United States

• Like them or despise them. But one thing you can’t do is ignore them. The Super Sevens have become a force to reckon with.
• Super Sevens appear homogenous but exhibit heterogeneity and diversity. They have growth stock like features while at the same time provide value stock like defensiveness.
• Super Sevens aggregate market cap is a staggering USD 12.14 trillion. They comprise 27% of S&P 500 and 55% of the Nasdaq 100 index collectively.

• Micron Technology, Inc. exceeded analyst expectations in terms of revenue as well as earnings.
• Although the expectation for 2024 remains relatively consistent, there has been an adjustment in the perspective on DRAM demand growth for 2023.
• In summary, Micron’s management emphasizes a positive trajectory for pricing and financial performance in 2024, attributing it to oversubscription in cutting-edge technologies.

• Nutanix, Inc. exceeded Wall Street’s revenue and earnings expectations, surpassing anticipated results despite a persistent uncertain macro backdrop.
• Exceeding guided metrics, Nutanix achieved significant quarterly revenue of $511 million, marking an annualized run rate surpassing $2 billion for the first time and an impressive 30% year-over-year growth in ARR to $1.7 billion.
• Nutanix announced crucial enhancements to the Cloud platform, fortifying its capabilities against ransomware attacks on unstructured data.

Key points (machine generated)

• Arcosa is a high-quality equity investment benefiting from secular trends and government spending, with underappreciated secondary businesses experiencing rapid growth.
• The IRA tax credits are expected to act as a significant catalyst for Arcosa, pushing its numbers higher than anticipated.
• Despite its strong balance sheet, excellent management, and successful capital allocation history, Arcosa has zero hedge fund ownership, making it an attractive opportunity.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• The company, referred to as “pumped up,” is seen as a patriotic SPAC, appealing to retail investors who support its mission.
• However, the memo claims that the company’s growth figures are exaggerated and may even be fabricated, questioning the reliability of the stock.
• According to researchers, the stock has a high likelihood of being worthless in the long term, with a projected downside of 65%. Nevertheless, they acknowledge the potential for a short squeeze due to the limited number of shares available for trading.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Fidelity National Information Services, Inc. delivered a disappointing set of results as they were unable to meet Wall Street’s revenue and earnings expectations.
• Their success is attributed to a 4% organic revenue surge, primarily driven by a remarkable 7% growth in recurring revenue within the Banking and Capital Markets segments.
• The company maintains a strong free cash flow trajectory, achieving an impressive 94% conversion year-to-date and poised to surpass the 2023 target of over 80%.

• Peloton Interactive, Inc. delivered a mixed set of results in its most recent results, with revenues above Wall Street expectations but below-par earnings.
• Peloton’s management anticipates a noteworthy upturn in Connected Fitness’s gross margin for the upcoming quarter.
• This positive shift is attributed to the expected leverage of fixed costs resulting from increased unit sales in Connected Fitness.

• Ball Corporation delivered a mixed result in the recent quarter, with revenues below market expectations but surpassed the analyst consensus regarding earnings.
• In the third quarter, they improved operational efficiencies and successful measures to counter inflationary costs.
• Notably, they navigated through a $14 million operating earnings headwind from the Russian sale and $43 million higher interest expense.

• Adobe Inc. delivered an all-around beat in the fourth quarter.
• The success can be attributed to pioneering innovations in Creative Cloud and Document businesses, positioning Creative Cloud as the preferred platform for content creation globally.
• Creative Cloud had a stellar quarter, generating a significant $3 billion in revenue.

• IAC had a mixed quarter with on-par revenues and below-par earnings given the impact of the recent market downturn.
• Changes implemented by the company have impacted its position, with an active real estate market proving beneficial for business demand.
• We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case.

