Outperformance No Matter How You Measure It
March 20, 2019
Image shown: The performance of Valuentum’s simulated Best Ideas Newsletter since the inaugural edition of the newsletter, July 13, 2011. We migrated to a weighting range format for the Best Ideas Newsletter portfolio ideas beginning in 2018. At that time, Visa (V) was the top weighting by far at 8.6%. Shares of Visa have soared since, and other ideas haven’t been too shabby either! Source. Valuentum’s Best Ideas Newsletter portfolio is in a class by itself. Did you know that ~90% of active fund managers are underperforming their benchmarks over prolonged periods of time? The lack of volatility of the simulated Best Ideas Newsletter portfolio had been driven by its massive average cash “weighting” of 25% during its history, something we
It Definitely Is a *Best* Ideas Newsletter!
March 20, 2019
Image shown: Valuentum migrated to a weighting range format for the Best Ideas Newsletter portfolio ideas beginning in 2018. This article was sent to members via email March 15. By Brian Nelson, CFA I was on social media the other day, and somebody was asking whether there would be more engagement/likes/appreciation from a picture of a cat than if someone were to put up great stock picks year after year. I think the poll came back in favor of the cat pictures! It’s an interesting time, and investors are tuning out great research because they simply don’t know what to listen to. They don’t know the real deal, and that’s why writing Value Trap: Theory of Universal Valuation was so important. It’s
Lockheed Martin May Be a FCF Cow But the Company Should Consider Debt Reduction Over Share Buybacks
March 19, 2019
Image Source: Lockheed Martin By Callum Turcan Known around the world as the manufacturer of F-35 stealth fighters and Blackhawk Helicopters, Lockheed Martin Corporation (LMT) is the world’s leading defense contractor and as of this writing yields a nice 3.0%. While burdened by a significant net debt load, Lockheed Martin has consistently been a free cash flow cow enabling the firm to sport decent dividend coverage. Last year, 70% of Lockheed Martin’s net sales came from the US government, highlighting how domestic annual defense spending levels are very important to the company’s financial performance. Growing Backlog Lockheed Martin’s order backlog stood at $130.5 billion at the end of 2018, up 24% or $25.0 billion from year-end 2017 levels. The company
Why We’re Staying Away from KLX Energy Services for Now
March 18, 2019
Image Source: KLX Energy Services By Callum Turcan KLX Energy Services Holdings Inc (KLXE) is the product of a major corporate restructuring, as the oilfield services side of KLX was spun-off to shareholders while the aerospace business was acquired outright by Boeing Company (BA) in an all-cash deal worth $4.25 billion (including the assumption of $1.0 billion in debt) last year. Going forward, the new KLX Energy Services is focused on providing well completion, well intervention, and drilling services to America’s upstream oil & gas industry. A key consideration is that as a more focused enterprise, KLX Energy Services should be able to better perform in a tough space to be in right now. Note that the company does not
Our Reports on Stocks in the Major Airlines Industry
March 17, 2019
Image Source: Cory Hatchel Structure of the Major Airlines Industry The airline industry has undergone meaningful changes since the beginning of the last decade. The painful restructuring by most of the legacy carriers via Chapter 11, significant consolidation by the majors, the introduction of ancillary revenue streams, and the ongoing efforts to rightsize capacity to slow weakening real yields are but a few. Though unarguably these are steps in the right direction, airlines remain shackled to the very poor structural characteristics of their industry, which has sent more to bankruptcy than any other in our coverage. Airline stocks should be viewed as merely speculative bets. We have dropped coverage of the Major Airlines industry.
DG Newsletter Alert, Markets on a Roll! New Highs Coming?
March 15, 2019
Image shown: We notified members December 26 that we had moved the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to a “fully invested” position, from a 30% and 20% cash “weighting” at the high end of the range, respectively. It doesn’t look like the timing could have been much better. Changes to Dividend Growth Newsletter portfolio Removing Novartis (NVS) -3.5%-5.5% Adding Health Care Select Sector SPDR Fund (XLV) +3.5%-5.5% By Brian Nelson, CFA The back half of 2018 was among the most exciting in Valuentum’s history. For one, we might have made one of our best “market-direction” calls since inception in practically calling the near-term bottom December 26. In hindsight, it’s clear the market had overreacted, but at the time, going to “fully
Dividend Increases/Decreases for the Week Ending March 15
March 15, 2019
Below we provide a list of firms that raised their dividends during the week ending March 15. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Acushnet Holdings (GOLF): now $0.14 per share quarterly dividend, was $0.13. Apollo Commercial Real Estate Finance Inc Cum Red Perp Pfd Shs Series C (ARI.PC): now $0.50 per share quarterly dividend, was $0.46. Badger Daylighting (BADFF): now CAD 0.0475 per share monthly dividend, was CAD 0.045. Center State Banks (CSFL): now $0.11 per share quarterly dividend, was $0.10. Citizens Financial Services (CZFS): now $0.445 per share
Boeing Had Been Overpriced, Breakup Facebook, Amazon, and Alphabet?
March 14, 2019
Let’s cover some of the recent developments related to Boeing and ongoing political posturing as it relates to large tech companies. Don’t forget about the 40/40 goal, and be sure to check out the tremendous success rates of the Exclusive publication! By Brian Nelson, CFA The interest in the Exclusive publication has never been greater, and frankly, I couldn’t be happier — and I only have you to thank. But what is the Exclusive and how does it differ from the High Yield Dividend Newsletter? Well, the Exclusive is our premiere newsletter, where we highlight an income idea, a capital appreciation idea and a short idea for consideration each month in thesis form. Many individuals, financial advisors, and institutions use
Our Reports on Stocks in the Media (Advertising) Industry
March 13, 2019
Image Source: Dan Structure of the Media (advertising) Industry The media (advertising) industry spans a variety of firms, including those that operate out-of-home liquid crystal display advertising, companies that engage in magazine publishing, and entities that provide services that enable marketers to sell their products online. National and local media revenues are affected by changes in demand for advertising and overall consumer health, both of which are tied to general economic conditions. Advertisers in China are beholden to significant government regulations, while all participants compete with other mass media, including Internet and television. We don’t like the group. We no longer publish reports on stocks in the Media (advertising industry). For reports on other media stocks: Media: CBS, CETV, GCI,
Our Reports on Stocks in the Energy Equipment & Services – Offshore Drilling Industry
March 13, 2019
Image Source: Michael Elleray Structure of the Energy Services – Offshore Drilling Industry The offshore drilling industry is driven by hydrocarbon demand and spending by oil and gas companies. The group has traditionally been subject to intense price competition and volatility. Periods of high demand and higher day rates are often followed by periods of low demand and lower day rates. Contracts vary in terms and rates depending on the nature of the operation to be performed. An oversupply of drilling rigs in any market area is a key risk to pricing dynamics and underlying profitability. We’re not big fans of the industry structure, though long-term contracts can offer stability to performance. We no longer publish reports on companies in the Energy
