restaurant. Chuck E. Cheese, whose parent company is CEC Entertainment, has long been a beloved rite of passage for children’s birthday celebrations. CEC has spent the past few years updating the venue’s image, mainly in an effort to appeal to the parents as well as their kids. The new image seems to be working. With the release of its second quarter and year-to-date results, CEC has now logged five consecutive quarters of same-store growth. Other highlights from CEC’s latest results (see above).
This week, Durig Capital looks at the healthcare sector to review one of the largest publicly traded hospital companies in the United States. Community Health Systems (NYSE:CYH) has spent the last few years rationalizing its portfolio of hospitals. The company is beginning to realize the effects of this strategy as evidenced by its same-store results for the second quarter (see above).
This week, Durig Capital reviews one of the leading producers of steel products in the United States. AK Steel (NYSE:AKS) produces steel for the automotive, infrastructure and manufacturing sectors. There has been much talk of bringing back manufacturing jobs to the U.S., especially in the production and manufacturing of steel. AK Steel is one of the companies trying to ensure continued heavy manufacturing capabilities within the United States. It recently reported its second quarter results (for the three months ending June 30, 2019) with the highlights (listed above).
This week, Durig Capital looks at a company that primarily provides private prison services for governmental agencies here in the United States. CoreCivic (NYSE:CXW) has also recently added two additional business segments to its portfolio – CoreCivic Community, which consists of residential reentry centers, and CoreCivic Properties, which is a portfolio of government-leased properties. The company recently posted a solid first quarter, registering increases in many of its financial metrics.
This week, Durig Capital looks to a Canadian issuer, a specialty pharmaceutical company that is successfully treating long-term HIV patients with its unique medicines so that patients have the opportunity to have a better quality of life. Theratechnologies (TSX:TH) has two landmark drugs, Trogarzo™ and EGRIFTA™ specifically developed to help HIV patients. The company has reported its second quarter results (for the three months ending May 31, 2019) and continues to see outstanding growth over its product lines.
This week, Durig Capital looks at a company providing private prison services for governmental agencies both domestically and abroad. Geo Group, Inc. (NYSE:GEO) is one of only a handful of private prison service companies. With the election of President Trump, private prison companies have gotten a boost due to more stringent prosecutions as directed by our new attorney general, as well as Trump’s zero tolerance policies on immigration. The company’s first quarter 2019 results reflect this new political climate (above).
Geo Group is awaiting decisions from the Federal Bureau of Prisons on two procurements (CAR 18 and CAR 19) that total close to 12,000 beds. If these decisions come back in favor of Geo Group, the company would likely again increase its current guidance (as it just did with the release of its first quarter results). Geo Group’s 2023 bonds, couponed at 5.125%, are currently trading at a discount, giving them an enticing yield-to-maturity of over 9%. With the most recent increase in guidance and the possibility of more on the way, these short-term maturity bonds (maturing in only 44 months) are an ideal addition to Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, the aggregated performance of which is shown below.
This week, Durig Capital takes a second look at an issuer involved in the design and manufacture of semiconductors. Magnachip Semiconductor (NYSE:MX) has been around for over three decades and is currently the largest independent supplier of OLED display drivers to panel makers for smartphones. The company is riding the wave of transition from LED to OLED in the smartphone world. This has paid handsomely as its full year 2018 results can attest (above). In addition, the company’s first quarter also posted continued wins for its Standard Products division.
This week, Durig Capital looks at one of the top propane companies in the United States. Ferrellgas (NYSE:FGP) is the second largest propane retailer and distributor in the country. Through a combination of acquisitions and colder winter weather, the company has posted solid numbers for its third quarter (ending April 30, 2019).
Durig Capital is excited to introduce three new model portfolio strategies composed of a variety of ETFs, Mutual Funds, and Index Funds. Model portfolios have been growing in popularity in recent years, with many large investing platforms now offering an increasingly wide variety of model portfolios.
