Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Feb 22, 2020

Is a Stock Market Crash Coming? -- Coronavirus Update and P/E Ratios
Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report -- 32. We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates--estimates that are likely too high given the evidence we are seeing with respect to a slowdown due to COVID-19--and corporate debt levels more elevated than ever before (note, a high net debt level should depress the P/E in enterprise valuation--US corporate debt has advanced 50% over the past decade, to $10 trillion), it is our contention that the current market reflects a “situation-equivalent” forward P/E (i.e. rightsizing for new net debt relative to the dot-com peak and adjusting for lower forward earnings expectations compared with current forecasts) perhaps greater than 24.4, which was recorded at the peak of the dot-com bubble. Though interest rates are lower than they were at the time of the dot-com crash, suggesting a modest reasonable bump to normalized forward P/E ratios of ~15 times to reflect “fair valuations,” we could seriously be in for fundamental-driven crash soon, as both the earnings multiple and earnings estimates contract aggressively. Hypothetically, a contraction to a 16x forward multiple on earnings estimates just 10% lower than currently forecast implies an S&P 500 of 2,566, or a swoon of about 20%-30% from current levels--and that would just get us down to 16x still-respectable forward numbers. How quantitative-driven price-agnostic trading may impact this scenario is not known either, and all of this could be setting up for a wild ride in the coming weeks and months. Fasten your seatbelts. We’ll have a few newsletter portfolio alerts coming Monday.

Jan 23, 2020

Resetting Your Mental Model
Image Source: affen ajlfe. Having the right mental model and using the right information can be the reason why you win or lose in investing.

Jan 4, 2020

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds
Image: President of Investment Research Brian Nelson, CFA. A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception.

Dec 24, 2019

Question: Arbitrage Opportunity in Dell/VMware?
Image Source: Mike Cohen. Member Question: It seems that there could be an arbitrage opportunity with Dell seemingly being valued at a lower amount than the stake Dell owns in VMware, (i.e. long Dell, short equivalent number of shares VMware). Any thoughts from your side?

Dec 11, 2019

Apple Charging Higher
Image Shown: Shares of Apple Inc continue to climb higher and we like the name in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. This is a long-term holding with substantial potential capital appreciation and dividend growth upside. We like Apple’s pristine balance sheet, top quality free cash flow profile, and decent growth outlook. The company retains an enormous amount of firepower for additional share buybacks and material dividend increases going forward. Depending on whether the US decides to impose additional tariffs on Chinese imports soon will be very material to Apple’s near-term performance, but the long-term trajectory remains the same. Beyond Apple Pay, the company has its new streaming offering (Apple TV+) which launched on November 1 to drive services-related revenue growth.

Dec 4, 2019

Reflecting on Two of Our Favorite Best Ideas Newsletter Portfolio Holdings
As we get closer to finishing out 2019, let’s take a look at two of the big winners in our Best Ideas Newsletter portfolio this year: Facebook and Alphabet. What a comeback Facebook has made since the summer of 2018! On the basis of our fair value estimate, we expect the company to surpass new highs. Alphabet just hit an all-time high last month, too!

Nov 15, 2019

Dividend Increases/Decreases for the Week Ending November 15
Let's take a look at companies that raised/lowered their dividend this week.

Oct 30, 2019

Tech Earnings Roundup: AAPL, FB, GOOG
Several large tech companies reported earnings this week including three of the top holdings in our Best Ideas Newsletter and Dividend Growth Newsletter portfolios.

Oct 23, 2019

Our Reports on Stocks in the Computer Hardware Industry
We've optimized our technology coverage.

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.