A guide for those looking to invest in Renewable Energy. (My Renewable portfolio with DD)
I've dedicated a large percentage of my portfolio to renewable energy companies and have obtained some knowledge on the sector and specific companies in doing so. I've noticed a trend of people inquiring about these companies so I hope that this post can provide some information. I'll provide a brief bullish thesis and some information about my investments in renewables. These are in order of weight in my portfolio. Tesla (TSLA) (511% gain) Most of us know what Tesla is about. They are the global leader in electric vehicles and will eventually come out with autonomous driving but I'll focus on their energy business. They sell solar panels with the lowest cost/watt of U.S. manufacturers, but this isn't the exciting part of their energy business. They are a leader in battery storage, which is an integral part of a renewable future. Energy storage systems store energy produced from solar panels and when the sun isn't shining, energy is consumed from the batteries instead. Also their autobidder software, which is out in trial in Massachusetts and Australia I believe, eventually will turn energy into a market place for Tesla customers. Read more about autobidder here: https://www.tesla.com/support/autobidder My bull case for Tesla (specifically the energy side of the business) is that they will continue to innovate with their low cost panels, and be a leader in battery storage, plus leverage their autobidder software to bring added value to residential customers. Vestas Wind Systems (VWDRY) (91.4% gain) https://www.vestas.com/~/media/vestas/investoinvestor%20pdf/financial%20reports/2020/q2/2020%20q2_pres.pdf Vestas is the leading manufacturer and installer of wind turbines. They have a global footprint and are expected to grow in line with the growth of the wind industry as a whole. A major growth engine in their business is going to be their expanding service and maintenance business, which has very high margins. My bull case for Vestas is that they are a unique pure play wind turbine company with years of experience in the growing industry. First Solar (FSLR). (24% gain) First Solar is an American based solar module manufacturing and solar project operating company. Most of their business comes from corporate and grid level solar projects. Notably, they have Next Era Energy, Microsoft and Apple as customers. The real bullish case behind First Solar is around their differentiated Cadmium Telluride solar modules. Compared to the standard Crystalline silicon technology, First Solar's modules last longer and produce energy at higher efficiencies in hotter climates. My bull case for First Solar is around their differentiated technology, strong balance sheet, and position as an American company, which typically warrants a higher P/E ratio than foreign companies. Jinko Solar (JKS) (22% gain) https://ir.jinkosolar.com/static-files/5a6d9266-d288-4ece-a0ea-f8e49ff60119 Jinko Solar is a leader is a Chinese based solar panel manufacturer. They produce low cost modules and also manage solar projects. Their business model is similar to First Solar's, however they trade at a cheaper valuation, due to being a Chinese company. You can read more about their technology on their investor relations page, but my main bull case for this company is around their position in South East Asia as a leading manufacturer, as this is undoubtably the biggest potential market for solar energy. Canadian Solar (CSIQ) (27.5% gain) http://investors.canadiansolar.com/events Canadian Solar is also a leader in the module manufacturing & project development business. They have a similar business model with Jinko and First Solar. Canadian Solar owns equity stakes in several of their solar projects, which gives them a source of recurring revenue. They also have a large footprint in American grid/commercial systems and are a market leader in North America. They trade at an absurdly low 5 P/E ratio despite significant growth expectations in the coming years. My bull case for CSIQ is around their ability to dominate the current market and potential to capitalize off of further market growth and consolidation towards the biggest solar companies. Also their current valuation is very intriguing. SolarEdge (SEDG) (126% gain) https://investors.solaredge.com/ SolarEdge is the global leader in the Inverter space, with a 60% U.S. market share. For those who don't know, Inverter's turn the D.C. electrical current from the sun into an A.C. current, which is used by households. The inverter business is also much higher margin than the module (panel) business, due to there being fewer players in the industry. They are also expanding into energy storage and electric vehicle manufacturing. My bull case around SolarEdge is around their market dominance in the Solar Inverter business, which will grow exponentially in the coming years plus future expansion in storage & EVs. They have a very strong management team as well. TPI composites (TPIC). (70.55% gain) https://ir.tpicomposites.com/download/companies/tpicomposites/Supplements/TPI%20Earnings%20Deck%202Q20.pdf TPI composites manufacturers wind blades and sells them to wind turbine companies. They have long term contracts with the top 5 non Chinese wind turbine companies (Vestas, GE, Siemens, Nordex & Enercon.) 63% of total wind blade manufacturing is outsourced to companies like TPI and they are the market leader in this space with about 20% market share globally. The business currently has low margins, but they target a 12% EBITDA margin for the future, and they trade at a measly 0.74 P/S ratio currently. They are also expanding into EV composite manufacturing and have a contract with a certain EV company that I can't mention on this subreddit apparently (DM if you want more info) to manufacture vehicle parts for them. Enphase Energy (ENPH) (46% gain) https://investor.enphase.com/static-files/81902e59-7d61-4693-aa86-8d54e63975b9 Enphase is the sole producer of Microinverters, which are smaller inverters that go on individual panels and provide a safer, more efficient, but more expensive solution than the standard string inverters. Microinverters are used in smaller solar systems, mostly residential. They also have an energy storage business that is just starting to scale. Enphase and SolarEdge are competitors in both of these spaces, and are expected to be major players in the future. Like SolarEdge, Enphases' inverter business is high margin and expects rapid future growth, as the residential solar market grows. My bullish case around Enphase is around their Microinverter technology, potential for expansion into storage and unique Ensamble home energy management system (read about Ensamble on the Investor relations page). Brookfield Renewables (BEPC). (12% gain) https://bep.brookfield.com/~/media/Files/B/Brookfield-BEP-IR-V2/events-and-presentations/bep-investor-brochure-q1-2020-vf.pdf Brookfield Renewables owns and operates renewable energy systems and projects. They sell energy produced from such systems to utility companies and have a recurring revenue stream. They also pay a 3.73% dividend yield. Their investments are split between Hydroelectric, solar and wind. My bullish thesis around BEPC is the consistent cash flow positive revenue stream and relative safety in the business model. Also, they provide me with exposure to hydroelectric energy. Let me know if you have any comments, hold, or plan to buy any of these companies! NOTE: I'm 19 years old and have a 5-10 year+ timeline for holding/buying into all of these companies PS: These are not all of my holdings, just the renewable energy portion of my portfolio. (which including Tesla makes up more than half, exluding Tesla about 1/4)
Earning Plays for Dummies: $UA is Under Water (Basic TA & Obvious Catalysts)
TL;DR: $UA is taking on a lot of debt because of historically low retail sales causing near bankruptcy cash flow. Largest athletic apparel retailer or not, when the business isn't making money it's losing it. Taking on LARGE amount of debt, to raise cash, to keep the doors open is not the nail in the coffin, but it is damn near close. ER this Friday 7/31 could be a historic miss and future projections, margins, growth and competition will cause a sell off. Super BEAR: 7/31 $8.50-$9 Puts Conservative BEAR: 8/14 $7.50-$8 Puts
To Bearish Autists,
Alright retards, this DD is not done by a professional CFA, CPA or single employee LLC day trading firm. I'm a college grad, with a BS in Chemistry, and i'm 100% self taught on trading for the last 5 years. It's a hobby that pays for other hobbies, not a job and definitely not a thing i do without being informed. That being said heres my hypothesis.
