Those willing to do real fundamental research can find companies creating real shareholder value amidst a glut of overvalued and/or poorly run firms. Noise traders create market inefficiency, but they also create opportunity to buy high-quality companies at cheap prices. Q3 hedge fund letters, conference, scoops etc This firm has continually...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Fund labels and descriptions should not be trusted. Too often, investors make the decision to buy a fund based on its name or stated methodology, rather than on holdings-based research. Only by analyzing a fund’s holdings can...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Q3 hedge fund letters, conference, scoops etc It appears that the Netflix (NFLX) micro-bubble might finally be bursting. We’ve been bearish on Netflix for a long time, but our conviction now is higher than ever. The noise-trader momentum...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Next year, S&P 500 companies will add roughly $600 billion (2% of total assets) to their balance sheets. One company will more than double its reported assets (and more than quadruple its reported liabilities). Q3 hedge fund letters,...
We recently published a list of “Micro-Bubble Winners” that should thrive when specific micro-bubbles burst, and while this stock didn’t make the list, it very well could have. Over its 150+ year history, this company has adapted to technological transformations, built up an impressive economic moat, and become a...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Q3 hedge fund letters, conference, scoops etc We often talk about the importance of holdings analysis when it comes to ETF and mutual fund research. After all, the performance of the holdings equals the performance of the ETF/mutual...
A recent article in the Wall Street Journal proclaims “the Fiduciary Rule is dead.” This statement is true in a technical sense, as a U.S. circuit struck down the Department of Labor’s fiduciary rule and the DOL chose not to appeal. However, the DOL’s attention to the Fiduciary Rule...
We’ve long argued (and proven empirically) that there is a strong correlation between improving ROIC and increasing shareholder value. Nevertheless, the majority of mutual funds managers continue to pick stocks based on flawed metrics that show no correlation to shareholder value, such as price-to-earnings ratios, return on equity, or...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. The Securities and Exchange Commission just made investing more dangerous for the little guy. Q3 hedge fund letters, conference, scoops etc By U.S. Government [Public domain], via Wikimedia CommonsUnder a new proposal, nearly 1,000 more companies can omit disclosures...
Sears Holdings Corp was originally selected as a Danger Zone pick on 4/22/13. We revisited SHLD in May 2018 as the stock had fallen nearly 80% since our original report. At the time of the first Danger Zone report, the stock received a Very Unattractive rating. The stock currently...
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Q3 hedge fund letters, conference, scoops etc Noise traders – individuals that distort the market by trading on incomplete or inaccurate information – have been discussed by academics and investors alike for decades.[1] No one could ever deny...
Lithium producer Livent (LTHM) will IPO on Thursday, October 11. At a price range of $18-$20/share, the company plans to sell up to $460 million in stock to the public that will result in a market cap of ~$2.7 billion. At the midpoint of the IPO range, LTHM currently...
Despite the micro-bubble in specific tech stocks, investors can still find value in the sector. This tech firm has a long history of profit growth, prudent capital stewardship, and an undervalued stock. It’s business model creates more value than peers. Add in its position in multiple fast-growing markets and...
Online freelance platform Upwork (UPWK) will IPO on Wednesday, October 3. At a price range of $12-$14 per share, the company plans to raise up to $90 million with an expected market cap of ~$1.3 billion. At the midpoint of the IPO price range, UPWK currently earns our Unattractive...
“Micro-Bubbles” are groups of stocks with extraordinary risk within an overall market that is reasonably valued. Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to...
Merger Monday is back, but the market’s not buying it. Comcast (CMCSA), Michael Kors (KORS), and Sirius XM (SIRI) all announced multi-billion-dollar acquisitions on Monday. The market responded by sending shares of all three companies deep into the red. Get Our Activist Investing Case Study! Get the entire 10-part series on...
Online survey provider SurveyMonkey (SVMK) will IPO on Wednesday, September 26. At a price range of $9-$11 per share, the company plans to raise up to $171 million with an expected market cap of ~$1.2 billion. At the midpoint of the IPO price range, SVMK currently earns our Very...
In early 2017, as Snap, Inc. (SNAP: $9/share) prepped for its IPO, CEO Evan Spiegel received fawning profiles in the pages of prominent papers like the LA Times and the New York Times. These profiles painted a portrait of Spiegel as an enigmatic genius, the latest in a line...
Elanco Animal Health (ELAN), the premier animal health company being spun out of Eli Lilly (LLY), is expected to begin trading on Thursday, September 20. At a price of $24 per share, the company plans to raise up to $1.7 billion with an expected market cap of ~$7.7 billion....
Check out this week’s Danger Zone interview with Chuck Jaffe of Money Life. Although the overall stock market looks reasonably valued, there are pockets of extraordinary risk where stocks with 2000-bubble-like valuations lurk. Specifically, there are “micro-bubbles” in certain stocks, where valuations reflect expectations for future cash flows that would require...
“The heads of many companies are not skilled in capital allocation. Their inadequacy is not surprising because most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration or, sometimes, institutional politics.” - Warren Buffett, 1987 letter to Berkshire Hathaway shareholders Get...
We recently wrote an article titled “CEO’s That Focus on ROIC Outperform,” and the corollary to that argument is that the opposite is also true: CEO’s that don’t focus on ROIC underperform. The market has many companies that have lagged behind their peers due to poor capital allocation. Any...
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