Saturday, August 27, 2016

TLH Weekly Review - August 27, 2016

"Man this market is dull - it's awesome"

Said no one ever!  Actually a lot of people have probably said this privately, but not in public.  Even with some conflicting remarks from Janet Yellen on Friday the S&P 500 moved a scant -0.16% on the day and down just -0.7%(14.71 points) for the week.  Not exactly earth shattering moves.

As we enjoy the last few weeks of summer I'll keep this post light. Especially since the portfolio was very quiet.

On Friday Janet Yellen and Co. gave a few remarks that confused a lot of people. Was she hawkish, or was she dovish? Depends on what you want to believe.

Wednesday, August 24, 2016

The Dow Dropped 1,089 Points

If I didn't mention it I bet most of you would have forgotten last year the Dow dropped 1,089 points exactly 1 year ago.

On August 23rd the Dow closed at 16,459. The following day on August 24th the Dow traded as low as 15,370. That's a 6.6% drop

The "Oil Indicator"

Not to long ago I discussed the Election Indicator, and it's surprising ability to accurately predict the election 86% of the time. Of course that indicator was the stock market which is a barometer of the business economy.

Here is another indicator we heard a lot about this past year.  It's the "Oil Indicator". 

Tuesday, August 23, 2016

The Self-Driving Investment

OK so I guess I'll admit right off the bat the article headline is just slightly mis-leading.  Today I want to talk about Ford's announcement to produce fully autonomous vehicles. In case you aren't aware there are already fully autonomous vehicles on the road.  A prime example is Google's self driving car fender bender fiasco.

But technology is always a hard area to invest with individual companies. Premiums are quickly bid up, and you never know when the next change is around the corner. Unfortunately technology is essential to growth, but is best had in a passive index fund in my opinion for the majority of people. Or basically by a fund which tracks the Nasdaq.

A lot of people want to invest in this area since they see it as the next "Big Thing".  Tesla has been made famous by their super fast electric vehicles ability to change lanes and park itself.   A process it gets even better at over time.  Their technology was provided mostly by Mobileye(MBLY) until their recent decision to part ways.  Mobileye is one of the few publicly traded companies out there with this type of technology, Google is another, and it's speculated Apple is in on the game too. The problem is it's not so easy to invest in this area outside of traditional automakers.

Each represents their own challenges. For one MBLY is trading at a pretty high valuation, although the pullback that ended in February did provide a decent opportunity for those willing to take some risk. They aren't the only ones with this technology. In fact it appears Ford developed their technology with in house engineers and other companies. They never even mention Mobileye in their recent press release. Reminds me of cell phone companies in the 90's and early 2000's. Just ask investors in Blackberry, Motorola, or Nokia how they have fared. Unless the company can continuously outdo the in-house technology from automakers, and competitors, it will be tough for them to maintain this premium.

Google is predominantly a search and advertising company that's slowly morphing into a content/data/business services enterprise.  I don't doubt they'll figure out a way to get a piece of the action, but it's not going to be their focal point which doesn't make it a clear cut investment in this space right now. The stock has been an absolute beast in performance terms so maybe its best to own it for what it is.

Apple is the technology investors poster child. The company initially had a lot of success. Almost went bankrupt, and then came roaring back into the worlds most dominant company.  If it does turn out they have some type of technology they've been developing in the field it might be an intriguing play. But for now count them out of the self-driving vehicle scene. 

Tesla on the other hand is in my opinion not fit for most investors right now. I just like to look at this metric to make my point. They are valued at $33 billion right now. But they barely sell 100k cars each year. That means each car is worth $330k in market cap. Compare that to any other major automaker selling millions of vehicles with reasonable market caps. Whether or not Tesla can meet it's forecast to sell 500,000 vehicles by 2018 remains to be seen. Even if they do reach that milestone each vehicle sold in market cap terms is worth $66k right now. Hope they don't slip up.

That leaves the other automakers. They'll be the ones making the actual vehicles as always so no change here.  However I don't see margins getting miraculously huge because of this.  At first their major self-driving cars customers will be companies using these vehicles for profit. Or in other words the dreaded fleet- vehicle sale accompanied by thin margins. The buyers own profit motive will drive them to seek low prices, and will likely buy in bulk to negotiate discounts.  That doesn't sound like margin expansion to me.  But plenty of them have plans to introduce fully autonomous vehicles. I think in the automotive space let a few other companies release details of their self-driving plans and go from there.  Whoever gets the biggest lead with the best looking technology might keep a leg up on the competition for awhile.

