Valuentum Exclusive Analysis for the Discerning Investor

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Dec 23, 2023

12 Reasons to Stay Aggressive in 2024
From outperforming simulated newsletter portfolios to fantastic success rates in the Exclusive publication to option ideas and great income-oriented ideas and beyond, we continue to deliver across our simulated newsletter suite as our latest video outlines. It’s hard to know exactly what 2024 will bring in terms of a market return, but the internals of the stock market and the U.S. economy look great to us. The new bull market we’re in could last for years, and as a result, we are staying aggressive with many of our new ideas as we look to benefit from these favorable trends.

Oct 25, 2023

Visa’s High Margin Business Reveals Consumer Spending Remains Resilient
Image: Visa has been a strong performer thus far in 2023. On October 24, Best Ideas Newsletter portfolio holding Visa reported excellent fourth-quarter results for its fiscal 2023. Net revenues advanced 11% on a year-over-year basis, while non-GAAP net income and non-GAAP earnings per share leapt 18% and 21% year-over-year, respectively, in the period. For the fiscal year, Visa generated an impressive 64.4% operating margin. Payments volume increased 9% and cross-border volume advanced 16%, showcasing that the consumer remains very healthy thanks in part to low unemployment rates, despite concerns over higher mortgage costs, student loan repayments, and general economic uncertainty as savings accrued during the COVID-19 pandemic wane. We continue to be big fans of Visa as our top payments-related idea.

Oct 22, 2023

There Will Be Volatility
Image: An ETF tracking Russell 1000 "growth" stocks has outperformed an ETF tracking Russell 2000 "value" stocks since the beginning of 2021. To us, the market remains hypersensitive to almost every economic data point that hits the wires, and we’re just not going to play that game. The macro headlines and never-ending news flow are what many quant and algorithmic traders are trading on, and to a very large extent, for investors with a long-term horizon, these macro data points just don’t factor into the equation. When valuing equities, we’re always after mid-cycle expectations, not peak or trough performance, so our valuations implicitly embed a "normal" recession. Warren Buffett didn’t become a billionaire buying and selling on macro data points, and volatility is simply to be expected given the proliferation of price-agnostic trading these days. Instead of panicking over higher interest rates, we think investors should view the Fed’s work thus far as future potential dry powder to stimulate both the economy and the markets. Whenever you feel like stocks are no good, have a read of Warren Buffett’s classic piece written during the Great Financial Crisis, “Buy American. I Am.” To us, we still like stocks for the long run. Happy investing!

Sep 21, 2023

Details Regarding Visa’s Exchange Offer
Image: Visa's 8-K. Visa remains a free-cash-flow generating powerhouse, and the firm’s operating and free cash flow margins are about as good as it gets. Future potential exchange offers from Visa corresponding to its various share classes should be viewed as a minor intermediate-term inconvenience that will only provide but a modest potential headwind to the advancement of the company’s intrinsic value over time, and only in the scenario where diluted shares outstanding increase relative to expectations based on then-conversion rates for non-A class shares when converted. We continue to like Visa as a holding in the simulated Best Ideas Newsletter portfolio, and we like it and Mastercard more than their rivals such as American Express and Discover Financial that take on credit risk.

Sep 20, 2023

ICYMI: Questions for Valuentum’s Brian Nelson
Valuentum's President Brian Nelson, CFA, answers your questions.

Sep 12, 2023

ESG Issues Plague Discover
Image: Discover’s shares have faced pressure due to a card misclassification issue and the resignation of CEO Roger Hochschild. Discover Financial’s shares have faced a difficult 52-week stretch as corporate news hasn’t been great. The company’s equity is down nearly 14%, while the S&P 500 is up more than 8% over the same time stretch. Though Discover has the potential to bounce back from the troubles it has encountered, the firm has certainly been in hot water since it disclosed a card product misclassification.

Aug 6, 2023

Berkshire’s Stake in Apple Has Been a Boon for Shareholders
Image: Apple has been a blessing for Berkshire Hathaway. Image Source: Berkshire Hathaway’s second-quarter 2023 10-Q. Berkshire Hathaway fits the bill of the types of companies we’re looking for in this market environment. The company holds a nice cash position on the books, to the tune of ~$147.4 billion, while notes payable and other borrowings stood at ~$125.3 billion--good for a solid net cash position. Operating cash flow advanced to ~$21.1 billion through the first six months of the year (up from ~$15.4 billion from the same period last year), while purchases of property, plant, and equipment came in at ~$8.4 billion (up from ~$6.8 billion), good enough for free cash flow generation of ~$12.7 billion year-to-date in 2023 (up from ~$8.5 billion). Berkshire’s strong net cash position and impressive free cash flow generating profile are big reasons why we continue to like shares in the Best Ideas Newsletter portfolio.

Jul 15, 2023

Subscribe to the Valuentum ESG Newsletter!
There may be no greater or better investment than becoming more exposed to the sustainable trend of environmental, social and governance (ESG) investing, where ESG research points to key risks of a company that could have tremendous implications on its intrinsic value or fair value estimate distribution. Subscribe to the monthly Valuentum ESG Newsletter today!

Jun 26, 2023

CFA Institute Blog: "Hide-'Til-Maturity" Accounting
CFA Institute Blog: "The Silicon Valley Bank (SVB) collapse recalls the tussle over the accounting for financial instruments after the global financial crisis (GFC) in 2009, particularly the debate about whether some financial instruments should be carried at amortized cost (held-to-maturity, HTM) rather than at fair value (available-for-sale, AFS), or what is referred to as the “mixed measurement model.”" -- Sandy Peters, CPA, CFA

Jun 5, 2023

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio
Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN).With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We're going to "fully invested" in the Best Ideas Newsletter portfolio today and expect to do the same in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio soon.