META

Berkshire Continues to Be a Staple in the Best Ideas Newsletter Portfolio

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Image Source: Fortune Live Media Warren Buffett has made some missteps over the years. For every Occidental Petroleum, there is a Kraft Heinz that hasn’t worked out. For every Apple, there is an IBM that has failed to live up to expectations. We hope our readers view our work in a holistic way, much like they view Buffett’s. By Brian Nelson, CFA On November 5, Berkshire Hathaway (BRK.A) (BRK.B), the conglomerate run by Warren Buffett and company, reported third-quarter results. Berkshire’s quarterly reports are always rather muddy, as GAAP presentation requires the company to report unrealized gains/losses on its stock investments as investment gains/losses in net earnings (losses). Such accounting doesn’t tell the whole story as most of Berkshire’s equity … Read more

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

In the News: META, AAPL, AMZN, RSG, DLR, VRTX, XOM, CVX

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Image Source: Valuentum By Brian Nelson, CFA Readers should expect a substantial reduction in our fair value estimate of Meta Platforms (META). The company’s spending is out of control, and the impact on our expectations of free cash flow will be materially punitive. As we have reiterated time and time again in our work, stock prices and returns are based in part on future expectations of free cash flow, and our expectations for Meta’s have changed. A look at how fast things fell apart at Meta is informative.  The company reported Q4’21 results in February 2022, and it’s only been a few months for the company to experience the considerable deterioration — for free cash flow to fall from $12.6 … Read more

Get Excited: Dividend Growth Investors Rejoice! – More “Outperformance”

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Image: Valuentum’s simulated Dividend Growth Newsletter portfolio continues to “outperform” relative to almost any dividend-paying benchmark this year! Past performance is not a guarantee of future results. This is not a real money portfolio. By Brian Nelson, CFA We just talked about the awesome success rates of the Exclusive publication, the fantastic performance of the simulated High Yield Dividend Newsletter portfolio, and now my friends, let’s put our hands together for Valuentum dividend growth investors! As of the last tally through October 19, the simulated Dividend Growth Newsletter portfolio is beating the S&P 500 Dividend ETF SPDR (SDY) by roughly ~3.2 percentage points so far in 2022 (-8.4% versus -11.6%), all the while we’ve seen some awesome dividend growth by … Read more

Announcing Valuentum’s Customer Appreciation Day Winners!

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In no particular order — the five winners… As a Chief Investment Strategist that oversees a significant amount of assets, it is vital to have unbiased research that we can lean on for decision making. Brian and the Valuentum team help provide a disciplined and fundamental approach to stock analysis without the typical Wall Street bias or conflicts of interest. The value we get on a monthly basis for having this detailed thought analysis and wise long-term thinking greatly outweighs the cost. We are very happy to have them on our short list of management we trust.  – Stephen H. (October 2022) —– I’d like you to know what my takeaways are from your research: 1) Be wary of capital … Read more

BIN Portfolio ALERT: Removing META, Adding to XLE, Adding MCD and PEP

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Image Source: Valuentum Summary Removed META Added to XLE: now 4%-6%, was 1%-2% Added MCD: 4%-6% Added PEP: 4%-6% By Brian Nelson, CFA As long-term investors, the hardest part is knowing when to get back into the market with “recently-raised” cash. We’ve done a good job year-to-date through the last “performance” measurement in August. [We’ll continue to update members periodically on simulated newsletter performance across all newsletter portfolios.] But with the markets being punished since August 19, when we “raised” cash, we’re going to go back to “fully invested.” Let’s explain what this means. First, we’re still bearish on the broader markets. We’ve carved out some “alpha” we would have missed had we not captured the latest downdraft, and we … Read more

Serious Question: What Are You Looking At?

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Image: Stocks with the largest 52-week losses, according to YahooFinance. By Brian Nelson, CFA Thank goodness that you’re subscribed to a service that didn’t include any of the above as top ideas in their simulated newsletter portfolios. Many were chasing returns in 2021 and are now left holding the bag this year, but we stuck to our methodology and processes, and we didn’t expose members to tremendous risks. That’s what it’s all about.  With that said, let’s talk about how we successfully navigated a number of these terrible ideas in the Exclusive publication, a monthly resource that includes an income idea, a capital appreciation idea, and a short idea consideration, released to members each month on the 8th. Exclusive Long Ideas … Read more

Recent Fair Value Estimate Updates

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Image Source: Valuentum By Brian Nelson, CFA  Our work is always forward-looking in nature, consistent with the markets, which drive pricing and valuation on the basis of future expectations. 2022 has no doubt been a difficult year for many an investor across asset classes, not just equities. Perhaps the biggest insight provided by the Valuentum analyst team for this year came in the second edition of the book Value Trap, “Renowned Investor Brian Nelson Publishes Second Edition of Best Indie Book Award Winner Value Trap: Theory of Universal Valuation,” but such an insight has often been reiterated on our website and through the newsletters, too. To put it bluntly: We became significantly worried about the diversification benefits of the 60/40 stock/bond … Read more

Microsoft Hinted at Trouble in Calendar Q2 But AMD’s Massive $1 Billion Quarterly Q3 Revenue Miss Spells Big Problems for PC Market; Search and News Advertising Revenue Also Likely Weakening Substantially

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  Image Source: Fritzchens Fritz By Brian Nelson, CFA Things aren’t going well across the technology (XLK) landscape these days. Microsoft Corp (MSFT) said in mid-July Windows OEM revenue faced pressure in its quarter ended June 30, its fourth quarter of fiscal 2022, and noted that the “PC market…deteriorated in June (slide 15).” On its fourth-quarter fiscal 2022 conference call, the software and gaming giant said that its outlook “has the trends (it) saw in June continu(ing) through Q1 (the quarter ending in September 2022). Continued weakness in the PC market demand and advertising spend (is expected to) impact Windows OEM, Surface, LinkedIn and search and news advertising revenue.” We took note of this weakness at the time, but it … Read more

ICYMI: Things Have Changed Fast; Inflation and the Fed Have Damaged the Economy

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This article was originally published October 5.   Image Source: EpicTop10.com By Brian Nelson, CFA The year 2022 started out with the popping of the bubble in the alternative investments arena–namely in the cryptocurrency (BITO), non-fungible token (NFT), and the collectibles markets–coupled with worries about the Fed raising interest rates to combat inflation and weakness in the most speculative equity areas, namely disruptive innovation stocks (ARKK). It’s important to note that the consumer price index (CPI) started to edge meaningfully higher in early 2021 (not this year). Though the writing was on the wall with respect to impending Fed tightening, as investors, we have to assess what the Fed will do and the impact on the markets, not necessarily what … Read more