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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

New Taxes? Trump’s Misstep and Seeming About-Face

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Image Source: FactSet and Valuentum estimates (2019, 2020) News that Trump was considering new taxes, his failure to repeal Obamacare, and the seeming about-face on for-profit education regulations have put the probability of corporate tax reform in jeopardy, from where we stand. If we’re right, the implications on the market could be considerable… and not in a good way. Let’s talk about this in the context of current market valuations. By Brian Nelson, CFA The shot across the bow has been fired. The news came and went, and many seemed to ignore its potential massive implications. What am I talking about? As you have read by now, Donald Trump’s first major move as President has resulted in failure–a divided Republican … 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

SEC Proposes Barring the Chinese Units of the Big 4 Accounting Firms for 6 Months; A Washington-Beijing Scuffle; Neither Firm-Specific, Nor Is It “New” News

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On Thursday, Reuters reported that SEC Administrative Law Judge Cameron Elliot believes “Chinese units of the global ‘Big Four’ accounting firms (KPMG, Deloitte & Touche, PricewaterhouseCoopers and Ernst and Young) should be suspended from auditing U.S.-listed companies for six months in an escalation in a long-running dispute over regulators’ access to documents.” Though the accounting firms have indicated that they intend to appeal against the ruling, the article did unnerve investors in many US-listed Chinese stocks, including Baidu (BIDU), which notes Ernst & Young Hua Ming LLP as its principal external auditor. This is not “new” news. Baidu goes to great lengths to highlight this scenario as a risk in its 20-F on page 32, with potential de-listing (not bankruptcy or … Read more

Why We Didn’t Get Excited About First Solar

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Tuesday afternoon, solar panel maker First Solar (click ticker for report: ) announced disappointing second-quarter results, confirming some of the issues we have long held with its business. Valuentum subscribers know that we don’t like the firm’s long-term prospects considering the industry’s ultra-competitiveness and First Solar’s forecast of weak gross margins. During the quarter, revenue at First Solar declined 46% year-over-year, to $520 million, more than $200 million short of consensus estimates. Earnings per share were 71% lower than a year ago, coming in at $0.37, again well below consensus expectations. Free cash flow was also materially weaker, registering $168 million (down 49% year-over-year) and equal to 32% of revenue. Image Source: FSLR 2Q 2013 Earnings Slides The situation for … Read more

First Solar Is Wise to Raise Capital

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First Solar’s Wild Ride Without question, solar modules and systems maker First Solar (click ticker for report: ) has been among the most controversial stocks in our coverage list during the past few years. The stock recently popped back above the $50 level on positive earnings guidance for 2014 and 2015, after nearly falling into the single digits last summer.  Though we’ve recently increased our fair value estimate for the solar maker to $47 per share (at the time of this writing) as we’ve warmed up to its mid-decade outlook (which looked better than what we had previously anticipated), management made a wise (and opportunistic) decision to raise equity capital at current levels via the announcement of a secondary offering yesterday. … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

There Is Milk At The Store

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This article first appeared in the September edition of the High Yield Dividend Newsletter. For more information about this publication, please see here. “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” — Winston Churchill By Brian Nelson, CFA Very few of us could have imagined that we’d witness the bull market that began on that fateful day in March 2009 that might very well mark a generational low. In 2009, major investment banks around the globe were struggling to survive, and the fallout in the mortgage markets left the banks holding paper that nobody wanted to own, let alone buy. The global financial system … Read more

ICYMI — Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?

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President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report. Summary Make sure you review Value Trap on Amazon. Do so here. We think those that bought equities near the bottom of this swoon may be looking to take profits at present levels. The market is currently reflecting an 80%-85% probability of a return to normalcy before 2021, which we believe is too high at this time. Our main concern is that government … Read more

Update: Frequently Asked Questions About Valuentum Securities, Inc.

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What is Valuentum Securities? Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. How do I subscribe to Valuentum’s investment research services? 1)    Click the following link: signup-page. 2)    Select your membership plan. 3)    Enter your contact details. 4)    Click ‘Sign Up.’ 5)    Complete your purchase. 6)   Your payment profile may be recurring, so please check … Read more