GM

Trump’s Tariffs Ignite Concerns about Protectionism, Rising Input Costs

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Image Source: Michael Vadon President Trump is making true on his promises to protect the domestic steel and aluminum industries. Input costs may move higher for many global industrials, and the long-term implications of protectionist policy will be tested. We’re not expecting retaliation, but we can’t rule it out either. Rising rates remain our primary concern. Kris Rosemann and Brian Nelson, CFA If rising interest rates aren’t enough to give the market heartburn, President Trump announced March 1 that he will impose tariffs on the importation of steel and aluminum to the tune of 25% and 10%, respectively, citing national security concerns. Steel and aluminum stocks rallied hard on the news, but it left many of its industrial brethren under … Read more

Buffett’s Berkshire, Corporate Buybacks on Pace for Record; Lithium, Steel Prices on the Move

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Image Source: Berkshire Hathaway, Shareholder Letter (2017). “Fifteen common stock investments at year end that had the largest market value.” “The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.” – Warren Buffett, Shareholder Letter (2017) By Kris Rosemann and Brian Nelson, CFA Simulated Best Ideas Newsletter portfolio holding Berkshire Hathaway’s (BRK.A, BRK.B) fourth-quarter results didn’t disappoint, and commentary from the Oracle of Omaha, Warren Buffett, was at its finest in the company’s Shareholder Letter. The letter was chock full of insights, from an emphasis on normalized earnings power, to buying stocks at a “sensible purchase price,” to warning about the dangers of “purchasing frenzy” with respect to M&A, … Read more

Systemic Risk

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Image Source: Maximo Santana We believe the next crisis will not be a banking crisis, but one of a breakdown in market structure. By Kris Rosemann and Brian Nelson, CFA The volatility of US equity markets has simply been incredible of late. What a change of tune from the past 12-18 months. Many investors are growing more concerned about the health of US sovereign credit and implications on borrowing costs, the benchmark Treasury yield, and further, such implications on long-run equity values (rising interest rates in stock valuation models reduces intrinsic value, all else equal). Moody’s has been warning about the deteriorating health of the US as a result of tax reform, pointing to “at least a $1.5 trillion deficit … Read more

Newsletter Portfolio Idea GM Powers Higher, Markets Calm Down…a Bit

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The US markets still faced quite a bit of volatility during the trading session February 6, but it wasn’t anything compared to the bloodbath from Groundhog Day and the subsequent Monday. We can only hope that the worst has passed, but it probably hasn’t. By Kris Rosemann and Brian Nelson, CFA After overnight fears February 5/6 of a significant drop at the stock-market open–the Dow Jones Industrial Average (DIA) had been indicated down as much as 1,000 points at one point–stocks jumped between positive and negative during the trading session February 6, and the last 24-48 hours have seen more than its fair share of volatility. The CBOE Volatility Index (VIX) rose above 50 for the first time since August … Read more

Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value

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President of Investment Research Brian Nelson defines the concept of universal value and shows how quantitative statistical methods are inextricably linked to those of fundamental, financial, business-model related analysis. Value does not exist in respective process vacuums! Value is universal. Find out why. Running time: ~10 minutes.  Tickerized for Valuentum’s stock and ETF coverage universe. Transcript Hi this is Brian Nelson from Valuentum Securities, and this is the tenth edition of a series that I call “Off the Cuff,” where I get in front of the camera and I talk for ten minutes. This is what we have to talk about today. We have to talk about this concept: The Theory of Universal Value. Value does not exist in vacuums … Read more

How Have Our Best “Dividend Growth Ideas” Performed During 2017?

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Read about the ideas in the Best Ideas Newsletter portfolio >> We wrote recently about how well the top-weighted ideas in the Best Ideas Newsletter portfolio have performed during 2017, but what about the top-weighted ideas in the other newsletter portfolio, the Dividend Growth Newsletter portfolio? How have they performed during 2017? Please tell us you know how well the top-weighted ideas have been performing. Key Takeaways: 1) “Excluding dividends, the SPDR S&P 500 Dividend ETF has advanced less than 9% this year. Meanwhile, excluding dividends, the two top-weighted ideas in the Dividend Growth Newsletter portfolio, Johnson & Johnson and Intel, are up ~20% and ~24%, respectively, more than double that of the SPDR S&P 500 Dividend ETF.”  2) “We’re viewing … Read more

How Have Our “Best Ideas” Performed During 2017?

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The top-weighted ideas are getting the job done, while we avoided one of the biggest missteps in all of 2017. We’ve had better years, but 2017 was still a great one. Key takeaways: 1) “The top-weighted ideas in the Best Ideas Newsletter portfolio, Apple and Visa, performed wonderfully from the release of the December 2016 newsletter through November 13, 2017, averaging more than an increase of 45%, excluding dividends, versus a mid-teens percentage advance for the S&P 500, excluding dividends.” 2) “The weighting concept within a portfolio context is an important one because, as a portfolio manager adds more and more ideas to the portfolio, the next best idea is just that–the next best one–so the probability of diluting portfolio … Read more

Bellwethers Drive Dow Jones Past 23,450 – Cheers!

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Image: The stock market is partying like it’s 1999 or 1929, or 1987. You pick. Cheers! Creative Commons, Ruth Hartnup. The market is reacting positively to calendar third-quarter earnings reports during the trading session October 24, and the Dow Jones Industrial Average (DIA) has now surpassed 23,450+. The rally in US equities ensues. Stocks mentioned in this note: General Motors (GM), McDonald’s (MCD), and Caterpillar (CAT). By Brian Nelson, CFA General Motors Delivers!!! We couldn’t be more excited for holders of newsletter portfolio idea General Motors. The auto giant released a solid third-quarter report October 24 that has sent shares rallying to ~$46 each. If you remember, GM’s stock was languishing in the mid-$30s when we penned our September piece, … Read more

General Motors Is Off to the Races!

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Image Shown: GM’s shares are breaking out. GM’s stock has been out of favor for years, but with an attractive price-to-earnings ratio and healthy dividend yield, is the market finally coming around to the company’s tremendous potential? By Brian Nelson, CFA General Motors’ (GM) share-price performance has been an enigma. The automaker’s price-to-earnings multiple is less than half and its dividend yield is more than double that of the average S&P 500 company, and we thought it was only a matter of time that the company’s share price would break out. There can only be so much time before market anomalies are closed, and GM was a big one. We wrote the following September 7, “Why Won’t GM Break Out … Read more