In today’s briefing:
- SPX 4,150 Sell Used to Short
- Short Ideas on Our Workbench: Earnings Quality
- Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers
- Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report
- A Comparison of Aave and Compound
- Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers
- Block: The Highly Uncertain Pivot Of The Business
SPX 4,150 Sell Used to Short
- SPX 4,150 turn target met. Our game plan focused on longs established near SPX 3,940 with an ideal sell zone at 4,150 on a brief spike above 4,100.
- We established shorts at that SPX 4,150 (NDX, RTY, CAC, NKY, HSI). Ladder shorts on strength and use dips to reduce.
- Mid December cycle peak may need some top building work into January where we range before a more prominent down leg.
Short Ideas on Our Workbench: Earnings Quality
- 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)
Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers
- This is our first report on engineering major, Emerson Electric.
- The company had a strong finish to the fiscal year 2022, with sales increasing by 9% surpassing Wall Street expectations.
- We initiate coverage on the stock of Emerson Electric with a ‘Hold’ rating.
Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report
- Emerson Electric is a well-known engineering company catering to clients in the industrial, commercial, and consumer markets.
- It continues to see growth potential in the life sciences sector thanks to continued investment in creating new drugs, vaccines, and medications.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
A Comparison of Aave and Compound
- Aave and Compound are two of DeFi’s stalwarts: the two largest lending and borrowing protocols on Ethereum, each with a TVL over ten times larger than the third largest protocol.
- Both protocols have functioned nearly flawlessly this year while a growing number of centralized entities have been failing in often spectacular fashion.
- Aave has accumulated just $2.17mn of bad debt (most of which was generated in a recent, likely unprofitable, exploit covered here) relative to its $3.2bn TVL, while Compound has just $65,000 to its $1.5bn TVL.
Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers
- This is our first report on global HVAC major, Carrier Global Corporation.
- On the heels of the continued traction on pricing, Carrier delivered quite high organic sales growth in the quarter, and importantly, it continues delivering double-digit aftermarket organic growth.
- Among other major updates, the company completed the acquisition of the global light commercial and residential HVAC business of Toshiba.
Block: The Highly Uncertain Pivot Of The Business
- Block share price continued to underperform on a risk-adjusted basis, even it delivered double digit returns.
- Topline growth is slowing down as macroeconomic environment is no longer supportive and competition intensifies.
- Block’s business model seems ill-positioned to deliver, according to the company.
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