$UA Has Struggled
This is no secret as many of us have brand name recognition of $UA and many of us own it. We know its not Nike and it's a step above Champions and other retail store brands, but it is simply the cost efficient/value brand for people that want quality and but aren't willing to pay Nike prices or get chafed nipples from the $WMT brand. It's become the largest athletic apparel brand in the US, with growth potential in China, signing one of the NBAs biggest star Steph Curry. Heres the problem, the company is facing increased competition and Covid may of burned down the house when they closed retailers. $UA helped prove there is a middle ground between $NKE and $WMT in quality and price, but they failed to build beyond that, and now $AMZN and other other brands have saturated the market. When i need workout clothes, i look online, a small part of $UA business model. I look for value, and although i'm not buying Nike i'm not buying $UA either. There are tons of other brands that provide the same quality cheaper, and i don't care about brand at they gym, just comfort. $UA failed to build a signature style, they got Steph Curry, but i never hear a 24 year old sneaker head dying over their new pair of shoes. They failed to push online channels of distribution, "have you been to their website?", and some compare their pandemic model to $LULU but they are completely different brands by quality, price and consumer segment. The companies lack of success could be bad marketing, they have the largest athletic apparel market share, but they can't turn a decent YOY earnings report. So it comes down to poor financial management and high levels of competition driving lower margins. In 2016 $UA was nearly $50/share and its lost billions YOY. Now it's facing an unpredictable pandemic, and record low revenue on a house of debt.
Important Factors for ER
The pandemic closed retailers and one of the largest retailers of $UA is Kohl's ($KSS). Because nearly 80% of the companies worth is in their merchandise revenue, this is a major hit. The other 20% is a licensee program that they get from selling the right to 3rd party manufacturers to make and sell the brand. They get revenue from licenses, but i'm not sure about royalties. This means that wholesale manufacturers could sell to other online retailers at a lower competitive rate than $UA if they are crafty enough, and their is supposedly low oversight on this. You can buy $UA on $AMZN but that doesn't mean you will be buying directly from $UA, and this could be true in open retail stores now. from 2017 to Q1 2020 online sales on $UA website have only grown 4%. $UA has had a tough time to have a direct to consumer channel over the past two quarters. The pandemic has lead to huge losses in retail sales, and the brands themselves. This leads us to our next subject.
DEBT DEBT & More DEBT
$UA Market Cap: $4.837 Billion Liabilities: $3.387 Billion (Q1 2020) Assets: $1.550 Billion (Q1 2020) Cash is KING and $UA is in desperate need of it with a recent convertible note offering that raised over $400 million dollars. I'm not a finance expert, but here's a snippet that explains the liquidity crunch.
As of March 31, Under Armour had just $959 million in cash. Now, it recently raised another $460 million or so in a convertible note, so its total liquidity is about $1.41 billion. But if it burns through $400 million over the next two quarters, the balance would fall to $600 million or so. At that point, the company would likely have to raise permanent equity and/or a mixture of equity and debt. Right now the company’s tangible book value per share (TBVPS) is just $1.02 billion, or $2.26 per share, according to data compiled by Seeking Alpha.>So, here is the problem: By the end of Q3, with another $800 million in FCF loses, the tangible book value will fall to $224 million or so, and the TBVPS will be just 49 cents per share. If that’s the case, there is no way that UA stock would still be trading at $9.28 per share, where it was earlier this week.-InvestorsPlace (Mark Hake)
Simply put they need to be frugal and cut cost to prevent bankruptcy. this is shown further in the last two weeks when $UA announced they will sell their running/social app, MyFitnessPal. They also sought to break a sponsorship deal with UCLA to conserve cash (nearly $20mil/year). The price tag for MyFitnessPal in 2015 was $425million, i don’t think $UA will have a easy time getting anyone to buy it, much less gain on the investment. Also the sponsorship deal isn’t broken, yet, and if they do it may come with a huge monetary penalty....exactly what they want to avoid. This weeks earnings report will announce a huge amount of new liabilities along with massive reductions in revenue expectations. This is the most important part of the ER this week.
