Valuentum Exclusive Analysis for the Discerning Investor

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Mar 29, 2024

In the News: Inflation, Walgreens, SPACs/IPOs, and Marine Insured Losses
Inflation comes in-line with expectations regarding the critical PCE price index release for February. Walgreens remains in the doghouse following the firm's recent dividend cut. SPACs and IPOs are alive and well with Redditt hitting the market and Trump Media & Technology garnering interest. The tanker Dali collided into Baltimore's Francis Scott Key Bridge, causing loss of life and billions in estimated insured damages.

Aug 19, 2022

Nelson: The 16 Most Important Steps To Understand The Stock Market
Image Source: Tim Green. We outline the '16 Most Important Steps to Understand the Stock Market.' We think it's important to take a read of these key stock market tenets when things are going great -- and perhaps even more important when things aren't going your way. This continues to be a working document.

Aug 10, 2022

Best Idea Berkshire Hathaway Continues to Impress
Image Shown: Berkshire Hathaway Inc is a stellar cash flow generator in almost any operating environment. Image Source: Berkshire Hathaway Inc – 10-Q SEC filing covering the Second Quarter of 2022. Berkshire Hathaway Inc reported second quarter 2022 earnings that saw its ‘operating earnings’ metric surge higher versus the year-ago level. This metric removes realized and unrealized gains/losses in its large equity portfolio from the picture to provide investors with a better understanding of the company’s underlying performance. Due to the downturn in equity markets seen during the first half of this year, Berkshire Hathaway’s GAAP net income swung to a large net loss last quarter. We include shares of Berkshire Hathaway Class B (ticker: BRK.B) in the Best Ideas Newsletter portfolio, and our fair value estimate sits at $320 per share with room for upside.

Nov 9, 2021

Best Idea Berkshire Hathaway Moving Higher!
Image Shown: Shares of Berkshire Hathaway Inc Class B have been on a nice upward climb over the past year. On November 6, the industrial and insurance conglomerate Berkshire Hathaway Inc (BRK.A) (BRK.B) reported third-quarter 2021 earnings. We liked what we saw in its latest earnings update as most of its business segments reported strong results, save for some of its insurance businesses which took a hit from major weather events and headwinds resulting from more drivers being on the road. Shares of Berkshire Hathaway Class B (ticker: BRK.B) are included as an idea in the Best Ideas Newsletter portfolio.

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Feb 5, 2021

Dividend Increases/Decreases for the Week February 5
Let's take a look at companies that raised/lowered their dividend this week.

Jun 3, 2020

Our Thoughts on SelectQuote Going Public
Image Source: SelectQuote Inc – S-1 filing. On May 22, the digitally-oriented insurance comparison company SelectQuote went public, and shares of SLQT have performed quite well since then as of this writing, jumping meaningfully from the reference price of $20 per share. The company intends to use some of the proceeds for debt reduction, as it is obligated to allocate at least a quarter of the net proceeds (up to $150 million) of the IPO towards paying down its term loan due November 2024. What SelectQuote offers is an online way for consumers to compare prices and policies for various insurance plans including life, auto, home, and senior healthcare insurance products. SelectQuote does not underwrite the insurance policies but sells these products on behalf of its various partners and takes a commission for each sale. Thus, SelectQuote does not have any underwriting risk. SelectQuote has licensed insurance agents in all 50 states, and at the end of 2019, the firm had 1,850 “full-time equivalent employees” including 636 core agents and 392 flex agents.

May 6, 2020

Berkshire Hathaway Prepares Itself for COVID-19
Image Source: Berkshire Hathaway Inc – 2019 Annual Report. Berkshire Hathaway reported first-quarter 2020 earnings on May 2, which due to significant unrealized losses in its investment portfolio (a product of the market swoon in the early months of 2020) the firm swung to a large loss on a GAAP basis. As Berkshire Hathaway’s leadership team has often noted, the 2018 accounting rule change that forces companies to recognize unrealized gains and losses in the income statement can make GAAP net income and GAAP diluted EPS figures near meaningless without digging deeper into the firm’s financials.

Feb 25, 2020

Berkshire Reports 2019 Earnings
Berkshire Hathaway reported fourth quarter and full-year results on Saturday February 22, and we appreciate the firm’s performance across most of its business lines, keeping in mind that losses at its insurance-underwriting business during the fourth quarter weakened its company-wide performance. That being said, the insurance business can be volatile at times, which is why we appreciate Berkshire’s large railroad, utility, consumer goods, and other business segments. On the topic of Berkshire’s insurance-related exposure to the ongoing COVID-19 epidemic (which has since spread from China to the rest of the world, shutting down economies in South Korea, Italy, and elsewhere), insurance firms fundamentally altered the structure of their policies after the 2002-2003 severe acute respiratory syndrome (‘SARS’) outbreak to exclude epidemic coverage from most policies (save for insurance policies that explicitly cover those situations) according to the WSJ. Shares of Berkshire Class B stock are included in our Best Ideas Newsletter portfolio with a top-weighting, and over the past few months shares of BRK.B has begun converging towards our fair value estimate of $229 per share. Berkshire Class B shares could move towards the top end of our fair value range estimate of $275 per share, particularly if the company figures out where to invest its enormous cash pile.

Feb 7, 2020

Dividend Increases/Decreases for the Week Ending February 7
Let's take a look at companies that raised/lowered their dividend this week.