This week, Durig Capital looks at an oil producer who has built its company using non-traditional production techniques. Denbury Resources (NYSE:DNR) has been successfully using enhanced oil recovery (EOR) techniques to build its name in the world of tertiary oil production. The company had a fantastic 2018 as well as a solid first quarter.
Beyond Belief… this may be the most fascinating debt instrument we have ever reviewed.
Rising with the price of gold, the cash flow and yield of Gran Colombia Gold’s senior secured “Gold Notes” appears to be headed straight into the land of unbelief. Perhaps what we see here is either wrong… or something in this picture seems to have quietly escaped the attention or the view of most other investors in the high yield bond market. Granted, this is not a straightforward and easily understood issue because of the quarterly interest boost linked to its amortized quarterly redemption of principle when the price of gold is higher 1250 per ounce. However, it is precisely this “hard to be understood” feature that is driving its current push into the land of dreams.
For this week’s bond review, Durig Capital ventures into the auto world to look at one of the leading auto rental companies in the U.S. and around the world. Hertz Global (NYSE:HTZ) had a fantastic 2018 and 2019 looks to be shaping up much the same.
- First quarter 2019 is the seventh consecutive quarter the company has recorded year-over-year growth.
- Total revenues were up 2% (during one the company’s historically slow quarters), up 4% on a constant currency basis.
- Revenues in the U.S. grew by 7%.
- Cash flow provided by operating activities grew by 28% over first quarter 2018.
- First quarter 2019 interest coverage of 3.4x.
This week, Durig Capital ventures into the telecom space to look at one of the country’s major telecommunications services providers. Frontier Communications (NASDAQ: FTR) has been working hard to transform itself as cable, voice and internet usage continues to change and evolve. The company’s most recent quarter highlights some of its progress as well as actions Frontier is taking to remain competitive.
(all price quotes are in Canadian Dollars, CAD)
This week, Durig Capital looks at a company that focuses on children’s content and brands. DHX Media (TSX: DHX; NASDAQ: DHXM) is the company behind such well-known names as Peanuts, Teletubbies, Inspector Gadget and the Degrassi franchise. With children spending more time viewing content not only through traditional television and cable, but also on various devices with online streaming capabilities, DHX is looking to optimize its proprietary children’s content through various channels. Having acquired the rights to the Peanuts brand a few years ago, the company is now starting to realize revenues from this iconic brand through licensing agreements with retailers like Lands’ End, Baskin Robbins, Tupperware, Levi’s and Macy’s just to name a few.
This week, Durig Capital takes a look at a unique oil and gas producer. California Resources Corporation (CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. Most people know that California is one of the largest states (physically) in the U.S. But most probably don’t know that it represents the world’s 5th largest economy. Against this backdrop, CRC produces oil, natural gas and NGLs and sells all of it in the state of California. This looks to be a great situation for CRC – a local buyer for all of its product and a huge appetite for more. CRC, a spinoff of Occidental Petroleum in 2014, has spent the past few years recovering from the oil doldrums of 2016 and it looks to be on the upswing. Some of the highlights from its most recent quarterly results in bullet points above.
This week, Durig Capital looks at one of the leading producers of steel products in the United States. AK Steel has been working diligently over the past few years to increase its competitiveness in the marketplace. Its design of its own ultra high-strength steel (UHSS) has produced excitement amongst the company’s automotive customer base. In addition, AK Steel’s acquisition of Precision Partners a few years ago has been very lucrative as that acquisition has now resulted in approximately $50 million in additional future revenues. The company recently released its first quarter results for 2019. Amongst some of the highlights:
This week, Durig Capital takes a look at an industrial designer, manufacturer and marketer of aftermarket parts for light vehicles, commercial trucks and other industrial uses. Tenneco Inc. recently posted a fantastic fourth quarter and full year results in large part due to its recent acquisition of Federal-Mogul. Highlights include:
Later this year, Tenneco will create two separate, market leading companies from its acquisition of Federal-Mogul. Federal-Mogul brings strong brands, products and capabilities that are complementary to Tenneco’s portfolio. Creating two new product focused companies with stronger product portfolios will allow each of them to move faster in executing on their specific growth priorities.
