Valuentum Exclusive Analysis for the Discerning Investor

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Apr 29, 2020

ALERT: Going to “Fully Invested” -- The Fed and Treasury Have Your Back
Image Source: BEA. Real GDP fell at an annual pace of 4.8% in the first quarter of 2020, according to the "advance" estimate released by the Bureau of Economic Analysis. We’re taking the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to “fully invested,” scaling up our existing positions to reflect that status. We plan to consider put options to hedge against downside risk, if or when the time comes. Moral hazard continues to run rampant, and the Fed and Treasury may have no choice but to continue artificially propping up this market, even buying stocks through certain vehicles, if necessary. Having warned members about the impending “Great Crash of 2020” and identifying savvy opportunities near the bottom, we are now withdrawing our S&P 500 target range as we move now to focus more on individual ideas through this turbulence. We expect to continue to identify opportunities for relative outperformance. 2019 was one of the best years in the Best Ideas Newsletter portfolio yet. In the Exclusive, we just registered our 25th consecutive monthly short idea in a row that has worked out. The markets may go much lower from here before we go higher again, but the Fed and Treasury won’t let this market go down in the longer run, in our view--even as we navigate a Depression-type economic environment in the near term. Stay the course.

Apr 25, 2020

Emergency Update on COVID-19
President of Investment Research at Valuentum, Brian Nelson provides an emergency update on COVID-19. He talks about how policymakers have dropped the ball thus far, and why investors should not let their guards down, despite what has been a nice bounce from the March 23 bottom.

Apr 22, 2020

What To Do Now?
Let's get President of Investment Research Brian Nelson's thoughts...

Apr 21, 2020

Macy’s Will Find It Difficult to Unlock the (Fair) Value of Its Real Estate
Image Source: Valuentum. The embattled department store Macy’s suspended its dividend and drew down its revolving credit line on March 20 in order to shore up its financial position in the face of the ongoing coronavirus (‘COVID-19’) pandemic. All of Macy’s physical stores were temporarily closed on March 18, though some might shut down for good given the company’s financial woes. The fair value estimate of Macy’s is heavily dependent on factors well outside the control of management, and considering the US economy and global economy at-large are sliding toward a pandemic/leverage induced recession/depression, we aren’t optimistic on Macy’s ability to unlock the (fair) value of its real estate. Any real estate sales done in the foreseeable future will likely be at a discount to their fair value. As the firm continues to burn through cash--there’s a very high probability Macy’s will continue to generate negative free cash flows until the “cocooning” of households ends--the clock is working against Macy’s. We are staying away from the name.

Apr 19, 2020

ICYMI -- Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?
President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report.

Apr 17, 2020

Earnings Roundup for the Week Ended Sunday, April 19, Covering Companies Across the Board
Let's take a look at several earnings reports across numerous industries in this article as the ongoing coronavirus (‘COVID-19’) pandemic forces the global economy to a crawl. Please note that as these reports primarily cover the first quarter of calendar year 2020, the impact of the pandemic has yet to be truly reflected in corporate earnings. That said, these reports still provide an important glimpse into what to expect going forward and how companies are responding to the pandemic.

Apr 17, 2020

Dividend Increases/Decreases for the Week Ending April 17
Let's take a look at companies that raised/lowered their dividend this week.

Apr 13, 2020

Dollar General Near All-Time Highs, Decides to Issue Long-Term Debt at Attractive Rates
Image Source: Dollar General Corporation – May 2016 Investor Day Presentation. Dollar General is now trading near its all-time highs after rising ~8.5% year-to-date, at a time when the S&P 500 is down almost 15%, as of the end of normal trading hours on April 9. We include shares of DG in our Best Ideas Newsletter portfolio and recently covered some of Dollar General’s operational updates in our ‘US Beer Sales Reportedly Surge During the Pandemic, Dollar General Well-Positioned to Meet Rising Demand’ article that can be viewed here. We are following up on that piece, and our note covering Dollar General’s most recent financial updates that can be viewed here, to highlight how Dollar General is maintaining its liquidity position during these harrowing times. The ongoing coronavirus (‘COVID-19’) pandemic is wreaking havoc on global economies and staying on top of debt maturities is a key part of maintaining the funds needed to meet surging demand for consumer staples products (keeping inventory management and other considerations in mind). Shares of DG yield ~0.9% as of this writing.

Apr 12, 2020

ICYMI -- Video: The Question Is If the Economy Can Be Held Together Without Vast Equity Dilution
President of Investment Research at Valuentum and award-winning author of "Value Trap: Theory of Universal Valuation" explains how the range of probable fair value outcomes of S&P 500 companies has increased as a result of COVID-19 and possible equity dilution on the downside to long-run inflationary pressures on stocks driven by runaway Fed and Treasury stimulus on the upside.

Apr 6, 2020

Wayfair’s Sales Rise as US Households Stay In
Image Shown: Shares of Wayfair Inc shot up on April 6 after publishing a very favorable business update. E-commerce firm Wayfair sells furniture and home décor online and operates several websites including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold. Shares of W surged upwards on April 6 after the e-commerce company put out a very promising business update that stated Wayfair’s sales were skyrocketing upwards. While most of the US economy (and others) is shutting down to contain and ride out the pandemic, Wayfair’s business model appears more resilient than the market was previously giving it credit for. That being said, the company remains very free cash flow negative and carries a net debt position. Its recent convertible debt issuance will provide Wayfair with much needed liquidity, but it remains to be seen if the company’s success of late will translate into positive free cash flows in the medium-term.