Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

Honeywell International / Equity Capital Markets

<ul><li>Despite a difficult backdrop that included an accelerated inflationary environment, ongoing supply chain constraints, and persistent Covid-19 variants, Honeywell had a strong fourth quarter and ended 2021 on a positive note.</li><li>In the fourth quarter, the company generated $2.6 billion in free cash flow, up 4% from the fourth quarter of 2020.</li><li>In addition, Honeywell completed the previously announced business combination of Honeywell quantum solutions and Cambridge Quantum to form Quantinuum.</li></ul>

Despite a difficult backdrop that included an accelerated inflationary environment, ongoing supply chain constraints, and persistent Covid-19 variants, Honeywell had a strong fourth quarter and ended 2021 on a positive note.In the fourth quarter, the company generated $2.6 billion in free cash flow, up 4% from the fourth quarter of 2020.In addition, Honeywell completed the previously announced business combination of Honeywell quantum solutions and Cambridge Quantum to form Quantinuum.

Honeywell International: Is The Conglomerate Premium Here To Stay? (02/2022)

<ul><li>Industrial behemoth, Honeywell had a decent quarter despite facing its a fair share of cost challenges like most peers.</li><li>Rising raw material prices and supply chain issues have been raising the cost of doing business and also creating revenue challenges for the company which is why the management lowered its sales guidance.</li><li>Its overall revenues grew by 9% for the quarter with the organic growth being around 8% which is fairly decent.</li></ul>

Industrial behemoth, Honeywell had a decent quarter despite facing its a fair share of cost challenges like most peers.Rising raw material prices and supply chain issues have been raising the cost of doing business and also creating revenue challenges for the company which is why the management lowered its sales guidance.Its overall revenues grew by 9% for the quarter with the organic growth being around 8% which is fairly decent.

Honeywell International Inc. - Investment Thesis

Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

<ul type="disc"><li>
Garrett Motion (GTX) is reducing its debt obligations and could be signaling the business is on pace with the guidance provided on the second quarter earnings report. GTX has reached an agreement with Honeywell International (HON), the sole holder of GTX’s Series B Preferred.</li></ul> <ul type="disc"><li>The Series B Preferred was structured to pay HON $800 million in eight equal annual payments. However, there were put and call options depending on GTX achieving $600 million adjusted EBITDA in trailing twelve months for two consecutive quarters.</li></ul> <ul type="disc"><li>The prepayment GTX is making helps reduce the leverage of its balance sheet while improving the capital structure. We believe GTX is on pace to achieve the guidance the Company issued with its second quarter earnings call.</li></ul> <ul type="disc"><li>GTX has forecast generating between $300 million and $400 million of free cash flow in 2021. GTX ended the June quarter with $401 million of cash and should be able to retain significant level liquidity entering 2022.</li></ul>


Garrett Motion (GTX) is reducing its debt obligations and could be signaling the business is on pace with the guidance provided on the second quarter earnings report. GTX has reached an agreement with Honeywell International (HON), the sole holder of GTX’s Series B Preferred. The Series B Preferred was structured to pay HON $800 million in eight equal annual payments. However, there were put and call options depending on GTX achieving $600 million adjusted EBITDA in trailing twelve months for two consecutive quarters. The prepayment GTX is making helps reduce the leverage of its balance sheet while improving the capital structure. We believe GTX is on pace to achieve the guidance the Company issued with its second quarter earnings call. GTX has forecast generating between $300 million and $400 million of free cash flow in 2021. GTX ended the June quarter with $401 million of cash and should be able to retain significant level liquidity entering 2022.

<ul><li>Honeywell International delivered another outstanding quarter, with an organic sales growth of 15% and is nearing our target price.</li><li>The company’s top-line performance was led by double-digit growth in the Safety and Productivity Solutions, Honeywell Building Technologies and Advanced Materials, and Performance Materials and Technologies segments.</li><li>We believe Honeywell International is well-positioned for a decent 2021 ahead and maintain our 'Hold' rating on the stock with a revised target price.</li></ul>

Honeywell International delivered another outstanding quarter, with an organic sales growth of 15% and is nearing our target price.The company’s top-line performance was led by double-digit growth in the Safety and Productivity Solutions, Honeywell Building Technologies and Advanced Materials, and Performance Materials and Technologies segments.We believe Honeywell International is well-positioned for a decent 2021 ahead and maintain our 'Hold' rating on the stock with a revised target price.