Good news this week for $UA is that they won a branding lawsuit in China this week...against a competitor that you nor I have and will never hear of. China is a very interesting component in the American economic and political world. They are a huge market, but politically they are neither our ally nor our foe. India will give us the same problem in 10-15 years. With increased tensions between DC and Beijing the risk of tariffs and american companies suffering are on the rise, especially retail and manufacturing. However, China presents a huge growth opportunity to whichever lucky retailers and brands can bribe the right officials and not get caught. $UA is one of those lucky companies, but they are competing in a tough sector. Nike, Adidas, New Balance, a zillion new brands that nobody has heard of and of course knock offs. I lived in Shanghai for a year in college, and theirs “Fake mall” everywhere selling the new Jorban’s and Rolex’s and of course $UA and the Chinese government will never stop it because they don’t practice fair trade practices, at least correctly. 30% of revenue for $UA is international business including several asian and european countries and Australia. China could eventually be more of a cash cow than the US for $UA. The international opportunity is real, but $UA may never see the light at the end of the tunnel due to this dark period of financial ruins and a competitive marketplace.
The ER for $UA is going to be devastating as it has been in quarters past. you’d be insane to think any differently as the company has only seen worse and worse circumstances with little navigational correction. The only thing that could prevent a total 15-25% downside is some sort of good news. What possible good news could they have, i personally can’t think of any if they are being honest and don’t give BS projections like $TSLA. IF you think of any, or i’m missing any honest upside to this ER please comment.
EPS: -0.4$ (Big miss) Revenue: $536mil (Near miss) Revenue is key, but the Cash flow and added liabilities will be the dagger.
A LITTLE TA & CHART PRICE ACTION
6 month Daily candle The price of $UA has been hovering around $6.40 & $10.60 for nearly 5 months. $UA has found a solid support at $8.25 and has an upward channel trend, and this has been a very slow recovery relative to other retail brands. RSI is inching toward overbought. MACD is unsure of the last two months progression and is looking to swing one way or the other after the ER, my bet is down. i expect that $UA will continue on trend nearing $10.60, if the stock price does not fall below the three day trend line(Lilac) then i will wait until thursday afternoon to buy the Puts for the morning ER Call. IF it falls below the lilac line before thursday afternoon i expect my downward channel to be correct and i purchase puts immediately. Still pondering my strategy for entry and optimizing the return, between there two option ideas. Super BEAR: 7/31 $9-$9.50 Conservative BEAR: 8/14 $7.50-$8 Puts $UA has a great value product. It has not done a good job financially due to massive oversight in fiscal management, not creating a better direct to consumer interface, and not being competitive enough in a market with stagnant margins and retail competition that can undercut and or be more popular than the other with celebrities and fashion. $UA is not $LULU, and its drowning in debt with no end in sight. Their model has failed, and their leadership has failed. I suspect retail traders who know $UA by name recognition are propping this up, not understanding their in trouble. As soon as institutional money abandons so will the pocket investors, not to poke fun at you retards. But hey, i may just be a fucking retard. P.S. - IF $UA goes under, or is bought out, which athletic apparel company gains the most? My guess is $NKE (long) or $AMZN. Edit: 7/27 today the SEC notified $UA that they will enforce action against the company for accounting practices seen as fraudulent in 2016 and 2017. It keeps getting worse. Edit: 7/30 today will most likely be the best opportunity to get cheap 10-20% OTM puts for Friday’s earning call. The stock is shrugged off SEC notices to top executives and a gloomy prediction for earnings. But the market isn’t rational right now, if it ever is, and the stock is looking to squeeze out of its channel past $10.60, and people will take profit before the crash after ER. Edit: 7/30 AH. 2500 shares pushed the stock up nearly 4%...still expecting big downward projection come morning. Bought 8/14 $8.50 puts this AM. Edit: 7/30 AH. 10,000 volume pushed the stock up 10% when it moves 1-2% on 5-7 million volume days. I smell stock manipulation by an insider who want to distract from the ER. Result: AH high of $12.80 and down to $10.25 pre market, I didn’t expect price action to play such a large role in this ER. Final: watching for 8/14 $8 put, won’t hold till expire most likely. AH/PM on 7/31 was wild and ruined the lotto for 7/31. I’m convinced it was manipulated, why else would a stock increase 25% AH before earnings and drop 27% thereafter from the AH high...in the first hour of trading...they wanted the stock to have buffer and show a new price action target/action...should of dropped below $9 but $9.49 from $12.80 high at least validates my opinion to some degree. $9.31 new support for monday, may blow past support channel at $8.90 and then drop to $8.20 soon after. OR there could be a retracement to the idiotic $12.81. All in all Lost 1% of my account on a yolo, truly retarded. Daily Candles 1min candles - Note AH pump...
