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Our Reports on Stocks in the Luxury Goods – Established Brands Industry

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Image Source: Kevin Wu Structure of the Luxury Goods Industry Luxury goods firms differentiate themselves based on brand name, perception, and quality in order to generate excess returns on invested capital through the economic cycle. Building a large, successful luxury brand is difficult, leaving those that possess them with intangible competitive advantages that are not easily overcome by new entrants. Growth in emerging middle classes and China will be the key demand drivers going forward, though the strongest brands will also grow successfully via market share gains. Though changes in consumer preferences should be watched closely, we like the structure of the group. For coverage of firms in the Luxury Goods – Established Brands – Industry, please click here.

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

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

Nike Posts a Solid Quarter and Issues Strong Guidance

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Image Shown: Shares of Nike popped on September 25 after reporting a strong first quarter for fiscal 2020 and issuing favorable guidance for the full fiscal year. By Callum Turcan Nike (NKE) reported earnings for the first quarter of its fiscal 2020 (ended August 31) on September 24 and investors clearly liked what they saw. The sportswear company’s GAAP revenues climbed 7% year-over-year to $10.7 billion, a growth rate that would have been 10% on a constant currency basis given ongoing strength in the US dollar. Sales in the Greater China region rose by 27% year-over-year on a constant-currency basis, complemented by strong growth in EMEA (up 12% on a constant currency basis) and the Asian Pacific region (up 13% … Read more

No Recession At Walmart; Estee Lauder Not Cheap

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Image Source: Mike Mozart Walmart’s results were quite reassuring regarding the health of the economy. There are also pockets of significant strength, with prestige beauty being catapulted by a “selfie generation.”  By Brian Nelson, CFA No Recession At Walmart Following what can best be described as “carnage” across the retail sector when Macy’s reported August 14, Walmart (WMT) eased some of the concerns in the retail sector when the bellwether reported August 15. Although Amazon (AMZN) seems to get most of the attention when it comes to assessing the health of the consumer, Walmart remains twice as large, as measured by revenue. Walmart generated ~$514 billion in revenue during its last fiscal year, while Amazon hauled in ~$233 billion. If the … Read more

Mall Retail Armageddon?

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We think investors should be extremely cautious if they are interested in any mall retailers. Mall REITs are starting to feel some of the pain, too. By Brian Nelson, CFA Our latest channel checks at the malls foreshadowed what eventually turned into a terrible showing during the first quarter for the department stores such as J.C. Penney, Kohl’s and Nordstrom, but the apparel names and other niche shops are feeling the pain, too. It is becoming eerie when visiting the malls these days. In some of the locations we’re visiting, hardly anyone is there! Generation Z may not pick up the slack from the millennial generation, and it is showing up in the numbers big time. Here’s a run down … 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

Mortgage REITs Floundering, More Reports

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In alphabetical order by company name: NLY, CAKE, CLX, CVS, EL, PBI, PSA, QCOM, O, SMG  — Annaly Capital (NLY): We’ve been warning about the mortgage REITs (REM) for as long as we can remember, and we just issued yet another warning recently about the sustainability of group’s dividends. These equities are high-risk, and they’ve been underperformers for years. On May 1, Annaly Capital pre-announced a dividend cut to $0.25 per share, down from $0.30 per share previously. Economic leverage at the mREIT was 7x at the end of the quarter, and mortgage market dynamics remain as difficult to predict as ever. CEO Kevin Keyes characterized the current environment as one hindered by a “flattening yield curve and compressed spreads.” Buyer … Read more

Facebook’s Huge New Opportunity in Instagram Checkout, Reiterating Fair Value Estimate ~$230

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Image Source: Facebook’s Instagram We continue to like Facebook, and we’re huge fans of Instagram Checkout. Many may not know it yet, but Instagram Checkout may mark the beginning of retailers’ websites becoming obsolete. The sell-off last summer in Facebook was a big gift for those that stuck with our thesis. Brian Nelson, CFA I think one of the things that financial advisors and financial planners do extremely well is explain the concept of patience to their clients. Can you imagine if a client cashed out upon every 15%-20% decline? That’d be a recipe for continuous disaster. On the path to the market setting broader market highs in 2018, there have been many disappointments along the way. There have been … Read more

ATTN: Advisors and Planners — Disruption Is Looming

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“With the commoditization of investment advice and intense competition from robos and other more cost-efficient solutions, growth-minded advisors want to create bespoke experiences for clients.” — WealthManagement.com By Brian Nelson, CFA Hi Valuentum members, colleagues and friends, Valuentum has a large subscriber base and is one of the most successful paid subscription financial information websites launched this decade. Over the past eight years or so, individuals, financial advisors and money managers from all over the world have subscribed to our services. We pride ourselves on independence and transparency, and we’re a champion of the investor. Today, I’d like to talk directly to our financial advisor, financial planner, and professional money-manager members. You probably already heard the news yesterday: Charles Schwab, which handles … Read more