GE

Newsletter Alert: Title Withheld – Members Only

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We’re as surprised as you are by this alert, but we’re removing GE from both newsletter portfolios. After rolling our discounted cash flow model forward (2017 first forecast year) and in light of GE’s release of its 10-Q late April, which showed surprisingly poor cash flow from operations conversion (negative $1.6 billion in industrial cash flow from operations) and only modest capital spending reductions (two key components of the Dividend Cushion ratio), we no longer have the confidence in shares as we did before. But why the change and why now? New information in the 10-Q, and new forecasts in our newly rolled-forward discounted cash flow model. By Kris Rosemann and Brian Nelson, CFA We had just finished saying how … Read more

Not Worried About Priceline, Boeing; Yes Worried About Fickle Retail

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Image Source: Mike Mozart Priceline and Boeing have been here before. Fickle retail continues to succumb to the Amazon effect. By Brian Nelson, CFA The Dow Jones Industrial Average (DIA) closed just shy of the 21,000 mark on May 11, while the S&P 500 (SPY) ended the session at ~2,395. We continue to ride the wave in the equity markets higher, even as we exercise caution almost across the board. First-quarter earnings season has actually been quite good, however, with the “blended earnings growth rate for S&P 500 companies north of 10% (it was 13.5% with more than 80% of S&P 500 companies reporting). FactSet noted in its May 5 report that this pace of growth is the highest since … Read more

Valuentum’s 3 Breakthroughs in the Field of Finance and More

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Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more

Dow 21,000+; Forward P/E on S&P 500 ~18!!!

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By Brian Nelson, CFA To say that the broader equity market is “extended” is an understatement. After testing the 20,000 mark on the Dow Jones Industrial Average (DIA), stocks have now plowed through 21,000 in such a fashion that can only be compared to the euphoric trading activity of 1999 when the index surged to 11,000 from 10,000 over roughly the same time frame. Who remembers the days of the dot-com bubble? The market is clearly off its rocker, but the market isn’t always on its rocker. Stock prices under and overshoot intrinsic value all of the time. It’s a part of the markets, as much as oxygen is necessary for human life. The markets overshot to the downside during … Read more

Is Clean Energy Just Burning Cash?

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Image Source: Chuck Coker Clean or renewable energy sources will undoubtedly be a part of how we generate power in the future, but how investible is the space? The answer is largely dependent on your risk tolerance. Key Takeaways: The success of the solar industry at this point in time is dependent on public policy, specifically investment tax credits, which allow participants to compete with traditional energy sources. The wind power industry is more developed than the solar industry, though many of the largest players in the industry are large utility holding companies. There are a wide range of ideas ancillary to the renewable energy movement in the areas of emissions reduction, power storage, and energy efficiency. By Kris Rosemann … Read more

Calendar Fourth Quarter Earnings Roundup: IBM, GE, PG, UNP

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Image Source: texasfeel Let’s get our thoughts on calendar fourth-quarter performance from a few giants in their respective industries. By Kris Rosemann and Brian Nelson, CFA International Business Machines IBM’s (IBM) stock is now back above the $170 per-share mark after falling below $120 per share just a little over a year ago. Five-year performance of the equity, however, still remains terrible, with shares of IBM languishing around the price they were changing hands at the beginning of 2012. Warren Buffett’s association with the stock has a lot of investors excited, but we think the Oracle of Omaha may be a bit too optimistic on this one. Year-over-year revenue at IBM has been under considerable pressure for some time, and … Read more

The Coming “Goldman Sachs Era”

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Valuentum covers recent developments in the financials sector, including hopes for a relaxation of certain prohibitive Dodd-Frank rules that, if repealed, could pave the way for improved economic returns across the banking sector during the Trump administration. A look back at the month of September 2008, and how Goldman Sachs may very well shape the financial markets during the next few years are two other areas in the piece. Financials stocks have come roaring back since Trump was elected the 45th President of the United States. We’ve participated. By Brian Nelson, CFA It’s been more than 8 years now. The month of September 2008 shaped my view of the financials and banking sector more than any other month possibly could–The … Read more

Dividend Growth Newsletter: Evaluating Our 2016 Dividend Growth Picks

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“…the average return of our dividend growth picks has blown the return of the S&P 500 out of the water during the past two years, and in each of the past two years.” By Brian Nelson, CFA What say us of our dividend growth stock-selection skills? First, on a portfolio level, I am very proud to say that the Dividend Growth Newsletter portfolio has advanced in each of the past two years, while the SPDR S&P Dividend ETF (SDY) has been significantly more volatile, declining during 2015, and bouncing back during 2016. For supposedly steady-eddy dividend growth indices, they tend to be quite volatile relative to the Valuentum Dividend Growth Newsletter portfolio, one of the main reasons why I don’t … Read more

The Next Industrial Revolution – Internet of Things

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Image Source: Skyworks Summary: ·        The Internet of Things has been called ‘the next Industrial Revolution,’ and the revolution is already well underway. ·        Explosive growth can be expected in the number of devices connected to the Internet in coming years, and the data extracted from such devices will enable businesses to make significant value creating improvements to operations. ·        The proliferation of the Internet of Things will take a combined effort from the end user of the technology to smart device manufacturers to software providers to networks. ·        The newsletter portfolios have significant exposure to early large-cap adopters of the IoT. We love the potential we see in some of our favorite names to capitalize on ‘the next Industrial … Read more

Tough Month – My Goodness

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By Brian Nelson, CFA The market rallied hard this month and seemed to leave a lot of the Dividend Growth Newsletter portfolio ideas behind. I’m not going to sugarcoat the results: The Dividend Growth Newsletter portfolio disappointed this month, and for that I’m sorry.  A lot of it may be “explainable” in light of what happened on Election Day 2016, however. I think a lot of investors have shifted capital from the stronger dividend payers to the more-speculative ones in hopes that a new, pro-business Trump administration will be their saving grace. We hope so, but Trump cannot be President forever, and dividend growth investors should consider a long-term perspective, in my opinion, especially when it comes to compounding payouts … Read more