INR

REITs Will Likely Continue To Underperform

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By Brian Nelson, CFA Stock prices and returns are in part a function of the cash-based sources of intrinsic value: net cash on the balance sheet and future expectations of free cash flow. Though there are many ways to slice and dice a company with respect to equity analysis, to arrive at an intrinsic value estimate of a firm, it generally comes down to these two important cash-based dynamics. Due to the nature of their business models, most REITs have lofty net debt positions, and many are investing in real estate at a pace that is faster than that which they are generating operating cash flow. One good example of the trouble brewing on many a REIT’s cash flow statement … Read more

Free Cash Flow Machine Visa Remains One of Our Best Ideas

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Image Shown: Visa’s ability to generate sizable free cash flows continues to impress. We are big fans of the payment processing giant. Image Source: Visa Inc – First Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan We’re huge fans of Visa Inc’s (V) business model. The credit card network’s free cash flow generating abilities are impressive, aided by its low capital expenditure requirements. We view Visa’s long-term outlook quite favorably and include the company in the Best Ideas Newsletter portfolio as a top-weighted idea. The top end of our fair value estimate sits at $263 per share of Visa, materially above where V is trading at as of this writing. Overview Visa benefits from the network effect, which … Read more

Currency: Cases in Probabilistic Thinking

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The rally in the Mexican peso relative to the US dollar during the first Trump-Clinton debate of 2016 showcased the increased likelihood of a Clinton victory, in light of Trump’s current political agenda. Instances like this, where currency markets serve to act as a probability indicator of the likelihood of a future event, have occurred through the course of history, the most fasinating of which happened during the American Civil War and with Confederate scrip specifically. Image Source: Bloomberg, “Mexican Peso Gives Clearest Signal Trump Lost Debate“ By Brian Nelson, CFA At Valuentum, we talk a lot about how markets act as “discounting” mechanisms of the probability of future events, and more specifically as it relates to stocks, how a … Read more