*** Updated Research SWK provides an amazing opportunity to take advantage of the bull market in precious metals at an undemanding valuation with excellent operational momentum. Environment: Precious metals have had a phenomenal ride lately; both due to fear arising from COVID-19, and coordinated monetary policy stimulating economies at an unprecedented level. The graphic below shows the recent parabolic move in GLD (overshadowed by SLV) and reflecting upon the 08 crisis and the numerous QE policies that followed, this upward trajectory may continue further. GLD vs DJIA (2006-Present) With rises in commodity prices, the logical next step is to get some operating leverage and purchase the gold miners. No doubt, this second level thinking has been handsomely rewarded albeit encountering the sovereign and FX risks with many of the global miners domiciled in South Africa and Russia: DRDGold, Polyus and Polymetal (April 20 - Present) Since many of these miners are in the process of expanding production, cash flow won't be realised for several years and operating margins may not improve as much as managements' forecast (i.e. ASX: DAC). Further, since the market has drawn the logical connection between commodity prices and miners, these companies have run a very long way in the last few months. Company Overview: This is where SWK provides us with a cheaper and lower risk opportunity to gain access to this thematic. SWK provides drilling services to large miners of metals (i.e. nickel, silver, gold etc.) in US, Canada, Europe and Australia. Specifically, they use specialised drills to extract samples, which they analyse to then assess to the viability of a site. Increasing demand for mining exploration will, intuitively, increase drilling utilisation and drilling rates. SWK also entirely owns Orexplore, which provides mobile sample analysis to determine the characteristics of extracted cores. This improves the efficiency of examining the quality of a site by removing cost (transportation and storage), timing (it can be conducted on-site), and operational risk (damage in transit) all of which further benefit the mining co. and embed SWK into the exploration process. Competitive Advantage: SWK’s competitive advantage is being able to a world class cost effective and efficient underground drilling. For example, their development of DeepEX allows for longer hole from underground that are cheaper than many shorter surface holes. Their recent contract extension from BHP at Olympic Dam despite competitors (i.e. MSV and BLY) rigs being used onsite is testament to their value proposition. SWK has also invested heavily (~$25mn) into their Orexplore technology in an attempt to move up the value chain away from high-capital intensive drilling into a higher margin business. This technology removes significant operating expenses (employees and equipment), reduces lead time (can be built and shipped globally within 2 weeks), is very simple to use (technical training is not required), and most importantly, is currently being purchased for free and is the main catalyst in this investment (more on this later). Furthermore, SWK has made a concerted effort to increasingly diversify their product offering to different miners (with exposure to various commodities), and geographically. Their global and diversified footprint has provided them with a world-wide footprint, with costs to build their global business already incurred (most recently in Pogo – Alaska), further encouraging a buyout (more on this later). FY19 Financial Report H1 2020 Financial Report Catalyst and Valuation: Exit Options: The primary catalyst for a revaluation in SWK is a huge macroeconomic tailwind providing momentum that might facilitate a sale of the drilling business to a strategic buyer. Without doing too much crystal ball gazing, I view the exit opportunities as follows: 5% - Amazing sale of drilling business = >100%+ returns; 65% - Solid sale of drilling business = 50-100% returns; 20% - No sale and general re-rate = 25-50% returns; 10% - Languishing business and capital destruction = -25%-0% returns. Given management’s firm guidance towards the sale (https://www.openbriefing.com/OB/Swick-Mining-Services-Ltd/2020/2/25/Swick-HY20-Results-Conference-Call/3716.aspx at ~08:00) I will focus on our base case that entails: (i) selling or closing surface drilling business as it’s the lowest margin / weakest vertical; (ii) selling underground drilling business; and (iii) refocus towards Orexplore either through taking the business private, IPOing a new entity or rebranding SWK. Given shareholders have been frustrated with SWKs delay in progressing the business towards a sale and having difficulty commercialising Orexplore it has been important to wait for a noticeable inflexion point in the business to attempt to “time” entry as much as possible. Let’s see how the inflexion point is here beyond the macroeconomic environment above. Miners around the world are aggressively looking to expand their operations due to increasing commodity prices and SWK's services become front of mind. Recent news is ticking all the boxes and adding huge momentum in the stock to catalyse a re-rating.
Reinstatement of dividend payment and share buyback program showing prudential capital management and a positive outlook relating to future financial position. This is a double-edged sword as management raised capital at 23c and bought back shares from 12.5c through to 17.5. By buying now, we have avoided this dilution although acknowledge this was not the best form of capital management. On the other hand, it does suggest management are flush with cash and happy to redistribute to existing shareholders before a possible sale; that is, we get paid to wait:
Contracts are being extended, new contracts being won, and guidance on FY21 figures. Management are highlighting clear intention to demerge and growth is providing EBITDA growth for a better sale price:
The Orexplore website (https://orexplore.com/the-orexplore-review/) has received increased attention with far more activity within their “Review Blog” section leading towards commercialisation. Posts are being made almost weekly increasing its awareness:
MSV as the strategic buyer for the drilling business has shown intent to inorganically expand their operations. Deepcore had an EV of ~$44m (excl. additional earnout payments), revenues of ~$50m p.a., and an EBITDA of ~$12m with approximately half the rig number of SWK. This purchase confirms the “fair value” multiple for a drilling business is ~4x EV/EBITDA, even for a significantly weaker private business due to utilisation, profitability, scale and contractual certainty.
