Valuentum Exclusive Analysis for the Discerning Investor

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Sep 3, 2020

3 Lessons in Portfolio Management Over 10 Years
Image Source: http://www.epictop10.com/. "When I left as director in the equity and credit department at Morningstar in 2011, I thought I knew a whole heck of a lot about investing. I felt like I was one in the top 5-10 in the world as it relates to the category of practical knowledge of enterprise valuation (maybe include Koller at McKinsey, Mauboussin at Counterpoint, and Damadoran at Stern on this list). After all, I oversaw the valuation infrastructure of a department that used the process extensively, and the firm was among just a few that used enterprise valuation systematically. Then, at Valuentum, our small team would go on to build/update 20,000+ more enterprise valuation models. There can always be someone else out there, of course, but I don't think anybody has worked within the DCF model as much as I have across so many different companies. That said, through the past near-10 years managing Valuentum's simulated newsletter portfolios, I've also learned a number of things to become an even better portfolio manager." -- Brian Nelson, CFA

Sep 3, 2020

Apple Reportedly Launching 5G iPhone Soon
Image Shown: Shares of Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Apple Inc have continued to surge higher this year. The tech giant is supported by strong demand for its hardware offerings, the launch of new services, and growing demand for its existing services. We are intrigued by the upcoming launch of its first 5G-capable iPhone, which is reportedly due to be released this Fall. Very recently, Bloomberg reported that Apple is asking its suppliers to get ready to deliver at least 75 million 5G iPhones later this year, which may grow as high as 80 million. What makes these targets particularly noteworthy is that it appears Apple is expecting demand for its upcoming iPhones to either match or exceed that of the demand for its iPhones last year, indicating the ongoing coronavirus (‘COVID-19’) pandemic has not shaken Apple’s confidence in its near-term outlook. Additionally, this would represent Apple’s first 5G-capable iPhone if the reports are true, which represents a major potential near-term growth catalyst.

Sep 2, 2020

ALERT: Markets Now Fairly Valued
Image Source: Sam Valadi. Long-term investing is a great proposition. You have an incredible advantage over most professional investors that have to deliver on a quarterly or annual basis. The reason is due to something called time horizon arbitrage.

Sep 1, 2020

Valuentum Website Overview
Overview of the key features of www.valuentum.com (03:55). Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF 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.

Aug 27, 2020

Earnings Brief: NTAP, URBN, HPE, SJM, MDT
Image Source: Valuentum. Pantry stuffing was prevalent during the second quarter, and mall-based retail is holding up better than some had expected. Cloud-based services companies continue to experience breakneck growth, and medical procedure volumes are picking up as we learn more and more about COVID-19.

Aug 4, 2020

Apple Surges Higher Ahead of Stock Split
Image Shown: Shares of Apple Inc have staged an impressive rally since bouncing off their March 2020 lows, with AAPL up ~46% year-to-date as of this writing on August 3. We added shares of Apple back to the Best Ideas Newsletter and Dividend Growth Newsletter portfolios on June 12, 2020. Later on this August, Apple intends on completing a four-for-one stock split. We added Apple back to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios on June 12, 2020 (link here). Companies that are supported by secular growth tailwinds and pristine balance sheets, such as Apple, are well-positioned to deal with the ongoing coronavirus (‘COVID-19’) pandemic. Shares of AAPL have surged significantly higher since mid-June and are now trading well above the top end of our fair value range as of this writing, but we want to stress here that we like to let our winners run. It is not until after a firm’s technicals turn against it that we would consider removing shares of that firm from our newsletter portfolios. Given its stellar third quarter fiscal 2020 earnings report (period ended June 27, 2020) published on July 27, shares of Apple may have room to run further still.

Jul 22, 2020

Second Quarter Earnings Roundup
The figure above shows the performance of the simulated Best Ideas Newsletter portfolio from inception May 17, 2011, through December 15, 2017, relative to its declared benchmark, the S&P 500 (SPY), on an apples-to-apples basis, with dividends collected but not reinvested for both the newsletter portfolio and the SPY, as reported in the monthly newsletter. The simulated Best Ideas Newsletter portfolio outperformed the S&P 500, including reinvested dividends in the benchmark, since inception (May 17, 2011) and since the inaugural release of the newsletter (July 13, 2011) through the end of the measurement period (December 15, 2017). The results are hypothetical and do not represent returns that an investor actually earned. Past results are not indicative of future performance.

Jul 22, 2020

IBM’s Cloud Transition Continues
Image Source: International Business Machines Corporation – 2019 Annual Report. On July 20, IBM reported second quarter 2020 earnings that beat both consensus top- and bottom-line estimates. Most of the market’s excitement centered on IBM’s ‘Cloud & Cognitive Software’ segment posting year-over-year revenue growth of ~3% in the second quarter while its company-wide GAAP revenue declined by ~5% year-over-year, though initial gains in IBM’s share price faded away during regular trading hours on July 21. In the earnings press release, IBM noted its “total cloud revenue” grew by 30% year-over-year last quarter. Shares of IBM are trading near their fair value estimate of $129 as of this writing, indicating that shares of IBM appear fairly valued.

Jul 1, 2020

July Dividend Growth Newsletter
"The COVID-19 pandemic has all but shown it's not the economy, or next quarter's earnings, or last year's book-to-market ratio or last year's P/E ratio that drives market prices and returns; it's enterprise valuation. Read about the duration of value composition in Value Trap." -- Brian Nelson, CFA

Jun 26, 2020

Update on Dell Technologies and VMware
Image Source: VMware Inc – First Quarter Fiscal 2021 IR Earnings Presentation. Dell Technologies and VMware Inc are back in the news as the WSJ recently reported the former is considering spinning off its enormous equity stake in the latter. Back in September 2016, Dell completed its ~$67 billion cash-and-stock acquisition of EMC which gave Dell a controlling equity stake in VMware (and a mountain of net debt in the process). As of January 31, 2020, Dell owned approximately 80.9% of VMware’s outstanding equity. Dell can spin off its equity stake in VMware tax-free after a five-year waiting period, though Dell would need to wait until September 2021 before that could occur (given when the EMC deal closed).