It doesn't mean the performance of any of these companies will be bad, or that lots of money will be made in this sector.  I'm betting there will be at least a couple of names that benefit greatly from this trend. What I do know is that it's too difficult to pick a winner right now.  These cars aren't even for sale yet with the exception of Tesla's semi-autonomous models. So for now I'd stand pat and continue to invest in solid companies that sell great products, have wide moats, and a solid operating history. Just like the ones found in our portfolio.

Saturday, August 20, 2016

TLH Weekly Review

Boring. That's what this market continues to be.  Even with the FOMC minutes released this week we only saw a 0.6%(15 points) move for the day, and S&P finished flat for the week.  In different times we might have seen 1-2% moves.

Some will attribute it to the "Summer Market", and all the big boys are out on vacation.  That has a little truth to it, but it doesn't account for all the low volatility.  The S&P 500 has just not been that volatile of late, which is a great thing!

Look at how the daily changes in the S&P have continued to drop all year, with the exception of the Brexit vote.  Frankly there just isn't much to worry about now and I think that was evidenced by the barely large moves we've been seeing even on Fed and ECB meeting days.

Yet that is totally fine with me.  I like boring.  In fact most of our stocks are "boring".  Boring means things change little on a daily basis, but over time continue to rise as the money rolls in. It has been tough though to find really good deals in this market. The majority of high quality names even have low yields as judged by NOBL, the ETF loaded with dividend aristocrats barely yields above 2%. Although we have plenty of high quality on our list yielding above 3%(DEO, BUD, CMI, RAI, PG, PM, VGR, HCP, MO, BTI, EMR).

We had the FOMC minutes released this week, and there really wasn't much of a reaction overall Don't confuse no rate hikes as good, and rate hikes as bad.  While the initial market reaction can be in either direction, history has shown in general equities trend up with rising interest rates.

Then we started to see some disagreement behind the scenes from two Fed Presidents. William Dudley, and John Williams both came out recently stating they felt rates needed to be raised. Either way the market is finally starting to think rates might go up this year. In fact futures traders now foresee a 53% probability of rates getting hiked by December.  This meeting wasn't the most clear on direction, and I think that's a very calculated message.  Some took the notes as "dovish", but I think the Fed is really starting to wonder about which month they'll raise rates. 

Inflation data was flat this week showing a 0.08% increase excluding food and energy.  While on the whole this is running beneath the Fed's target rate, it continues to inch up for the most part. While the strong dollar and low energy prices have been able to keep a lid on prices, it doesn't mean everything is gloomy. 

We saw Industrial Production increased at a healthy pace.  The 0.7% increase was one of the largest since November 2014, and a lot of that weakness was attributed to the dollars rise during that time. With the dollar trending flat this year manufacturers have been able to handle currency pressures much better.  We've seen some pretty income numbers recently, and eventually higher wages and production will work it's way into the economy.

Not so boring week for a some portfolio members

Hain Celestial dropped a bombshell on us. I ended up selling part of the shares as a result.  The company noted they had accounting revenue recognition issues. You never like to see accounting issues when you own a stock.  The company did note it would not affect the amount of revenues, but the timing. No matter what, what worries investors is if they find out who actually knew of the problem and if it was not accidental. The company played it off that it wasn't, but I'm always skeptical.

The bigger issue is they announced they'll miss earnings. Considering just last quarter they issued no warning, things have changed quite a bit over the summer.  I think this earnings miss will be big.  If it wasn't they would have announced a new EPS range changed maybe 5 cents from prior guidance. That's what concerns investors.  Competition is getting stiff, and when the company started trading higher on buyout valuations(due to WWAV) you get the perfect storm for a multiple contractions.  I'm expecting the stock to start trading at a P/E under 20 for the foreseeable future.

Emerson Electric announced they'll be buying Pentair Plc valve and control unit.  The market didn't like the news and initially sent the stock down more than 5%.  The shares recovered a bit, and ended the day down around 3%.  I'm not sure what the margins are in this business, but I hope they are good.  Considering the company has been selling low margin divisions to re-invest into higher margin areas it better fit the bill.  I'll have to take some time to research.  The company has just shed about $5 billion in assets, and has now spent more than half of it with this $3 billion purchase.

