MNST

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

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds

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Image: President of Investment Research Brian Nelson, CFA By Brian Nelson, CFA A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception. Though the book focuses more on the life and times of founder Jim Simons and dedicated only a page or two to the fall of Long-Term Capital Management (LTCM), another quant fund that went belly-up during the late 1990s, it was nonetheless a thoroughly interesting and enjoyable read. But why I am bringing up one of the most successful quant … Read more

Keurig Dr Pepper Is Moving in the Right Direction

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Image Source: Keurig Dr Pepper – September 2019 IR Presentation By Callum Turcan Keurig Dr Pepper Inc (KDP) markets, sells, and distributes numerous coffees, flavored soft drinks, teas, waters, juices, mixers, energy drinks, and other types of beverages through either its ownership of the brand or through its various partnerships. The beverage giant’s top brands include 7UP, Dr Pepper, Green Mountain Coffee Roasters, Keurig, Snapple, and Mott’s. JAB Holding Company, a privately-held entity, owns ~87% of Keurig Dr Pepper after Dr Pepper Snapple merged with Keurig Green Mountain last year. We expect Keurig Dr Pepper to generate sizable free cash flows as a combined entity going forward, but we also caution that the company’s hefty net debt load weighs negatively … Read more

Our Reports on Stocks in the Nonalcoholic Beverages Industry

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Image Source: Mike Mozart Structure of the Nonalcoholic Beverages Industry The nonalcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies that make various sparkling beverages, water products, juices, fruit drinks, energy and other performance-enhancing drinks. Pricing, advertising, product innovation, the availability of in-store private-label beverages, and health concerns about sugar-sweetened beverages are key drivers that impact demand. Leading brands with high levels of consumer acceptance and an expansive distribution network are sources of competitive strengths. We like the structure of the group. We’ve reallocated our resources to cover more recession-resistant stocks. See here.

Coca-Cola Posts a Nice Quarter But Shares Too Pricey

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By Callum Turcan The Coca-Cola Company (KO) reported third-quarter earnings for fiscal 2019 (period ended September 27) on October 18, which were positively received by the market as the beverage giant showed signs that there’s strong demand worldwide for its offerings. Coca-Cola’s GAAP net revenues jumped 8% year-over-year while its non-GAAP organic revenues increased 5%, supported by higher prices and a favorable product mix that offset the negative impact from reduced concentrate sales. Management noted that Coca-Cola continued to “gain value share” in the ready-to-drink non-alcoholic beverage market. Shares of KO yield 2.9% as of this writing and ended up over 2% during normal trading hours on Friday October 18. Coca-Cola As an aside, it’s important to remember that Coca-Cola … Read more

ICYMI: Interview with Valuentum’s President Brian M. Nelson, CFA

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Catch up with Valuentum’s President Brian M. Nelson, CFA in a recent interview with dividend growth investor Arne Magnus Lorentzen Ulland of the blog stockles. By Brian Nelson, CFA Recently, I was interviewed by Arne Magnus Lorentzen Ulland of the blog stockles. Arne is a dividend growth investor like many of you, and I sincerely hope you enjoy the interview he put together. I’m very grateful for his interest. His questions were fantastic. We discuss why and how I incorporate independence and integrity into the service at Valuentum. We go into detail regarding why Valuentum views stocks the way it does, and how Valuentum combines enterprise valuation and the information contained in prices in its stock-selection process. I discuss the pitfalls … Read more

PepsiCo Posts Solid Quarterly Report, Targets Powerful Long-Term Growth Trends

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan On October 3, PepsiCo (PEP) reported third quarter earnings for fiscal 2019 (12 week period ended September 7) that were positively received by the market as the beverage and snack company beat both consensus top and bottom line estimates. Management reiterated that PepsiCo sees its organic non-GAAP revenues growing by at least 4% annually this fiscal year and that free cash flows would come in at approximately $5.0 billion, enough to cover approximately $5.0 billion in expected dividend payments. While core constant currency (non-GAAP) EPS is still expected to decline by 1% annually this fiscal year, strong apparent underlying demand for PepsiCo’s products creates room for optimism. Shares of PEP … Read more

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap

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Image Source: Owens-Illinois Inc – IR Presentation By Callum Turcan Owens-Illinois Inc (OI) is a global manufacturer of glass packaging products, and we see the firm as a major beneficiary of the shift in consumer preferences towards non-plastic packaging options for health and environmental reasons. As of this writing, shares of OI yield 1.9% on a forward-looking basis after management initiated a new dividend policy that saw common quarterly payouts commence in 2019. While Owens-Illinois’ share price below $11/share, as it is at the time of this writing, appears cheap at first glance because shares are trading at a steep discount to our $17 per share fair value estimate, we caution that its technicals are telling another story. Investors were … Read more

Coca-Cola’s Valuation Is Stretched

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Image Source: Broderick By Callum Turcan Coca-Cola Company (KO) posted a great second quarter report for 2019 on July 23, sending shares up 6% on the day. Management surprised the market by upgrading their forecast for Coca-Cola’s full-year performance with guidance for organic revenue, constant currency operating income, net operating cash flow, and capital expenditures for 2019 all getting a boost. We still think shares of KO are overvalued as the market has gotten ahead of itself. Consumer staples companies trading at premium valuations late in the business cycle are prime examples of how irrational exuberance can seep into every corner of the market. Furthermore, the IMF just downgraded global GDP growth projections for both 2019 and 2020, and while … Read more

Reviewing PepsiCo’s Latest Earnings

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan Maker of snacks and sugary beverages, PepsiCo Inc (PEP) posted second-quarter earnings for fiscal 2019 on July 9 that were positively received by the market. PepsiCo reaffirmed 2019 guidance calling for 4% annual organic revenue growth, a 1% decline in core constant EPS (3% decline when including an expected 200 basis point headwind from foreign currency movements) versus 2018 levels, and ~$4.5 billion in free cash flow generation. Shares of PEP yield 2.9% as of this writing and we like PepsiCo’s dividend coverage. However, please note that the company expects to spend $5.0 billion on dividends and $3.0 billion on share buybacks this year. Forecasted free cash flows will only … Read more