Valuentum Exclusive Analysis for the Discerning Investor

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Sep 1, 2020

Experience and Judgment
"Think of a DCF model like a baseball bat. It's not so much the bat, itself, that matters, but rather it's the hitter that uses the bat that matters. Two hitters can use the same bat and arrive at a completely different outcome. In my near-10 years working at Valuentum, this concept is the most important one I've sought to emphasize. The DCF model is a tool, much like the baseball bat is the instrument by which the slugger hits home runs. That same bat can lead to a triple crown or set the league record in strike outs." -- Valuentum's Brian Nelson, CFA

Aug 27, 2020

Hats Off to Powell and Mnuchin!
"My hat goes off to Powell and Mnuchin. As you know, I used to be a big believer in (very) hands-off government policies when it comes to the free-market system, but we can no longer afford that today. There are too many investors that aren't paying attention to their investments and/or pursuing misguided correlation analysis. Many have noted, including Danielle DiMartino Booth, that "the Fed could be setting the US economy up for a harder fall down the road by flooding markets with cash and spurring investors to prop up firms that are not fit to survive." Almost completely lost today, however, is that the Fed and Treasury also propped up almost every investment firm tied to indexing and modern portfolio theory." -- Valuentum's President Brian Nelson, CFA

Aug 26, 2020

L Brands Beats Low Expectations
Image Shown: Though shares of L Brands Inc are up year-to-date, they remain down significantly over the past five years as of this writing (before taking dividend considerations into account). The owner of the Victoria’s Secret, PINK, and Bath & Body Works retail brands L Brands reported second quarter fiscal 2020 earnings (period ended August 1, 2020) on August 19 that smashed past both consensus top- and bottom-line estimates. However, those estimates were a low bar to beat as analysts had already factored in the significant headwinds the coronavirus (‘COVID-19’) pandemic created for its business. Last fiscal quarter, L Brands reopened most of its stores and leaned on e-commerce sales channels to meet customer demand as best it could. For reference, Victoria’s Secret and PINK (collectively referred to as Victoria’s Secret by L Brands) sell lingerie and similar apparel/accessories while Bath & Body Works sells fragrances, soaps, hygiene products, and similar offerings.

Aug 25, 2020

Facebook Hits Another All-Time High!
Image: The Valuentum Buying Index is not a stair-step trading strategy, and we view only 9s and 10s and 1s and 2s as material considerations to consider buying or consider selling criteria. We have held prior 9s and 10s in the newsletter portfolios until they reach our fair value estimates, until their technicals roll over, until they register ratings of 1 or 2 on the VBI, or due to changes in certain criteria with respect to market conditions or overall portfolio constitution. Our best ideas remain in the newsletter portfolios and Exclusive publication.Top-weighted idea in the Best Ideas Newsletter portfolio Facebook has hit another all-time high!

Aug 20, 2020

ALERT: Newsletter Portfolio Changes; Investing Is Simple, Not Easy

Aug 20, 2020

Johnson & Johnson Buys Momenta Pharmaceuticals
Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 IR Earnings Presentation. On August 19, Johnson & Johnson announced it was acquiring Momenta Pharmaceuticals for $52.50 per share in cash through a deal worth $6.5 billion (or $6.1 billion when including Momenta Pharmaceuticals’ net cash position). At the end of June 2020, Momenta Pharmaceuticals had ~$0.45 billion in cash and cash equivalents on hand with no debt on the books. We include shares of JNJ as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios.

Aug 19, 2020

Update: COVID-19 Vaccine Race
Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has devasted the global economy (though things are starting to improve) and has fundamentally altered daily human life. According to a draft report from the World Health Organization (‘WHO’), there were 29 COVID-19 vaccine candidates undergoing clinical trials as of August 13 along with 138 other candidates undergoing preclinical evaluation. It is a race against the clock. Unfortunately, as of this writing on August 18, there have been ~170,000 COVID-19-related deaths in the US alone according to data from the US Centers for Disease Control and Prevention (‘CDC’). We are optimistic that one of the many “shots on goal” will end up proving successful. The US launched Operation Warp Speed to accelerate the development of a COVID-19 vaccine, which involves providing funding to companies with promising vaccine candidates. Furthermore, please note that major economies around the world have adjusted their rules and procedures to allow for multiple phases of clinical trials to be conducted concurrently. Before getting into some of the most promising COVID-19 vaccine candidates, we hope everyone, their loved ones, and their family members are staying safe out there as we ride out the pandemic.

Aug 13, 2020

Cisco Responds to Near-Term Headwinds with Large Cost Cuts
Image Shown: Cisco Systems Inc’s financial performance held up well, relatively speaking, during the initial stages of the pandemic. Image Source: Cisco Systems Inc – Fourth Quarter of Fiscal 2020 IR Earnings Presentation. On August 12, Cisco Systems reported fourth quarter fiscal 2020 earnings (period ended July 25, 2020) that beat consensus estimates on both the top- and bottom-lines. However, Cisco’s outlook for the current fiscal quarter was weaker than expected which weighed on shares of CSCO during normal trading hours on August 13. Cisco’s near-term performance is facing headwinds due to the ongoing coronavirus (‘COVID-19’) pandemic as many of its customers are delaying projects until after the storm has passed. With that in mind, Cisco remained a free cash flow cow last fiscal year and that is likely to continue going forward, which supports its ability to continue paying meaningful dividends. Cisco’s strong cash flow profile is further supported by its pristine balance sheet, and we continue to like the firm as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Shares of CSCO yield ~3.4% as of this writing. Please note that Cisco recently announced its CFO for the past five years, Kelly Kramer, plans to leave the company once her replacement has been found.

Aug 7, 2020

Dividend Increases/Decreases for the Week August 7
Let's take a look at companies that raised/lowered their dividend this week.

Aug 6, 2020

Excerpt from the Second Edition of Value Trap: Theory of Universal Valuation (now available to order!): The Greatest Financial Fraud in History?
With an added Appendix and 40+ page Prologue, the second edition of the 2019 Best Indie Book Award (BIBA) winner for the category of Business takes readers through the COVID-19 crisis, building on the key tenets of the first edition. Value Trap received acclaim from the prestigious Next Generation Indie Book Awards, a Finalist in the category of Business. The text was also a Blue Ink Notable Book as well as a Readers' Favorite 5 Stars, named Honorable Mention in the Non-Fiction - General genre. More detail and new commentary, the second edition of Value Trap is a must read for any serious investor. Brian Michael Nelson, CFA, delivers again.