GM

How About the New Vette? General Motors Bouncing Back

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Image Source: GM Chevrolet Next-Generation Corvette, 2020 Stingray revealed July 18 Shares of General Motors held up well in an otherwise weak market August 1 after posting a solid second quarter 2019 earnings report. By Callum Turcan A holding in both our Dividend Growth Newsletter and Best Ideas Newsletter portfolios, General Motors (GM) held up well August 1 after reporting a nice earnings beat with revenue coming in-line with consensus analyst estimates. GM’s North America division led the way, aided by its all-new Chevrolet Silverado and GMC Sierra offerings taking market share in the pickup truck market (according to third-party data cited by GM). GAAP revenue declined by 2% year-over-year and non-GAAP adjusted EBIT moved lower by 6%, but GM’s … Read more

Viewing Intrinsic Value as a Range of Outcomes: Tesla’s Margins Come Under Fire in Second Quarter, Shares Sell Off

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By Callum Turcan On July 24, Tesla Inc (TSLA) posted second quarter 2019 earnings that did not go over well with investors. For starters, the electric vehicle maker’s company-wide GAAP gross margin tanked by ~100 basis points while Tesla’s ‘Automotive’ segment’s gross margin came in at 18.9% during the quarter, down ~170 basis points from 20.6% in the same period last year. This is entirely a result of Tesla ramping up production and deliveries of the less profitable Model 3 to meet demand while production and deliveries of its higher margin Model S/X move lower. Shares of TSLA are under considerable pressure as the market adjusted its long-term view of Tesla’s gross margins and ultimately future free cash flows. Here … Read more

New Highs! The December Call Has Been Well-Rewarded

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Image shown: Valuentum’s Dividend Growth Newsletter portfolio. Since inception, the newsletter portfolio has *never* had a constituent that experienced a dividend cut. We moved to weighting ranges beginning in 2018.   “The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.” – Warren Buffett (2018) By Brian Nelson, CFA While others are celebrating, we know better. This market could come down upon itself like nothing else. But for now. We breathe a sigh of relief. A company, Valuentum, that emphasizes the importance of timing and then delivers on that cold December 26 day to move to all-in in the newsletter portfolios is something remarkable (see image below). We cannot go back to … Read more

Now a Trade War on Multiple Fronts!

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This article appeared as the introduction to the June edition of the Dividend Growth Newsletter. By Callum Turcan and Brian Nelson, CFA On May 5, President Trump announced via Twitter (TWTR) that he planned to raise American tariffs on $200 billion of Chinese imports from 10% to 25%, stepping up pressure on Beijing in what we initially saw as a bid to get a trade deal over the finish line. By May 10, the new tariff rates had gone into effect and it became clear that neither side was any closer to reaching an agreement, unfortunately.  Just a few weeks ago, state-sanctioned rumors were coming out of Beijing (particularly, the editor-in-chief of the influential Global Times) that China was considering … Read more

Hardcore: Tesla’s Stock May Collapse to Double Digits

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Image: The Valuentum Buying Index almost called the top in Tesla’s shares. Whenever a CEO comes out saying that the company must engage in “hardcore” cost cutting, bad things happen. Morale is likely in the pits at the car company, and cost takeouts will probably cut more than just some excess fat. The downward spiral at Tesla has been in the works for many months now, but the writing is on the wall for a major disappointment that truly resets reality for shareholders. — By Brian Nelson, CFA — I’ve given CEO Elon Musk the benefit of the doubt. As a fellow founder and entrepreneur with skin in the game, I can understand some of the challenges that leaders face. … 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

Lyft Takes a Fall, S-1 Reads Like Business School Homework

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Image Source: Lyft’s S-1 Reminiscences of the dot-com boom came back to the markets with the over-hyped initial public offering of Lyft, a stock that continues to get shellacked as its first days as a publicly-traded enterprise. Those that know Valuentum know that we wouldn’t touch such investments with a 10-foot pole. The company lost $43 per share in 2018. By Brian Nelson, CFA Call me old school, but I’m surprised as to the widely-accepted nature of the business models of Lyft (LYFT) and Uber, and other ridesharing services. For those that don’t know Lyft, the company maintains “peer-to-peer marketplace for on-demand ridesharing,” and thus far has “facilitated over one billion rides,” according to its S-1 filing. It generates almost … Read more

Big Bank Roundup, Bank of America Catches Our Eye

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In this article, let’s catch up with how far the big 6 banks in the US have come since the height of the financial crisis exactly a decade hence. We will highlight the improvements in the banking system, some of the key risks, and a few high level thoughts about the individual franchises leading the US banking system. We like Bank of America the most, and we include diversified banking exposure in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. “Both a European bank crisis and/or a Chinese banking and economic crisis would be mutually reinforcing to the downside and a major cause of global deflation.” – Matthew Warren By Matthew Warren When you take a look at the … 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

In the News: Dividend Growth Still on Hold at General Mills After Strong Quarter, Avoiding FedEx and BMW After Warnings on Bottom-Line Weakness, and a Biogen as a Prime Example of Risks to Avoid in Biotech

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General Mills raised bottom-line and free cash flow conversion expectations for fiscal 2019, but we’re not interested in shares as it continues to prioritize deleveraging over dividend growth in a slow growth environment. International corporations continue to weigh the impact of slowing macroeconomic activity and global trade tensions, as evidenced by FedEx and BMW slashing bottom-line expectations, and shares of Biogen have been rocked by news that it terminated two late-stage studies of a key Alzheimer’s treatment. By Kris Rosemann General Mills Turns in Positive Organic Sales Growth and Operating Margin Expansion Food products giant General Mills (GIS) turned in better-than-expected results in its fiscal 2019 third quarter report, released March 20, as organic sales growth advanced 1% on a … Read more