Valuentum Exclusive Analysis for the Discerning Investor

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Jun 10, 2024

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. We address a number of questions from both subscribers and visitors to our site.

Sep 18, 2023

The Role of Luck in Investing and How To Think About It
Image: EpicTop10.com.  For every Amazon that made it, there are hundreds, maybe thousands, from the dot-com era that didn't. Very few remember Pets.com or etoys.com, both of which went belly up during the dot-com meltdown. For every Tesla, there is a DeLorean Motor Co. We might have completely forgotten about DeLorean were it not for the blockbuster movie, Back To The Future, that immortalized its futuristic sports car. For every streaming enterprise like Netflix, there is a Napster that failed. Most of us probably don't even remember the original Napster, which encountered legal troubles before closing shop shortly after the dot-com bust. For every Alphabet, there's an AltaVista or Netscape. For every Apple, there is a Palm or Blackberry. Who remembers how popular the Palm Pilot and Blackberry were? How about the Motorola Razr? For every Facebook and Instagram, there is a Myspace or Friendster. As investors, we underestimate the role of luck in a company's long-term success. In February 2000, a month before the dot-com market crash, a fledgling Amazon raised $672 million in convertible notes to European investors. If the company hadn't done so, there'd likely be no Amazon today, and one of the wealthiest men in the world, Jeff Bezos, might have just been a mere footnote in stock market history. Amazon would have been insolvent in 2001-2002 just like many of its other dot-com peers.

Apr 11, 2023

Not Worried About Global PC Demand Weakness
Image Source: IDC. On April 9, International Data Corporation (IDC) issued preliminary findings for the first quarter of 2023 for global personal computer (PC) shipments in its Worldwide Quarterly Personal Computing Device Tracker. The results were a bit surprising, with the firm noting that “weak demand, excess inventory, and a worsening macroeconomic climate were all contributing factors for the precipitous drop in shipments of traditional PCs during the first quarter of 2023.” According to the IDC report, global PC shipments fell 29% to 56.9 million compared to the first quarter of 2022. Apple experienced the biggest year-over-year percentage decline, where shipments fell more than 40%. Dell Technologies, Lenovo and ASUS experienced declines greater than 30%, while HP Inc. and a basket of other PC makers witnessed declines in the mid-20% range. Channel inventory remains elevated, and investors should expect more discounting from the PC makers, as the industry continues to optimize the supply chain amid pre-COVID and post-COVID demand dynamics.

Oct 20, 2022

Announcing Valuentum’s Customer Appreciation Day Winners!
Let's see who won an autographed copy of Value Trap and what they said about Valuentum's research! We applaud all of our members in their quest to preserve and generate long-term wealth. Keep going strong!

Dec 10, 2021

What Really Is the ”S” in ESG Investing
Image: The Valuentum Environmental, Social and Governance (ESG) Scoring System shows how “Social” considerations are analyzed. Social considerations tend to ebb and flow and reflect the values of society. Renewed interest in diversity, inclusion, and equity, for example, have made these areas a greater focus for companies and investors. As we have evolved as a society over decades and generations, the types of social considerations that may have primacy will change over time, so it’s important to make sure social considerations are just one part of your research. In addition to looking at how a company scores on the Valuentum ESG rating system and how it aligns with your own values, be sure to also look at whether such an idea is in the simulated newsletter portfolios, how it rates on the Valuentum Buying Index (VBI), its Dividend Cushion ratio for dividend-paying stocks, and much more. It’s extremely important to reward those companies doing the social good, but equity prices and returns will always be driven in part by a company’s cash-based sources of intrinsic value: net cash on the balance sheet and future expected free cash flow.

Oct 7, 2021

IBM Provides Investors with a Major Update
Image Source: International Business Machines Corporation – October 2021 IR Presentation. While still a major enterprise, International Business Machines Corp is no longer the tech juggernaut it used to be and hasn’t been a leading tech company for over a decade. The company recognizes this and back in October 2020, IBM announced that it planned to “separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company” that will be called Kyndryl. By the end of 2021, this tax-free spinoff is expected to be complete (shares of Kyndryl will be spun off to IBM shareholders). In October 2021, IBM provided a major update to its shareholders covering its medium-term financial outlook, key operational updates, and what to expect going forward as it concerns its dividend policy, areas that we are going to cover in this article.