In more cross border transaction news our recent pick Praxair(PX) announced they are in merger discussions with European counterpart Linde AG.  This combination would create the worlds largest industrial gas company worth nearly $60 billion.  Shares of PX popped higher on the news so it appears investors like the idea. I'm considering adding more shares if they fall back down a bit with this news as a nice tailwind.

That's all for now. Have a great weekend!

Wednesday, August 17, 2016

Sell Hain Celestial

I thought about it all day, night, and into this morning.  What was I going to do with the portfolio's Hain Celestial holdings.  The news wasn't good, and the subsequent 27%+ drop felt even worse. 

It feels bad for a number of reasons. One I had such high hopes for the company especially following the WhiteWave acquisition.  It made me feel good to see other big CEO's were seeing opportunity in the healthy food sector.  Second is I use and love some of their products because I believe that higher quality, healthier food, is better for our bodies. Yet it's not always good for the investment pocketbook :(

It feels the worse to know you were just dead wrong on something. It's never easy admitting you were wrong on a company.  Either way I decided to meet halfway on my decision to sell.  I decided to sell half the shares in the portfolio.  For bookkeeping purposes I'm selling the first "add" from when I started this endeavor.  Remember the first add when I started this site in October does not represent my actual buy prices. They represent the price of the stock that day.  The reasoning was I felt it was improper to include my original buys since some holdings had already been held for years, and I only decided in October 2015 to take my tracking online. It just didn't seem fair to bring that past success into my performance. Instead I was willing to show that over time as I made more picks I could still beat the market. 

That will bring the total HAIN portion of the portfolio to less than 1% of the holdings, which I feel comfortable with. I still think the company has products that are very valuable. I also think that in 5 years there are a few scenarios that could be played out.  One is the company could still receive a buyout offer after this clears up.  Second is I think this will force management to refocus on it's strategy.  I'm hoping they cut a few more brands, and reinvest in their best performers. That I think they can do.  So I don't want to completely miss out on any future upside, but I am not willing to have as much capital on the line.  That would have been a good thought last week!

I do think this will all take quite some time to clear up. And judging from the technical damage on the chart possibly over a year is my best guess.  Plus it remains a real possibility the multiple investors are willing to pay for earnings will decline. That will keep a lid on the stock as it was already fetching a higher premium.  In the mean time I could be missing out on plenty of other investing opportunities.  A few examples in my opinion right now are DEO & EMR.  It keeps getting harder to find value in this market, but with our current holdings these two stand out.

*Shares were sold at $38.00

Tuesday, August 16, 2016

CPI & Inustrial Production

Today we received CPI and Industrial Production numbers.

CPI overall came in flat with 0.0% change. However excluding Food and Energy prices rose 0.8% in the last year.  Basically food and energy are dragging down consumer prices. Or in other words we are seeing some deflation in this sector still.

We actually have been getting good results on the Industrial side of our economy.  After taking another dip at the beginning of the year production has continued to increase in the spring and summer. In fact the 0.7% increase was the largest since November 2014. Since that time industrial production was hitting a rough patch as it faced off with a stronger dollar, and some slow downs overseas. It appears that pressure has abated somewhat for now.


Late last night Hain Celestial announced they were delaying their fiscal year end 10-K filing, Q4 results, and the big whopper an investigation into accounting issues. More specifically their accounting issues revolve around revenue recognition to distributors. It was not named which distributors they had issues with.  Oh and then they included this little nugget.

"Separately, the Company does not expect to achieve it's previously announced guidance for fiscal year 2016."

This all pisses me off for a few reasons. One is I don't see why they wouldn't have caught the revenue issue before. If not then shame on them and it highlights carelessness.  I don't care if there will be zero net revenue changes, just shuffling to different periods. Also in one news release this morning it stated both the CFO and CAO have announced resignations in recent months. While I normally don't follow that type of news I feel some dots are now being connected.  When I see that I start to think it's likely they both new of the issue and decided to leave while the going was good. Also it then seems plausible they were condoning of the issue and  decided to go along with CEO/Board pressure to skew results. Then when it seemed they could no longer keep it up they leave and the company is forced to announce they'll miss earnings like they did today.

The announcement they'll miss earnings is really angering.  Just in May the company stated Q4 non-GAAP EPS should come in at $2.00-$2.04 .  How big of a miss this will be is going to be fun to watch.  Of course not fun for the portfolio!

