BAC

Which Sectors Are Leading the Market Higher? And Why Is This Important?

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Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more

How to Think About Corporate Tax Reform

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Credit Suisse Is a Case Study in Poor Governance and Why ESG Investing Matters

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Image Shown: Shares of Credit Suisse Group AG have performed poorly in recent years as a revolving door of leaders combined with several major scandals have led to billions in losses and prompted Swiss regulators to launch investigations into the bank. The company has a plan in place to turn things around, though it will take years for these efforts to be fully reflected in its financial performance. Credit Suisse recently issued out lackluster guidance for 2022 that weakened investor confidence in its turnaround story. We think Credit Suisse is a good case study in poor corporate governance.   By Callum Turcan   A key part of the investment decision-making process involves evaluating a company’s leadership team, the process of which … Read more

8 Announcements and Top Research You May Have Missed

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8 Announcements. This article was sent to members via email March 27. By Brian Nelson, CFA Hi everyone, Brian here. Trust you are doing great! Here are eight announcements I want you to be aware of: Everything we do is for our members. We’re very proud of the outperformance of the Best Ideas Newsletter portfolio, that we’ve never had a dividend cut in the Dividend Growth Newsletter portfolio, that our high-yield ideas are holding up very well, and the success rates of the Exclusive capital-appreciation ideas and short-idea considerations are running at approximately 80%. We’re proud to be your research partner. The odds of a Fed rate cut are going up as yield-curve inversion continues to threaten. The risks are more behavioral in … Read more

Where Are the Safe Havens?

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“We believe that staying diversified as in holding a broad swath of ideas as in either the Best Ideas Newsletter portfolio or Dividend Growth Newsletter portfolio as the equity portion of one’s allocation makes a lot of sense in any environment…High yield dividend investing may become more and more popular in coming years as rates across the globe approach 0%, and the amount of negative-yielding debt proliferates.” — Brian Nelson, CFA By The Valuentum Team The Federal Reserve is weighing all its options as it assesses how to balance global economic weakness and strong performance in the US, pressure from the White House to aggressively cut rates, and a 30-year yield that puts the federal funds rate at the highest … Read more

Why We Don’t Like Dividends of Banking Firms: 4 Very Good Reasons

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Untermyer: Is not commercial credit based primarily upon money or property? Morgan: No, sir. The first thing is character. Untermyer: Before money or property? Morgan: Before money or anything else. Money cannot buy it … a man I do not trust could not get money from me on all the bonds in Christendom. –Mr. JP Morgan’s testimony before the Pujo Committee (questioning from Samuel Untermyer), 1912-1913 Reason #1: A Bank Run Is Always Possible Though the history of banking dates back to as early as 2000 BC in Babylonia, the makings of the present-day banking system in the US really didn’t take hold until the beginning of the 20th century. Some financial historians may argue for a later date, but we … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

Dividend Increases/Decreases for the Week of June 28

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Below we provide a list of firms that raised their dividends during the week ending June 28. 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                          The Adirondack Trust Company (ADKT): now $29.00 per share semi-annual dividend, was $28.75. B3 S.A. – Brasil, Bolsa, Balcão (BOLSY): now $0.0249 per share quarterly dividend, was $0.0235. Bank of America (BAC): now $0.26 per share quarterly dividend, was $0.24. Bankinter, S.A. (BKNIY): now $0.0967 per share quarterly dividend, was $0.0946. The Bank of New York Mellon (BK): now $0.47 per share quarterly dividend, … Read more

Top Research and Ideas You May Have Missed

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Is Quant Value Giving Intrinsic Value Investors a Bad Name? Surely, you don’t believe Warren Buffett’s “style” is out of favor? By Brian Nelson, CFA I need to make sure that you’re aware of something very important. The media and perhaps many investment professionals define the concept of “value” as companies with low price-to-book (P/B) ratios, and the concept of “growth” as companies with high price-to-book ratios. This definition of “value” and “growth” and their corresponding returns have been magnified in writings throughout the media and across quantitative research, even in prestigious journals. Warren Buffett has been rallying against most quantitative applications and how “growth” and “value” are defined in popular media and quantitative research for decades.  Here’s one of the Oracle’s most … Read more

Primer on the Banking Sector: Where Are We in the Cycle?

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Image Source: GotCredit Three of our favorite banks are JPMorgan Chase, Bank of America, and US Bancorp. These are three very high-quality institutions which are also very well managed. They all benefit from cultures that encourage the right kind of risk/reward thinking. If these equities start to trade at a meaningful discount to our fair value estimates, they may be are worth considering as long-term investments, in our view. Summary We’ll talk about how banks make money, and the three most important costs of running a bank. The Great Financial Crisis revealed the tremendous risks of banking equities, and we’ll walk through these in depth. We’ll discuss how to conceptualize where we are in the banking cycle, and how that … Read more