JPM

The Coming “Goldman Sachs Era”

by

Valuentum covers recent developments in the financials sector, including hopes for a relaxation of certain prohibitive Dodd-Frank rules that, if repealed, could pave the way for improved economic returns across the banking sector during the Trump administration. A look back at the month of September 2008, and how Goldman Sachs may very well shape the financial markets during the next few years are two other areas in the piece. Financials stocks have come roaring back since Trump was elected the 45th President of the United States. We’ve participated. By Brian Nelson, CFA It’s been more than 8 years now. The month of September 2008 shaped my view of the financials and banking sector more than any other month possibly could–The … Read more

Podcast: Why ETFs and Roasting the Banks

by

The Valuentum analyst team talks about why we don’t like the business models of banking entities, why they are currently destroying economic value, but also why the team includes exposure in the Best Ideas Newsletter portfolio. What gives? Find out in this ~9 minute podcast. If you cannot view the video, please view the transcript that follows. Tickerized for holdings in the exchange traded funds, XLF and KBE, and for various financials-oriented ETFs.  Kris Rosemann: Hello and welcome to the Valuentum Securities podcast. My name is Kris Rosemann Associate Investment Analyst at Valuentum. With me is Chris Araos and Brian Nelson President of Equity Research and ETF Analysis at Valuentum. Today, we are going to have a quick discussion over … Read more

Breaking the Bank…

by

Image Source: Tony Webster By Brian Nelson, CFA Financial institutions (XLF, KBE) are unique entities. In good times, the growth of pre-tax pre-provision earnings and return on equity often have more influence over banking entities’ stock prices than anything else, but in bad times, the health of their loan/derivative books and the strength of their capital bases are the most important factors when it comes to buying and selling activity. Throw in outsize leverage, huge derivatives books, and market psychology, and you have, in my opinion, still one of the riskiest sectors out there. As followers know, we don’t like firm-specific exposure to the banking sector. We perform valuation exercises on banks in a rather straightforward way, using a residual … Read more

Video: An Overview of Our 16-page Stock Research Reports

by

Can’t view the video walk-through of our 16-page reports on your mobile device? Download the Puffin Web Browser App from Apple free. Click here. Unable to display content. Adobe Flash is required.

Understanding the Chartered Financial Analyst (CFA) Designation

by

“Among the countless finance degrees around the world, the Chartered Financial Analyst qualification has become the gold standard.” – Financial Times, 13 August 2010 “[The] qualification is roughly equivalent to a specialized postgraduate finance degree, including a mixture of economics, ethics, law, and accountancy… Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA, managed and examined by an American association of financial professionals, the CFA Institute.” – the Economist From the CFA Institute: “The Chartered Financial Analyst (CFA) charter is an investment credential that, for more than 60 years, has been the global standard for embodying the integrity, dedication, and advanced skills needed to … Read more

Deutsche Bank Another Example of Necessary Confidence in Banking Sector

by

By Kris Rosemann Let’s walk through the situation with Deutsche Bank (DB) from mid-November through today. The “5 Cs of credit” — character, capacity, capital, collateral, and conditions — is a widely-followed framework and generally-accepted guideline for lending to consumers, but for corporate entities, we think another C is much more important: confidence. In almost every situation where a bank has encountered trouble, it has resulted from a loss of confidence in the sustainability of the entity as a going-concern. The loss of confidence could originate from counterparties, intermediaries, depositors or clients, or from any other core stakeholder. Lack of confidence typically spreads quickly. Quite simply, if the market does not have confidence in a banking entity, that banking entity will … Read more

The Banking Industry Is All About Confidence

by

Image Source: 401(K) 2012 The “5 Cs of credit” — character, capacity, capital, collateral, and conditions — is a widely-followed framework and generally-accepted guideline for lending to consumers, but for corporate entities, we think another C is much more important: confidence. By Brian Nelson, CFA The financial sector, and the underlying banking industry in particular, is distinctly different than most other sectors like industrials, retail, or healthcare, for example. Unlike the latter industries, banks use money to make money (net interest income), instead of using operating assets like property, plant and equipment (PPE) and raw materials to drive revenue and resulting free cash flow. This means that continued access to money and credit is the primary source of banks’ economic returns … Read more

The Next Banking Crisis? No… Well, Not Yet.

by

Image Source: Berit Watkin “Washington Mutual customers withdrew $16.7 billion in cash from the thrift in the past nine days, a huge outflow that led to the largest bank failure in U.S. history, the institution’s regulator said Friday.” — MarketWatch, September 26, 2008 By Brian Nelson, CFA Let’s get this out of the way. We’re not sensationalistic or bombastic. We’re realistic, and we love focusing on the risks of investing because an investor that knows his downside risks is a much better investor than the one that is only looking at sunshine in the rear-view mirror. I’m going to put it bluntly. We’re starting to hear of some rather serious developments in the UK following Brexit. If the UK pound hitting … Read more

Brexit: Secession Bells Are Ringing!

by

First Baptist Church in Columbia, S.C., where the first secession convention in the United States opened on Dec. 17, 1860. Source: Library of Congress, Washington, DC. Photo. Encyclopædia Britannica Online. Web. 24 Jun. 2016. Global markets are plunging, and the implosion may still be in the early innings. Market valuations remain stretched among stagnant global economic growth, and “Brexit” may be the catalyst for a correction. In the paraphrased words of the well-known The Day of the Jackal author, Frederick Forsyth: the peasants have spoken. On June 23, the UK (EWU) held a referendum, in which anyone of voting age could take part, to decide whether the country should leave the European Union. The turnout was incredible at nearly 72%, and … Read more

Dividend Increases/Decreases for the Week Ending May 20

by

Below we provide a list of firms that raised/lowered their dividends during the week ending May 20. 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 Blue Hills Bancorp (BHBK): now $0.03 per share quarterly dividend, was $0.02. Burberry Group Plc ADR (BURBY): now £37 per share annual dividend, was £35.2 Carriage (CSV): now $0.05 per share quarterly dividend, was $0.025. Cato (CATO): now $0.33 per share quarterly dividend, was $0.30. Chubb (CB): now $0.69 per share quarterly dividend, was $0.67. Cineplex (CPXGF): now C$0.135 per share monthly dividend, was C$0.13. Clorox … Read more