The “Luck” and “Randomness” of Index Funds
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VRNT
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
Comment: Verint’s Traditional Free Cash Flow
Image shown: Page 1 of 16, Valuentum’s 16-page stock report on Verint (VRNT) Verint is free cash flow positive, implying that non-GAAP earnings adjustments are of high quality. By Kris Rosemann and Brian Nelson, CFA Q: What are your thoughts on this bear case for Verint Systems? “Verint’s Profits Don’t Justify Its High Valuation” A: We’re somewhat puzzled by the financial analysis of the write up, perhaps most with the author’s calculation of free cash flow, which may not truly reflect the goings-on of the cash flow statement (the author defines free cash flow as NOPAT less the change in invested capital). Adjustments to free cash flow are typically made within the valuation context (as NOPAT less the change in … Read more
Altria Back Above $70, Dollar General Pleases, Verint Sells Off
Image shown: Dollar General’s stock has performed very well since being added to the Best Ideas Newsletter portfolio. We were very happy to see newsletter portfolio idea Altria surge back above $70 per share in recent days. Dollar General continues its strength as the economy churns out more of its demographic, and we continue to believe the dollar store arena may be one of the few spaces of retail that is truly insulated from the Amazon effect. Verint Systems, on the other hand, has faced selling pressure, which we think is flat-out unwarranted. By Kris Rosemann and Brian Nelson, CFA In case you missed the latest video from President of Investment Research Brian Nelson here, we’ve been following very closely developments … Read more
Strategy Versus Tactics in the Best Ideas Newsletter Portfolio
Image Source: Anna & Michal We made a few tactical tweaks to the Best Ideas Newsletter portfolio during 2017. Let’s walk through them, and how we’re out to win the war, not win every battle. By Brian Nelson, CFA I’m not going to reference The Art of War written by Chinese military strategist Sun Tzu some time in the 5th century, nor am I going to use any quotes from the military treatise (I think it’s too well-traveled of a topic), but I do believe the approach to portfolio management is much like that of a general on a path to win the war. Now, don’t get me confused: I’m not saying that portfolio management is actually like being in … Read more
Verint Systems: An Overlooked Idea on Cybersecurity
Image Source: Verint The Best Ideas Newsletter idea is trying to break through the mid-$40s level, which has been illusive since late 2015. By Brian Nelson, CFA Verint Systems (VRNT) put up a very strong fiscal second-quarter (ended July 31) in early September when it beat bottom-line expectations by $0.14 and the top line by over $5 million. Not only did the top and bottom line come in ahead of expectations, but management increased its earnings-per-share outlook for the fiscal year ending January 31, 2018, to $2.75 at the midpoint. With shares trading at ~$40 each, that means Verint sports a multiple under 15 times current-year fiscal earnings, comparatively cheap (on a forward basis, the S&P 500 is trading over … Read more
Best Ideas, Dividend Growth Newsletter Alerts and More
Image Shown: The stock price performance of Boeing. Let’s take a look at recent news from newsletter portfolio holdings. We’re also parting with a “trade” we never should have made in the first place, and we’re letting go of one of our favorite restaurants in light of deteriorating technicals. This and more… By Brian Nelson, CFA Aside from predicting the ongoing inflation of the current equity market bubble in the US so far in 2017, we also thought crude oil prices (USO) would continue their recovery. Unfortunately, this hasn’t exactly worked out, and US crude oil prices have now entered a “bear market,” now falling below $43 per barrel. Are we saying that we know where crude oil prices are … Read more
Verint’s Cyber Intelligence Division Impresses
Image Source: Blogtrepreneur One of the latest additions to the Best Ideas Newsletter portfolio experienced strong top-line growth in both of its operating segments during the first quarter, and we continue to like the company’s exposure to the cyber intelligence arena. By Brian Nelson, CFA Our thesis on Verint (VRNT) is unchanged after the company reported strong first-quarter 2017 results June 7 led by a Cyber Intelligence division that experienced revenue growth of 19% on a year-over-year basis. Verint is one of our favorite ideas to capitalize on the increased spending to prevent cybercrime. We do not expect to make any changes to our fair value estimate at this time, and we plan to continue to include the idea in … 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
Trash As A Source of Cash and 2 New Additions to the Best Ideas Newsletter Portfolio
Image Source: thetaxhaven We’re making a number of adjustments to the Best Ideas Newsletter portfolio. By Kris Rosemann and Brian Nelson, CFA It’s time to take out the trash… that is, trash hauler Republic Services (RSG) from the Best Ideas Newsletter portfolio (it’s not “trash” – it’s actually a fantastic company and has been a great stock, but boy is it pricey now). We’re also adding ~1.5% positions in two new ideas, Dollar General (DG) and Verint Systems (VRNT), in the Best Ideas Newsletter portfolio as both have attractive valuations, in our view. Dollar General’s 27 consecutive years of same-store-sales growth are impressive, and Verint is now at the low end of its short-term uptrend, offering an interesting entry point … Read more