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ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG

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Image source: Centers for Disease Control and Prevention.  ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today.  — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a … Read more

Is a Stock Market Crash Coming? — Coronavirus Update and P/E Ratios

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Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report — 32 We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates–estimates that are likely too high given the evidence we are seeing with respect to a slowdown due … Read more

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

PPG Industries’ Latest Earnings Report Indicates Softer Industrial Activity Ahead

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Image Shown: Capitalizing on the various lucrative opportunities the aerospace industry offers PPG Industries Inc underpins its long-term free cash flow trajectory. Image Source: PPG Industries – December 2019 IR Presentation By Callum Turcan On January 16, maker of painting, coating, and specialty materials PPG Industries Inc (PPG) posted fourth quarter earnings for 2019 that missed consensus estimates on both the top- and bottom-lines. Shares sold off sharply initially before recovering modestly throughout the trading session January 16. Let’s walk through PPG Industries’ quarterly performance to get a feel for how broader industrial activity is trending and why economic softness may be looming. As of this writing, PPG Industries is trading in the upper bound of our fair value estimate … 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

Our Reports on Stocks in the Broad Chemicals Industry

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Structure of the Chemicals Industry The broad chemicals industry includes firms that make thousands of different chemical substances, ranging from basic raw materials to advanced specialty chemicals. Making chemicals is a cyclical and energy-intensive business, with volatile oil/gas prices influencing feedstock, operation, and transportation costs. Specialty providers can carve out niches, but commodity chemicals producers are largely undifferentiated, making it impossible to gain a sustainable competitive edge. The industry is very capital intensive, and large swings in prices and volume should be expected. We don’t like the industry structure. We’ve optimized our chemicals coverage, the reports of which can be found here.

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

RYAM: Terrible Business, Potentially Cheap Stock

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Image Source: First Quarter 2019 Financial Presentation Materials Rayonier Advanced Materials has seen better days, but has the market overreacted? We don’t think there are many businesses that have poorer industry structure, but if the company can get things back on track, normalized free cash flow indicates substantial upside potential. Commodity prices and tariffs remain big wild cards to this story, and the Valuentum investor always waits for technicals and momentum indicators to turn decidedly positive first. By Brian Nelson, CFA Rayonier Advanced Materials (RYAM) was spun out of Rayonier (RYN) a few years ago. The company is a leader “of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in cell phone and computer screens, filters … Read more

Markets Swooning, Expect Extreme Volatility, Finger on Put-Option Trigger

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Image shown: We notified members December 26 that we had  moved  the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to a “fully invested” position, from a 30% and 20% cash “weighting” at the high end of the range, respectively.  — No change to simulated newsletter portfolios…at this time.  — Hi everyone, — Hope you’re navigating these tumultuous markets well.   — If you recall, during the holiday season last year, we had moved the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to “fully invested.” See image above (point of the arrow). Because many members were traveling and out of the office, not all were able to read the notification until a week or two after. They were … Read more

Dividend Increases/Decreases for the Week Ending April 19

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Below we provide a list of firms that raised their dividends during the week ending April 19. 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 American Water Works (AWK): now $0.50 per share quarterly dividend, was $0.455. AptarGroup (ATR): now $0.36 per share quarterly dividend, was $0.34. Celanese (CE): now $0.62 per share quarterly dividend, was $0.54. CIT (CIT): now $0.35 per share quarterly dividend, was $0.25. Civista Bancshares (CIVB): now $0.11 per share quarterly dividend, was $0.09. CNX Midstream Partners (CNXM): now $0.3732 per share quarterly dividend, was $0.3603. Cross … Read more