LNKD

Something New!

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Hi everyone: To stay true to our mission, you’ll find something new regarding our methodology. In the coming weeks, you’ll see this table in our work going forward. We just wanted to let you know. We appreciate your membership very much!   ——————————————— About Our Name But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth,”…We view that as fuzzy thinking…Growth is always a component of value [and] the very term “value investing” is redundant.                          — Warren Buffett, Berkshire Hathaway annual report, 1992 At Valuentum, we take Buffett’s thoughts one step further. We think the best opportunities arise from an understanding of … Read more

New Payment Option! Valuentum Research Update!

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Hi everyone: — We’re excited to say that we’re adding additional payment flexibility at Valuentum. — Many members have expressed interest in paying via other providers, and we have added Square to the mix. You can use credit or debit card or bank (ACH) to pay via invoice. — With all of the goings-on in the financial technology and payments space, we wanted to continue to provide members options to pay their memberships how they want and through who they want. You can always reach out to us at info@valuentum.com. — You’ll notice that we’ve also tightened our focus at Valuentum during the past 12-24 months in advance of what has certainly become a more difficult 2022 than even some … Read more

Our Reports on Stocks in the Internet Content & Services Group

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Image Source: Christopher Structure of the Internet Software & Services Industry The Internet software/services industry is composed of a variety of companies with rapidly-changing business models. Most focus on improving the ways people connect with information, either via Internet search or by social media platforms, and generate revenue primarily by delivering cost-effective online advertising. Constituents earn significant returns on invested capital due to their capital-light operations, though competition remains fierce. We expect most companies in this group to look substantially different 10 years from now than they do today. Overall, we’re neutral on the structure. We’ve optimized our tehnology coverage. To access the reports, please select here.

Video: Indexing/Quant Bubble, Pitfalls of Backward Multiple Analysis, and Thoughts on the CAPE Ratio

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President of Investment Research Brian Nelson talks about what causes a stock pricing bubble, notes how the “price setters” are disappearing in today’s market, explains the pitfalls of backward-looking multiple analysis, and shares his thoughts on the CAPE (cyclically-adjusted price-to-earnings) ratio. Running time: ~11 minutes Internet Content & Services: AABA, AKAM, ANGI, BIDU, FB, GOOG, GRUB, JD, LNKD, SOHU, TCEHY, TRIP, TWTR, TZOO, ULTI, WBMD, YELP Internet Content & Catalog Retail: AMZN, BABA, EBAY, EXPE, GRPN, IACI, LQDT, OSTK, PCLN, QVCA, STMP

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

Cloud Lifting Microsoft Shares Toward All-Time Highs

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“…Microsoft flexed its free cash flow generating muscles in the first quarter of fiscal 2017. The software giant reported free cash flow of just under $9.4 billion, an increase of nearly 25% from the year-ago period despite capital expenditures jumping approximately 60%. Such strong free cash flow generation helped the firm advance its net cash position, excluding long-term equity and other investments of ~$10.5 billion, to an impressive $62.2 billion, up from $59.8 billion at the beginning of the quarter.” – Kris Rosemann By Kris Rosemann Microsoft (MSFT) reported a strong quarter October 20, both in terms of financial performance and in terms of ongoing momentum in the transformation of its business. Non-GAAP revenue, which takes into account revenue deferrals … Read more

After-Hours: MSFT +5.9%, PYPL +4.6%

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A holding in the Dividend Growth Newsletter portfolio and a holding in the Best Ideas Newsletter portfolio are indicated up after hours October 20. You may remember us taking some profits on Microsoft (MSFT) following its deal to acquire LinkedIn (LNKD), but did you know the company has been the prime example of our cash-flow-based dividend methodology for years? Microsoft was added to the Dividend Growth Newsletter portfolio at inception at a tender price of ~$26 per share. Our roughly 2.5% current weighting (yes, it is still one of our favorite dividend growth ideas!) is indicated up in after-hours trading, now to all-time highs near $61 per share, even past those of the dot-com bubble days! We’re not going to … Read more

The “Uninvestable” Twitter and Netflix Buoyed By Takeout Chatter

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By Kris Rosemann and Brian Nelson, CFA At Valuentum, we like slam-dunk, no-brainer investment opportunities–like Microsoft (MSFT) in the mid-$20s before it doubled, or Visa (V) prior to its strong equity price performance in recent years, or even cigarette-maker Altria (MO) in advance of its ongoing march higher since the dawn of the release of the inaugural Best Ideas Newsletter. Our members count on us to use our knowledge of valuation to sort out “investable” stocks from “uninvestable” ones; good stocks with fundamental promise from bad ones built on fantasy outcomes. Benjamin Graham calls what we do “investing,” while he may call readers that dabble in the two highlighted stocks in this piece “speculators.” There is a difference, and it’s … Read more

About the Fair Value Range

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Understanding the Fair Value Range and Why It’s Important FAQ: Why do you use such a wide fair value range for certain companies?   One of the most important concepts of the Valuentum methodology (and valuation in general) is the understanding that the value of a company is a range of probable valuation outcomes, not a single point estimate. Even well-seasoned stock analysts are guilty of saying that a company’s shares are worth exactly $25 or a firm’s stock is worth exactly $100. The reality is that, in the first case, the company’s shares are probably worth somewhere between $20 and $30, and in the latter case, the stock is worth somewhere between $75 and $125.   Why? Because all … Read more

Microsoft Remains Committed to Returning Capital to Shareholders

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The above chart shows Microsoft’s annual dividend per share, excluding special dividends, from fiscal year 2003 through the current annualized dividend rate of fiscal 2017. Percentage increases for each fiscal year are on display as well. Dividends are classified in the fiscal year in which they were announced. By Kris Rosemann We have a few things to say about Microsoft (MSFT). Let’s begin this recap of some recent news with an excerpt from our most recent piece on the company, “Microsoft With Its Head in the Clouds? (July 2016)”: We’re doing well in both newsletter portfolios in part because we’re not taking on foolish risks in an overheated market, and we continue to feel that a reduction to the weighting in Microsoft in the … Read more