Daily Brief United States: Tesla Motors, USD, OpenAI, Lyondellbasell Indu Cl A, VAALCO Energy, Vulcan Materials Co, Lands’ End Inc, Qurate Retail , Relmada Therapeutics , Express and more

• Tesla Q1 must be tracking even worse than I expected based on the uptick in Elon Musk’s erratic behavior—his tell when bad news spirals out of control.
• Wacko conspiracies, Putin propaganda, National security threat! At least he has his self-flattering alter ego Adrian Dittmann to boost his spirits. 
• Musk’s companies continue to rack up safety violations, government investigations, and lawsuits, while he loses his massive pay package and tries to dodge the SEC investigation into his Twitter acquisition.

• The Federal Reserve was expected to announce tapering of quantitative tightening (QT) in March and implement it in April, but recent minutes suggest a more relaxed approach with no urgency to start the process soon.
• SOFR rates have trended lower in January, easing concerns over upward pressure, and there is plenty of liquidity in the marketplace, with significant RRP and reserve balances.
• Forecasting for the Fed’s balance sheet evolution suggests a less volatile TGA balance and a shift in the relationship between t-bill issuance and RRP balances, leading to a more stable scenario for reserves in the near term.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• OpenAI, founded in 2015 as a nonprofit research lab, has transitioned into a for-profit entity with ambitious goals of creating artificial general intelligence to benefit humanity.
• The company’s CEO, Sam Altman, is focused on solving the problem of super intelligence and has plans to set up his own semiconductor manufacturing pipeline and extend human lifespan.
• OpenAI’s business model now involves catering to enterprise customers to generate revenue, and they face challenges in balancing their grand mission with the need for significant investment.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Upon evaluation of LyondellBasell’s Q4 and full-year 2023 results, a finely balanced investment thesis can be derived, considering the company’s strategic initiatives, performance, and the broader economic environment.
• LyondellBasell safely navigated a challenging year, as illustrated in its outcome of earning $8.65 per share and a robust EBITDA of $5.2 billion.
• The company’s cash generation was commendable, marked at $4.9 billion from operations, validating its efficient cash conversion ratio of 98%.

• VAALCO is in discussions with Svenska Petroleum Exploration regarding a possible corporate transaction to acquire Svenska, whose primary asset is a 27.39% interest in Block CI-40, offshore Cote d’Ivoire.
• Current working interest production is approximately 4,500 boe/d net to Svenska.
• In 2022, Svenska generated after tax cashflow (before changes in working capital) of ~US$115 mm.

• Vulcan Materials is America’s largest producer of construction aggregates, providing the foundation for buildings, roads, and infrastructure.
• The company owns over 400 quarries located within 60% of the US population, producing aggregates used in asphalt and concrete.
• The industry structure involves owning quarries and crushing rocks down to create materials used in various construction projects, with a market size of around $35 billion.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• We are initiating coverage of Lands’ End, Inc., a leading solutions-based retailer of casual apparel, swimwear, outerwear, accessories, footwear and home products under the Lands’ End label, and school uniforms and workwear under the Lands’ End Outfitters brand, with a Buy rating and $12 price target, or 8.1X our FY24 (January) Adjusted EBITDA projection.
• Under new CEO Andrew McLean, Lands’ End has shifted to a more returns driven business model, with a focus on offering key customer solutions, reducing inventory and discounting levels, shifting lower margin products to the licensing model, and expanding into key digital marketplaces, resulting in higher margins and cash flow.
• With Lands’ End projected to shift into an EPS driven mode in FY24 and beyond, we believe the risk/reward in LE has materially improved, and we are initiating coverage of LE with a Buy rating and $12 price target.

Key points

• Qurate Retail’s capital structure is being optimized through buying back bonds to reduce leverage
• The equity is viewed as a low-cost call option due to the company’s 35% annual growth in OIBDA
• Despite industry concerns, QRTEA is positioned as a market leader in a growing sector, making it an attractive investment option.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points

• RLMD is a biotech company with a high-stakes binary outcome in 2024 for their antidepressant, REL-1017
• Despite previous phase 3 trial failures, the drug has a validated mechanism of action and promising phase 2 data, leading to a $1.1B valuation
• The stock is undervalued and presents a compelling investment opportunity with significant upside potential, especially through underpriced options for exposure to the outcome in mid-2024

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We are reiterating our Buy rating, price target and projections for Express after visiting stores in Connecticut and Long Island.
• With the stores receiving early Spring shipments, the focus is on the final clearance of older goods and setting up for the new Spring Season.
• The new Spring season for women is setting up for lighter colors, continued high levels of versatility, and further expansion of key categories such as denim and Body Contour and women’s suiting, while for men the focus is on textured and patterned tops, denim and seasonal suiting and dress shirts, with the relaunch of performance long sleeve shirts.