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Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill

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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust (SPY). President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. By Callum Turcan On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus … 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

Dividend Increases/Decreases for the Week Ending August 2

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Below we provide a list of firms that raised their dividends during the week ending August 2. 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 Alexander & Baldwin (ALEX): now $0.19 per share quarterly dividend, was $0.165. AllianceBernstein (AB): now $0.56 per share quarterly dividend, was $0.49. American States Water (AWR): now $0.305 per share quarterly dividend, was $0.275. Apollo Global Management (APO): now $0.50 per share quarterly dividend, was $0.46. Arbor Realty Trust (ABR): now $0.29 per share quarterly dividend, was $0.28. Artisan Partners Asset Management (APAM): now $0.60 per … Read more

Dividend Increases/Decreases for the Week Ending April 27

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Below we provide a list of firms that raised their dividends during the week ending April 27. 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 abaxis (ABAX): now $0.18 per share quarterly dividend, was $0.16. Alliance Holdings (AHGP): now $0.7475 per share quarterly dividend, was $0.7425. Alliance Resource Partners (ARLP): now $0.515 per share quarterly dividend, was $0.51. Ames National Corporation (ATLO): now $0.23 per share quarterly dividend, was $0.22. Amphenol (APH): now $0.23 per share quarterly dividend, was $0.19. Ameriprise Financial (AMP): now $0.90 per share quarterly dividend, was $0.83. … 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

American Express Carries Meaningful Credit Risk

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Image Source: American Express Company – First Quarter of 2020 Earnings IR Presentation By Callum Turcan At Valuentum, we are very bullish on the growth trajectory of high-quality payment processing, payment solutions, and financial technology firms. That’s why we include PayPal Holdings Inc (PYPL) and Visa Inc (V) as top-weighted holdings in our Best Ideas Newsletter portfolio. However, please note that what makes those firms appealing is the limited or lack of exposure to credit risk. Visa carries no credit risk and generates revenues through fees collected on transactions conducted with Visa-branded cards, and while PayPal possesses some credit risk, that risk is rather small relative to its overall business. Both firms enable investors to capitalize on the shift to … Read more

Dividend Increases/Decreases for the Week Ending July 27

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Below we provide a list of firms that raised their dividends during the week ending July 27. 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 Access National (ANCX): now $0.16 per share quarterly dividend, was $0.15. Alliance Resource Partners (ARLP): now $0.52 per share quarterly dividend, was $0.515. Archrock (AROC): now $0.132 per share quarterly dividend, was $0.12. Ares Commercial Real Estate (ACRE): now $0.29 per share quarterly dividend, was $0.28. Arrow Financial (AROW): now $0.26 per share quarterly dividend, was $0.25. BancorpSouth (BXS): now $0.17 per share quarterly dividend, was … Read more

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

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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   Image: Bank Run in Michigan, USA, February 1933. Source: Public Domain. By Brian Nelson, CFA It’s sometimes easy to lose sight of the fragility of a banking firm’s business model. Let’s examine the reasons why we don’t like banking firms’ dividends. Reason #1: A Bank Run Is Always Possible. Reason #2: Others Have Tried to Invest in Bank Dividends and Have Failed. Reason #3: … Read more

There Is Milk At The Store

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This article first appeared in the September edition of the High Yield Dividend Newsletter. For more information about this publication, please see here. “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” — Winston Churchill By Brian Nelson, CFA Very few of us could have imagined that we’d witness the bull market that began on that fateful day in March 2009 that might very well mark a generational low. In 2009, major investment banks around the globe were struggling to survive, and the fallout in the mortgage markets left the banks holding paper that nobody wanted to own, let alone buy. The global financial system … Read more