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The Best Years Are Ahead

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By Brian Nelson, CFA — The wind is at our backs. — The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. — The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets … Read more

Dividend Increases/Decreases for the Week Ending March 10

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Below we provide a list of firms that raised/lowered their dividends during the week ending March 10. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week American Tower (AMT): now $0.62 per share quarterly dividend, was $0.58. American Vanguard (AVD): now $0.015 per share quarterly dividend, was $0.01. AMERISAFE (AMSF): now $0.20 per share quarterly dividend, was $0.18. Avnet (AVT): now $0.18 per share quarterly dividend, was $0.17. Cabot Microelectronics (CCMP): now $0.20 per share quarterly dividend, was $0.18. Carter’s (CRI): now $0.37 per share quarterly dividend, was $0.33. CenterState Banks (CSFL): … Read more

The “Hierarchy” of Valuentum Idea Generation

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Let’s talk about this hierarchy of idea generation in this note. —  A version of this article was sent to members previously. New content has been added.  — Note: We continue to work to optimize the signal-to-noise ratio in our work, and we are evaluating expanding our update cycle to half-year periods to better bolster the signaling aspects of the Valuentum Buying Index (VBI). In our widely-read case study (see here), the VBI showed its ability to rank equity returns over a forward 12-month period, and we think a migration to less-frequent updating may make the most sense to better capture the forward-looking dynamics of the system. We think this will help weed out false breakouts and other noise that could be harmful. You shouldn’t think of … Read more

Dividend Increases/Decreases for the Week February 25

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Below we provide a list of firms that raised their dividends during the week ending February 25. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Aaron’s (AAN): now $0.1125 per share quarterly dividend, was $0.1000.           Agnico Eagle (AEM): now $0.40 per share quarterly dividend, was $0.35. Albemarle (ALB): now $0.395 per share quarterly dividend, was $0.390. Alexander & Baldwin (ALEX): now $0.19 per share quarterly dividend, was $0.18. Allison Transmission Holdings (ALSN): now $0.21 per share quarterly dividend, was $0.19. AMERISAFE (AMSF): now $0.31 per share quarterly dividend, was $0.29. Apple … Read more

Volatility Spikes, Oh Cisco, the Mighty US Dollar, and More

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Image Source: CBOE Let’s talk about recent market events May 17. There’s a lot going on. By Brian Nelson, CFA It looks like volatility is back in a big way, with “all 29 volatility indexes at the CBOE ris(ing) today,” one more-than-doubling, the CBOE Short-Term Volatility Index (VXST). The ridiculously-named “fear gauge” or “fear index” or the CBOE Volatility Index, the VIX (VIX) leapt nearly 50%. On May 17, we effectively bought volatility intraday by adding put options to the newsletter portfolios, both on the S&P 500 SPDR (SPY) and Netflix, a company whose valuation we think remains ridiculous. We may continue to add put options on entities whose equity prices we believe have become too stretched, positions that may … Read more

Dividend Increases/Decreases for the Week of February 28

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Below we provide a list of firms that raised their dividends during the week ending February 28. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          AerCap (AER): now $0.27 per share quarterly dividend, was $0.25. Affinity Bancshares (AFBI): now $1.50 per share special dividend. Allstate (ALL): now $1.00 per share quarterly dividend, was $0.92. American Financial (AFG): now $2.00 per share special dividend, was $0.80. AMERISAFE (AMSF): now $0.39 per share quarterly dividend, was $0.37. Anheuser-Busch InBev (BUD): now EUR 1.00 per share annual dividend, was EUR 0.82. Aura … Read more

Understanding Share Buybacks

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Image Source: Mike Mozart This article is for educational purposes only and may not reflect our updated opinion on any companies mentioned. Rule of Thumb: If share buybacks are completed at a price level that is under a firm’s fair value estimate, the activity can be considered value-creating. If share buybacks are completed at a price level that is above a firm’s fair value estimate, they can be considered value-destroying. By Brian Nelson, CFA Share buybacks are not always a “good thing.” The general rule of thumb may be that share buybacks reveal that management believes its stock is underpriced and that the executive team thinks there may be no better investment opportunities out there with firm money than its very own company … Read more

Still Bullish — Stocks for the Long Run!

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Excuses not to pick stocks are only exposing biases these days. By Brian Nelson, CFA The S&P 500 (SPY), Dow Jones Industrial Average (DIA) and Nasdaq (QQQ) continue to hover near all-time highs, and all appears well. We maintain our bullish take on the markets and believe that we are in the early innings of a long bull market that started following the washout March 2020 during the depths of the COVID-19 meltdown. Stock bull markets tend to average about 4.4 years in duration, with the last one enduring ~11 years, while bear markets are very abrupt, lasting only 11.3 months on average, the last one a very short 1.1 months, according to data from First Trust. We’re about 15 … Read more

Valuentum’s Economic Roundtable: Trade War, Factors and Beyond

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Tickerized for holdings in the DIA. The markets rallied hard September 5 on relief that the US and China (FXI, MCHI) will go back to the negotiations table next month. This back-and-forth news cycle is enough to give any investor whiplash. Let’s catch up with the Valuentum Team on the latest developments, not only with the trade war but also with respect to factor investing, possible bubbles and beyond. Let’s kick things off with the following prompt from ForeignPolicy.com, released August 2: Trump Hired Robert Lighthizer to Win a Trade War. He Lost. Robert Lighthizer, the U.S. trade representative, agreed to serve in President Donald Trump’s cabinet in order to test his theory: that if the United States freed itself … Read more

The Success Equation Book Review: Is the Skill Paradox a Myth in Investing? We Think So

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“If I’d just tried for them dinky singles, I could’ve batted around .600.” – Babe Ruth — “In investing, the trend toward conformity is clear. For example, portfolios today look more like their benchmarks than they did thirty years ago. The average active share, a measure of how different a mutual fund portfolio is compared to its benchmark, has fallen from 75 percent in 1980 to about 60 percent in 2010 in the United States. Leaders in sports as well as in business fear straying too far from convention, even in cases where the convention isn’t all that great (page 174).” – The Success Equation (2012) — This article was originally published October 16, 2020. — By Brian Nelson, CFA — … Read more