This week, Durig Capital reviews the largest underground gold and silver producer in Colombia. Gran Colombia Gold has staged an amazing transformation from just a short three years ago, when Durig Capital began to carefully follow this issuer. After completing a well-timed and skillfully crafted restructure of its balance sheet early in 2018, the company has consistently continued to smash its production targets, and has once again impressed us with its most recent results for the fourth quarter and full-year 2018.
This week, Durig Capital reviews a Canadian heavy haul transportation and crane company. Entrec Corporation provides heavy haul transportation and crane solutions to the oil and gas, construction and power generation industries, among others. Entrec’s most recent results for both its fourth quarter and full year 2018 showcase healthy growth in the company’s U.S. operations. And given the volatility in oil and gas late last year, the company’s results are even more impressive.
This week, Durig Capital reviews a traditional print-based marketing company that is undergoing a transformation. Quad Graphics (recently rebranded to just Quad) is in the midst of implementing its Quad Transformation 3.0 plan. This plan is helping to add core marketing expertise to the company’s service offerings. This has been accomplished mainly through acquisitions. The company’s most recent financial results show some of the progress on this plan.
This week, Durig Capital takes a look at a company that provides communications services for consumers and businesses across the U.S. Frontier Communications has spent most of 2018 making progress on its transformation initiatives that are designed to reduce costs, increase profitability and improve the balance sheet. The company recently released its fourth quarter and full year results for 2018. The company is showing progress on its initiatives.
Frontier Communications’ April 2022 bonds are currently trading at a significant discount, giving them an outstanding yield-to-maturity of about 23%. These bonds provide investors with an excellent opportunity for diversification into the essential service of internet connection. Considering Frontier’s solid free cash flow and excellent interest coverage, these 2022 bonds make an ideal addition to Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, which historically, has done well in a rising interest rate environment, shown below.
This week, Durig Capital takes a look at a company that provides compressions services and equipment for the oil and gas industry. CSI Compressco (CCLP) has had multiple successive quarters where the company has increased revenues and its latest quarter did not disappoint. Included with this increase were several other notable achievements.
With the continued demand for LNG and the current and planned LNG terminals in the U.S. and Canada, CSI Compressco looks to be perfectly positioned to take advantage of this demand. In light of the company’s solid performance in 2018, the company’s short-term bonds maturing 2022 are an ideal candidate for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, shown below.
Informa Investment Solutions (Informa) recently benchmarked the performance of Durig Capital’s FX2 Portfolio Strategy against its peer group of over 200 in short term fixed income on it’s PSN database and found that as of Q4, 2018, Durig’s FX2 was in ranked 1st in Trailing 2, 3, 5, and Since Inception Return Periods.
This week’s bond review focuses on one of the nation’s largest publicly traded hospital companies. Community Health Systems, Inc. (NYSE: CYH). CYH has spent the past few years divesting hospitals in an effort to reshape its portfolio towards urban and suburban markets. The company continues to make that shift and has now added urgent care centers in some of those markets to help drive additional patients to its hospitals. Its fourth quarter and full-year 2018 results look to be an indicator that the transformation is gaining a foothold.
This week, Durig Capital looks at a longtime company that has adopted a new name to reflect its new direction. Pyxus International, formerly Alliance One, is well into its “One Tomorrow” transformation plan, where it has added new products to its product base of leaf tobacco. The company has entered into producing e-liquids, cannabis and cannabis related products.
Durig’s FX2 SMA Ranked 1st by Morningstar
Morningstar recently ranked the performance of Durig’s FX2 Portfolio Strategy among a peer group of over 200 High Yielding Fixed Income SMA’s and found that as of Q4, 2018, Durig’s FX2 was in the top 17th percentile amongst our peer group in Trailing 1 Year Return.