So now I have 3 options.
  1. I sit tight and wait to see how this all pans out. 
  2. I sell.
  3. Or maybe the craziest option I buy more right now because they company is over $1 billion cheaper than it was yesterday.  
What's funny is I noticed some strange volume and price action the last two days. I feel even worse for the person who likely bought Friday on the tip of "big news coming out soon", only to find it was really bad news. Actually never mind I don't feel bad for that person trying to use inside information.
I'll have to think about what course of action I'll take, and I'll update this post when I do decide. Might take me an hour or a week. Tough decision as I really liked the potential here, especially after the WWAV buyout.

The Election Indicator

Right now as a side effect of the elections you'll hear about the Election Year Indicator.  It's part of a group of indicators people have come up with over the years to correlate with the market. While this is one is likely the most famous let's not forget about the Super Bowl Indicator, Lipstick Indicator, Women's

Monday, August 15, 2016

Stumbling Upon Opportunity Outdoors?

Just last week while on an awesome 32 mile bike ride I was thinking about how hard it is to buy into certain sectors in the outdoor category.  Specifically the firearm, hunting, and cycling industries.  Probably not topics everyone else thinks of while cycling, but I also brought Investor's Business Daily to read during my 8th grade lunch.

Not that I was dead set on buying something, but it's one of the few sectors with not a lot of publicly traded names. The reason being is I love the outdoors and devote a lot of my time, and hard earned money to these industries. I'm an avid skier, hunter, cyclist, hiker, and general outdoor enthusiast for those interested. I feel like there is nothing more rewarding then spending time doing outdoor activities. Plus it follows my theme of buying what I love(examples are DEO, COST, HAIN, MKC).

Off the top of my head I can think of the following companies related to this space:

Saturday, August 13, 2016

TLH Weekly Review

You have to treat investing like shopping at the mall. You buy when there is a sale.  - The Long Haul Investor

Now I'll be the first to admit even I don't always buy when everything is on sale. In fact off the top of my head I can recall my Costco purchase where I nailed buying at the top in December 2015. Pat myself on the back for that one! Of course it's taken a full 8 months for the price to finally reach that level again.  Ah mistakes, only good if you learn from them.

Visit to see more great charts.
Now stocks have calmly been trading near all time highs,

Friday, August 12, 2016

It's Up How Much!?!?

The year might have started out rough, but the S&P 500 is up 20.6% since it's February 11 low to today's high!  Good thing we don't follow market idiots(sorry smart people) like Jeff Gundlach.  These people could care less about the average investor trying to make a living. If you listened to schmucks

Banks Feel the Heat?

Here is an article I came across that I meant to comment on.  Apparently the big banks are starting to feel the heat just a bit as nimbler financial services companies are eating into their transaction volume.

The article specifically mentions Venmo,

Thursday, August 11, 2016

Equal Weight Versus Market Cap

Here is a chart depicting the SPY(cap weighted) versus the RSP(equal weight) ETF's for the S&P 500 during August 2006 through August 2016. For those that are unaware these are two passive index ETF's.

Tuesday, August 9, 2016

Earnings - WWAV & HCP

This morning WhiteWave Foods(WWAV) reported Q2 results with EPS of $0.29 on revenues of $1.05 billion up 14%. Excluding acquisitions sales were up 7%.  That's a strong quarter, and of course during this time they announced their acquisition by Danone.  I find it funny that Dean Foods which is a full blown dairy company spun-off WhiteWave to unlock value.

Friday, August 5, 2016

Earnings - CHD, CTSH, UVV

Church & Dwight(CHD) reported Q2 results with EPS coming in at $0.85 on revenues of $877 million.  The company also announced a 2-1 stock split effective Sept 2nd, in addition to it's 462nd consecutive dividend. The company noted nice gains in it's laundry detergent sales, and noted lower commodity costs are helping margins. The shares have moved up since the announcement, which is nice but I would have liked them to fall so I could buy more! The company guided Q3 EPS at $0.92.  Here is the CEO statement.

Matthew T. Farrell, President and Chief Executive Officer, commented, “We are extremely pleased with our sales and earnings growth as our strong momentum has continued. Our first half gross margin expansion gives us flexibility with respect to our second half marketing and promotional investments. We continue to believe that innovation is the key to increasing our market share and have launched new products in many of our major categories including BATISTE, the #1 global dry shampoo, and ARM & HAMMER bi-layer and dual chamber unit dose laundry detergent.”

