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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

Homebuilder Optimism Rises to Decades-Long Highs; Valuations Similarly High

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The Housing Market Index, which is based on a monthly survey of National Association of Home Builders (NAHB) members, posted a higher than expected jump in the most recent release of the monthly survey-based index, and homebuilders are nearly as optimistic as they have been at any point in the past two decades. Image shown: The iShares US Home Construction ETF’s (ITB) share price performance since the beginning of 2017. Shares are up more than 55% year-to-date (2017). By Kris Rosemann The housing market continues its recovery from the Financial Crisis of late last decade, and homebuilders’ confidence has rarely been higher. The Housing Market Index (HMI), which is based on a monthly survey of National Association of Home Builders … Read more

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

Housing Is Back! Trends in Home Improvement

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Housing prices are no longer in the dumps. What does this mean for the home improvement retailers, and how might other trends be helping to provide a positive industrywide backdrop? Both Home Depot and Lowes may be long-term winners, but valuation considerations shouldn’t be ignored. The Valuentum analyst team digs in. ~8 mins. If you cannot view the podcast below, please select the link here or view the transcript that follows. Chris Araos: Hello, this is Chris Araos at Valuentum Securities. With me are Kris Roseman and Brian Nelson. Today, we are going to focus on Home Depot (HD) and Lowes (LOW) and why they are doing so well. We have a strong housing market. New home sales have hit … Read more

New Home Sales Leap, Computer Sciences Surges; Xilinx Jumps

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May 24 brought news that US new home sales rose at the fastest pace in more than 8 years during the month of April 2016. Computer Sciences leaps to our estimate of intrinsic value on buyout news, and Altera rival Xilinx rises on speculation of potential suitor. ————————- By The Valuentum Team New Homes Sales Leap “Sales of new single-family houses in April 2016 were at a seasonally adjusted annual rate of 619,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 16.6 percent (±15.4%) above the revised March rate of 531,000 and is 23.8 percent (±22.8%) above the April 2015 estimate of 500,000… …The median sales price … Read more

Don’t Be Tempted By Homebuilders’ Dividends

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Image Source: Toll Brothers By Kris Rosemann The underproduction of homes since 2008 has created pent-up demand, providing a material tailwind for homebuilders as of late. According to estimates from Toll Brothers (TOL), the total estimated shortfall of housing starts from the period 2008-2014 was 5.7 million. That equates to an annual shortfall in production of ~818,000 new homes, providing significant opportunities for the homebuilding group as a whole moving forward. Pent-up housing demand has been accruing for years, and stronger general economic conditions, including lower unemployment, modest wage growth, and general consumer confidence continue to drive demand. A favorable jobs/wage market has the potential to provide a material boost for homebuilders, and additional demand could be found in the … Read more

Homebuilders Bucking Downtrend

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Homebuilders have a reason to be optimistic as of late. Not only has the SPDR S&P Homebuilders ETF (XHB) firmed up, but Toll Brothers (TOL) released strong fundamental news, helping to buoy the industry. Toll Brothers operates at the high-end of the homebuilding industry. Its average home price, for example, has historically been ~$650,000 compared to ~$300,000 for its publicly-traded peers. As a result, we’d view Toll’s main competitors as small private builders catering to luxury demographics, not necessarily the large public builders. The firm’s performance, however, is worth watching as yet another data point with respect to the industry’s health. Pent up housing demand has been accruing for years, and new home inventory is limited, which makes for an … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more