Morningstar’s Peer Ranking of Durig’s FX2, Q4 2018
This week’s bond review delves into the retail sector with a specialty retailer of durable consumer goods who also offers its customers financing on their purchases. Conn’s Inc., which is headquartered in Texas, has a market presence that stretches across the southern United States. Conn’s set some records in its most recent quarterly results (third quarter for its fiscal year 2019).
- Record third quarter retail gross margin of 41.2%
- Record quarterly credit segment revenues of $89.9 million.
- For the first nine months of fiscal year 2019, the company registered its second highest nine month operating income ever
- Excellent interest coverage of 2.4x.
This week, Durig Capital looks to the healthcare industry, where a medical supply logistics provider has made some key acquisitions to broaden its revenue sources. Over the past 18 months, Owens & Minor has acquired Byram Healthcare, a direct to patient medical supply distributor, along with Halyard’s surgical and infection prevention (S&IP) business. Combined, these two acquisitions are slated to add $1.45 billion in annual revenues for Owens & Minor. The company’s last reported quarterly results (third quarter 2018) show revenue growth coming through these most recent additions.
This week, Durig Capital ventures to the technology sector to review an issuer involved in the design and manufacture of semiconductors. Magnachip Semiconductor (NYSE:MX) has been around for over 30 years and is the largest independent supplier of OLED display drivers to panel makers for smartphones. The company’s latest reported quarterly results (three months ending September 30, 2018) were excellent.
Adjusted EBITDA increased 13% year-over-year.
Gross profits were up 10.8% over the prior year period.
Operating income increased by 17.9% over Q3 2017.
Revenues were up 16.6% year-over-year and were at the highest levels since Q4 2012.
Interest coverage over 3x for the third quarter.
This week’s bond review ventures into the auto world, specifically car rentals. Hertz is one of the leading auto rental companies in the U.S. and around the world. The company recently posted its financial results for its third quarter, presenting solid evidence that the 2017 Transformation Plan is continuing to bear fruit. Some of the company’s excellent Q3 results include the following:
A 52% increase in in global net income.
U.S. adjusted corporate EBITDA increased by 25% year-over-year.
Revenues for U.S. operations also increased 10% year-over-year.
This week’s bond review looks at a diversified conglomerate that has been reshaping its portfolio of companies to grow and increase synergies. Griffon Corporation has spent the past few years strengthening its business segments, particularly its Home and Building Products segment, acquiring leading brands like ClosetMaid and CornellCookson. Griffon had a fantastic third quarter. Some of the highlights include:
A 44% increase in revenues year-over-year.
Home and Building Products sales increased 59% over third quarter 2017.
Business orders for the company’s Telephonics business were up 30% year-over-year.
The Defense Electronics segment has accumulated Contract backlog of $346 million.
Durig Capital’s FX2: Bond Investing with Equity-like Returns
Stocks versus bonds – which is the better investment? This is a highly individual question and depends on the goals of the investor. For most investors, getting the best return with the least amount of risk is a goal worth striving for. But what is the best way to do this? While stocks have generally outperformed bonds, there are exceptions to the rule. Consider Durig Capital’s FX2 Managed Income Portfolio.
This portfolio’s 3-year trailing return has handily beat the S&P 500 index.
Not only has its returns exceeded that of the S&P 500 index, it has done so with roughly half the risk (volatility).
Morningstar claimed that FX2 was the top performing Fixed Income SMA among its peer group in the last significant interest rate spike of 2016.
Additionally, Morningstar has ranked Durig Captial’s FX2 portfolio as the top performing Fixed Income SMA for Trailing 1-year, 3-year, and 5-year returns, as well as for Q1 and Q2 of 2018, amongst a peer group of over 800 SMA’s.
Informa ranked FX2 1st in performance in 1,2,3 and 5 year return categories, as well as since inception, as compared to its peers in Short-Term Fixed Income.