The Wax Report - Week Ending 02/10/2017

The dapperly managed Wax Ink Portfolio was up 0.2% for the week.

By comparison, the Dow was up 1.0%, the Nasdaq was up 1.2%, the S&P 500 was up 0.8%, the Russell 2000 was up 0.8%, and the Volatility Index, commonly known as the VIX, was down 1.1%.

With 323 days remaining in 2017, the Wax Ink portfolio is up 0.6%, the Dow is up 2.6%, the Nasdaq is up 6.5%, the S&P 500 is up 3.5%, the Russell 2000 is up 2.3%, and the VIX is lower by 22.7%.

Portfolio Summary
The portfolio breakdown is roughly 52% cash, 48% equities, and 0% bonds. The current value of portfolio cash on a per share basis is $25.41 and the current value of portfolio equities on a per share basis is $23.66, making the average per share price $49.07.

The average baseline valuation estimate of all equities currently held in the Wax Ink Portfolio is $30.62 and the average market closing price of all equities held in the Wax Ink Portfolio is $26.18, making the current portfolio growth potential factor 14.5%.

Hydrocarbon Prices
WTI Crude ended the week at $53.86, up 0.1%, while Brent Crude ended the week at $56.70, down 0.2%, creating a crude price spread of $2.84, a decrease of 4.7%. Distillate RBOB Gasoline ended the week at $1.5896, up 2.3%, and Heating Oil ended the week at $1.6659, unchanged, moving the Gulf Coast 3:2:1 Crack Spread (two barrels of gasoline + one barrel of heating oil – three barrels of crude oil) / 3) to $13.97, an increase of 7.6% for the week. Natural Gas ended the week at $3.03, down 1.0%.

Year to date WTI Crude is higher by 0.2%, Brent Crude is lower by 0.2%, Natural Gas is lower by 18.5%, RBOB Gasoline is lower by 4.9%, Heating Oil is lower by 3.6%, and the Gulf Coast 3:2:1 Crack Spread is lower by 19.1%.

Treasury and Bond Yields
The 5 Year Treasury ended the week at 1.86, down 1.6%, while the 10 Year Treasury ended the week at 2.40, down 2.0%. The 5 Year AAA Municipal Bond ended the week at 1.41, up 6.0%, and the 10 Year AAA Municipal Bond ended the week at 2.33, down 0.4%. Lastly, the 5 Year AAA Corporate closed the week at 2.05, down 1.4%, with the 10 Year AAA Corporate ending the week down 1.3% at $3.05.

Year to date the 5 Year Treasury is down 1.6%, the 10 Year Treasury is down 0.8%, the 5 Year AAA Muni is down 19.9, the 10 year AAA Muni is down 9.0%, the 5 Year AAA Corporate is down 0.5%, and the 10 Year AAA Corporate is up 0.7%.

Fair Warning
Please remember that the minimum holding time for shares in the Wax Ink portfolio is 60 months (1825 days), and unless otherwise stated, I have no position in any stock mentioned in this report.

As companies file their latest SEC 10-K information, I will be updating my baseline valuation worksheets, so expect to see changes in the average per share baseline valuation numbers over the coming few weeks. Baseline valuation changes noted this week were the result of valuation changes in The Goodyear Tire and Rubber Company, which has been part of the Wax Ink portfolio since 2011.

Baseline Valuation Estimates and Worksheets
Baseline Valuation Estimates are initial valuations which Accredited Investors, after completing their own due diligence, can either increase or decrease in accordance with their individual risk tolerance or investing philosophy.

Financial data used in the creation of each Baseline Valuation Estimate is the most recent SEC 10-K ANNUAL financial data as reported to the U.S. Securities and Exchange Commission.

Archived worksheets may be downloaded by going to the Worksheets page at the site and selecting an industry which will move you to all of the worksheets I have updated for the selected industry.

Worksheets
Worksheets were either created or updated during the week for the following companies.

Energizer Holdings, Inc. (NYSE: ENR) - FYE 09/2016
Edgewell Personal Care Company, Inc. (NYSE: EPC) - FYE 09/2016
Ashland Global Holdings, Inc. (NYSE: ASH) - FYE 09/2016
Bloomin' Brands, Inc. (Nasdaq: BLMN) - FYE 12/2015

Baseline Valuation Estimates
Baseline valuation estimates are determined through fundamental analysis of the listed company's most recent annual financial information. Because these valuations are never exact, what is presented here is a baseline valuation range. Baseline valuation estimates were either created or updated during the week for the following companies:

Energizer Holdings, Inc. - $25-$26
Edgewell Personal Care Company, Inc. - $25-$26
Ashland Global Holdings, Inc. - $14-$24
Bloomin' Brands, Inc. - $25-$28

Growth Only Valuation Estimates
Growth only valuations are determined utilizing current pricing levels, year over year earnings growth, dividend yield, the current PE ratio, and an earnings growth estimate. Because growth only valuations are EXTREMELY volatile, what is presented here is a single growth only valuation estimate. Growth only valuation estimates were either created or updated during the week for the following companies:

Energizer Holdings, Inc. - $54
Edgewell Personal Care Company, Inc. - $54
Ashland Global Holdings, Inc. - $110
Bloomin' Brands, Inc. - $24

Investment Summaries
Energizer Holdings, Inc. - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)

Edgewell Personal Care Company, Inc. - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)

Ashland Global Holdings, Inc. - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)

Bloomin' Brands, Inc. - Neutral - the current baseline valuation and key performance indicators (KPIs) are mixed for investment consideration at this time (Hold)

Future Value Estimates
This is a new baseline metric I will be adding to the worksheet using prior five year data I have collected to determine what a reasonable average future value for a stock could be based on a five year hold. In addition, the worksheet will highlight the future values year by year.

I am still working through the application of the data and doing some back testing which of course is a slow process for me, but I hope to have this completed in a couple of weeks depending on my schedule at work, so more to come.


Have a great week.

Wax

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