https://preview.redd.it/jumpn58y2dh51.png?width=602&format=png&auto=webp&s=ad650e7b63b341e06ddd0a8bff88121249a03925 Valuation: Ok, so let’s turn our attention to the forward guidance and conservative estimates for SWK. SWK against mostly all metrics is very cheap. Management have forecast EBITDA to be ~$25mn in FY20. Although I think we can conservatively estimate this to grow significantly throughout FY21. The improvements to EBITDA will come from the following: (i) commercialisation of Orexplore = $0.5-1mn, (ii) ~$3-4mn in reaching steady state (20%) margin from the Pogo contract as costs normalise and backdated earnings flow through; (iii) ~$2mn in operating expense reduction during COVID-19; (iv) the $120m increase in the order book between 30 July and 14 August implies $120/5 = $24m p.a. at a slight discount to target margin of ~15% gives another $3.5mn EBITDA. Putting this all together FY21 EBITDA might be ~$35mn. In addition to the purchase of Deepcore, we can use the current valuation ratios of MSV and CAPD as a guide. Currently competitors trade between 3.5x (CAPD) and 4.5x (MSV) EV/EBITDA multiples. If we use 4x as a reasonable multiple on current EBITDA, this would imply an enterprise value of ~$100mn (or a 30% upside) whilst paying nothing for Orexplore. Upon conservative forward FY21 EBITDA figures, the enterprise value could easily reach ~$150 (or a 100% upside) again paying almost nothing (only $1mn / $35mn in EBITDA) for Orexplore. By way of reference, SWK with similar metrics in 2011/12 was trading at a ~100% premium (i.e. ~40c (market cap $90-110mn) whereas now it is ~$20 (market cap $50mn). A decade ago, it also did not have the same existing clientele and large-scale contract wins (see 3a above with a forward order book of $363mn (relative to current revenues of ~$150mn). The cherry on top of this investment is Orexplore, which we buy for free. None of the revenue and earnings multiples above include any real impact from Orexplore. On 14th August the commercial viability of Orexplore was been partially validated with their first contract win. Although its value is only $700,000 over 6 months this call option like payoff comes entirely for free. Further, the true profit margins of SWK has been hidden due to the losses incurred from Orexplore, which has to date cost $25mn in R&D (or equal to almost 10yrs of earnings), the amortisation of associated software development, and continued global expansion (Portugal and Europe before North America) each requiring initial costs prior to achieving target margins. Even better we get a first glimpse at how attractive Orexplore might be. Combining discussion in the latest conference call (https://www.openbriefing.com/OB/Swick-Mining-Services-Ltd/2020/2/25/Swick-HY20-Results-Conference-Call/3716.aspx 04:30 - 06:30) with the recent contract we can conclude the following: (i) 3 machines at Sandfire will generate ~$3.6mn in revenue covering approx. 50% of cash flow with nearly no operating expenses; (ii) $700,000 for 6months scanning 1500m of core per month implies ~$75/m (against an estimated $100m from guidance). As per guidance, if we assume Orexplore machines can scan ~$4m/hr ($300hr) and total costs may include one unskilled technician and minimal overheads ~$50mn this provides a gross margin of ~75% (or almost 4x undergrounding drilling). Due to the profitability of Orexplore, 15-20 operational machines on yearly contracts would provide greater earnings than SWK’s entire business. Hopefully the publicity of Orexplore at Sandfire can attract some attention, and in turn some additional contracts. Risks: No investment is without its risks, and for SWK they fall into: (i) capital mismanagement; and (ii) poor communication / delays. Firstly, the recent capital raise at ~23c followed by aggressive buybacks at ~12.5-14c-17c seems unwise. Although buying now avoids this dilution, it is unclear why excess capital was required if dividends and buybacks were announced shortly thereafter. Secondly, the share price has historically languished due to a lack of publicity and detail on the transformational Orexplore. It is likely that management were unwilling to oversell the Orexplore narrative before genuine contracts were won and the technology was established. Now that these are in place, hopefully the corporate restructure can take place and the upcoming strategic review can provide a clearer picture for the near term.
https://preview.redd.it/41gp3gv0bdg51.png?width=578&format=png&auto=webp&s=8efaa3dbd334c1adce493869153462c862392e3b I post these editorials in the morning because before bed and early are when I do my best slow thinking. They are actually hard for me to post because they make me feel a little vulnerable, though I'm not sure why - or why still. I used to just delete them about an hour after I posted them. I get up before dawn so I doubt any of you caught it. Then I started leaving them and saying I would delete them later. Either they had a time sensitive stock "idea" or just something I changed my mind on later. Then people asked me to stop doing that. I try to be more selective about what I post and make sure it has real value to learns like I do. These posts get the least Up-votes so I know they are not read as much because those are generally good "I've read this" checks to know whats popular. They are always at the bottom of the sorted lists and I'm lucky to get one comment. But the comments I do get are usually profound ones like "I can't believe no one explained it that way to me.. I finally get it". That was me. I never got things the way other people did. Since I was a kid. I had to find people who taught me things in a way that I understood. Now I think I have advantages for the way my brain learns a little differently, whether I shaped it or not. But it doesn't make it any easier to know that when most people read your stuff they just don't care about half of it. But now I know that's them not me. I finally realized like me, some people don't learn like I do, so this part of my content does not interest them and that's just fine with me. I really started this sub to help my fellow slow thinkers. The people who can read something like this and extrapolate some hidden value that I might be trying to get across. That's who I am anyway. And as long as every once in a while, I get a note that says I helped someone see something new for the first time, then I'll keep trying different tactics to get through to different minds. If you don't like them, just skip anything labeled "Opinion". https://preview.redd.it/8fdwfa3dxcg51.png?width=512&format=png&auto=webp&s=80209f3941f8d6bcb5aa5be244402c8eaa88dbc8 Yesterday I posted the content from our Guest Mentor, John Chao. For our Q&A I let him do his own editing so he chose what words he bolded. The only one I added bold to out of the whole thing was this sentence that he came up with in the moment. "To be a consistently profitable trader, we need to be disciplined like a professional athlete." One of my favorite novels of recent years was a book called The Art of Racing In the Rain. It has since become a movie, and one I quite like. It's about a dog who's owner is a race car driver, told through the dogs perspective. The owner meets a girl and a lot happens, but without spoiling it, there's