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Macroeconomics

<ul>
<li>This year's narrative from US treasuries suggests a short-lived inflation/overheating scare in Q1, which coincided with Winter Storm Uri and the Texas power crisis, along with an initial phase of tapering talk from regional Fed presidents which subsequently faded; since the March peak, 10yr yields are down -45bps or a whopping -26%, representing the view that inflationary pressures have been entirely transitory</li>
<li>The picture from 5yr TIPS breakevens and the 5yr5yr has been more closely attuned to commodities:  In the past 6 months, 5yr TIPS breakevens and 5yr5yr have been 74% and 70% correlated with copper prices vs. the 10yr yield's 46%, though correlations with oil have been low; breakevens peaked with copper in May and bottomed in June-July</li>
<li>While 10yr yields continued to grind lower in July, our text mining is picking up a new surge in reports of supply constraints, which have been strongly correlated with breakevens and reflect corporate commentary in the current earnings season</li>
<li>The inflation narrative from treasuries appears to be asynchronous with the Q2 earnings season narrative from cyclical corporates, who are uniformly reporting worsening raw materials inflation expected in Q3 and lingering supply constraints</li>
<li>Nonetheless, our text mining acknowledges that talk of tightening financial conditions last spiked in March and has not resurfaced since, and expectations of a massive US infrastructure package have faded</li>
</ul><div class="content-highlight">TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </div>


This year's narrative from US treasuries suggests a short-lived inflation/overheating scare in Q1, which coincided with Winter Storm Uri and the Texas power crisis, along with an initial phase of tapering talk from regional Fed presidents which subsequently faded; since the March peak, 10yr yields are down -45bps or a whopping -26%, representing the view that inflationary pressures have been entirely transitory
The picture from 5yr TIPS breakevens and the 5yr5yr has been more closely attuned to commodities:  In the past 6 months, 5yr TIPS breakevens and 5yr5yr have been 74% and 70% correlated with copper prices vs. the 10yr yield's 46%, though correlations with oil have been low; breakevens peaked with copper in May and bottomed in June-July
While 10yr yields continued to grind lower in July, our text mining is picking up a new surge in reports of supply constraints, which have been strongly correlated with breakevens and reflect corporate commentary in the current earnings season
The inflation narrative from treasuries appears to be asynchronous with the Q2 earnings season narrative from cyclical corporates, who are uniformly reporting worsening raw materials inflation expected in Q3 and lingering supply constraints
Nonetheless, our text mining acknowledges that talk of tightening financial conditions last spiked in March and has not resurfaced since, and expectations of a massive US infrastructure package have faded
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot:  Asynchronous Inflation Narratives

United States

Honeywell International Inc. is a worldwide diversified technology and manufacturing company providing aerospace products and services, control, sensing and security technologies, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy efficient products and solutions.

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Honeywell International (HON US)

Honeywell International: Is The Conglomerate Premium Here To Stay? (02/2022)

Despite a difficult backdrop that included an accelerated inflationary environment, ongoing supply chain constraints, and persistent Covid-19...

Baptista Research

Honeywell International Inc. - Investment Thesis

Industrial behemoth, Honeywell had a decent quarter despite facing its a fair share of cost challenges like most peers. Rising raw material prices...

Baptista Research

GTX: Turbocharged Deleverage

GTX reached an agreement with HON to repay $213 million of its Series B Pfd to reduce its debt balance. The prepayment suggests GTX should manage...

BWS Financial Inc

Honeywell International Inc. - Investment Thesis

Honeywell International delivered another outstanding quarter, with an organic sales growth of 15% and is nearing our target price. The company’s...

Baptista Research

TMI Snapshot: Asynchronous Inflation Narratives

While the bond market continues to dismiss inflationary pressures, our text mining picked up a recent spike in mentions of supply constraints as...

Elan Gore

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