Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area.Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information.
Brian Michael Nelson is the president of equity and dividend growth research and ETF analysis at Valuentum Securities.
He is the architect behind the company’s research methodology and processes, developing the Valuentum Buying Index rating system, the Economic Castle rating, and the Dividend Cushion ratio. Mr. Nelson has acted as editor-in-chief of the firm’s Best Ideas Newsletter and Dividend Growth Newsletter since their inception.
Before founding Valuentum in early 2011, Brian worked as a director at Morningstar, where he was responsible for training and methodology development within the firm's equity and credit research department. Prior to that position, he served as a senior industrials securities analyst covering aerospace, airlines, construction, and environmental services companies.
Before joining Morningstar in February 2006, Mr. Nelson worked for a small capitalization fund covering a variety of sectors for an aggressive growth investment management firm in Chicago. He holds a Bachelor's degree in finance and a minor in mathematics, magna cum laude, from Benedictine University. Mr. Nelson has an MBA from the University of Chicago Booth School of Business and also holds the Chartered Financial Analyst (CFA) designation.
Brian is frequently quoted in the media and has been a frequent guest on Nightly Business Report, Bloomberg TV, CNBC, and the MoneyShow.
Mr. Nelson is very experienced valuing equities, developing discounted cash-flow models used to derive the fair value estimates for companies in the equity coverage universes of two independent investment research firms, including Valuentum.
Brian worked on a small cap fund and a micro cap fund that were ranked within the top 10th percentile and top 1st percentile within the Small Cap Lipper Growth Universe, respectively, in 2005.
Brian Nelson led the charge in developing Morningstar's issuer credit ratings, creating and rolling-out one of the firm's proprietary credit metrics, the Cash Flow Cushion.
Value Trap is a 350 page book, including Preface, Notes, Bibliography and Index. Brian Nelson, former Director of Methodology at Morningstar and President of Investment Research at Valuentum, explains how enterprise valuation forms the Theory of Universal Valuation and why a focus on it may not only help you avoid value traps, but also save you from the next financial crisis.
The text of this download is a response to many worrisome trends and processes in the investment management business today. The book strives to answer the question: what is the appropriate empirical evidence in evidence-based finance? Surely, not just any empirical evidence will do. The book is not meant to be controversial, but a discussion of the great contradiction of “explaining” stock return behavior between factor-based investing (which is based mostly on ambiguous, realized data within in-sample sets) and the efficient markets hypothesis (which is based on expectations of future data, realized or not) may make it so.
The text is heavy in behavioral thinking and puts forth enterprise valuation as a behavioral framework in which to view stock prices and their movements. This book also shows how enterprise valuation is much more than a simple stock valuation tool, but rather that enterprise valuation is truly universal valuation, resting at the intersection of behavioral economics, quantitative theory, equity valuation, and therefore finance, itself. A reading of "The Data Dilemma and Valuentum Investing" in the Preface is necessary to understand the various types of data Nelson refers to frequently in this text: ambiguous, causal and impractical. Also emphasized in this book is the difference between in-sample, out-of-sample and walk-forward studies, the latter the author believes to be the most robust and authentic of processes.
In the first section of this book (chapters 1 through 3), Nelson welcomes you on a journey through the early lessons of his career and introduces some of the major shortcomings of traditional quant factor-based analysis, while building up the importance of a common theme in this text: the information contained in share prices. In the second section of this book (chapters 4 through 6), the causal nature of enterprise valuation to stock prices is explained, culminating in the Theory of Universal Valuation, which offers enterprise valuation as the central theme to quantitative value studies, efficient markets hypothesis testing and beyond. If at any time, it gets too theoretical, Brian Nelson encourages the casual reader to skip ahead.
In the final section of the book (chapters 7 through 10), Nelson talks about practical application of the principles explained in this text: how enterprise valuation can be used to identify bubbles and mispricings, how it’s valuable to dividend-growth and income frameworks, how it’s connected to economic moat and economic castle theory, and how it can be applied practically in an equity portfolio setting, as in Valuentum investing.
This book is not a how-to manual on how to perform enterprise valuation, or a get-rich-quick investment program, but rather a text that Nelson feels lays the foundation for a genuine conversation about stock investing, a conversation about price versus estimated intrinsic value. The book is chock-full of footnotes, too, offering greater depth in areas that may require it. This book is content-rich for the number of pages, as the author wants every sentence, every paragraph to be worth your while.
Brian Nelson has over 15 years' experience in enterprise valuation and holds the Chartered Financial Analyst designation. For any questions, please contact us at [email protected]. Don't forget to leave your review of Value Trap on Amazon. Thank you!
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