Valuentum Exclusive Analysis for the Discerning Investor

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Dec 20, 2023

Latest Report Updates
Check out the latest report updates on the website.

Dec 15, 2023

Dividend Increases/Decreases for the Week of December 15
Let's take a look at firms raising/lowering their dividends this week.

Oct 22, 2023

There Will Be Volatility
Image: An ETF tracking Russell 1000 "growth" stocks has outperformed an ETF tracking Russell 2000 "value" stocks since the beginning of 2021. To us, the market remains hypersensitive to almost every economic data point that hits the wires, and we’re just not going to play that game. The macro headlines and never-ending news flow are what many quant and algorithmic traders are trading on, and to a very large extent, for investors with a long-term horizon, these macro data points just don’t factor into the equation. When valuing equities, we’re always after mid-cycle expectations, not peak or trough performance, so our valuations implicitly embed a "normal" recession. Warren Buffett didn’t become a billionaire buying and selling on macro data points, and volatility is simply to be expected given the proliferation of price-agnostic trading these days. Instead of panicking over higher interest rates, we think investors should view the Fed’s work thus far as future potential dry powder to stimulate both the economy and the markets. Whenever you feel like stocks are no good, have a read of Warren Buffett’s classic piece written during the Great Financial Crisis, “Buy American. I Am.” To us, we still like stocks for the long run. Happy investing!

Sep 24, 2023

Report Updates: Amazon Registers the Lowest Rating on Our Scale
Check out the latest report updates on the website. The biggest takeaway of this refresh is that Amazon is poised to generate significantly negative free cash flow in 2023, and while we think the firm will turn this measure around materially in the long haul, shares are coming out as overvalued on our discounted cash-flow process, while technically its stock price is breaking down. An overvalued stock on both an absolute and relative value basis with negative technical/momentum indicators registers the worst rating on our methodology, the Valuentum Buying Index (1=worst, 10-best).

Sep 20, 2023

ICYMI: Questions for Valuentum’s Brian Nelson
Valuentum's President Brian Nelson, CFA, answers your questions.

Jul 11, 2023

An Important Measure of Leverage for Dividend-Growth and Income-Oriented Shareholders, One That Is Dividend-Adjusted
As more and more investors rely on company dividends for income, dividends, in our view, have become more debt-like commitments in nature, especially from the perspective of dividend-growth or income-oriented shareholders. Years ago, we rolled out a measure of financial leverage that considers both the company’s debt and the present value of its future expected cash dividend obligations, which, in the eyes of die-hard dividend-growth or income-oriented shareholders, may be implicitly assumed to be debt-like commitments in substance. We think this leverage ratio can be used in conjunction with the Dividend Cushion ratio to gain additional insight into the dividend-paying financial health of an entity.

Jun 26, 2023

Latest Report Updates Concentrated in Mining & Chemicals and Healthcare Industries
In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company's rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis with an evaluation of a firm's technicals and momentum indicators to derive a score between 1 and 10 for each company (10=best). We believe the VBI methodology helps identify the most attractive stocks at the best time to consider buying, helping to avoid value traps and lagging performance due to the opportunity cost of holding a stock with great potential but at an inopportune time. The Best Ideas Newsletter portfolio puts the VBI into practice. Read more about the Valuentum Buying Index rating system, "Value and Momentum Within Stocks, Too." Members can access our 16-page company research reports by using our 'Symbol' search box in our website header.

May 30, 2023

Paper: Value and Momentum Within Stocks, Too
Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks.

May 17, 2023

Our Reports on the Health Care Bellwethers Industry
Our reports on the Health Care Bellwethers industry can be found in this article. Reports include JNJ, CVS, ABT, ABBV, LLY, AMGN, MRK, PFE, VRTX, UNH, BMY, GILD, ISRG, MDT, WBA, ZTS.

Mar 24, 2023

How the Payment of a Dividend Impacts Intrinsic Value Estimation
"Dividends are a transfer of cash to the shareholders that the shareholders already owned."In this purely educational article, using historical data from 3M, let’s walk through the mechanics of how the payment of a dividend impacts the intrinsic value of a company. The takeaways may be somewhat counterintuitive but are nonetheless very important for members to understand.