some health crisis that occurs, which is probably what made me connect to it so much. The dog's owner, a racer named Denny Swift, is not a big guy. He wasn't in the book either. But he was sharp. Sharp physically and mentally. He was alert and wired and ready to go. But he was also cool and calm and the longer he raced the more cool and calm he appeared on the outside while on the inside he was corralled team of horses waiting to be let out to pasture whenever he needed them. All the terrible struggles and victories he faced seemed minor because he was always cool - always ready. I had one bad group/mentor that I regret. It actually was not a bad service, but it was just pay-to-win setup. I had no control over what I bought. I did place my orders, but they picked the stocks and prices. I never took a trade for a while because it made me feel so sick. They posted winning members trades on a Facebook, sort of like I have been posting our member's great trades recently. I was sure it was a scam. I thought, they are only posting the good ones. It bet that's like 5%. I spent all my time finding new ways to get angry at other people, when I was just angry at myself for wasting all this money that I was already hurting for from a horrible loss streak. I actually have been angry about that until this morning when I was talking to a new member about possibly posting a good trade she had, but she wanted to "wait for a better one". (Good for you!) In the shower this morning, my best slow thinking time of day, I asked myself, am I just like that guy who ran that service? I don't charge money but the effect is still the same. Maybe I don't want to be famous or rich from this mentoring but I do want a big following of people committed to independence. So am I selling out in a way? I then emotionally re-processed what I went through with that paid service. I stayed about a month, even though I paid for a year because it was 50% off, and I was not making good choices at the time. Every day I got a tip and every day I didn't take it because I felt like it was resigning to the fact that I would not make it as a trader. I went to the Facebook every day and kept reading those winning trade recaps. I was furious. I wanted my money back but I knew I made the decision and it was one I wanted to live with. After a couple weeks I took one trade. I made back all the money I paid for the course and deleted my account. This was less than 5 years ago That was the last time I spent money on anything that I did not know exactly what it was and how it would help me be independent. I did not resign myself again after that day though I came close many times again. I took desperate measures to get back above PDT and it hurt but I did it. I can feel my heart rate increasing as I type this and had to get up to walk around, that's how traumatic it was. I had already taken some really quality education before this, for over a year. I already knew cycles, waves, divergences. I knew how to race. I just hadn't done it enough and thought I should be Denny Swift, the racer from the book, without having his ten thousand laps. To me the stock market is a race track. The scans I give out, or watchlists anyone else does, are race cars. They are great tools in the right hands, but like a new racer who's tires were not changed by a team the driver trusts, they are just as likely to crash it as make a clean lap. They read the books and watched the videos. But they haven't raced enough. They should have gone 5 miles and hour, but they went 60. They could gone for one lap, but they went for two. They don't have the best gear and don't even know what the best gear is. Is there even a best set of gear for everyone or do they need to study more books to find out what their best gear is? There's tons of race cars and they all work just fine. If you can't drive one yet, switching to another one won't help. https://preview.redd.it/69y6meu09dg51.png?width=512&format=png&auto=webp&s=fecc7d6278d3d29858b617e74655a833bc183b05 I think I'm finally over that bad program I paid for at one of my lowest moment in trading. But, boy, did it take a while to figure that one out. If you took anything from this post, or are new to trying to find the hidden message then let me help you this time. Notice all the links I put about a Nobel-prize-winning-book that helps you determine if you are a slow or fast thinker and how not figuring that out can hold you back for life. Notice how I actually figured out what my most thoughtful time of day is (in the shower) and I know what to think about during those few minutes to get more out of it. I know what foods literally cause me to make poorer choices when I trade. I mention a novel I read because I thought it might be insightful to my life and now my trading. I can't race a car, I've never watched Nascar, and I rarely drive myself anymore. I have health problems that make just getting out of bed feel like a long hard race most days. But even on my worst days, my mind is sharp. And if I'm not well enough to exercise one day, I'm probably reading about how to improve my exercise for the next day. I never miss and opportunity to improve myself and apply learning in everything I do. My mind is a corralled team of horses and I am always ready to meet a challenge with full force and commitment because I am prepared. I was born a thoughtless baby just like you. I had more disadvantages then most but I want the mind of a racer, not that helpless trader I was a few years ago, so I work at it constantly. It's contagious and addictive and I love it so much more than sitting around waiting for things to change when I know they rarely do. https://preview.redd.it/84but6qaadg51.png?width=512&format=png&auto=webp&s=50a3f318cc90e997572f8de4c57b4ef5dfce7eba skotlaroc is one of our members and someone who has made more progress than most. He can't race full speed yet but his racer's mind is developing rapidly and when he's ready I am confident he will crush it. One reason he is making such progress, and others like him, though its not always apparent when we they are the ones driving, he talks to me and other trades constantly. He happens to be in Australia and trades the ASX which puts him at a huge disadvantage because he doesn't trade the tickers I talk about, his market has totally different volatility and his market opens when mine closes. But rather than give up he learned how to drive on a wet track. Rather than be upset about the time difference he uses it to his advantage with my weird sleeping schedule. Since he is going to bed when I am waking up, he actually figured out that that my (Ryan's) slowest thinking time is before dawn and right before I turn off my screens at night so he always catches me then to get my more insightful feedback. He probably doesn't even know he did this but he knew how to get the most out of a situation by figuring it ut. He's making choices and his team of horses is growing in his mind and his car is revving up on the track. He just has to survive long enough until he can take his off the speed limit control and go full speed with a full team of horses in his engine. https://preview.redd.it/fjodtyp2bdg51.png?width=512&format=png&auto=webp&s=805442fe7e4ecea9c742f305c7e5d1e1fc5bff11 I don't want you to think I don't