SCWX

How Some Members Use Valuentum’s Investment Services

by

By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are … Read more

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

by

Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process

by

With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company’s revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There’s a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Our Thoughts on Intel’s Latest Earnings Report

by

Image Shown: An overview of Intel Corporation’s performance during the first nine months of fiscal 2020. Image Source: Intel Corporation – Third Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan On October 22, Intel Corporation (INTC) reported third quarter fiscal 2020 earnings (period ended September 26, 2020) that largely matched consensus expectations. Intel boosted its full-year outlook for fiscal 2020 on a net basis (which included an increase in its expected free cash flows this fiscal year) during its latest earnings update, though management reduced its forecast for Intel’s expected operating margins versus previous expectations. We continue to like Intel’s ability to generate sizable free cash flows, though we are concerned with its rising net debt load of … Read more

Our Thoughts on Intel’s Big Divestiture Ahead of Its Earnings Report

by

Image Source: Intel Corporation – Second Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan On October 20, Intel Corporation (INTC) and South Korean-based SK Hynix announced a major transaction that will reshape the global NAND flash memory market. For reference, NAND flash memory is used in smartphones, personal computers, and other digital devices. Intel will receive $9.0 billion in cash that will be paid out in two phases, assuming everything goes as planned. In return, SK Hynix is receiving “Intel NAND memory and storage business, which includes the NAND SSD business, the NAND component and wafer business, and the Dalian NAND memory manufacturing facility in China” though Intel will retain its Intel Optane business, which caters to both … Read more

Intel’s 7-nm Chips Behind Schedule, Free Cash Flows Remain Strong

by

Image Shown: Intel Corporation made waves on July 23 when it announced its 7-nm chips were well behind schedule. Image Source: Intel Corporation – Second Quarter Fiscal 2020 IR Earnings Presentation By Callum Turcan On July 23, Intel Corporation (INTC) reported second quarter fiscal 2020 earnings (period ended June 27, 2020) that beat both consensus top- and bottom-line estimates. However, shares of INTC dropped during after hours trading that day due to Intel delaying the rollout of its 7-nanometer chips. The company offered full-year guidance for fiscal 2020 that indicated its growth trajectory was continuing in the face of the ongoing coronavirus (‘COVID-19’) pandemic, though investors were largely fixated on the delay of its 7-nm chip offerings. Guidance Update In … Read more

Microsoft Closes Out Fiscal 2020

by

Image Shown: An overview of Microsoft Corporation’s financial performance during the fourth quarter of fiscal 2020. The company reported strong year-over-year revenue growth across its three main business segments. Image Source: Microsoft Corporation – Fourth Quarter Fiscal 2020 Earnings PowerPoint Presentation By Callum Turcan On June 12, 2020 (link here), we added Microsoft Corporation (MSFT) back to the Best Ideas Newsletter and the Dividend Growth Newsletter portfolios. We strongly appreciate Microsoft’s net cash position, high quality cash flow profile, and its long-term outlook, which is underpinned by secular growth tailwinds. On July 22, Microsoft posted fourth quarter fiscal 2020 (period ended June 30, 2020) that beat both consensus top- and bottom-line estimates, though its guidance for the current fiscal quarter … Read more

IBM’s Cloud Transition Continues

by

Image Source: International Business Machines Corporation – 2019 Annual Report By Callum Turcan On July 20, International Business Machines Corporation (IBM) reported second quarter 2020 earnings that beat both consensus top- and bottom-line estimates. Most of the market’s excitement centered on IBM’s ‘Cloud & Cognitive Software’ segment posting year-over-year revenue growth of ~3% in the second quarter while its company-wide GAAP revenue declined by ~5% year-over-year, though initial gains in IBM’s share price faded away during regular trading hours on July 21. In the earnings press release, IBM noted its “total cloud revenue” grew by 30% year-over-year last quarter. Shares of IBM are trading near their fair value estimate of $129 as of this writing, indicating that shares of IBM … Read more

Update on Dell Technologies and VMware

by

Image Source: VMware Inc – First Quarter Fiscal 2021 IR Earnings Presentation By Callum Turcan Dell Technologies Inc (DELL) and VMware Inc (VMW) are back in the news as the WSJ recently reported the former is considering spinning off its enormous equity stake in the latter. Back in September 2016, Dell completed its ~$67 billion cash-and-stock acquisition of EMC which gave Dell a controlling equity stake in VMware (and a mountain of net debt in the process). As of January 31, 2020, Dell owned approximately 80.9% of VMware’s outstanding equity. Dell can spin off its equity stake in VMware tax-free after a five-year waiting period, though Dell would need to wait until September 2021 before that could occur (given when … Read more

Podcast: Defense Spending and the Explosion of Cyber Crime

by

The Valuentum analyst team discusses trends in US and global defense spending and the explosion of Internet crime that is fueling investment in cyber security both in the public and private sectors. ~7 mins. This podcast was originally published November 3, 2016. If you cannot view the video below, please view the transcript that follows or click the link here. Software – Security: CHKP, FEYE, FTNT, IMPV, PANW, PFPT, SYMC, VRSN Aerospace & Defense – Prime: BA, FLIR, GD, LLL, LMT, NOC, RTN Brian Nelson, CFA: This is Brian Nelson for Valuentum Securities, and today I have joining me on our podcast Mr. Kris Rosemann and Mr. Chris Araos. Today, we are going to talk about the landscape for defense spending … Read more