Cognizant Technology Solutions(CTSH) reported Q2 EPS of $0.41 on revenues of $3.37 billion.  EPS was impacted $0.31 by a one time remittance of cash from India to the US and other locales(and people wonder why no one brings their cash back home).  I'm pleased with Cognizant's revenue growth, and their focus on providing value to other business'. The company expanded it's share repurchase program by $1 billion and until December 2018. Overall very nice results from the company. The shares initially took a hit, but have since recovered and are now up 1.5% as I write this. Here is their statement regarding the cash repatriation, and CEO comments.

In May 2016, our principal operating subsidiary in India repurchased shares from its shareholders, which are non-Indian Cognizant entities, resulting in a one-time remittance of $2.8 billion of cash from India. $1.2 billion, or $1.0 billion net of taxes, was transferred to the U.S. with the other $1.6 billion remaining overseas. As a result of this transaction, we will incur an incremental 2016 income tax expense of $237.5 million, of which $190.0 million was recognized in the quarter ended June 30, 2016 and approximately $23.7 million will be recognized in each of the quarters ending September 30, 2016 and December 31, 2016.

"Our second quarter performance, as anticipated, represented broad-based revenue growth across service lines, geographies and industries, including healthcare and financial services," said Francisco D'Souza, Chief Executive Officer. "While our revised guidance reflects the impact of near-term macroeconomic headwinds, our longer term outlook and underlying business fundamentals remain strong. We continue to see an expanding market opportunity ahead and are well positioned to capitalize on the digital transformations taking place among enterprises around the world."

"The shift to digital continues to intensify and accelerate," said Gordon Coburn, President. "Our strong second quarter revenue growth, adding incremental quarterly revenue of nearly $170 million, is the result of clients turning to Cognizant to help them define strategy and infuse new technologies to address key challenges and implement new business models. Our robust strategy and implementation capabilities have made us a key partner to clients as they fundamentally transform their businesses and navigate the shift to the digital economy."

"During the second quarter, we were pleased to execute a one-time remittance of $2.8 billion from India, which increased our cash in the U.S. by $1.0 billion, net of taxes, and in other international markets by $1.6 billion," said Karen McLoughlin, Chief Financial Officer. "This provides additional financial flexibility in funding our strategic investments to drive long term growth for Cognizant."

Universal Corp(UVV) reported fiscal year 2017 Q1 results with EPS coming in at -$0.40, on revenues of $295 million. This is a quiet quarter for the company as it falls in their seasonal quiet time. The next quarter after harvest begins will be more exciting. The company is operating as normal, and given the reaction in price today the market likes it as the shares are up over 5%. Here is the CEO statement.

Mr. Freeman stated, "Our seasonally weak first quarter results were in line with our expectations, as we anticipate that fiscal year 2017 will develop similarly to the past several fiscal years, with volumes weighted to the second half of the fiscal year. Results for our North America segment improved on increased volumes, largely due to carryover shipments from changes in the business model there. However, higher currency remeasurement and exchange losses, primarily in our Other Regions segment, negatively impacted our results. Lower crop levels in Brazil from El Nino weather patterns, coupled with our decision to reduce our buying program there due to escalating and unsustainable green leaf prices, reduced our Brazilian purchasing and processing volumes in the first fiscal quarter. We expect decreased volumes from that origin to continue to affect our results throughout the fiscal year. Our global leaf production estimates indicate a return to historical crop levels in Brazil's 2017 growing season, for which plantings are currently underway

Wednesday, August 3, 2016

Sell Your Stocks!!!

I'm sure you might be surprised to see that statement coming from me. I mean I'm THE LONG HAUL INVESTOR.  I don't sell my awesome companies cause some guy I don't know said so.  But if you watched any television or news this week quite a few "smart people" think you should.

Earnings - BTI, EMR, PG, CMI

First of all I'd like to apologize for not including BTI in my recap last week. They reported July 28. My broker does not always get the earnings announcements for ADR's out correctly. My guess is some type of software glitch. I normally try to check the ADR's manually if I suspect a notice has not been sent, and that doesn't always mean I'll catch it in time. Either way here is the recap for companies that have reported so far.

British American Tobacco(BTI) reported half-year results EPS at 143.8(GBP) on revenues up 4.2% to 6.6 billion(GBP). The company is our only tobacco name that has reported higher volumes(3.4%). Additionally they are benefiting from the weaker British Pound, which is opposite the majority of our holdings which are USD based. The company also announced it's half year dividend which will be 51.3 pence up 4% from last years. The company highlighted their vaping business in the press release.

