ALTR

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

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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

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

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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.

Lots to Like About Intel’s 2016: 3D XPoint and Altera!

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Newsletter portfolio holding Intel (INTC) continues to change with the world around it. An increasingly smart and connected world offers significant opportunities for the company, but those opportunities will not be presented without obstacles to hurdle. It didn’t work out so well for the price of Intel the week of its report, as it released a somewhat cautious outlook on a day of a big market swoon, but we still expect some good things ahead from the chip giant. In fact, we continue to like the holding in the context of achieving the goals of the newsletter portfolios. In the fourth quarter of 2015, results released January 14, Intel reported record revenue of $14.9 billion, though the top line grew … Read more

Intel May Have a Breakout Year in 2016

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Intel’s (INTC) third-quarter results, released October 14, didn’t turn many heads, but the company did beat expectations on both the top and bottom lines, performance that was well-received by the market. Revenue generated in the quarter was approximately flat on a year-over-year basis, but the mark did beat the consensus estimate by $250 million. The chip giant’s earnings of $0.64 per share in the quarter exceeded expectations by a nickel per share. It wasn’t a bad showing by any stretch of the imagination, but Intel continues to feel the pain of a shrinking personal computing market, even as optimism flies high with respect to the firm’s 6th Gen Intel Core processors. Revenue from Intel’s Data Center Group, which includes server, … Read more

The Market Top?

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For those that are following along closely, you shouldn’t be surprised if the market corrects 5%-10% in the coming months. Let’s talk about this. From a technical standpoint, it may not be too far of stretch to say that we’re likely going to test the bottom of the S&P 500 (SPY) uptrend, and that could feasibly mean a drop to the 200-day moving average (blue line above). My technical alerts are telling me that with respect to the S&P 500, we’ve just dipped below the 50-day moving average, an arbitrary simple rolling average but one that is no less self-fulfilling than value investing itself. Don’t panic though. We’ve cut through the 50-day moving average many a time before during this … Read more

Intel, A Disciplined Capital Allocator?

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   Image Source: Gareth Halfacree We fully applaud Intel’s (INTC) management for walking away from the deal with Altera (ALTR). Though we liked the transaction from a strategic standpoint, our view centered on the assumption that Intel could “pay up to ~$40 per share for the company…and still create value for existing shareholders.” With Altera’s shares trading north of $43 at present, Intel would have had to pay a sharp premium to market levels, perhaps in the $60s, to entice management. Bloomberg reported that Intel had offered as much as $54 per share, and in this light, we’re glad the company walked away. Even though we think the bid was too high, our opinion of the executive suite has been … Read more

Why Intel Wants Altera

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In its biggest potential acquisition in history, newsletter portfolio holding Intel (INTC) is reportedly in talks to acquire Altera (ALTR), though deal terms have yet to be disclosed. We think Intel could pay up to ~$40 per share for the company on the basis of the high end of our fair value estimate range for Altera and still generate value for shareholders, though we wouldn’t expect Altera’s $2 billion revenue stream to be much of a needle-mover against Intel’s $50+ billion revenue base, at least initially. However, there are a few reasons why this would be a strategic win for Intel.  Altera is one of the top standard cell ASIC (application-specific integrated circuit) suppliers in terms of revenue. Due to … Read more

The Correction: Draghi; Chip, Telecom Warnings; Oil and MLPs

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The equity markets have been under significant pressure the past few weeks, and we think there is further downside to come. Our view is that the equity markets will be lower than today’s levels within the next 6-18 months, if not tomorrow or next week or next month. We’ve taken profits on cyclicals, and we’ve already closed out the put option hedges in both portfolios for a substantial gain (the latest transaction alert email can be accessed here). Europe appears to be in a giant mess again. The region hadn’t been strong by any stretch of the imagination, but we recently picked up material weakness during Ford’s (F) recent analyst day, which in part prompted us to take a very … Read more

Dividend Increases/Decreases for the Week Ending July 25

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Below we provide a list of firms that raised/lowered their dividends during the week ending July 25. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Alliance Bancorp (ALLB): now $0.06 per share quarterly dividend, was $0.05. Altera (ALTR): now $0.18 per share quarterly dividend, was $0.15. BancorpSouth (BXS): now $0.075 per share quarterly dividend, was $0.05. BankFinancial (BFIN): now $0.02 per share quarterly dividend, was $0.01. Bar Harbor Bankshares (BHB): now $0.23 per share quarterly dividend, was $0.223. BBCN Bancorp (BBCN): now $0.10 per share quarterly dividend, was $0.075. BorgWarner (BWA): … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more