Key points (machine generated)

• FLEX is undergoing a strategic shift towards higher-margin markets, which is expected to improve its operating margins and free cash flow.
• The potential spin-off of NEXTracker gives FLEX an opportunity to repurchase shares and enhance shareholder value.
• FLEX’s outstanding shares are expected to further increase shareholder value.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Despite supply cuts by OPEC members the EIA expects supply to outpace demand for most of 2024 and 2025.
• The agency forecasts the average spot price of WTI and Brent to decline in 2024 and 2025.
• Concerns of tepid global demand and inventory build-up grow as short positions in the crude oil options market jump.

Key points (machine generated)

• Queen City Investments (QUCT) is an illiquid OTC-traded affiliate of Farmers & Merchants of Long Beach (FMBL), a regional bank.
• QUCT has a strong balance sheet with $30 million in cash/treasuries and no debt.
• In 2022, QUCT generated approximately $4.4 million in free cash flow, indicating its financial stability.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The crypto industry’s big dream has become a reality.
• The US Securities and Exchange Commission (SEC) gave the green light to 11 Bitcoin spot ETFs after the market closed yesterday.
• Notably, this includes approval for BlackRock’s iShares Bitcoin Trust and the conversion of the Grayscale Bitcoin Trust into an ETF.

• Ten fund management companies are preparing to launch spot Exchange-Traded Funds backed by virtual assets in Hong Kong, according to an executive of crypto exchange operator HashKey Group.
• Up to eight of the fund companies are at an “advanced stage” for the launch, Livio Weng, HashKey’s chief operating officer, told Caixin in an interview.
• He didn’t provide any more details.

• Amer Sports (AS US) plans to raise more than US$1bn in its US IPO. Proceeds will be used to pay down loans to Anta Sports Products (2020 HK) led consortium.
• Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
• In this note, we talk about the positive aspects of the deal.

• TLNE is an independent power producer that has emerged from bankruptcy as a public company with the stock not reflecting the intrinsic value of the assets the Company owns
• The reduced leverage profile creates a valuation appeal. However, it is the catalyst from what TLNE could achieve at its Susquehanna nuclear plant that could enhance shareholder value
• TLNE has been private for more than six years and is now trading on the OTC Markets making it likely that many investors have yet to hear about the Company

• XPER is gaining momentum within the car and TV, setting up the potential for the second half of the year outperforming expectations.
• The additional customer wins are poised to put XPER on pace to grow adjusted EBITDA over 2023 levels. Additionally, these wins could be large enough to generate broader interest.
• During CES, XPER announced new design win at Argos, a United Kingdom based brand, and disclosed Konka, a Chinese TV maker, was the previously unnamed third TVOS partner

• Haptics continued to remain relevant at CES this year. The technology has evolved from smartphones and gamepads to include automobiles and different gaming accessories.
• At CES, Mercedes Benz announced its infotainment would include haptics within the seats to further enhance the experience within the cabin.
• Haptics within gaming has evolved from gamepads. The technology is part of the gaming experience through accessories for sitting, hearing, and watching. We could see the different uses at CES

• Pro-Dex specializes in the design, development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and maxocranial facial markets. 
• Pro-dex has patented adaptive torque-limiting software and proprietary sealing solutions which appeals to their customers, primarily medical device distributors
• They also manufacture and sell rotary air motors to a wide range of industries.

• US Soybean futures have tumbled 4% from their close in 2023 due to favourable weather in Brazil as well as fading demand outlook in US.
• Rainfall in Brazil has arrived in droves and remains strong this week but forecasts point to inconsistent rain next week.
• CONAB and USDA reports this week should be watched for potential downward revisions in Brazil’s production, following Safras e Mercado’s lead.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
• In Amer Sports IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on ball & racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.

• JPM generated USD 38.9B in profits for the first 9 months of 2023, or about 18% of the industry total.
• Since start of 2023, JPM has outperformed S&P by 450 bps and Invesco KBW Bank ETF by a staggering 32.47%.
• Tight financial conditions, inflation, elevated rates, & lacklustre M&A activity, will hammer Q4 bank earnings. But JPM will buck the trend.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
• In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.  
• The bull case rests on the rapid growth and gross margin improvement under the consortium’s ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. 

