Valuentum Exclusive Analysis for the Discerning Investor

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Mar 17, 2022

Berkshire Hathaway Is Firing on All Cylinders; Shares Surging
Image Shown: Shares of best idea Berkshire Hathaway Class B (ticker: BRK.B) have surged higher over the past year with room to run. Those of you that have been long-time members of Valuentum (thank you by the way!) know that we are huge fans of Warren Buffett. We include Berkshire Hathaway Inc (BRK.A) (BRK.B), specifically its Class B shares (ticker: BRK.B), as an idea in the Best Ideas Newsletter portfolio. Recently, Buffett (CEO and Chairman of Berkshire) released his latest annual letter to shareholders, which included plenty of important information regarding the conglomerate’s financial performance and investing practices at-large. One of the things that stuck out in Buffett’s latest annual letter to shareholders, a topic that he has brought up often in the past, is his belief in betting on America. In the letter, Buffett notes that “our country would have done splendidly in the years since 1965 without Berkshire. Absent our American home, however, Berkshire would never have come close to becoming what it is today.” For reference, Buffett took control of Berkshire back in 1965. We are also big believers that the number one place for investors to be invested is in U.S. equities. Specifically, large cap U.S. tech stocks with “moaty” business models, fortress-like balance sheets, incredible free cash flow generating abilities, and growth outlooks underpinned by secular tailwinds represent some of our favorite ideas alongside U.S. energy giants (a shorter term tactical play in the face of the ongoing inflationary environment) and high-quality U.S.-focused firms like Berkshire. We appreciate Buffett’s longstanding commitment to utilizing discounted free cash flow analysis to locate and invest in undervalued enterprises based in the U.S.

Mar 10, 2022

AT&T’s WarnerMedia Unit and Discovery Are Close to Finalizing Their Blockbuster Merger
Image Shown: Announced back in May 2021, the blockbuster merger of AT&T Inc’s WarnerMedia unit with Discovery Inc is expected to close in the second quarter of 2022. Image Source: AT&T Inc & Discovery Inc – May 2021 IR Presentation. The blockbuster merger of WarnerMedia, currently a part of AT&T Inc, with Discovery Inc. is getting closer to completion. On March 11, Discovery shareholders voted on whether to proceed with the transaction. AT&T does not need to secure shareholder approval through a vote to close the transaction. AT&T intends to reduce its annualized dividend to $1.11 per share ($0.2775 per share on a quarterly basis) down from $2.08 per share currently ($0.52 per share on a quarterly basis) after the merger closes. This pending payout cut has stung investors, as has AT&T’s deal making over the past decade. If everything goes as planned, WarnerMedia and Discovery are set to close their merger during the second quarter of 2022. Let's dig more into the details of this deal.

Feb 10, 2022

Best Idea Disney Rebounding Nicely; Shares Look Cheap
Image Shown: Shares of The Walt Disney Company strengthened February 9 in the wake of the media and entertainment giant's latest earnings report. We include shares of DIS as an idea in the Best Ideas Newsletter portfolio. On February 9, The Walt Disney Company reported first-quarter fiscal 2022 earnings (period ended January 1, 2022) that smashed past both consensus top- and bottom-line estimates. A sharp rebound at its ‘Disney Parks, Experiences and Products’ unit impressed investors and shares of DIS are strengthening nicely in the wake of its latest earnings report. We are big fans of Disney and include shares of DIS as an idea in the Best Ideas Newsletter portfolio. Our fair value estimate stands at $179 per share of Disney with room for upside as the high end of our fair value estimate range sits at $219 per share. Shares are currently trading at ~$155 each at the time of this writing.

Jan 23, 2022

Netflix’s Subscriber Growth Is Slowing Down, Competition Heating Up
Image Shown: Netflix Inc’s paid subscriber base is expected to grow at a slower pace in the near term compared to the performance seen in recent years. Image Source: Netflix Inc – Shareholder letter covering the fourth quarter of 2021. On January 20, Netflix reported fourth-quarter 2021 earnings after the bell. The video streaming giant met consensus top-line estimates and beat consensus bottom-line estimates last quarter as original content such as the South Korean TV show Squid Game (released September 2021) proved to be quite popular in markets around the globe and helped Netflix retain interest in its service. During Netflix’s latest earnings call, management noted that the violent Squid Game TV show had been renewed for a second season when asked by an analyst about the issue. However, the near-term guidance Netflix provided in conjunction with its latest earnings update signaled that growth in its paid subscriber base was expected to slow down in the first quarter of 2022 on both a year-over-year and sequential basis. During regular trading hours on January 21, shares of NFLX were pummeled.

