Valuentum Exclusive Analysis for the Discerning Investor

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Sep 19, 2022

The Success Equation Book Review: Is the Skill Paradox a Myth in Investing? We Think So
Image: The game of baseball has changed during the past 100 years. While many point to a declining standard deviation and coefficient of variation in batting averages for evidence of a paradox of skill in baseball, it's more likely the game has changed. Players are hitting more homeruns, sacrificing batting average as a result. Note the red part of the line is when the game of baseball expanded to the current number of 30 teams. Data from the COVID-19 shortened 2020 season omitted. Source: Baseball Almanac. There's a lot of informational value in reading The Success Equation (and everyone should pick up a copy), but please be careful to come to your own conclusion. From where we stand, there is not a paradox of skill in investing (or baseball, for that matter). The games have simply changed based on new incentives. Some wise person may have written this before: Be careful not in what you read, but rather in the conclusions you draw from your reading. We wish Mauboussin could re-write The Success Equation considering some of the thoughts in this article. Maybe he will!

Sep 11, 2022

U.S. Housing Market Showing Signs of Weakness
Image Shown: The U.S. housing market is starting to show signs of weakness. Companies involved in the home building business in the U.S. are starting to feel the heat, with the iShares US Home Construction ETF down ~30% year-to-date as of early September 2022 on a price-only basis. The national U.S. housing market has been on fire during the past few years. Sharp increases in U.S. housing prices are now contending with rising mortgage rates, which is prompting the question, are U.S. housing prices heading for a crash? Affordability issues are rampant, with many households now priced out of the market, and signs of weakness are emerging in the U.S. housing market. We think the prospect for rising mortgage interest rates could send housing prices spiraling lower, but nothing like that of the housing crisis of 2007-2009.

Sep 8, 2022

LINK --> Massive Unrest In Europe, Energy Crisis Could Be the Catalyst to Topple the Global Markets
Europe is on the brink Over 70000 people came out in support of Russia in Prague and are forcing the Govt to resign for supporting Ukraine pic.twitter.com/lwMAjkBM2U — Mahesh 🇮🇳 (@Mahesh10816) September 3, 2022 The European energy crisis continues to unfold, and we’ve been keeping our members updated on this huge story. In the wake of the Russian invasion of Ukraine in February 2022, the European Union (‘EU’) along with key Western allies (such as the US, UK, Canada, Japan, South Korea, and Australia) imposed punishing economic sanctions on Russia to hinder its efforts in Ukraine and deter other nations from pursuing imperialistic land grabs. Russia retaliated by limiting the flow of various energy products to nations that imposed those sanctions. In particularly, energy flows from Russia to member nations within the EU were curtailed aggressively, with an eye towards France, Italy, and Germany along with Poland and the Baltic states (Latvia, Lithuania, and Estonia). Natural gas, crude oil, and petroleum product exports from Russia to EU member nations have tanked this year. The land war in Ukraine has not grown into a massive economic war in Europe, and this catalyst could be the one that topples the global markets.

Aug 25, 2022

Dividend Growth Idea Dick’s Sporting Goods Beats Estimates, Raises Guidance
Image Shown: Shares of Dick’s Sporting Goods Inc have been on a nice upward climb of late. The sporting goods retailer raised its full-year guidance for fiscal 2022 during its fiscal second quarter earnings report. On August 23, Dick’s Sporting Goods Inc reported second quarter earnings for fiscal 2022 (period ended July 30, 2022) that beat both consensus top- and bottom-line estimates. The sporting goods retailer also raised its full-year guidance for fiscal 2022 in conjunction with the report, after previously lowering its guidance during its fiscal first quarter earnings update in May 2022. We continue to like Dick’s Sporting Goods as an idea in the Dividend Growth Newsletter portfolio. Shares of DKS yield ~1.8% as of this writing when looking at its regular quarterly payout. The company has also paid out special dividends in the recent past, including a $5.50 per share special dividend in fiscal 2021 along with a $2.00 per share special dividend back in fiscal 2012.

Aug 10, 2022

Garbage Hauler Republic Services Beats Estimates, Raises Guidance
Image Shown: Shares of newsletter portfolio idea Republic Services have put up strong performance so far year-to-date in the face of volatile capital markets. There is a lot to like about Republic Services as the waste management firm is a tremendous free cash flow generator with ample pricing power. Management is incredibly shareholder friendly, as seen through recent per share dividend increases, and the company has been firing on all cylinders of late. We continue to like Republic Services in our newsletter portfolios. Our recently updated fair value estimate for RSG sits at $132 per share and the top end of our fair value estimate range sits at $158 per share of Republic Services.

Aug 8, 2022

Loving Stocks Here! Meta and Alphabet Setting Up Nicely for Long Term Investors!
Image: Nelson still remains bullish. We wouldn't be surprised to see the markets make new highs as they have done time and time again over the stock market's storied history of bull and bear markets, crashes and rip-your-face off rallies, and economic booms and recessions! There are myriad risks, but we're not overthinking this market. We like stocks for the long haul. One of the hardest parts of investing is keeping your head when others around you are running for the exits. That's exactly what we did for members (we don't manage money), and the stock market has come roaring back since the mid-June bottom! Anyone who has read our book Value Trap knows that the rapid fall in the 10-year Treasury yield to ~2.8% today from the mid-3% range in mid-June has helped support this stock market advance (due to a lower cost of capital in discounted cash-flow models -- enterprise valuation is the key driver behind stock market performance, in our view, as it has been revealed time and time again). After calling the COVID-19 crash when others doubted the impact that the coronavirus would have on the markets, and then calling the tremendous bull run that followed, we still remain bullish on these markets, and the simulated newsletter portfolios have done fantastic on a relative basis so far this year.

Aug 3, 2022

Shares of Best Idea Alphabet Remain Incredibly Undervalued
Image Shown: Alphabet Inc Class C shares are trading at bargain basement levels, in our view. Alphabet Inc reported second quarter 2022 earnings that missed consensus top- and bottom-line estimates. However, investors were clearly expecting the tech giant to perform much worse as shares of GOOG leapt higher following the report. We continue to like Alphabet Class C shares (ticker: GOOG) as a top-weighted idea in the Best Ideas Newsletter portfolio. Our fair value estimate (adjusted for Alphabet’s recent 20:1 stock split) sits near $157 per share of GOOG, well above where shares are trading at as of this writing.

Jul 30, 2022

Meta Platforms’ Shares Remain Cheap; Long Term Focus Required
Image Shown: Meta Platforms Inc’s family of apps continued to grow its active user base last quarter. Its social media networks are used by billions of users every single day. Image Source: Meta Platforms Inc – Second Quarter of 2022 IR Earnings Presentation. On July 27, Meta Platforms reported second quarter 2022 earnings that missed consensus top- and bottom-line estimates. We appreciate that its active user base across its family of apps (Facebook, Instagram, WhatsApp, and Messenger) and its ad impressions continued to trend in the right direction last quarter, though recent softness in its pricing power is concerning. Meta Platforms is responding by scaling back its targeted operating expense growth, which we appreciate. We continue to like Meta Platforms as an idea in the Best Ideas Newsletter portfolio, though we recognize that near term headwinds are weighing quite negatively on investor sentiment towards the name.

Jul 29, 2022

Dividend Increases/Decreases for the Week of July 29
Let's take a look at firms raising/lowering their dividends this week.

Jul 22, 2022

Dividend Increases/Decreases for the Week of July 22
Let's take a look at firms raising/lowering their dividends this week.