The Wax Report - Week Ending 11/04/2016

The Wax Report - Week Ending 11/04/2016
The wretchedly managed Wax Ink Portfolio was down 8.0% for the week.

By comparison, the Dow was down 1.5%, the Nasdaq was down 2.8%, the S&P 500 was down 1.9%, the Russell 2000 was down 2.0%, and the Volatility Index, commonly known as the VIX, was up 39.0%.

Year to date, the Wax Ink portfolio is down 30.4% on a per share held basis, the Dow is up 2.7%, the Nasdaq is up 0.8%, the S&P 500 is up 2.0%, the Russell 2000 is up 2.5%, and the VIX is higher by 23.6%.

Portfolio Summary
The portfolio breakdown is roughly 52% cash, 48% equities, and 0% bonds. The current cash value on a per share basis is $22.36 and the current equity value on a per share basis is $20.64 making the average per share price $43.01. The average baseline valuation estimate of all equities currently held in the Wax Ink Portfolio is $30.47 and the average market closing price of all equities held in the Wax Ink Portfolio is $26.30, making the current portfolio equilibrium factor (13.67%).

Hydrocarbon Prices
Two numbers often watched by oil traders are the Crude Spread (Brent Crude less WTI Crude) as well as the Gulf Coast Crack Spread (two barrels of gasoline + one barrel of heating oil – three barrels of crude oil) / 3). These numbers are now apart of The Wax Report.

WTI Crude ended the week at $44.07, down 9.5%, while Brent Crude ended the week at $45.58, down 8.3%, creating a crude price spread of $1.51, a change of 49.5% for the week. Distillate RBOB Gasoline ended the week at $1.3789, down 6.2%, and Heating Oil ended the week at $1.4303, up 7.3%, moving the Gulf Coast 3:2:1 Crack Spread to $14.56, up 3.7% for the week. Natural Gas ended the week at $2.78, down 10.6%.

Year to date WTI Crude is higher by 19.0%, Brent Crude is higher by 22.3%, Natural Gas is higher by 18.8%, RBOB Gasoline is higher by 8.5%, Heating Oil is higher by 27%, and the Gulf Coast 3:2:1 Crack Spread is higher by 1.6%.

Treasury and Bond Yields
The 5 Year Treasury ended the week at 1.21, down 8.3%, while the 10 Year Treasury ended the week at 1.76, down 3.8%. The 5 Year AAA Municipal Bond ended the week at 0.95, up 3.3%, and the 10 Year AAA Municipal Bond ended the week at 1.54, down 7.8%. Lastly, the 5 Year AAA Corporate closed the week at 1.40, down 4.8%, with the 10 Year AAA Corporate ending the week down 1.2% at $2.40.

Year to date the 5 Year Treasury is down 30.5%, the 10 Year Treasury is down 21.8%, the 5 Year AAA Muni is down 23.4%, the 10 year AAA Muni is down 28%, the 5 Year AAA Corporate is down 26.3%, and the 10 Year AAA Corporate is down 17.8%.

Fair Warning
During the course of the week I added shares of Graham Corporation and Wabash National Corporation to my portfolio. With these two exceptions, I have no investment positions in any of the stocks mentioned in this report.

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.

Schlumberger Limited (NYSE: SLB) - FYE 12/2015
Halliburton Company (NYSE: HAL) - FYE 12/2015
Modine Manufacturing Company, Inc. (NYSE: MOD) - FYE 03/2016
Abaxis, Inc. (Nasdaq: ABAX) - FYE 03/2016
Orbital ATK (NYSE: OA) - FYE 03/2016

Baseline Valuation Estimates
Baseline valuation estimates are determined through fundamental analysis of the listed company's 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:

Schlumberger Limited - $53-$59
Halliburton Company - $41-$50
Modine Manufacturing Company, Inc. - $15-$20
Abaxis, Inc. - $34-$43
Orbital ATK - $38-$39

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:

Schlumberger Limited - $75
Halliburton Company - $44
Modine Manufacturing Company, Inc. - $11
Abaxis, Inc. - $53
Orbital ATK - $73

Investment Summaries
Investment summaries are determined based on fundamental valuation of the underlying equity AND a minimum hold of 60 months (5 years). Investment summaries were issued during the week for the following companies:

Schlumberger Limited - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)

Halliburton Company - Neutral - the current baseline valuation and key performance indicators (KPIs) are mixed for investment consideration at this time (Hold)

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

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

Orbital ATK - Negative - the current baseline valuation and key performance indicators (KPIs) no longer favor investment consideration (Sell)


Have a great week.

Wax

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