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

<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. This week: Moderna, Sonos, Knowles, Juniper Tech</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. This week: Moderna, Sonos, Knowles, Juniper Tech


Reminder: Earnings Quality Short Candidates: Moderna, Sonos, Knowles, Juniper Tech

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

Juniper Networks / Equity Capital Markets

<ul><li>This is our first report on networking solutions player, Juniper Networks.</li><li>The company’s stock has undergone a massive correction over the past months though the demand for its offerings is not too bad.</li><li>We initiate coverage on the stock of Juniper Networks with a ‘Hold’ rating.</li></ul>

This is our first report on networking solutions player, Juniper Networks.The company’s stock has undergone a massive correction over the past months though the demand for its offerings is not too bad.We initiate coverage on the stock of Juniper Networks with a ‘Hold’ rating.

Juniper Networks Inc.: Initiation of Coverage – Financial Forecasts

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Plover Bay Technologies / Equity Bottom-Up

<ul>
<li>Plover Bay appears cheaply valued by Mr. Market in light of the highly promising growth prospect of the SD-WAN space;</li>
<li>We find it worthwhile to dive deeper into the business and look for any value play (or value trap) from a long-term investing perspective.</li>
</ul>


Plover Bay appears cheaply valued by Mr. Market in light of the highly promising growth prospect of the SD-WAN space;
We find it worthwhile to dive deeper into the business and look for any value play (or value trap) from a long-term investing perspective.


Plover Bay: A Value Play Or A Value Trap?

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Thematic (Sector/Industry)

<blockquote><p><em> </em><em>‘The ‘Peak Smartphone’ theme justified an underweight stance back in Q4 across the most heavily exposed Asian supply chain stocks, with DDR4 DRAM prices down about 20% from its January peak and NAND flash down a third. Many bulls put premature faith in AI and AVs as incremental demand drivers, certainly valid medium term, but not on a scale to offset smartphone weakness this year while for high-end chip makers the end of the crypto mining frenzy is starting to impact. TSMC said this week that sales will rise by only a ‘high single-digit’ percentage in USD terms, down from a previous (reduced) projection of 10%.</em>’</p></blockquote><div class="content-remarks"><p>Weekly Insight, July 20th 2018</p></div>

 ‘The ‘Peak Smartphone’ theme justified an underweight stance back in Q4 across the most heavily exposed Asian supply chain stocks, with DDR4 DRAM prices down about 20% from its January peak and NAND flash down a third. Many bulls put premature faith in AI and AVs as incremental demand drivers, certainly valid medium term, but not on a scale to offset smartphone weakness this year while for high-end chip makers the end of the crypto mining frenzy is starting to impact. TSMC said this week that sales will rise by only a ‘high single-digit’ percentage in USD terms, down from a previous (reduced) projection of 10%.’Weekly Insight, July 20th 2018

Bearish Tech Stance Still Performing, as 5G Rollout Looms

United States

Juniper Networks, Inc. provides Internet infrastructure solutions for Internet service providers and other telecommunications service providers.  The Company offers network infrastructure solutions that includes IP routing, Ethernet switching, security and application acceleration solutions.

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Juniper Networks (JNPR 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

Reminder: Earnings Quality Short Candidates: Moderna, Sonos, Knowles, Juniper Tech

Earnings Quality shorts lead to idiosyncratic alpha. Today, we show our model rankings and highlight Moderna, Sonos, Knowles, Juniper Tech

Eric Fernandez, CFA

Juniper Networks Inc.: Initiation of Coverage – Financial Forecasts

This is our first report on networking solutions player, Juniper Networks. The company’s stock has undergone a massive correction over the past...

Baptista Research

Plover Bay: A Value Play Or A Value Trap?

Plover Bay appears cheaply valued at the backdrop of the highly promising SD-WAN space, and we find it worthwhile to dive deeper into the business...

Steven Chen

Bearish Tech Stance Still Performing, as 5G Rollout Looms

‘The ‘Peak Smartphone’ theme justified an underweight stance back in Q4 across the most heavily exposed Asian supply chain stocks, with DDR4 DRAM...

Sean Maher

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