The “Luck” and “Randomness” of Index Funds
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Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value
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
Omega Healthcare and Holly Energy Partners: Case Studies in REIT and MLP Income Evaluation
An assessment of a REIT’s or MLP’s dividend/distribution strength not only should reflect firm-specific fundamentals, but also external market conditions, which are paramount to the sustainability of most any REIT’s or MLP’s payout. Let’s remind readers of this important dynamic, which is captured via the two different Dividend Cushion ratios, and walk through what goes into the analysis we pursue when making a change with respect to our assessment of a company’s dividend health or safety. By Kris Rosemann and Brian Nelson, CFA Real estate investment trusts (REITs) and master limited partnerships (MLPs) are not your typical operating companies. These business structures have certain provisions that incentivize lofty and growing dividends/distributions, which sounds good, but because these business models tend … Read more
Valuentum’s 3 Breakthroughs in the Field of Finance and More
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
Podcast: REITs, Interest Rates and Beyond!
The Valuentum analyst team talks REITs and the reasons why REIT investors should pay close attention to changes in Treasury rates. Various secular themes across the data center, healthcare, office, and mall REITs are discussed, and an explanation for the sector’s systematically poor raw, unadjusted Dividend Cushion ratios is covered. ~8 mins. Tickerized for various ETFs and the holdings in the VNQ. Brian Nelson, CFA: In September, REITs were officially broken out from the financial sector to their own sector of the S&P 500 — some 30 or so stocks with $600 billion in market capitalization, or about 3% of the S&P 500. Could this change have marked a peak in performance for equity and mortgage REIT stocks? Are investors … Read more
Top-Rated OHI: Not Adding It But Why?
Image Source: Omega “In my opinion, a golf club is only as good as the player that uses it, and in a similar light, a financial model or a rating system is only as good as the user that applies it.” — Brian Nelson, CFA Summary We stake so much on the performance of the portfolios in the Best Ideas Newsletter and Dividend Growth Newsletter. They represent the outcome of all of the work we do on the website, rolled into one final assessment: our best ideas for each respective strategy. We value the human, qualitative overlay, which captures a wealth of experience and common sense. The thoughts behind the weighting of each idea and the portfolio management process … Read more
Dividend Increases/Decreases for the Week Ending October 7
Below we provide a list of firms that raised/lowered their dividends during the week ending October 7. 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 American Financial (AFG): now $0.3125 per share quarterly dividend, was $0.28. Bank of the Ozarks (OZRK): now $0.165 per share quarterly dividend, was $0.16. Enterprise Products (EPD): now $0.405 per share quarterly dividend, was $0.40. FNB Bancorp (FNBG): now $0.16 per share quarterly dividend, was $0.15. Genesis Energy (GEL): now $0.70 per share quarterly dividend, was $0.69. Ingersoll-Rand (IR): now $0.40 per share quarterly dividend, was … Read more
Alert: Health Care REITs Whacked
We know better than to make mistakes such as HCP (HCP), but we can’t go back now. We’ve been holding onto the company because it was just a sliver of a position in the Dividend Growth Newsletter portfolio, but today we’re saying good-bye. Here’s what we wrote as recently as November 9, “Dividend Growth Newsletter REITs:” HCP continues to be a lesson learned to us here at Valuentum. The firm’s dividend track record had far too high of an influence on our decision making in establishing a position in the REIT in the Dividend Growth Newsletter portfolio. The fact that the company is the only REIT included on the list of Dividend Aristocrats was too attractive for us to deny, … Read more
Dividend Growth Newsletter REITs
Realty Income’s (O) Dividend Track Record Pictured: Income investors in Realty Income have been handsomely rewarded through the years. Source: Realty Income HCP’s (HCP) Dividend Track Record Pictured: HCP has rewarded income investors in each of the past 30 years with consecutive annual dividend increases. Source: HCP Let’s Talk Interest Rates There’s a lot to think about these days with respect to REITs and rising interest rates. In the equity valuation context, for one, a rising nominal interest rate, by itself, is negative. Increased borrowing costs translate into a higher discount rate applied to a REIT’s future projected net operating income (or a higher cap rate used in the valuation process), and by extension, results in a lower intrinsic value … Read more
Dividend Increases for the Week Ending October 2
Below we provide a list of firms that raised their dividends during the week ending October 2. 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 Adcare Health Systems (ADK): now $0.06 per share quarterly dividend, was $0.055. American Financial (AFG): now $0.28 per share quarterly dividend, was $0.25. Bank of the Ozarks (OZRK): now $0.145 per share quarterly dividend, was $0.14. Clarcor (CLC): now $0.22 per share quarterly dividend, was $0.20. DineEquity (DIN): now $0.92 per share quarterly dividend, was $0.875. Enterprise Products (EPD): now $0.385 per share quarterly dividend, was … Read more