ALGT

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

by

Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

New Issue Airbnb’s Shares Pricing In Strong Recovery and Then Some

by

Image Shown: Airbnb is losing money hand over fist while as it grows into its substantial market opportunity. Source: S-1. By Brian Nelson, CFA Rental platform Airbnb (ABNB) has been a part of the latest series of IPOs that have soared out of the gates recently. Shares went public at $68 per share December 10, and now the equity is trading at more than $148 per share at the time of this writing. For those that don’t know the story of Airbnb (AirBed & Breakfast), the concept started in 2007 when, after discovering that every hotel was sold out during an international design conference in San Francisco, the founders started renting airbeds in their apartment to conference attendees. Thirteen years have now … Read more

Recent Data Indicates US Consumer Spending Holding Up Well, Online Sales Surging

by

Image Shown: As of this writing, the S&P 500 (SPY) appears ready to end 2020 on a high note, supported by the resilience of the US consumer. By Callum Turcan The ongoing coronavirus (‘COVID-19’) pandemic accelerated the shift towards e-commerce, and that change has long legs. Retailers that previously invested in their digital operations and omni-channel sales capabilities were able to capitalize on this shift while those that relied heavily on foot traffic were hurt badly. Numerous retailers went under in 2020 including J.C. Penney Company Inc (JCPNQ) and Neiman Marcus. Holiday season shopping data indicates that US consumer spending was frontloaded and grew modestly in 2020, aided by surging e-commerce sales, which advanced nearly 50% on a year-over-year basis. … Read more

Boeing’s Financials Are Absolutely Frightening

by

By Brian Nelson, CFA On November 18, 2020, Boeing (BA) announced that the US Federal Aviation Administration (FAA) withdrew its order that had grounded its 737-8s and 737-9s (737 MAX) that had been involved in two terrible accidents during the past few years, a Lion Air flight that killed 189 people and an Ethiopian Airlines jet crash that claimed the lives of 157 more. We’ll never forget these tragedies and the impact on the families and the aviation industry, more generally.   In January 2017, we had added Boeing to the Dividend Growth Newsletter portfolio, but we had removed it March 16, 2018, prior to the unfortunate and high-profile accidents that occurred several months after. During the short time it … Read more

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process

by

With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company’s revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There’s a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Buffett Makes Another “Unforced Error” in Airlines

by

Image Source: Value Trap: Theory of Universal Valuation By Callum Turcan The commercial passenger airline industry is nearly impossible, to downright impossible, to generate meaningful shareholder value in. Specifically as it relates to the US, since the Airline Deregulation Act of 1978 (which among other things allowed airlines to set their own routes without always needing to seek regulatory approval which in turn greatly increased competition, lowered fares, and saw a boom in travelers and miles traveled) various airlines have gone under (such as Pan Am in 1991 and Delta Air Lines (DAL) in 2005 along with others) as competitive advantages once created by government barriers no longer existed. This is true globally as well, as rising competition from private … Read more

Why *NOW* Do You Care About Boeing’s Stock?

by

Image Source: Robert Sullivan In no, way shape or form should you *now* be interested in Boeing’s stock. Let’s explain. By Brian Nelson, CFA I used to cover Boeing (BA) full-time when I worked as a senior equity analyst at Morningstar many moons ago. I remember pounding the table on the name to many a buyside shop in Chicago when it must have been trading well under $100 at the time (now more than 10 years ago). I remember posting an old video of me with Pat Dorsey, who now runs his own shop in Chicago, Dorsey Asset Management. That video used to be here, but as in what usually happens on the Internet, the darn thing doesn’t exist anymore. … Read more

FB/FIZZ Methodologically Speaking and CMG, AAPL, BA!

by

By Brian Nelson, CFA Hi everyone, Hope you are doing great. There a few things I wanted to put on your radar this evening. We’re going to talk the importance of having CFA charterholder research at your advisory practice. We’ll discuss Facebook (FB) and National Beverage (FIZZ) in the context of our methodology, and we’re going to touch on a couple things at Chipotle (CMG), Apple (AAPL) and Boeing (BA). Did you hear about the 737 MAX 8? Not good. I also wanted to remind you of the new 40/40 Goal (click here), of which we are already making progress (the book reviews keep coming in). Thank you! First, just a quick reminder on the 40/40 Goal. We now have 15 reviews … Read more

The Bull Case for Airline Stocks?

by

Image Source: BriYYZ Warren Buffett has famously said that airline stocks are horrible long-term investments, but his vast portfolio now owns a number of airlines. What’s the bull case for owning these capital-intensive, cyclical and often boom-and-bust stocks? By Brian Nelson, CFA Last year, the Oracle of Omaha Warren Buffett shocked the investment world when his company Berkshire Hathaway (BRK.A, BRK.B) disclosed that it held stakes in American Airlines (AAL), United Continental (UAL), Delta (DAL) and Southwest (LUV). For a die-hard, economic-moat investor, thinking about taking a stake in an airline seems crazy. After all, Buffett himself used to joke that he had an 1-800 number that he could call anytime he had the urge to buy an airline stock … Read more

Prepared Remarks From Nelson Exclusive Conference Call June 30

by

Read President of Investment Research Brian Nelson’s prepared remarks for the yearly roundup conference call, held for Nelson Exclusive members. If you would like to subscribe to the Nelson Exclusive publication, please learn more about the publication here. The Nelson Exclusive publication does not reflect real performance. Performance is hypothetical and does not represent actual trading. Ladies and Gentlemen, Thank you very much for joining us on the first conference call for members of the Nelson Exclusive publication. The first year of the publication has surely been an exciting one for all involved. When I first wrote the introductory letter of the Nelson Exclusive on July 1, 2016, we were well-aware the market had laid down the gauntlet for this publication. … Read more