Valuentum Exclusive Analysis for the Discerning Investor

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Jan 23, 2020

Resetting Your Mental Model
Image Source: affen ajlfe. Having the right mental model and using the right information can be the reason why you win or lose in investing.

Jan 14, 2020

Disney Joins the Best Ideas Newsletter Portfolio
Image Shown: Shares of The Walt Disney Company have performed well over the past year, and we see room for additional upside. Media and entertainment giant The Walt Disney Company was just added to our Best Ideas Newsletter portfolio. Though the firm does not register the typically high Valuentum Buying Index rating that we would prefer with new additions (sometimes we have to relax criteria to achieve newsletter portfolio goals), we like Disney’s business model and its future free cash flows are underpinned by: a top quality intellectual property (‘IP’) portfolio that’s practically impossible to replace, the immense profitability of its theme parks (which benefit from its strong and ever-growing IP portfolio i.e. adding Star Wars-themed rides), its strength in streaming (Disney owns ~67% of Hulu and Disney+ has reportedly been a big hit initially), its position in live sports (one of the few reasons why households keep cable, or choose higher priced streaming packages) is top notch (ESPN, which Disney owns ~80% of, now has ESPN+ to offer incremental upside), and the company should be able to wring out synergies after buying 21st Century Fox (the deal closed in March 2019) through a ~$71 billion cash-and-stock deal.

Jan 4, 2020

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds
Image: President of Investment Research Brian Nelson, CFA. A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception.

Dec 27, 2019

Streaming Wars Roundup
Image Shown: Shares of Netflix Inc came under pressure around the same time that competition in the streaming video space really started to heat up. Those competitive headwinds are only going to build going forward. This is often referred to the start of the “streaming wars” which is what we’ll cover in this article.With so many competitors now entering the streaming space, it will likely become hard for companies to push through price increases unless they are truly producing top tier content. That will make covering enormous content creation liabilities a difficult but not impossible task. Our favorite companies in this space remain Apple and AT&T. Differentiation is possible in this industry but having a strong free cash flow profile (both Apple and AT&T’s free cash flows are simply enormous) is essential to having a chance.

Nov 5, 2019

Our Reports on Stocks in the Media Entertainment Industry
The media (entertainment) industry spans firms with diversified worldwide entertainment operations to those that specialize primarily in motion picture production and technologies. Firms with media network businesses compete for viewers with other networks, while companies with studio entertainment businesses compete with all forms of entertainment. A significant number of companies produce theatrical/television films, and success depends on unpredictable public preferences. The strongest participants will consistently create filmed entertainment and/or cable programming that consumers want. We’re neutral on the group.

Oct 27, 2019

Economic Commentary – Politics, the WeWork Debacle, and How We Use the Valuentum Buying Index in the Newsletter Portfolios
In our latest Economic Commentary, the Valuentum team continues its discussion on politics and the markets and the implications of a potential WeWork failure on the commercial real estate and construction markets. We’ll also address a very important question: Why are there lower Valuentum Buying Index ratings in the newsletter portfolios at times? The answer is rather straightforward and a good thing! Let’s get started.

Oct 23, 2019

Netflix Continues to Grow Paying Subscriber Count, Free Cash Flows Elusive for Now
Image Shown: Netflix Inc continues to grow its global net subscriber count as it pushes deeper into overseas markets and fends off rising competitive threats. Image Source: Netflix Inc – Third quarter 2019 IR presentation. While we doubt Netflix will generate meaningful free cash flows in the short-term given its large content investments and marketing spend, we think the company’s longer term trajectory is quite promising. Competitive pressures are building, however, and while growth ensues at the firm, we aren’t interested in shares of NFLX given its wide fair value estimate range (small changes in Netflix’s trajectory can have an outsized influence on its intrinsic value). That said, we see the company being able to stay a leader in the streaming race.

Oct 12, 2019

ICYMI: Interview with Valuentum's President Brian M. Nelson, CFA
Catch up with Valuentum's President Brian M. Nelson, CFA in a recent interview with dividend growth investor Arne Magnus Lorentzen Ulland of the blog stockles.

Oct 11, 2019

Apple Surges Higher!
We continue to like Apple and think shares will continue advancing toward the upper end of our fair value estimate range ($260+). Recent technical strength at Apple is possibly a sign that investors are beginning to price in the very positive tailwind the tech giant’s ‘Services’ segment represents in terms of both sales and margin upside (and the positive effect that has on Apple’s expected future free cash flows).

Sep 23, 2019

Empirical Support for Porter’s “Gospel,” Plus Comments on the “Head Fake” Rotation
“Let’s be very clear: There is strong empirical quantitative evidence that the price-to-fair value equation (“factor”) is predictive of returns, which is what matters for value investors, and in Morningstar’s case, the moat assessment is just part of that overarching conclusion (fair value estimate). Researchers continue to attack the moat “factor” on grounds that don’t make any sense, in my view, and are cherry-picking parameters to assess value investing.” – Brian Nelson, CFA