CAH

Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds

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Image: President of Investment Research Brian Nelson, CFA By Brian Nelson, CFA A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception. Though the book focuses more on the life and times of founder Jim Simons and dedicated only a page or two to the fall of Long-Term Capital Management (LTCM), another quant fund that went belly-up during the late 1990s, it was nonetheless a thoroughly interesting and enjoyable read. But why I am bringing up one of the most successful quant … Read more

Health Care Sector Remains Hot

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Image Shown: The Health Care Select Sector SPDR ETF, a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has been on an upward tear over the past several years. Strong macro tailwinds combined with the ability for industries within the health care sector to generate meaningful shareholder value have been key to supporting strong capital appreciation of equities operating in the area of late. By Callum Turcan The Health Care Select Sector SPDR ETF (XLV) is a top holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. We like the exposure and diversification to health care equities that XLV provides. XLV yields ~1.5% as of this writing. State Street Corp (STT) acts as … Read more

Procter & Gamble Appears Overvalued

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Image Shown: Shares of Procter & Gamble have been on an epic run since mid-2018, and we think shares have gotten ahead of themselves here. By Callum Turcan Consumer staples giant Procter & Gamble (PG) is a solid company that generates sizable and consistent free cash flows. However, in our view, shares of PG have gotten way ahead of themselves due to a “flight to quality” that has seen the market bid up P&G’s share price from the low $70s in April 2018 to almost $120 as of this writing. Shares of PG now yield 2.5% as of this writing and trade well above the top end of our fair value estimate range of $101 per share. Please note P&G … Read more

Johnson & Johnson Announces New Test Results That Reveal No Traces of Asbestos in Johnson Baby Powder Products

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Image Source: Johnson & Johnson – February 2019 CAGNY IR Presentation By Callum Turcan A holding in both our Dividend Growth Newsletter and Best Ideas Newsletter portfolios, shares of Johnson & Johnson (JNJ) have been on a wild ride of late over dueling narratives regarding the firm’s potential legal liabilities. In particular, liabilities concerning its talc-based Johnson Baby Powder product. On October 18, Johnson & Johnson announced it was voluntarily recalling “a single lot” of its Johnson Baby Powder product (equal to around 33,000 bottles) after the US FDA found sub-traces of chrysotile asbestos in a single bottle (less than 0.00002%). At the time, Johnson & Johnson vigorously defended its baby care brand and said that its Johnson Baby Powder … Read more

Johnson & Johnson’s Talc Problems Hit Another Bump

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Image Shown: Johnson & Johnson’s embattled ‘Baby Care’ segment performed poorly during the third quarter of 2019. Image Source: Johnson & Johnson – IR Presentation. By Callum Turcan Johnson & Johnson (JNJ) was back in the news Friday October 18 when the company announced it was voluntarily recalling “a single lot” of its embattled Johnson’s Baby Powder product in the US due to alleged asbestos contamination risks. The US Food and Drug Administration tested a single bottle from this lot, according to Johnson & Johnson, with the federal regulator noting that sub-trace levels (no greater than 0.00002%) of chrysotile asbestos had been detected in the bottle. Johnson & Johnson plans to vigorously contest these allegations and maintains that its talc … Read more

Johnson & Johnson Raises Full-Year Guidance Yet Again

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Image Shown: Shares of Johnson & Johnson climbed higher on October 15 after reporting a nice third quarter earnings report and raising guidance for the full year. By Callum Turcan On October 15, Best Ideas Newsletter and Dividend Growth Newsletter holding Johnson & Johnson (JNJ) reported third-quarter 2019 earnings that were positively received by the market. The healthcare giant once again boosted full-year non-GAAP sales and EPS guidance, which we appreciate, on the back of solid performance at its ‘Pharmaceuticals’ and ‘Medical Devices’ segments. Please note that Johnson & Johnson had already raised its guidance for 2019 twice before this latest increase, which we covered in this July 2019 piece here and this April 2019 piece here. During the third … Read more

ICYMI: Interview with Valuentum’s President Brian M. Nelson, CFA

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Catch up with Valuentum’s President Brian M. Nelson, CFA in a recent interview with dividend growth investor Arne Magnus Lorentzen Ulland of the blog stockles. By Brian Nelson, CFA Recently, I was interviewed by Arne Magnus Lorentzen Ulland of the blog stockles. Arne is a dividend growth investor like many of you, and I sincerely hope you enjoy the interview he put together. I’m very grateful for his interest. His questions were fantastic. We discuss why and how I incorporate independence and integrity into the service at Valuentum. We go into detail regarding why Valuentum views stocks the way it does, and how Valuentum combines enterprise valuation and the information contained in prices in its stock-selection process. I discuss the pitfalls … Read more

Hold ‘em or Fold ‘em?

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Let’s talk Cardinal Health, Hanesbrands, Ford and Verint in this piece. Our best ideas are ideas in the newsletter portfolios. Unlike other widely followed strategies, the Valuentum strategy likes to capture the entire pricing cycle on an idea. We don’t “operate” in ideas only below the ‘undervalued’ line, but we like to let our winners run to when they are overvalued and showing signs of technical/momentum deterioration. By Brian Nelson, CFA The most important quality of a Valuentum investor is patience. Once we add an idea to the newsletter portfolios, we don’t remove it once it starts to approach the lower bounds of the fair value estimate range. We generally don’t remove it at our fair value estimate either, and … Read more

Triple-A Rated J&J’s Opioid Liabilities Likely More Than Priced In

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  Image Source: J&J Shares of J&J have settled into the high-$120s at the time of this writing, well below our ~$150 fair value estimate. We’re going to stick with J&J in both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio at this time. By Callum Turcan and Brian Nelson, CFA On August 26, an Oklahoma judge ruled that Johnson & Johnson (JNJ) had to pay $572 million to the state over its role in the opioid crisis in America. In particular, District Judge Thad Balkman noted that “Johnson & Johnson’s misleading marketing and promotion of opioids created a nuisance” that compromised the health of thousands in Oklahoma. Johnson & Johnson and its Janssen subsidiary will contest the … Read more