The question is, can Value Line be used as a market forecast proxy or do you actually have to buy the services? The main revenue growth driver was licensing fees up 75% for the comparable periods, albeit the growth was based on smallish but optimistic product offerings. No management comment about future growth was offered.
But the old mainstay of periodicals and publications revenues was down 5% and related expenses down 4% with the resulting margin squeeze. Value Line also claims to have spent more money (up a whopping 16%) on marketing campaigns and fees to third parties to drive in more business. These campaigns are usually targeted at the individual investor. The campaigns did not seem to work.
Within the electronic publishing category, revenues were flat and paper revenues declined in keeping with all the usual experiences of North American Media. Retail subscribers were down but institutional investor subscription growth offset.
Mark Hulbert, of MarketWatch, recently said:
Perhaps the most widely known of these newsletters is the Value Line Investment Survey, which is one of the best-performing of any of the newsletters tracked by the Hulbert Financial Digest over the past three decades....This newsletter has not made any recommendation in its model portfolios since early October, and in the months before that it dramatically cut back on the number of transactions it recommended. This represented a big shift, because in prior years the newsletter's model portfolios were quite actively traded.
Could it be that the action addicted investor category now finds Value Line advice boring and is changing to more adrenaline pumped advisories? Institutions hopefully are less frenetic and therefore value intellectually honest analysis and opinions.
Could it also be that the market is similar to a roller-coaster ride? We are the top of a very large rise and just cannot figure out what the next sequence will be. If the newsletter is good at predicting and cannot identify something to buy, that’s bad for the market. If the newsletter is good at predicting and cannot identify anything to sell, that’s good for the market.
Therefore, Value Line has issued a market neutral signal.
VALU 1-yr chart: