PSA

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

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

Image: Returns Following the Trump Victory

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To download the table for easier viewing, please select the link . Financials: Trump’s Treasury Secretary choice Steven Mnuchin wants to repeal most of the burdensome Dodd-Frank legislation. A steepening yield curve is helping banks and may drive improved net interest margins in coming periods. Goldman Sachs is ripping higher, leading the Dow’s charge.   Crude Oil: The world is moving to a better balance in supply/demand dynamics in the energy markets. OPEC is talking, has agreed to cuts, and expectations for improved economic growth are helping energy resource pricing. High-beta companies such as Continental Resources are rallying hard.   Energy: Capital spending cuts are bolstering free cash flow in the upstream space as energy resource pricing improves. Reduced regulations could help … Read more

Podcast: REITs, Interest Rates and Beyond!

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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

Best Idea Kinder Morgan Working To Solve Debt Problem

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Image Source: Benson Kua By The Valuentum Team Kinder Morgan is on its way to righting its debt problems, and we love it! When the US government seemingly raises the so-called debt ceiling every few months, how can the public view towards massive leverage and effectively being unable to repay future obligations without making significant changes hold a stigma? In many ways, it has now become “okay” to be buried under mountains of debt. Is it now the norm? Each citizen in the US, for example, owns a piece of its country’s $19.3 trillion national debt, amounting to a whopping $60,000 per person, and this number is growing. That means that each new baby born in America is saddled with … Read more

Alerts: A Long-Time Favorite from the Bullpen and An Interest Rate Risk Hedge

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We’ve long appreciated the stand-out dividend strength characteristics of Cracker Barrel (CBRL) among the full-service restaurant space, and we see an opportunity to add the company to the Dividend Growth Newsletter portfolio today (see page 5). We’ve outlined our case for Cracker Barrel in the past, “Free Cash Flow Feeds Cracker Barrel’s Dividend Growth,” and while we haven’t quite gotten our price just yet, we’re going to inch forward a bit with a small 1.5% position in the Dividend Growth Newsletter portfolio at this time. The company yields a very nice ~3.4%, and its Dividend Cushion is solid for that high of a payout. One of the areas we’re expecting Cracker Barrel to surprise to the upside is the positive … Read more

Maintaining Our Small Position in HCP

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Dividend Growth Newsletter portfolio holding HCP’s (HCP) shares have been under pressure as of late, and we’re not happy about it. Part of the reason we were drawn to HCP, and we posit that many others were lured by the same attribute, was that it is the only REIT that is included in the coveted S&P 500 Dividend Aristocrats index. At the time it was added in 2012, there were only 50 companies in all that fit the bill of 1) a market capitalization in excess of $3 billion and 2) a track record of raising their dividends in each of the past 25 years. Though HCP’s fundamental quality has deteriorated since we added it, some of the share price … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Overvalued and Dangerous Dividend: Iron Mountain Crushed by REIT Conversion Update

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It is not too often that a firm in our coverage universe finds itself on both the Top 25 Most Overvalued Stocks list AND Dividend Yields to Avoid list, but that is exactly where Iron Mountain (click ticker for report: ) has been for a while now. However, it wasn’t until the IRS issued a tentatively adverse ruling to the company’s REIT (real-estate investment trust) conversion request that a catalyst emerged to send the stock tumbling back toward our fair value estimate. Why Did the IRS Delay the Ruling? During the past few years, we’ve seen a large number of companies rush to become REITs in order to capitalize on more-efficient tax policy, as well as to satisfy the desire for yield from investors. REIT conversions have been one of … Read more