Brian Nelson

Turn Off the TV

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By Brian Nelson, CFA Intrinsic value represents the conclusion to any and all stock research: What is the company worth? DCF valuation captures the expectations of a firm’s competitive advantages, growth prospects, strategic endeavors, and any other qualitative factor. No other process does this. Putting to numbers a plethora of advanced fundamental items in arriving at a fair value estimate is the cornerstone–and the most critical component–of any stock research analysis. Without an in-depth intrinsic-value assessment, research is but a story that has no ending.  — Brian Nelson, President, Valuentum Securities, 2011 Having worked on the buyside for a top-performing small-capitalization fund and on the independent/sell-side for a number of years in methodology development and optimization, I can tell you … Read more

Merger Activity Has Stepped Up Again as Stock Market Strengthens

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Let’s bring to your attention the many deals that hit the wires the past couple days. Siemens Announces Agreement to Acquire Dresser-Rand Takeover bid for Dresser-Rand has a total transaction value of $7.6 billion Acquisition strengthens Siemens’ portfolio for oil & gas industry Complementary regional footprint and product portfolio Siemens executes on its Vision 2020 with a decisive move to strengthen its core. The company has entered into an agreement with Dresser-Rand (DRC), which is listed on the New York Stock Exchange, to acquire all of the issued and outstanding common shares of Dresser-Rand by way of a friendly takeover bid. Siemens’ bid is unanimously supported by Dresser-Rand’s Board of Directors. The offer price is $83 per common share in … Read more

Question About the September Best Ideas Newsletter

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Q: I’m curious – how does BWLD go from a Valuentum 6 rating to a 3 with no earnings in the interim and price movement to the downside in the ensuing 30 day period? Was there a calculation error? Thank you for the question. The Valuentum Buying Index is not a step function tool (e.g. the score moves from 3 to 4 to 5). The Valuentum Buying Index considers a discounted cash flow process, a relative valuation process, and a technical/momentum assessment. It has components of both a value-based system and a momentum-based system. Any one of these parameters can influence a change in the rating, so there are a number of variables that can cause a multiple notch move … Read more

Dividend Increases/Decreases for the Week Ending September 19

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Below we provide a list of firms that raised/lowered their dividends during the week ending September 19. 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 Apollo Residential Mortgage (AMTG): now $0.44 per share quarterly dividend, was $0.42. Artesian Resources (ARTNA): now $0.2151 per share quarterly dividend, was $0.2119. Atlantic Tele-Network (ATNI): now $0.29 per share quarterly dividend, was $0.27. Blackstone Mortgage (BXMT): now $0.50 per share quarterly dividend, was $0.48. Covanta (CVA): now $0.25 per share quarterly dividend, was $0.18. Covidien (COV): now $0.36 per share quarterly dividend, was $0.32. Elmer … Read more

What Is Fat Pitch Investing?

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“I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” —Warren Buffett, Interview in Forbes magazine (1 November 1974) “The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” –Warren Buffett, 1999 Berkshire Hathaway Annual Meeting, … Read more

Potash Market: The Best Is Behind It

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It’s always sad when good things come to an end. In this case, it appears to be the global potash cartel…permanently. According to reports from the Wall Street Journal this week, the CEO of “Russian potash giant Uralkali JSC has no plans to restore a sales partnership with Belarus.” It appears that the prospects for reconciliation of the Belarusian Potash Company (BPC) have passed, and the global pricing cartel in the fertilizer ingredient is now a thing of the past. There are no plans for further talks at this time. Canpotex, which is comprised of Potash Corp (POT), the Mosaic Co (MOS), and Agrium (AGU), and the BPC collectively controlled about 70% of global potash exports. With the breakup of … Read more

Valuentum Update: Four Important Topics

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“You all are truly the best. I really mean that. You should know that I read every email I receive, and I truly value our relationship with each and every one of you!” – President Brian Nelson, CFA It is with great pleasure that I am writing this note to you. In it, I’d like to cover four topics. First, we continue to grow and grow and grow! We reached another new milestone this quarter with respect to subscriber count. Both the Valuentum Best Ideas portfolio and Valuentum Dividend Growth portfolio are performing well, and the Valuentum Buying Index continues to identify outperformers, the most recent example was the flawless execution of previously 10-rated Baidu (BIDU). For those following the … Read more

Financial Analysis 501: How to Identify Managed Earnings

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A version of this article appeared on our website October, 23, 2013. This article is for educational purposes only and may not reflect our updated opinion on any companies mentioned. Please access the updated research for any firm of interest. Update (9/17/2014): On July 23, 2014, “Morningstar reported adjusted operating income of $36.2 million in the second quarter of 2014, a decrease of 16.9% compared with the second quarter of 2013. Adjusted operating income declined mainly because of higher compensation expense from additional headcount, reflecting new hires as well as acquisitions. Adjusted operating income is also a non-GAAP measure.” We think the analysis below helped identify the inflection point in operating performance. Part of the reason why I have picked Morningstar (MORN) … Read more

Microsoft Just Hiked Its Dividend 11%!

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After the market closed Tuesday, the top holding in the Dividend Growth portfolio Microsoft (MSFT) raised its dividend 11%, to $0.31 per share on a quarterly basis. Though we try to be as modest as possible, we think it’s not an exaggeration to say that ‘we hit the ball out of the park’ with the call on Microsoft — not only in making the controversial decision to add it to the Dividend Growth portfolio (when the consensus was convinced it was ‘dead money’) but also in retaining the stock as the portfolio’s largest weighting for the past several months. Microsoft was added to the Dividend Growth portfolio at $25.96 per share at the beginning of 2012, and shares closed yesterday … Read more