The global vapour products category continues to grow at a significant rate and, following the geographic expansion of Vype, we are now present in the biggest vapour markets outside of the US. Vype is performing extremely well - having reached 9% category retail share of market in the UK, as measured by AC Nielsen, and an estimated category retail share4 of 8% in Germany and 5% in France. It is now available in several innovative product formats, with new product launches and upgrades planned for this year. Further expansion to new markets are planned later in the year and into 2017.

Emerson Electric(EMR) reported Q3 results with EPS coming in at $0.74 on revenues $5.12 billion.  The company also announced the sale of it's Network Power business for $4 billion, and their Leroy-Somer and Control Techniques business for another $1.2 billion. If you are wondering why they sold the Network Power business it is actually the lowest margin business in the company. Ironically it also was the only one showing revenue gains this quarter.  Guidance continues to reflect a weak sales outlook, and EPS to be in a range of $2.37-$2.55. At this level shares have a price yield of 4.4%, but the dividend is still 3.4%.  I'd say that's fair value, and considering this is a dividend king it's one of the few places investors can get a decent yield. I'd put fellow portfolio holding PG in here as well, and I'll highlight that next.  I think EMR's CEO statement perfectly sums up the way things are in the world right now(the first sentence that is).

“We continue to operate in a market defined by a heightened level of uncertainty due to economic and political conditions around the world, making the efficient execution of our strategic plans even more critical,” said Farr. “With the majority of our restructuring programs complete, we remain keenly focused on the completion of our outstanding initiatives for 2016 while continuing to face these challenges head-on. The progress we've made on the restructuring programs and the strategic portfolio repositioning is further proof of Emerson's ability to remake itself in order to meet the evolving needs of our customers and to drive profitability and growth across our businesses.”.

Procter & Gamble reported their fiscal year results with EPS coming in at $0.69 on revenues of $16.1 billion.  For the full year the company reported EPS at $3.69 on revenues down 8% to $65.3 billion. The company is going through some sluggishness right now as increased competition in some segments has hurt sales, plus currency headwinds too.  Either way the company has increased dividends for 60 years, and currently yields 3.1%.  It's a little richly valued with an earnings yield of 4.2%, but consumer staples have long commanded a premium.  Their 2017 guidance for GAAP isn't so straightforward due to this years Venezulean adjustments so I'll take their "core" EPS projection of mid single digit growth to estimate 2017 GAAP EPS around $3.75-$3.80. Make no mistake the company is still a cash generating machine. Here is the CEO statement.

“The fourth quarter was another period of progress driving P&G’s results to a balance of strong top-line growth, bottom-line growth and cash generation,” said Chairman, President and Chief Executive Officer David Taylor. “We grew organic volume and sales in all reporting segments. We increased investments in innovation and advertising, funded by strong productivity improvement. Looking forward, we’re committed to continued productivity improvement and cost savings that provide the fuel for innovation and investments needed to accelerate and sustain faster top-line growth. We expect fiscal 2017 to mark another significant step toward our goal of balanced growth and value creation and total shareholder return in the top third of our competitive peer group.”

Next up is Cummins Inc(CMI) which reported Q2 EPS of $2.40 on revenues of $4.5 billion.  CMI hasn't been immune to sales and EPS falling either, but the company still turned in a solid quarter. The company is seeing more weakness than expected in North America.  However the company increased it's dividend 5.1% to $1.025 next quarter. The new yield is 3.3%. The company actually lowered full year revenue guidance 8-10%, but investors and traders seemed to have shrugged this off.  Here is the CEO statement.

“We made strong progress in our cost reduction initiatives in the second quarter, while continuing to invest in and launch new products that will drive profitable growth in the future,” said Tom Linebarger, Cummins Chairman and CEO. “Benefits from restructuring actions, material cost reduction initiatives, and improvements in product quality helped to mitigate the impact of weak demand in a number of our largest markets and will position the Company for stronger performance when markets improve. We have returned more than $1 billion to shareholders so far this year, through a combination of dividends and share repurchases. Our Board of Directors recently approved an increase in our quarterly dividend of 5.1 percent, consistent with our plans to return 75 percent of operating cash flow to shareholders in 2016,” concluded Linebarger.