have fun and just work all day. I work a lot because I love it and the only thing I do more than trade right now is this community. But I get my ego handed to me by a 10 year old every day at 3:00. https://preview.redd.it/vlckly7c1dg51.png?width=578&format=png&auto=webp&s=b821d982fdb115b6da2a8632e803c3d0b6424a44 I bought the Cadillac of bubble machines to add excitement to our squirt gun fights. https://preview.redd.it/ylopkn422dg51.png?width=535&format=png&auto=webp&s=e8c65e9eb8c29c637925eb07b06f39dfa824d5a8 And even go down the slide I put in last year for her. https://preview.redd.it/9nvi0gf92dg51.png?width=633&format=png&auto=webp&s=24992c2de64986335761ee5c489e8361ef734f65 I still play first persons shooters when a good one comes out, I watched the second season of Umbrella Club twice and I probably have more THC in my blood than your teenage children. But everything I do is deliberate and thoughtful. It doesn't mean I always work hard or work it all. I just know that life is finite and mine probably more than most. I will never again waste one minute feeling sorry for myself or blaming other people for anything when I can choose to use that time to try to resolve what got me upset in the first place. I know most people who take my scans never look at the code to learn, even though I say this is its purpose. I know people buy things I just post a ticker of, which is why I rarely do. I see oh so many people talk to me about concepts and they are showing they understand them but then I click their names I still see them still posting on other reddit's asking complete strangers "what do you guys think about XYZ?" https://preview.redd.it/eeoh1n0lbdg51.png?width=512&format=png&auto=webp&s=696809c70939b6d188ed61b5644b16f21d97a87d I woke up to a new message from skotlaroc this morning before 3:00am. His market had closed so he was done for the day. I told him I was going to get some coffee and to leave me an update on his trading. He knows he is at risk of being posted about if he talks to me. just don't judge us for our typo's at that time of day. https://preview.redd.it/kvt71c8h4dg51.png?width=1335&format=png&auto=webp&s=ae03af84799529bd4e6c3a83b575ab439436d010 You notice he doesn't tell me how much money he made or lost because I don't care what he does in a day. I care what he does in a year. What I can tell you is that is the dialogue of a racer in him. Neither of us are Denny Swift's and I might have a faster lap time, but he knows how to drive and that's all that matters. He slowed down now so he can control the car better. He can always go faster later I've said this before, and it's not just hyperbole: the quality of people in this group and the promise of this community is far higher than anything else I have been involved in by a huge margin. I think we have a lot of real racers here. Just don't crash the car before you take your thousand laps. Good Luck. Buckle Up. https://preview.redd.it/d0eczm3h5dg51.png?width=300&format=png&auto=webp&s=47087cf023ff3adb8ebd31cbfbb583c86d3f8721 https://preview.redd.it/j3ojqzul5dg51.png?width=104&format=png&auto=webp&s=71c4de459ed414bd817233e86bec4efbb47bfc90
I've had discussion with a couple people on why defense is doing so poorly right now, wanted to get a broader general opinion. I'm going to leave BA and RTX out because of their large commercial exposure but leave in GD, HII and LHX since it's much smaller. I'll focus on a core of LMT/NOC/GD/LHX/HII but this can be extended to others like KTOS, LDOS, CACI etc. Here are today's closing prices for reference: LMT - $354 / NOC - $304 / GD - $145 / LHX - $168 / HII - $168 Defense stocks - what the heck is happening? Taking a look over the last month: LMT is down 15% / NOC is down 12% / GD is down 13% / LHX is down 19% / HII is down 18% And the question is why? Particularly in the case of NOC and LMT that are as close to pure plays as you can get - why are defense contractors hemorrhaging? Some of these are trading near their post-March crash lows 1 - Revenue is nearly unaffected by COVID, and backlogs keep growing Defense contracts have long award processes and are usually multi-year and booked in advance. Here are some of the ridiculous backlog sizes from the first quarter LMT - backlog of $144 billion NOC - backlog of $64 billion GD - backlog of $86 billion LHX - not sure? Didn't see it in the May earnings call - It's somewhere near $20 billion for the end of last year and the book to bill increased slightly, so somewhere around there HII - backlog of $42 billion LMT and NOC noted that COVID would have insignificant impacts to revenue and fronted payments to their suppliers in some cases to help them out. Most contractors had a positive book to bill with increased sales and increasing margins 2 - Target prices are miles away and a ton of buy ratings I'm going to pull some average target prices from WSJ LMT - average $430, upside of 21% NOC - average $389, upside of 28% GD - average of $171, upside of 18% LHX - average of $240, upside of 42% HII - average of $222, upside of 32% 3 - Defense spending is not shrinking any time soon, tensions are rising The new National Defense Authorization Act (NDAA) has been flying through approvals, and allocated $741B for spending. The current bill is allocated at $738B. This flew through the Senate Armed Services Committee with a 25-2 pass and will probably pass both Senate and House, as it seems defense spending is the one thing every one agrees on. And we are not the only nation increasing spending US and China relations have deteriorated. Australia just announced a big beef up, raising their spending goal over the next decade from $135B to $187B. Japan's been increasing their spending for years, as has SK and everyone else in the region. Big wins for companies like RTX, LMT and others involved Europe has been flat but Middle East is buffing up. India over the winter announced the purchase of several billion in US helicopters and imports will probably grow if tensions with China continue 4 - Not dependent on a China trade deal Sticking this here due to futures crashing briefly overnight after Navarro made his late night comments a couple weeks ago. If things do go south with that deal, it will not effect revenue Not to mention pluses such as a nice dividend, industry preference towards established giants due to high entry costs, etc. Hilariously enough, I found an old article from the end of 2018 that had the same feeling I do now https://www.barrons.com/articles/defense-stocks-are-lagging-and-there-are-no-good-reasons-why-51544614201 After this article was written, defense had a major major outperform year in 2019. LMT stock price grew 50% in 2019 for instance, similar to NOC So - what gives? Is defense really just not sexy? Are these companies just thrown in with industrials and traded in step with the rest of the market? Am I crazy? EDIT: full disclosure I do have calls on NOC and LMT
News Heading into Friday July 31st 2020 NOTE: PLEASE DO NOT YOLO THE VARIOUS TICKERS WITHOUT DOING RESEARCH. THE TIME STAMPS ON THE FOLLOWING ARTICLES MAY BE LATER THAN OTHERS ON THE WEB. THE CREATOR OF THIS THREAD COMPILED THE FOLLOWING IN A QUICK MANNER AND DOES NOT ATTEST TO THE VERACITY OF THE INFORMATION BELOW. YOU ARE RESPONSIBLE FOR VETTING YOUR OWN SOURCES AND DOING YOUR OWN DD.
