Valuentum Exclusive Analysis for the Discerning Investor

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Catch up with Valuentum's President Brian M. Nelson, CFA in a recent interview with dividend growth investor Arne Magnus Lorentzen Ulland of the blog stockles.

By Brian Nelson, CFA

Recently, I was interviewed by Arne Magnus Lorentzen Ulland of the blog stockles. Arne is a dividend growth investor like many of you, and I sincerely hope you enjoy the interview he put together. I'm very grateful for his interest. His questions were fantastic.

We discuss why and how I incorporate independence and integrity into the service at Valuentum. We go into detail regarding why Valuentum views stocks the way it does, and how Valuentum combines enterprise valuation and the information contained in prices in its stock-selection process. I discuss the pitfalls of certain valuation multiples, and explain how most all quantitative factor models must converge into enterprise valuation, the free cash flow to the firm process.

In the interview, I touch on my warning in Value Trap if investors don't pay attention to intrinsic-value analysis. I also discuss the importance of fair value estimates relative to Wall Street's price targets, and why we at Valuentum view valuation as a range of fair value outcomes, not a point fair value estimate. I hit on the 5 things that every dividend investor should know and explain why capital preservation is still paramount, even in a dividend growth strategy.

We discuss Valuentum's Dividend Cushion ratio and the best argument for owning dividend-paying stocks relative to the S&P 500 Index. I talk about how I believe that the theoretical underpinnings of index investing are fading, given the growing theoretical evidence that the average active investor can outperform, net of fees, and that active funds and ETFs are just 16% of the corporate equity market in total, any underperformance hardly supporting the idea of indexing.

Finally, we discuss why Valuentum likes Berkshire Hathaway and what might be the reasons why the Valuentum team would remove it from the simulated Best Ideas Newsletter portfolio. I discuss the hazards of making expected return forecasts, particularly over longer periods of time, and we wrap up with suggestions for professional and personal development. I hope you enjoy the interview greatly!  

Access the interview by selecting the following link: 

https://www.stockles.com/2019/04/21/former-morningstar-director-cfa-we-are-all-market-timers/

Tickerized for holdings in the SPDR S&P 500 ETF (SPY).

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Brian Nelson does not own shares in any of the securities mentioned above. Some of the companies written about in this article may be included in Valuentum's simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.