Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>We normally write these “Workbench” reports in between our larger initiation pieces.  They are intended to offer a window into our short investment process and to highlight potentially interesting names.</li>
<li>This Workbench focuses exclusively on earnings quality shorts.  We continue to work on these names. Today we highlight:</li>
<li>Moderna (MRNA),  Knowles (KN)    Juniper Networks (JNPR)  Upstart Holdings (UPST)  Beauty Health Co (SKIN), Sonos (SONO). Kraft Heinz (KHC), AZEK Co. (AZEK), Energizer Holdings (ENR),  Fox Factory Holding  (FOXF)</li>
</ul>


We normally write these “Workbench” reports in between our larger initiation pieces.  They are intended to offer a window into our short investment process and to highlight potentially interesting names.
This Workbench focuses exclusively on earnings quality shorts.  We continue to work on these names. Today we highlight:
Moderna (MRNA),  Knowles (KN)    Juniper Networks (JNPR)  Upstart Holdings (UPST)  Beauty Health Co (SKIN), Sonos (SONO). Kraft Heinz (KHC), AZEK Co. (AZEK), Energizer Holdings (ENR),  Fox Factory Holding  (FOXF)


Short Ideas on Our Workbench:  Earnings Quality

ZoomInfo Technologies  / Equity Bottom-Up

<ul>
<li>This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  </li>
<li>They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.</li>
<li>These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.</li>
</ul>


This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.


Earnings Quality Short Candidates: ZoomInfo, Gogo, Elanco Animal Hlth, Sonos, Energizer

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

We are a global market research company focused on industries, countries, economies and consumers worldwide. Our cross-country comparable research helps your organisation identify opportunities and develop growth strategies in countries and regions across the globe. With offices around the world, 1,200 analysts in 100 countries and market research on every key trend and driver, we give you powerful access to the real story behind consumer change.

Thematic (Sector/Industry)

<ul><li>Sun care grew by 5% in current value terms to reach SGD27 million in 2017.</li><li>Health concerns and the desire for fair skin drives growth.</li><li>The average unit price of sun care rose in 2017.</li><li>Energizer (S) Pte Ltd retained lead in sun care in 2017 with a value share of 36%.</li><li>Sun care is projected to increase at a value CAGR of 4% at constant 2017 prices over the forecast period to reach SGD32 million in 2022.</li></ul>

Sun care grew by 5% in current value terms to reach SGD27 million in 2017.Health concerns and the desire for fair skin drives growth.The average unit price of sun care rose in 2017.Energizer (S) Pte Ltd retained lead in sun care in 2017 with a value share of 36%.Sun care is projected to increase at a value CAGR of 4% at constant 2017 prices over the forecast period to reach SGD32 million in 2022.

M&A Reporting, CTFN

Jonathan Spitzer

M&A Reporting

CTFN

Bringing the marketplace leading coverage of mergers, events, and major corporate actions, CTFN has a team of seasoned reporters from Los Angeles to London, publishing news that advances stories that matter to event-driven investors and deal professionals.

Event-Driven

On March 29, Energizer Holdings and Spectrum Brands announced that the Federal Trade Commission allowed expiration of the waiting period under the Hart-Scott-Rodino Antitrust Act regarding Energizer’s acquisition of Spectrum Brands’ battery unit. The swift clearance was a surprise to investors and to the antitrust community, as well as to the attorneys working on the deal, sources shared with CTFN.

On March 29, Energizer Holdings and Spectrum Brands announced that the Federal Trade Commission allowed expiration of the waiting period under the Hart-Scott-Rodino Antitrust Act regarding Energizer’s acquisition of Spectrum Brands’ battery unit. The swift clearance was a surprise to investors and to the antitrust community, as well as to the attorneys working on the deal, sources shared with CTFN.

How a 3-2 Merger Got Done in The Present US Antitrust Environment

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

In this review, we highlight 5 Thai stocks that could potentially do well in the Donald December 2016, the last Christmas Obama will get to celebrate from the White House. In terms of updates, we collected news and snippets from NY Times and other publications about who the potential Trump cabinet could include in 2017. Honestly, the actual composition of the Cabinet is unlikely to have much impact on Thai equities, but MCorp Review has followed the US elections for so long it makes sense to go…

In this review, we highlight 5 Thai stocks that could potentially do well in the Donald December 2016, the last Christmas Obama will get to celebrate from the White House. In terms of updates, we collected news and snippets from NY Times and other publications about who the potential Trump cabinet could include in 2017. Honestly, the actual composition of the Cabinet is unlikely to have much impact on Thai equities, but MCorp Review has followed the US elections for so long it makes sense to go…

United States

Spectrum Brands Holdings, Inc. is a global and diversified consumer products company and a supplier of consumer batteries, residential locksets, residential builders' hardware, faucets, shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn and garden and home pest control products, and personal insect repellents.

Central Garden & Pet Company supplies consumer lawn and garden and pet supply products.  The Company's products are sold under brand names such as Pennington Seed, Zodiac, Four Paws, Island, and Grant's.  Central also offers value-added services, including inventory management, advertising and promotional programs, in-store service, and sales program development.

WD-40 Company manufactures and markets multi-purpose lubricant products and heavy-duty hand cleaners.  The Company's WD-40 acts as a lubricant, rust preventative, penetrant, cleaner, and moisture displacer.  WD-40's 3-IN-ONE Oil is a drip oil lubricant that allows precise application. The Company also manufactures Lava heavy-duty hand cleaner and other household cleaning products.

