Valuentum Exclusive Analysis for the Discerning Investor

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Jun 4, 2020

BHP Benefiting from an Industrial Rebound in China
Image Source: BHP Group – Fiscal 2019 Annual Report. In recent months, iron ore futures prices have surged higher due to an ongoing recovery in China’s industrial sector and supply concerns in Brazil, which has culminated into the Dalian Commodity Exchange’s September 2020 iron ore deliveries hitting a record high since the futures contract was first launched in 2013. Pivoting to copper, three-month copper futures prices based on trading activity on the London Metals Exchange have also perked up on the back of an apparent recovery in Chinese economic activity. Rising metals prices bodes well for major and minor miners around the globe, including BHP Group.

May 21, 2020

Southern Copper’s Payout Is Not That Healthy
Image Shown: An overview of Southern Copper’s core operations in Mexico and Peru. Image Source: Southern Copper Corporation – May 2019 IR Presentation. Copper (symbol Cu, atomic number 29) is an essential building block of modern civilization as it is used as a conductor for heat and electricity. Electrical components, utility-scale electrical transmission systems, residential and commercial heating appliances, electric vehicles, and much more all rely on copper products (electromagnets, heat exchangers, heat sinks, integrated circuits, printed circuits, copper wiring, and copper fittings are all examples of products that contain copper). The largest consumer of copper is China, accounting for roughly half of global demand making the Middle Kingdom an essential part of the copper supply chain. On the other end of the supply chain, it’s companies like Southern Copper Corp that develop and operate the copper mines in major producing regions that enable global supply to meet demand. Copper plays an essential role in the transportation, industrial, consumer goods, utilities, and construction industries/sectors. The pace of construction activity in China has an outsize impact on global copper prices.

May 21, 2020

Covering the US-China “Technological Arms Race”
Image Shown: The future of geopolitical tensions will likely boil down to what some see as a “technological arms race” between the US and China. Image Source: Nvidia Corp – May 2020 Presentation. Given the rise of US-China geopolitical tensions, we wanted to cover the changing state of the semiconductor industry and the rare earth minerals landscape. Recent announcements from Taiwan Semiconductor Manufacturing Company or ‘TSMC’ caught our eye. For some background, in the world of semiconductors, there are what is referred to as fabrication facilities and foundries. The former is used to make chips for internal purposes while the latter contracts out its production capacity to third parties to make chips for external purposes. TSMC is considered a foundry operator, with the second-largest wafer production capacity (silicon wafers are slices of semiconductors) and the largest chip contract producing capacity in the world at the end of 2019 according to some reports.

May 20, 2020

ALERT: Important Recap of Valuentum's Research and Market Events
Image: Breaking out to new highs, Facebook is a top weighting in the Best Ideas Newsletter portfolio (which includes our favorite capital appreciation ideas in a portfolio setting). The social media giant is surging on news of a new Shops feature, something we've been expecting and raving about with respect to its potential for years--as we maintain our view that, anti-trust considerations aside, Facebook is poised to become the "new Internet." The high end of our fair value estimate range for Facebook is nearly $290, and we would not be surprised if the company eventually reaches those levels. Note: PayPal, another big weighting in the Best Ideas Newsletter portfolio, has been a huge winner of late, too. The value of our research remains heavily tilted toward proficiency in enterprise valuation and technical/momentum indicators, portfolio construction, idea generation, individual stock selection, and assessing dividend health and resilience, among other things. ALERT: Important Recap of Valuentum's Research and Market Events: Unequivocally Bullish, S&P Target Range Was Withdrawn Last Month, Continued Focus on Individual Stock Selection with "Moaty" Operations, Huge Net Cash Positions, Strong Expected Future Free Cash Flows, Established Recurring Business Models, and Otherwise Attractive Economic Castles. Big Cap Tech and Large Cap "Growth" Remain Our Favorite Allocations.

May 18, 2020

Earnings Roundup for Week Ended May 17
Image Shown: We cover several earnings reports in this article across several sectors and industries to provide an overview of how corporates performed during the early stages of the ongoing coronavirus (‘COVID-19’) pandemic. Reducing expenses, generating efficiency gains, and ultimately improving the cost structure of corporates appears to be a key theme during the first-quarter 2020 earnings cycle. Management teams across the board are hunkering down and preparing for the pain to continue as global economic activity is expected to grind to a halt in the second quarter of 2020, before recovering somewhat due in part to massive fiscal and monetary stimulus measures that were launched to offset the negative impact COVID-19 is having on economic activity.

May 7, 2020

Gold Miner Newmont Continues to Shine
Image Source: Newmont Corporation – First Quarter of 2020 Earnings IR Presentation. On May 5, the gold miner Newmont Corp reported first quarter 2020 earnings that missed both consensus top- and bottom-line estimates which prompted shares to sell off modestly during the normal trading session that day, though shares of NEM have been on an epic bull run since the start of 2020. We continue to like Newmont as an idea in our Dividend Growth Newsletter portfolio with shares of NEM up ~48% as of this writing since joining the portfolio on January 13, 2020, before taking dividend considerations into account, while the S&P 500 is down ~13% during this period before taking dividend considerations into account. At Newmont’s new annualized dividend payout of $1.00 per share, shares of NEM yield ~1.6% as of this writing.

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 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.