Jun 3, 2021

How to Navigate the Low Return Environment
Image Source: QuoteInspector.com. Investors continue to gamble on meme stocks and cryptocurrencies. There are no shortcuts to success in the markets and focusing on individual security selection within the equity component of the capital structure with a focus on long-term cash-flow-based fundamentals continues to be a prudent strategy, in our view. Success rates within the Exclusive publication, for example, continue to be fantastic. The success rates for capital appreciation ideas (49 of 59) and short idea considerations (53 of 59) in the Exclusive publication are now ~83%% and ~90% from July 2016-May 2021. For investors focused on capital appreciation potential, the Best Ideas Newsletter portfolio may be worth a look. For those with a dividend growth focus, the Dividend Growth Newsletter portfolio has a plethora of ideas. Though AT&T threw us a curve ball with respect to changes in its dividend payout recently, the prudent and diversified nature of the simulated High Yield Dividend Newsletter portfolio continues to deliver, while idea generation remains robust. Many of our options ideas have done quite well, too. We remember when the S&P was trading at about 3,000, and we pegged a fair value range on the S&P 500 of 3,530-3,920, and many thought we were crazy at the time (the S&P 500 now stands at ~4,200 at the time of this writing). You have to understand: Stock prices and returns are based on future expectations and forecasts, a truism that AMC Entertainment’s trading activity has all but proven. AMC defeats efficient markets theory. AMC defeats value versus growth. AMC defeats backward-looking analysis. Finance is dead. The field must evolve. Long live Value Trap.

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

Jan 25, 2021

ALERT: Bull Raids, Short Squeezes and Highly Unusual Market Activity
Image: Shares of GameStop have been on an irrationally wild ride recently driven by what looks to have been an orchestrated and highly unethical (and perhaps illegal) short squeeze on the stock. According to some reports, during the pre-market session January 25, GameStop’s shares were up ~80%, and turned red during the trading session, with no fundamental news.In late 2018, Valuentum published Value Trap, a book that warned to all that would heed its warning that a collapse in the traditional quant value factor was coming and that excessive volatility in the markets caused by price-agnostic trading--or those that aren’t paying attention to fair value estimate calculations--would only build and build to eventually reach extreme and irrational levels. The book, while hugely successful winning award after award, was largely ignored by the media, despite our best efforts to get the word out. Now, the chickens are coming home to roost.

Nov 20, 2020

Nvidia Is a Great Company but Its Shares Appear to be Generously Valued
Image Source: Nvidia Corporation – October 2020 IR Presentation. On November 18, Nvidia Corp reported third quarter earnings for fiscal 2021 (period ended October 25, 2020) that beat both consensus top- and bottom-line estimates. The company’s GAAP revenues jumped higher by 57% year-over-year last fiscal quarter, aided by growth at its ‘Data Center’ (sales were up 190% year-over-year) and ‘Gaming’ (sales were up 37% year-over-year) business operating segments, which combined represented ~88% of its revenues last fiscal quarter. Nvidia’s ‘Professional Visualization’ and ‘Automotive’ business operating segments both posted year-over-year declines in sales. The ongoing coronavirus (‘COVID-19’) pandemic has accelerated recent trends in the digital world, such as the pivot towards offsite cloud-computing solutions to meet IT needs. In turn, this dynamic has sharply increased demand for data centers that make the transition towards cloud-computing possible, which has proven to be a boon for Nvidia. The work-from-home (‘WFH’) trend has driven up demand for PCs and laptops over the past few quarters. Additionally, rising demand for video games entertainment options is likely supporting demand for higher end PCs and laptops as well. Nvidia has so far been able to rise to the occasion and meet surging demand for data centers, laptops, and PCs during these turbulent times.