Valuentum Exclusive Analysis for the Discerning Investor

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Nov 20, 2019

Economic Commentary: Marks, Dalio, and the Discount Rate
Image Source: Mike Cohen. We sat down with the Valuentum team to discuss their latest thoughts on recent economic developments. To kick off the conversation, let’s start with the team’s views on the latest memo from Oaktree’s Howard Marks: Mysterious. For those that don’t know Howard, he is the Director and Co-Chairman of Oaktree, which managed about $122 billion in AUM, as of September 2019. The memo goes into depth on the reasons for negative interest rates, the impact of negative interest rates, and opines on whether the US will ever see negative interest rates. Then, we’ll go from there!

Nov 13, 2019

Intel Still One of Our Favorite Ideas
Image Source: Intel Corporation – August 2019 IR Presentation. We continue to like Intel in both our newsletter portfolios and see the company’s investments in the IoT space (and elsewhere) supporting decent free cash flow growth over the coming years. As Intel continues to monetize portions of its non-strategic equity and debt investments, expect a lot of those proceeds to go towards buying back its stock. That should help see shares of INTC continue converging towards the upper end of our fair value estimate range.

Nov 1, 2019

Nostalgia?
Image Source: Tim Vrtiska. As I think back over the many years we've managed the Dividend Growth Newsletter portfolio, it has been an incredibly rewarding experience to be able to help so many dividend growth investors, not only in finding big winners, but also in avoiding big losers. If you recall, many dividend growth investors were swept away by the MLP craze years ago, and we saved our membership, perhaps in impeccable fashion. Who remembers? From "getting out" of General Electric near $30 per share, to warning about ConocoPhillips' and Kinder Morgan's dividend cuts far in advance years ago, we've been focused intensely on gaining your trust each and every day. Of course we've had some huge winners, too, some of them no longer in the newsletter portfolio such as Hasbro, Procter & Gamble, Medtronic, names we may add back into the future at the "right price," near the low end of our fair value estimate range on the "way up." How can we forget some of the big winners still in the newsletter portfolios! Big tech has been on fire of late with Intel and Microsoft approaching new all-time highs. You may recall these two companies were among the first stocks to ever register a 9 or 10 on the Valuentum Buying Index in 2011/2012, and their respective Dividend Cushion ratios have been fantastic for years, accompanied by strong dividend growth. How can we forget about Apple? What a call that one has turned out to be -- shares of the iPhone maker closed at ~$256 today! Microsoft is now a mid-$140 stock! A number of years ago, we traveled the country sharing our thoughts on Microsoft, pounding the table on its undervaluation and strong dividend growth prospects, saying it epitomized what Valuentum looks for in dividend growth ideas at the time. This presentation from our September 2015 trip to the Silicon Valley AAII was one of my favorites. Download that presentation to learn how we looked at Microsoft through the lens of the Dividend Cushion ratio, "Value-Focused, Momentum-Based Dividend Growth Investing (pdf)." Please go ahead. The Dividend Cushion ratio is worth the price of any membership. I'm so very proud of the Valuentum team, its methodologies, Value Trap, and what we've been able to do for investors all these years, especially dividend growth investors. I'm so grateful for you. You found us, tuned out the noise, and hopefully have made so much money these many years. Without tearing up on any further nostalgia, download the November edition of the Dividend Growth Newsletter in this article. You've earned it. I hope you enjoy this edition greatly, and thank you so much! -- Brian Nelson, CFA

Oct 25, 2019

Portfolio Holdings Intel and Visa Hit It Out of the Park
Image Shown: Shares of Intel Corporation leapt higher on Friday October 25 as the market digested its solid earnings report and guidance for this quarter. We continue to really like Intel in our Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio, and Visa in our Best Ideas Newsletter portfolio. The share price action seen in shares of INTC and V on Friday October 25 seem to indicate the market really appreciated each company’s latest earnings report, with shares of both companies marching higher as of this writing.

Oct 14, 2019

Economic Commentary: Robots, Value Trap, and Politics on the Markets
Valuentum sat down for the latest installment of its periodic economic commentary, and the team tackled a wide array of topics, from robots on Wall Street, to President of Investment Research Brian Nelson’s new book Value Trap, to political influence on the markets and boyond. Let’s set the stage with a prompt from a recent Bloomberg article, “The Master of Robots…Coming for Wall Street...

Oct 12, 2019

ICYMI: Interview with Valuentum's President Brian M. Nelson, CFA
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.

Oct 4, 2019

Economic Commentary: Apple $225+, Brokers Tumble, Auto Sales Look Tired
Image: Shares of TD Ameritrade Holdings have been punished as online trading commissions go to zero. "Though all signs point to increased volatility, we maintain our view that we’re well-positioned in the newsletter portfolios, and the ideas highlighted in the Exclusive publication consider the backdrop economic conditions we closely monitor." -- Brian Nelson, CFA

Sep 23, 2019

Empirical Support for Porter’s “Gospel,” Plus Comments on the “Head Fake” Rotation
“Let’s be very clear: There is strong empirical quantitative evidence that the price-to-fair value equation (“factor”) is predictive of returns, which is what matters for value investors, and in Morningstar’s case, the moat assessment is just part of that overarching conclusion (fair value estimate). Researchers continue to attack the moat “factor” on grounds that don’t make any sense, in my view, and are cherry-picking parameters to assess value investing.” – Brian Nelson, CFA

Sep 16, 2019

Economic Roundtable: Quant Quake, “Quac-cidental Correlation,” and Economic Moats
Image Source: Anders Sandberg. Last week, the markets may have revealed that internals aren’t all that healthy. Major equity markets experienced a “rotation” that reminded many investors of the “quant quake” from August 2007. As Valuentum’s Brian Nelson wrote in Value Trap, “just a few bad days in the market caused a rapid unwinding of many quant long-short strategies (back then). Goldman’s chief financial officer said at the time that the firm was witnessing ‘25-standard deviation moves, several days in a row.’” On the surface, markets last week seemed relatively calm, but as the episode in 2007 revealed the activity last week may just be the calm before the storm. Many are pointing to overcrowded trades in betting against certain factors, while others are saying that many were forced to deleverage. We’re not so sure, and we think it may be the opposite: after years of suffering from lagging “value” returns, we think several quant shops stepped in to take on leverage, betting on a return to “value.” Let's talk about last week's quant quake, spurious correlations (the “guac-cidental correlation, in fact), economic moats and much more.

Sep 15, 2019

Semiconductors Broadcom and Cree Push Forward in an Uncertain Environment
Image Source: Broadcom Inc -- IR Presentation. While the free cash flow outlooks for AVGO and CREE are relatively strong, weakening business confidence and investment around the world and mounting geopolitical tensions between the US and China (short-term tariff reprieves aside) create monstrous headwinds that the semiconductor industry can only do so much to mitigate. We don’t include many semiconductors in our portfolios given how notoriously difficult the space is to play. As things stand today, Intel is included in both our Dividend Growth Newsletter and Best Ideas Newsletter portfolios, and we continue to like INTC as our way to gain exposure to secular growth trends within the semiconductor space.