Understanding the Chartered Financial Analyst (CFA) Designation
October 13, 2016
“Among the countless finance degrees around the world, the Chartered Financial Analyst qualification has become the gold standard.” – Financial Times, 13 August 2010 “[The] qualification is roughly equivalent to a specialized postgraduate finance degree, including a mixture of economics, ethics, law, and accountancy… Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA, managed and examined by an American association of financial professionals, the CFA Institute.” – the Economist From the CFA Institute: “The Chartered Financial Analyst (CFA) charter is an investment credential that, for more than 60 years, has been the global standard for embodying the integrity, dedication, and advanced skills needed to
Apple V. Samsung
October 13, 2016
Image Source: Lr43_L1000009 By Kris Rosemann Samsung’s (SSNLF) issues with its Galaxy Note 7 smartphone began in late August when the firm postponed shipments of the smartphone due to product quality testing. The event was not a major issue, as early demand for the device had outpaced supply, already causing shipment delays to some markets. Shortly after the delay was announced, claims of the smartphones’ batteries exploding surfaced, and Samsung subsequently announced it would recall Galaxy Note 7s across the globe. The recall announcement only began the saga of despair for the Galaxy Note 7 series. One week later, the FAA issued a warning that the devices could be an airborne fire hazard and suggested consumers refrain from using the smartphones
Retail Weakness: Blame the Election?
October 13, 2016
Image Source: DonkeyHotey By Kris Rosemann The 2016 election cycle has been one characterized by unprecedented amounts of criticism and accusations, of both the personal and political variety, and it may be true that the perceived political environment from the view of the general public has not been in such a state of uncertainty for some time. Let’s not get into the details of who called whom what in last night’s Presidential debate, but some parents were reportedly not allowing their children to watch the debate out of fear that their values or outlook on democracy could be skewed. But could the uncertainty surrounding the election actually be enough to impact consumer activity at retail outlets and restaurants? Some are
Honeywell’s Stock Up 170% Since End of 2009; GE a Better Bet?
October 10, 2016
Has Honeywell’s business value truly increased by 170% in less than seven years, or are shares overheated? We think investors should continue to exercise prudence in today’s stretched market. GE may be a better relative bet than Honeywell. By Brian Nelson, CFA What a wonderful ride it has been these past seven years from the March 2009 panic bottom. The S&P 500 (SPY) has experienced one of its strongest showings in history during this time, and even large caps have posted returns that have turned heads. The share price of Honeywell (HON), for one, has leapt more than 170% since the end of 2009, simply a huge run for a company of its size. The question, however, on everyone’s mind:
Dividend Increases/Decreases for the Week Ending October 7
October 10, 2016
Below we provide a list of firms that raised/lowered their dividends during the week ending October 7. 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 American Financial (AFG): now $0.3125 per share quarterly dividend, was $0.28. Bank of the Ozarks (OZRK): now $0.165 per share quarterly dividend, was $0.16. Enterprise Products (EPD): now $0.405 per share quarterly dividend, was $0.40. FNB Bancorp (FNBG): now $0.16 per share quarterly dividend, was $0.15. Genesis Energy (GEL): now $0.70 per share quarterly dividend, was $0.69. Ingersoll-Rand (IR): now $0.40 per share quarterly dividend, was
Currency: Cases in Probabilistic Thinking
October 8, 2016
The rally in the Mexican peso relative to the US dollar during the first Trump-Clinton debate of 2016 showcased the increased likelihood of a Clinton victory, in light of Trump’s current political agenda. Instances like this, where currency markets serve to act as a probability indicator of the likelihood of a future event, have occurred through the course of history, the most fasinating of which happened during the American Civil War and with Confederate scrip specifically. Image Source: Bloomberg, “Mexican Peso Gives Clearest Signal Trump Lost Debate“ By Brian Nelson, CFA At Valuentum, we talk a lot about how markets act as “discounting” mechanisms of the probability of future events, and more specifically as it relates to stocks, how a
Yahoo’s Cascade of Issues
October 7, 2016
By Valuentum Analysts Yahoo (YHOO) has been in the news a lot lately, and not in a good light. The revelations recently uncovered at the Internet portal have put the terms of its pending deal to be bought by Verizon (VZ) at risk, perhaps jeopardizing the transaction altogether. Recent reports indicate that Yahoo shareholders may now get far less for their business from Verizon, to the tune of ~$1 billion, and top Verizon executives are even “wondering if (it) should pull out of the deal.” The telecom giant could just be taking advantage of the “bad” situation at Yahoo in asking for a better price, but the company walking away would not be out of the question. Yahoo, after all,
The “Uninvestable” Twitter and Netflix Buoyed By Takeout Chatter
October 6, 2016
By Kris Rosemann and Brian Nelson, CFA At Valuentum, we like slam-dunk, no-brainer investment opportunities–like Microsoft (MSFT) in the mid-$20s before it doubled, or Visa (V) prior to its strong equity price performance in recent years, or even cigarette-maker Altria (MO) in advance of its ongoing march higher since the dawn of the release of the inaugural Best Ideas Newsletter. Our members count on us to use our knowledge of valuation to sort out “investable” stocks from “uninvestable” ones; good stocks with fundamental promise from bad ones built on fantasy outcomes. Benjamin Graham calls what we do “investing,” while he may call readers that dabble in the two highlighted stocks in this piece “speculators.” There is a difference, and it’s
Apple Pushing for Growth in Healthcare and Corporate IT
October 4, 2016
By Kris Rosemann Late September brought two announcements from Apple (AAPL) that should bode well for demand for its mobile devices and wearable technology and add to the reach of its ecosystem of apps. On September 28, the firm announced a partnership with consulting firm Deloitte & Touche to form a service called ‘EnterpriseNext’ in which Deloitte is creating a service with over 5,000 strategic advisors focused on helping businesses maximize the effectiveness of their use of iOS with iPhones and iPads. Deloitte CEO Punit Renjen pointed to his company’s use of Apple products, and 75 custom apps, as a core driver behind the deal. Deloitte will not only offer consulting services across more than 20 industries but will also
About the Fair Value Range
October 4, 2016
Understanding the Fair Value Range and Why It’s Important FAQ: Why do you use such a wide fair value range for certain companies? One of the most important concepts of the Valuentum methodology (and valuation in general) is the understanding that the value of a company is a range of probable valuation outcomes, not a single point estimate. Even well-seasoned stock analysts are guilty of saying that a company’s shares are worth exactly $25 or a firm’s stock is worth exactly $100. The reality is that, in the first case, the company’s shares are probably worth somewhere between $20 and $30, and in the latter case, the stock is worth somewhere between $75 and $125. Why? Because all