Dec 24, 2021

High-Yielding Crown Castle Is One of Our Favorite REITs
Image Shown: We include Crown Castle International Corp as an idea in our High Yield Dividend Newsletter portfolio. Image Source: Crown Castle International Corp – October 2021 IR Presentation. Crown Castle International Corp is a real estate investment trust (‘REIT’) that owns and operates cell towers, fiber networks, and small cell nodes in the US. These assets form the backbone of wireless infrastructure and are key to enabling the domestic rollout of 5G networks and supporting existing 4G networks. We include shares of CCI in our High Yield Dividend Newsletter portfolio as we are big fans of its strong dividend coverage (when taking its ability to tap capital markets into account), impressive growth outlook, and high-quality cash flow profile. Shares of CCI yield ~2.9% as of this writing after the REIT boosted its quarterly dividend by 11% sequentially in October 2021, bringing its annualized payout up to $5.88 per share. Over the long haul, Crown Castle targets 7%-8% annual dividend growth. The REIT’s expansive asset base stretches across the US with operations in virtually every major metropolitan market. Crown Castle’s long-term contracts with its tenants (namely telecommunications giants) provide substantial visibility as it concerns its future cash flow performance. Additionally, Crown Castle generates substantial free cash flows, something we like a lot.

Nov 30, 2021

We Remain Bullish on Disney’s Capital Appreciation Upside Potential
Image Shown: Shares of The Walt Disney Company have shifted lower over the past month, though are still bullish on its capital appreciation upside. Our fair value estimate sits at $192 per share of Disney. The Walt Disney Company reported fourth-quarter earnings for fiscal 2021 (period ended October 2, 2021) on November 10 that missed consensus top- and bottom-line estimates. While the company’s ‘Disney Parks, Experiences and Products’ segment (includes its theme parks and resorts operations) staged an impressive turnaround last fiscal quarter, its ‘Disney Media and Entertainment Distribution’ segment (includes its video streaming businesses) grew at a slower pace than expected. Shares of Disney sold off after its latest earnings report, though we remain confident that the company’s free cash flow growth outlook remains stellar and continue to view Disney’s capital appreciation upside potential quite favorably. Disney is included as an idea in the Best Ideas Newsletter portfolio.

Sep 27, 2021

Update on High-Yielding AT&T
Image Source: AT&T Inc – Second Quarter of 2021 IR Earnings Presentation. The communications and media giant AT&T Inc is pivoting back to its roots, a strategy that we think will pay off handsomely in the long run, though there have been plenty of rough bumps along the way. Management has finally found a strategy that AT&T can stick with. We include AT&T as an idea in the High Yield Dividend Newsletter portfolio and shares of T yield ~7.7% as of this writing (note that the company will rightsize its dividend in the coming quarters, resulting in a yield adjustment lower).

Sep 3, 2021

Dividend Increases/Decreases for the Week September 3
Let's take a look at companies that raised/lowered their dividend this week.

Aug 16, 2021

Best Idea Disney’s Video Streaming Business Booms
Image Shown: The Walt Disney Company’s video streaming growth ambitions showed signs of significant progress last fiscal quarter. Image Source: The Walt Disney Company – Third Quarter of Fiscal 2021 Earnings Press Release. On August 12, The Walt Disney Company reported third quarter earnings for fiscal 2021 (period ended July 3, 2021) that beat both consensus top- and bottom-line estimates. Disney’s video streaming services reported a sharp uptick in paid subscribers while the financial performance of the segment that includes its theme park and resort operations staged an immense rebound. We continue to be huge fans of Disney’s capital appreciation potential and include shares of DIS as an idea in the Best Ideas Newsletter portfolio.

Jul 27, 2021

High-Yielding AT&T Remains Free Cash Flow Cow
Image Shown: AT&T Inc’s core businesses in the wireless and fiber arenas continue to gain subscribers at a rapid pace, while its HBO/HBO Max offerings are also growing at a nice clip. Image Source: AT&T Inc – Second Quarter of 2021 IR Earnings Presentation. On July 22, AT&T reported second quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The company added 1,156,000 net postpaid customers to its core ‘Mobility’ business including 789,000 net postpaid phone customers, aided by its lowest churn rates ever at just below 0.7%. AT&T also added 174,000 net prepaid phone customers while its AT&T Fiber business added 246,000 net customers last quarter. We include shares of AT&T as an idea in the High Yield Dividend Newsletter portfolio (more on that here), and shares of T yield ~7.4% as of this writing.