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In the News: META, AAPL, AMZN, RSG, DLR, VRTX, XOM, CVX

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Image Source: Valuentum By Brian Nelson, CFA Readers should expect a substantial reduction in our fair value estimate of Meta Platforms (META). The company’s spending is out of control, and the impact on our expectations of free cash flow will be materially punitive. As we have reiterated time and time again in our work, stock prices and returns are based in part on future expectations of free cash flow, and our expectations for Meta’s have changed. A look at how fast things fell apart at Meta is informative.  The company reported Q4’21 results in February 2022, and it’s only been a few months for the company to experience the considerable deterioration — for free cash flow to fall from $12.6 … Read more

Post-Mortem on Facebook (Meta Platforms): Apple Crushed Our Thesis

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Image: Thesis creep kept us excited about Meta, but we’ve since trimmed the “weighting” in the simulated Best Ideas Newsletter portfolio, as updated August 19. What more can we say–Apple is eating Facebook’s lunch, and the iPhone giant is now advancing with its advertising revenue, too. Apple blew up our thesis on Meta, and that’s the long and short of it. By Brian Nelson, CFA Meta Platforms (META) wasn’t the first idea that hasn’t worked out perfectly for us, and it won’t be the last. Frankly, we’re as surprised as the next person at how quickly things fell apart at Meta, and there wasn’t much time to be patient on the idea as the savviest portfolio managers like to do. … Read more

ICYMI (Aug 19) — ALERT — PYPL, META, GOOG, V — Making Some Big Changes in the Simulated Best Ideas Newsletter Portfolio!

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This note was emailed to members August 19. Alert >> Image Shown: We are very happy with the overall “performance” of the simulated Best Ideas Newsletter portfolio, which is carving out 2.6 percentage points of relative outperformance so far in 2022 on a price-only basis, as shown in the table above. However, we’re making some big changes to the simulated newsletter portfolio today on some of our favorite names. Our best ideas continue to be in the simulated Best Ideas Newsletter portfolio, the simulated Dividend Growth Newsletter portfolio, the simulated High Yield Dividend Newsletter portfolio, the ESG Newsletter portfolio, and the Exclusive publication, as well as with our additional options commentary. “So when it comes to using data, you can think … Read more

Cash-Based Sources of Intrinsic Value for Meta Platforms and PayPal Remain Strong

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Image Shown: Shares of Meta Platforms Inc (blue line) and PayPal Holdings Inc (orange line) have staged a nice comeback during the past month, as of the start of April 2022. By Callum Turcan Rising interest rates and the impact that has had on the market’s discount rate implictly used within the enterprise cash flow pricing process has pressured the value of equities with long free-cash-flow growth tails–stocks that are expected to grow at a meaningful premium over global economic growth over the coming decades. The rapid increase in the 10-year Treasury rate, no doubt, has had a profound impact on the equity values of long-duration cash-flow companies such as those held in the ultra-speculative ARK Innovation ETF (ARKK), for … Read more