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ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

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Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process

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With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company’s revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There’s a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Zillow Continues to Disrupt Real Estate Market

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Image Source: Zillow Group Inc – May 2020 IR Presentation By Callum Turcan Record low interest rates for mortgages in the US, largely a product of the Fed’s monetary stimulus measures (quantitative easing and near-zero interest rates), has gone a long way in stimulating demand for homes. According to the US Census Bureau, the national homeownership rate stood at 67.4% in the second quarter of 2020, up ~260 basis points from the same period the prior year. For reference, the domestic homeownership rate has been steadily climbing higher since 2015-2016 (when homeownership rates were in the low-60s% range) according to data provided by the US Census Bureau. Homeownership rates peaked in 2005-2006 at the high-60s% level before sliding significantly lower … Read more

Dividend Increases/Decreases for the Week October 9

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Below we provide a list of firms that raised their dividends during the week ending October 9. 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 Alpine Banks of Colorado (ALPIB): now $18.00 per share quarterly dividend, was $16.00. Ameren (AEE): now $0.515 per share quarterly dividend, was $0.495. Aon (AON): now $0.46 per share quarterly dividend, was $0.44. Bassett Furniture (BSET): now $0.125 per share quarterly dividend, was $0.080. ConocoPhillips (COP): now $0.43 per share quarterly dividend, was $0.42. Educational Development (EDUC): now $0.10 per share quarterly dividend, was $0.06. Intuit … Read more

Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

News Roundup: Tesla’s Musk, Department Stores, Summit Midstream, Cracker Barrel, Home Depot, GE and More

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No changes to simulated newsletter portfolios By Brian Nelson, CFA There’s never a dull moment in the Tesla (TSLA) story. Just when we thought things were getting back to “normal,” Tesla’s CEO Elon Musk has been hit with a contempt charge for a tweet that allegedly violated his prior deal with the SEC. We don’t think the tweet was a big deal, by itself, and it may have included content from a prior conference call, but given Musk’s prior behavior, including being outspoken about not having any respect for the SEC, he doesn’t have much wiggle room with the authorities. From our perspective, Musk is in now in some serious hot water. We’ve always viewed Tesla as “uninvestable,” not necessarily … Read more

What’s Weighing on the Markets

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Renewed concerns over the severity of trade tensions, a flattening yield curve, negative news out of the homebuilding space and other geopolitical uncertainties have investors feeling anxious. December 4 marked the worst day for the Dow Jones Industrial Average since October 10. By Kris Rosemann What was once thought to be broad-based optimism related to potentially easing trade tensions between the US and China (FXI) and investors taking a liking to recent commentary from the Fed regarding an easing of the future trajectory of rate hikes came tumbling down during the trading session December 4. President Trump tweeted early in the session that people should remember he is “a Tariff Man” if a trade deal cannot be reached with China, … Read more

In the News: Housing Starts and Railroad Pricing

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Two highly-followed portions of the US economy are experiencing demand and pricing movements, and investors are taking note. Let’s take a quick look. By Kris Rosemann Homebuilders (XHB, ITB) faced selling pressure early in the October 17 trading session after concerns over slowing demand and affordability continue to be present. Housing starts for the month of September revealed a more significant than expected decline from the previous month as the measure fell 5.3% to 1.201 million compared to the 1.216 million expected. Building permits came in at 1.241 million in the month compared to 1.272 million expected. Meanwhile, mortgage applications dropped as interest rates continue to rise, and total mortgage applications fell 7.1% in the week ended October 12. The … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … Read more

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