Oil-Dri Corporation of America develops, manufactures, and markets sorbent products.  The Company's products, consisting primarily of cat litter, are used in the consumer, fluids purification, agricultural, industrial and automotive markets.  They are sold through the grocery products industry, mass merchandisers, warehouse clubs, and pet specialty retail outlets.

Edgewell Personal Care Co., manufactures and markets a diversified range of personal care  products in the wet shave, skin care, feminine care and infant care categories.  The Companies products include shaving systems and disposable razors, feminine care products, sun care products, infant feeding, gloves and moist wipes.

Herbalife Ltd. is a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products. The Company distributes and sells its products through a network of independent distributors, using the direct selling channel.

USANA Health Sciences, Inc. develops, manufactures, and markets nutritionals, personal care, and weight management products.  The Company's products are sold directly to preferred customers and distributors throughout the United States, Canada, Australia, New Zealand, the United Kingdom, and Hong Kong.

Nu Skin Enterprises, Inc. is a global direct selling company.  The Company distributes premium quality personal care products and nutritional supplements. Nu Skin markets its products in the Americas, Europe, and the Asia Pacific region.  The Company provides marketing and distribution of technology-based products through Big Planet, Inc.

Inter Parfums, Inc. manufactures, markets, and distributes a wide array of fragrances and fragrance related products. The Company's European-based operations produce and distribute prestige fragrance products primarily under license with brand owners. It's U.S.-based operations primarily produce and sell fragrance and personal care products under several specialty retail brands.

Nature's Sunshine Products, Inc. manufactures and distributes nutritional and personal care products.  The Company's products include herbal products, vitamins, homeopathics, oils and lotions, aloe vera gel, herbal shampoo, toothpaste, and skin cleanser.  Nature's Sunshine markets its products in the United States and internationally.

Jyothy Laboratories Limited develops and manufactures household products.

Lion Corporation manufactures a variety of household products such as toothpaste and detergents. The Company also produces pharmaceuticals, chemical products, and seasonings.  Lion sells its products primarily in Asia.

Nafine Chemical Industry Group Co., Ltd. manufactures and sells a variety of chemical products.  The Company's products include laundry detergents, Glauber's salt, alkali sulfides, and fertilizers.

Duc Giang Chemicals And Detergent Powder Joint Stock Company primarily produces and sells detergents powder and liquids, and chemical raw materials and commodity chemicals in Vietnam. Its products include mono ammonium phosphate, axetone, Duc Giang detergent powder, soffy fabric softener, and yellow phosphorus. It also engages in manufacturing and trading other chemical products, such as H3PO4, pharmaceutical, purity chemicals, and engineering chemicals. The company is based in Hanoi, Vietnam.

PIGEON CORPORATION manufactures and sells baby care goods.  The Company also produces maternity and elder care products.

C&S Paper Company Limited researches, develops, manufactures and sells consumer tissue. The Company's main products include tissue rolls, paper handkerchiefs, boxed tissues and soft pumping paper.

Shanghai Feilo Acoustics Co Ltd primarily engages in the manufacture and distribution of lighting equipment. The Company also produces musical equipment and provides acoustics technology consulting service.

Shanghai Feilo Acoustics Co., (600651 CH)

Vinda International Holdings Limited manufactures tissue paper products in China.

Lonkey Industrial Co., Ltd., Guangzhou manufactures and markets detergents, soaps, and other cleaning products for household use.  The Company also manufactures sulphonic acid, glycerine, and other chemical materials for industrial use.

PZ Cussons plc is a holding company.  Through its subsidiaries, the Company manufactures soaps, detergents, toiletries, pharmaceuticals, refrigerators, and air conditioners.  PZ Cussons also sells and merchandises its products in the United Kingdom, Greece, Africa, Australia, Indonesia, and Thailand.

Energizer Holdings, Inc. manufactures dry cell batteries and flashlights. The Company offers a full line of products, including alkaline, carbon zinc, miniature, and rechargeable batteries, as well as lighting products. Energizer also manufactures and markets a range of razor and shave related products on a global basis.

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Energizer Holdings (ENR US)

Short Ideas on Our Workbench: Earnings Quality

Our "Workbench" focuses exclusively on potential earnings quality shorts. We continue to work on these names. Today we highlight ten names of...

Eric Fernandez, CFA

Earnings Quality Short Candidates: ZoomInfo, Gogo, Elanco Animal Hlth, Sonos, Energizer

Earnings Quality shorts lead to idiosyncratic alpha. Today, we show our model rankings and highlight ZoomInfo, Gogo, Elanco Animal Hlth, Sonos,...

Eric Fernandez, CFA

Sector Capsule: Sun Care in Singapore

Sun care grew by 5% in current value terms to reach SGD27 million in 2017. Health concerns and the desire for fair skin drives growth. The average...

Euromonitor International Ltd.

How a 3-2 Merger Got Done in The Present US Antitrust Environment

On March 29, Energizer Holdings and Spectrum Brands announced that the Federal Trade Commission allowed expiration of the waiting period under the...

CTFN

5 Stock Picks for Santa Trump

In this review, we highlight 5 Thai stocks that could potentially do well in the Donald December 2016, the last Christmas Obama will get to...

Athaporn Arayasantiparb, CFA

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