Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Jun 14, 2023

UnitedHealth Group’s Long-Term Story Intact
Image: UnitedHealth Group’s shares are facing pressure as the pace of medical procedures normalizes following COVID-19. We still like shares. On June 7, UnitedHealth Group raised its quarterly dividend nearly 14%, to $1.88 per share, which reflects a forward estimated dividend yield of 1.65%. The company remains a staple in the Dividend Growth Newsletter portfolio and is a new add in the Best Ideas Newsletter portfolio. Recent comments by UNH’s John Rex on June 14 regarding the firm’s healthcare costs during the second quarter have put shares under pressure during the trading session. Discretionary surgeries have picked back up following a lull during most of the COVID-19 pandemic as hospital capacity was largely constrained during that time. We’re viewing the expectations for higher medical costs in the near term for UNH as a reflection of pent-up demand (e.g. hip, knee replacements) and therefore largely a one-time step up that will weigh on is financials during 2023, but not in the longer run as premiums are eventually reset (repriced) to better cover the cost pressures. We think the market is overreacting to the news and likely reallocating to more aggressive areas within big cap tech as defensive stocks within healthcare weaken in 2023. UNH’s shares are now trading in the lower bound of our fair value estimate range, and we still like this large cap growth idea in the long run.

Jun 13, 2023

ESG Facing Opposition But Still an Indispensable Component of Investing
Image: Shares of Anheuser-Busch Inbev and Target have fallen 16%+ and 22%+, respectively, since the beginning of April. ESG investing is facing numerous challenges during 2023 as investors look to reallocate funds to other areas, including higher-yielding bonds and AI-levered big cap tech. Social dynamics have also become increasingly more difficult to navigate as companies seek to extend their brands, and the missteps at BUD and TGT mean that C-suites have to pay more attention to how they incorporate social issues into their messaging than ever before. Regardless of the weak fund flows at ESG-focused financial instruments during 2023, the concepts embedded within ESG remain absolutely critical to an investor’s success.

Jun 13, 2023

Oracle Hits All-Time Highs; Larry Ellison Pumps AI Opportunity
Image: Newsletter portfolio holding Oracle surges to all-time highs! “Oracle's Gen2 Cloud has quickly become the number 1 choice for running Generative AI workloads. Why? Because Oracle has the highest performance, lowest cost GPU cluster technology in the world. NVIDIA themselves are using our clusters, including one with more than 4,000 GPUs, for their AI infrastructure. Our GPU clusters are built using the highest-bandwidth and lowest-latency RDMA network—and scale up to 32,000 GPUs. As a result, cutting edge companies doing LLM development such as Mosaic ML, Adept AI, Cohere plus 30 other AI development companies have recently signed contracts to purchase more than $2 billion of capacity in Oracle's Gen2 Cloud.” – Chairman and CTO Larry Ellison

Jun 12, 2023

FDA Accepts License Application for Vertex Pharma’s and CRISPR Therapeutics’ Key Investigational Treatment
Image: Vertex's pipeline is impressive. We like its areas of focus and the progress it continues to make with key therapies in CRISPR and pain management. The combination of robust financials and a tremendous pipeline of game-changing therapeutics from exa-cel to VX-548 makes Vertex Pharma a no-brainer idea for the Best Ideas Newsletter portfolio, in our view. Vertex Pharma's shares are up nearly 18% so far in 2023, and we think its long term remains very bright. The company's dominance in CF gives it moaty economic characteristics, while the possible launch of as many as five new products in the next five years offers tremendous promise. Vertex Pharma's risk-reward situation continues to be skewed positively in investors' favor.

Jun 9, 2023

Dividend Increases/Decreases for the Week of June 9
Let's take a look at firms raising/lowering their dividends this week.

Jun 7, 2023

Apple’s 'Vision Pro' Not in Our Valuation Model; Expect Upside
Image: Apple released its first major product since the Apple Watch in the Vision Pro on June 5. The device opens the door to the era of spatial computing and is priced at $3,499. Apple unveiled its Vision Pro at the company’s Worldwide Developers Conference on June 5. We were impressed with the new major product launch, its first since the release of the Apple Watch nearly a decade ago but estimating the total market opportunity for a $3,499 device is a difficult one. The Vision Pro will be available in early 2024 and will compete in many areas with the Meta Quest, and we expect Apple’s annual numbers come next year to be impressive. The market for high-end consumer devices is a large one, and from what we can tell, the number of possible applications of the Vision Pro are many. We’re not making any changes to our valuation of Apple until we get a better feel for just how big of a needle-mover the Vision Pro will be, but we expect to raise our fair value estimate of Apple. The company has another winner on its hands, in our view.

Jun 5, 2023

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio
Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN).With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We're going to "fully invested" in the Best Ideas Newsletter portfolio today and expect to do the same in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio soon.

Jun 1, 2023

ICYMI: The Impact Rising Interest Rates Have on Equity REITs
Image: REITs have not performed as well as one might have thought. The Vanguard REIT ETF has underperformed the broader market considerably since 2015, while dividends per share have not grown much, if at all, since 2005. Source: Vanguard. The question on most everyone's minds: How will equity real estate investment trusts (REITs) fare in the current rising interest-rate environment? The topic has long been debated and studied, and there are myriad opinions on the subject. From where we stand, however, there are a two main moving parts consisting of fundamental and investment dynamics that investors should be aware of. Let's have a look.

May 30, 2023

Phillips 66’s Stock May Be Volatile But Its Management Remains Very Shareholder Friendly
Image: Phillips 66’s shares have been quite volatile as refining margins ebb and flow, but shares are up nicely since the start of 2021 even as they’ve given up some ground so far in 2023. Phillips 66’s dividend yield stands at 4.4% at the time of its writing, and management remains committed to continuing to raise the payout, having done so as recently as its most recently reported quarter. Refining margins will continue to be volatile as feedstock costs fluctuate and prices at the pump vary, and while Phillips 66 retains a rather large total debt load, we think the risks are acceptable for this income generator. We continue to like shares as an idea in a well-diversified equity income portfolio.

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.