• Following last week’s pullback, a consistent theme we are seeing is that many broad market indexes and Sector ETFs are holding above (and bouncing at) major base supports.
• As long as these base supports continue to hold, it tells us this is likely just a normal pullback within the overall bullish trend.
• Important supports that we need to see hold in order to remain bullish include 4600 on the S&P 500 and 14,400 on the Nasdaq Composite.

• At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
• We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
• The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

• Hollysys Automation Technologies (HOLI US) has announced that an EGM is scheduled for February 8th to vote on the merger agreement with Ascendent Capital Partners. 
• The Offer price remains at US$26.50/ADS. The shareholder approval required is simple majority. Regulatory approvals include NDRC, MoC and SAFE. Maybe a national security review.
• And the Dazheng consortium? Apparently insufficient information as to its financing sources and consortium structure ruled it out. Separately, the SGM to spill the board has now been called off. 

• Everyone is buzzing with anticipation, predicting a highly favorable year for crypto.
• The general sentiment in the market suggests that 2024 will be a memorable year, drawing parallels to the positive environments witnessed in 2017 and 2021.
• The crypto landscape was overshadowed by the dramatic collapse of FTX in November 2022, making 2022 end on a rather bleak note. 

• We all know about China’s importance in global trade as it is the single most important importer of many key commodities and raw materials.
• This great chart by S&P Global highlights this once again.
• Meanwhile, this importance could at least top out over the next couple of years – as the demographic problem really hits the country.

• Aspira Women’s Health hosted an R&D Day and discussed updates on its non-invasive diagnostic platforms for ovarian cancer and endometriosis.
• CEO Nicole Sandford led the discussion, and was joined by Chief Scientific Officer Dr. Jody Berry, PhD, and one of Aspira’s medical advisors and research partners, Dr. Kevin Elias, MD.
• Aspira also discussed the domestic market potential for both ovarian cancer and endometriosis products, which it estimates is more than $1.5 billion.

• Hollysys Automation Technologies (HOLI US) shareholders vote on Ascendent’s US$26.50 offer on 8 February. The special meeting will not be held as the 30% shareholding threshold is no longer satisfied.
• The proxy statement shows that despite Dazheng Consoritum’s competing public campaign, it has withdrawn its court injunction and has struggled to provide proof of financing.
• The proxy statement suggests that the special committee ran a fair process. While shareholders should approve Ascendent’s offer, the 0.2% gross spread indicates an unfavourable risk/reward profile.

• TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, has announced a preliminary non-binding proposal from Laurent Junique, founder/CEO, and largest shareholder (98.3% of the voting power).
• Junique is offering US$6.60/ADS, a 39% premium to the 30-day VWAP, but a 63% discount to its IPO price a little over two years ago. 
• One issue dogging TDCX is the key man risk given Junique’s almost absolute control. Now he’s trying to take the company private on the cheap.

• The last twelve months were, market-wise, interesting. Multiple things have happened that contributed to changes in my thinking-process.
• Refining thoughts and the mental mechanism I utilize to approach portfolio management should lead to success, or at least that is my hypothesis.
• Continuous learning allows for building more solid premises. Given time, compound interest sharpens them to the point where chances of error are minimum.

• The first week of trading in 2024 was packed with deals and updates for SPACs.
• Three new deals were announced, including a SPAC taking an amusement park-focused tech firm, a helium exploration company, and an insurance brokerage firm public.
• Also, a film studio completes an acquisition ahead of its merger, and a sponsor sells its stake in a SPAC. Read on to find out the latest about all things SPACs. 

