Market Structure Is the Cause of the Volatility
December 26, 2018
This article was sent to members via email December 25. That email can be accessed via the link that follows this article. By Brian Nelson, CFA What a beautiful time of the year. I’m writing to you from Gatlinburg, Tennessee, in the beautiful Smoky Mountains. I know it’s easy to have anxiety about the markets, but please be sure to find time to spend with friends and family this holiday season. Money, we can make more of. Time, we cannot. May you and yours have a blessed holiday season. Christmas Eve was another market rout. Secretary Treasury Steven Mnuchin tried to ease the market’s concerns by ensuring that the biggest of the banks had sufficient liquidity. This is textbook policy in the
Prudence and Experience Wins Again
December 26, 2018
This article was sent to members via email December 23. You can access that email at the link that follows this article. By Brian Nelson, CFA Hi everyone, Many of you may be just checking your account statements or retirement account balances and might be a little disappointed for what might become the worst December return in the stock markets since the 1930s.This has certainly been a December to remember, but not for good reasons. Though things look bleak heading into the remaining days of 2018 and into 2019, there’s really no need to panic at all. For those following the Best Ideas Newsletter portfolio, it’s easy to be disappointed with ideas such as Facebook and Johnson & Johnson, but you’re missing
Volatility May Only Get Worse
December 26, 2018
Image Source: TradingView.com This article was sent to members via email December 21. You can access that email at the link that follows this article. By Brian Nelson, CFA Good morning folks, Boy is it good to be back in the full swing of things. Writing Value Trap: Theory of Universal Valuation took almost everything out of me the past few months, but it was absolutely necessary. This book challenges the greatest thinkers in finance, and its 350 pages are chock-full of footnotes and examples, complete with a Preface, Notes, Bibliography and 18-page index. I think you’re going to love it, and what’s more, if you have questions about it, you can reach out to me for further explanation! Yesterday was another
Market Looks Vulnerable
December 26, 2018
Image Source: TradingView.com This article was sent to members via email December 20. You can access that email via the link that follows this article. By Brian Nelson, CFA Hi everyone, It’s time to start thinking about portfolio protection. It looks like the S&P 500 broke below technical levels, and I would not be surprised to see heightened volatility heading into the close of this year into next. This December has been one of the worst months in history, but I feel like 2019 may become one of our worst years in history. That doesn’t mean you should panic, but you should reset your expectations lower. This market is looking treacherous. Just when it looked like Facebook (FB) was getting
Stock Market Technical Breakdown
December 26, 2018
Image Source: TradingView.com This article was sent to members via email December 18. You can access that email via the link that follows this article. By Brian Nelson, CFA Hi everyone, I’m getting a bit concerned about the technical backdrop of the market, and while fundamentals certainly aren’t poor, it is changes in future fundamental *expectations* that drive prices. My book will hammer this point home: if the conversation is about last year’s data and not about how you arrived at your fair value estimate, efforts are lost before they begin. In evaluating the past data, often ambiguous valuation multiples, you’re evaluating something that is non-causal to returns, and therefore cannot be predictive of returns. Future expectations of enterprise free
Shale and LNG Drive Upstream Production at Chevron
December 26, 2018
Image Source: Author’s Calculations, Chevron Investor Relations From 2010 to 2017, Chevron’s oil and gas production dropped as output from new producing properties was more than offset by declines at mature fields. By leveraging the company’s extensive unconventional growth runway, management appears to have been able to fix a key structural problem. The revival in Chevron’s upstream production was aided by the completion of two major LNG developments in Australia that offer near-term upside. By Callum Turcan Shares of Chevron Corp (CVX) yield 4.3% as of this writing, and the image above shows annual per share dividend increases from the company since 2010. Its Dividend Cushion ratio currently sits at 1.2. As oil prices followed a generally positive trend from
Parting with Altria on News of Stake in JUUL
December 21, 2018
Image shown: Altria’s performance during the past couple years. Tobacco giant Altria is working to expand its long-term growth potential away from the secular decline in cigarette volumes via an investment in the leading US e-cigarette company. Unfortunately, we think its large investment in JUUL has put the pace of its dividend growth at risk, and we’re parting with this long-term winner in both simulated newsletter portfolios. We’re also putting Altria’s fair value estimate under review, and we expect to lower it materially in an updated report to be published after the holidays. Technical weakness has also put a damper on our excitement. By Kris Rosemann and Brian Nelson, CFA We’re parting ways in both the simulated Best Ideas Newsletter
Dividend Increases/Decreases for the Week Ending December 21
December 21, 2018
Below we provide a list of firms that raised their dividends during the week ending December 21. 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 Abbot Laboratories (ABT): now $0.32 per share quarterly dividend, was $0.28. ABM Industries (ABM): now $0.18 per share quarterly dividend, was $0.175. Alamo (ALG): now $0.12 per share quarterly dividend, was $0.11. ALPS Alerian Energy Infrastructure ETF (ENFR): now $0.1863 per share quarterly dividend, was $0.17. ALPS Cohen & Steers Global Realty Majors ETF (GRI): now $0.4095 per share quarterly dividend, was $0.22. ALPS Equal Sector
Market Mayhem — Alerts for Members
December 20, 2018
During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA brian@valuentum.com
Oracle Raises Internal Guidance; Share Buybacks Abound
December 19, 2018
Image Source: May Wong Oracle’s fiscal 2019 second quarter report revealed expectations for accelerating top-line growth thanks in large part to strong momentum in bookings. The company’s technology leadership may be greater than ever before, and it continues to generate robust free cash flow. Management’s appetite for buybacks appears insatiable. By Kris Rosemann Simulated Dividend Growth Newsletter portfolio idea Oracle (ORCL) released its fiscal 2019 second quarter report December 18, and management brought with it an increase in its internal expectations for top- and bottom-line growth for the full fiscal year. On the quarterly conference call, CEO Safra Catz stated expectations for an acceleration of constant currency revenue growth in the second half of the fiscal year, and the company’s