• Zetachain is building a bridge into a  smart contract platform in a bid to create a platform for omnichain smart contracts.
• Omnichain smart contracts enable applications to live on multiple chains but still be connected and share liquidity.
• There is opportunity for Zetachain to seize across DeFi, NFTs, and Ordinals. Whether this will happen comes down to strategy execution and ecosystem building.

• EigenLayer emerges as a protocol reshaping the staking paradigm. Going beyond Ethereum’s security, EigenLayer greatly extends the utility of staked ETH.
• UniswapX and other intent based apps will break DEXs out of their growth plateau. 
• Scalability advancements through rollapps and UX improvements from next-gen wallets will make DeFi more viable for end users. 

• On January 4th, Microsoft announced a design change for PCs whereby a new physical key will be added to PC keyboards; the Microsoft Copilot key.
• Microsoft Copilot will become a must-have for companies in our view. Initial Copilot capabilities can dramatically improve worker productivity and this should help drive AI PC upgrades for the industry.
• CES 2024 Jan 9th – 12th will showcase AI PC models sporting Intel’s Core Ultra processors and Microsoft’s new Copilot key. We also update our Dell vs. Taiwan PCs trade.

• The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
• Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
• Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.

• A10 Networks (ATEN) not warning about missing consensus estimates is a positive, but not enough for a victory lap after a volatile 2023
• The fourth quarter was of particular importance since the Company had reported third quarter revenue materially below estimates
• Service providers represented 50 percent of ATEN’s third quarter revenue compared to 67 percent in prior years. Throughout 2023 this customer base was not consistent with their purchasing

• New product introductions have historically resulted in revenue growth at Ubiquiti (UI) and fiscal second quarter 2024 (December 2023) had several of them
• Ubiquiti has introduced a series of new products. The biggest change at Ubiquiti is the availability of paid for tech support
• There are several products that have stood out this past quarter. Including, a new Dream Machine meant for the home, called UniFi Express. The device immediately sold out

• As the saying goes, “sector rotation is the lifeblood of a bull market.” That appears to be exactly what is going on as we kick off 2024.
• Leadership areas that have significantly outperformed since the October 2023 lows are starting to pull back rather hard — and on above average volume (XLK, SMH, IGV, ARKK, IPO, BITQ)
• Other Sectors are picking up the slack, namely Health Care (XLV), Staples (XLP), Utilities (XLU), Energy (XLE), Financials (XLF), and Real Estate (XLRE). Shift exposure toward value and defensives

• Iberdrola SA (IBE SM)‘s U.S. subsidiary Avangrid (AGR US) terminated its $8.3 billion deal for PNM Resources (PNM US) as it could not New Mexico regulatory approval by 31 December 2023.
• Iberdrola lost its patience but freed up €11.5 billion from that deal, together with €5.5 billion from assets sold to the Mexican Government. That’s a lot for inorganic growth. 
• PNM, at 9.7x EV/Fwd EBITDA, is trading in line with comparables, thus on a multiples basis there should be limited downside to the share price.

• Allkem Ltd (AKE AU) saw its last day of trading on 21 December. There was large volume at the close as one major index provider gave it the boot. 
• Another delayed their treatment at the last minute, and eliminated a cross-flow.
• But there is still a lot of net buy flow tomorrow (3 Jan) and the next day in the US. Perhaps more than I expected. 

• Happy new year guys – another chapter has arrived and it’s time to make the best out of it.
• First of all, let’s look at the past, the now and the costly mistakes we made during the past year.
• Soft commodities dominated the commodity front during 2023.

• Oil prices surge as tensions in the Red Sea escalate with new and strong provocations from Iran.
• Oil oversupply concerns and weak demand persist while ongoing geopolitical tensions support oil prices.
• WTI current implied volatilities still well below elevated levels seen in October 2023.

• SDRL ended 2023 with a contract that is poised to set the course for day rates moving higher in 2024. Prior to Christmas, SDRL announced two new contracts with PBR
• We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024
• We are not making changes to our earnings model and believe there is now greater potential for our estimates having to be revised higher