32 Stocks Moving In Thursday's After-Hours Session
Nokia ($4.45) posts surprise second-quarter profit jump ahead of CEO change. Nokia EPS beats by €0.03 on strong margin expansion. Misses on revenue. (Breaking Overnight)
LKCO ($0.83) Announces a New Round of Financing (Odd because they priced it at $3.00 per share). (Breaking Overnight)
ASX ($5.12) ASE Technology EPS beats by $0.03 (Breaking Overnight)
TLSA ($12.25) Tiziana Announces Submission of Patent Application on Use of Foralumab, the Only Fully Human Anti-CD3 Monoclonal Antibody, to Enhance Success of CAR-T Therapy (Breaking Ovenight)
TENB Tenable Announces Pricing of Public Offering of Common Stock by Selling Stockholders (Breaking Overnight)
VSTA Vasta Platform Limited Announces Pricing of Initial Public Offering (Breaking Overnight)
Although AEF uniquely benefits from the structural tailwinds of both superannuation and ethical investing, we believe it remains misunderstood as an expensive traditional fund manager. The Opportunity Australian Ethical Funds (ASX.AEF) is a public market superannuation fund manager. The perception of the company itself vs. the industry is nicely summarised by the two figures below. Herein lies the opportunity. https://preview.redd.it/jhvvua1t5oj51.png?width=680&format=png&auto=webp&s=e511deb4411e81840ffcf8b635e1d8f7b78eeb6e AEF is a renowned Australian fund manager that fits within the ESG trend. It represents one of the only pure play superannuation investments in the Australian public market, with 67% of funds under management (FUM) coming from superannuation. The stock bounced exceptionally from a low of $2 in March, reaching a high of $9 in June, and has since retraced towards the low $4s. Previously, the business traded at $6+ following its announcement of end of year FUM and expected earnings figures. On 8th August IOOF Holdings (ASX.IFL) – 19.9% shareholder – announced it was divesting 15% of its stake in AEF. IOOF is a peer and platform provider which offers AEF products to its clients. The investment was sold at $5.24 vs. market price of $5.90. IOOF disclosed it was selling its AEF investment (at a gain) to raise much needed liquidity. The block trade was viewed negatively by the market, with AEF immediately re-rating to below $5.24 and trending downwards (towards low $4s) ever since. The current share price of $4.17 (24 August close) implies the stock is trading at ~51x FY20 earnings guidance, which is slightly above historical levels despite substantially improved performance and outlook. We suspect that the FY20 results will be aligned with guidance (as demonstrated historically) provided in the quarterly FUM update and guided earnings figures. Results have also been positive across its peers throughout mid to late August (see ‘Roadmap’). https://preview.redd.it/t4oy3ksu5oj51.png?width=478&format=png&auto=webp&s=e2a88ef0bf70fba2e85d36bc71a1df2994217dcf Company History AEF began as Australian Ethical Investments (AEI) in 1986 and was owned by 600 insider shareholders before listing. It is a superannuation fund – so revenue is derived from fees on managing invested funds. By 2005, the business managed four unit trusts and a superannuation fund: · Australian Ethical Balanced Trust (est. 1989) · Australian Ethical Equities Trust (est. 1994) · Australian Ethical Income Trust (est. 1997) · Australian Ethical Large Companies Share Trust (est. 1997) · Parent of Australian Ethical Superannuation (est. 1998) The investments of the trust and super fund are guided by ‘The Charter’ – a series of positive and negative investment screens that must be taken into account when selecting securities for inclusion. https://preview.redd.it/cye711106oj51.png?width=680&format=png&auto=webp&s=60c149549d7d752c26108c662ec319b56ebf371a In July 2005, the government enacted policy that afforded more choice to individual employees with regards to their superannuation provider (marking the beginning of a positive era for the superannuation industry). In that same year, AEF registered for a superannuation license which it was granted in 2006. Back in 2005/06 the company did not split out superannuation FUM, but FUM increased from $311m in Jun-05 to $380m in September-05 following this policy shift – suggesting there was an existing demand for ethical investment products in superannuation. From 2005 to 2011, AEF grew total FUM from $311m to $644m, despite muted FUM growth through the GFC-era. In 2012, the business began separating out its superannuation FUM-growth to improve its visibility. This era saw FUM increasing from $617m in 2012 to $4.05bn as at 30 June 2020. From 2016-19 reduction in FUM-based fees has seen suppressed revenue growth vs. FUM growth. This has resulted in several step changes in FUM-based revenue margins (revenue / FUM) as a result of lower overall fees earned on products. We view this shift as a positive in the long-run since AEF has competitively priced its funds, entrenching their competitive advantages (discussed below) and reducing the temptation that fee-conscious members switch funds. Since AEF has ratcheted the cost of their funds downwards (often ahead of their peers and industry averages), we believe fee compression improves the durability of AEFs revenue compared to peers who are yet to compress their margins. https://preview.redd.it/fcq5jog26oj51.png?width=453&format=png&auto=webp&s=d194c8778727e9adf1ebc162e6b181d8207cc292 Business Model AEF has a relatively simple business model – revenue is derived from fees on managing invested funds. The funds it manages includes retail, institutional and wholesale (non-super) funds, as well as superannuation funds. We are most interested in the superannuation business although the direct and indirect benefits associated with the funds management business are a noteworthy component to the brand and investment management infrastructure (i.e. ideation / performance fee generating / high performing ESG). Until 2012, AEF did not explicitly separate its super vs. non-super FUM. We believe this contributed to its (mis)perception as a traditional fund manager rather than a superannuation fund. Thankfully, since 2012 AEF has provided details relating to the composition of its FUM (below), and noticeably the growth in its superannuation FUM has been the driving force of the business. https://preview.redd.it/6ccbtqm36oj51.png?width=680&format=png&auto=webp&s=6fb4e11064313ca9ab7b57186b2eddc6be62b928 Competitive Advantage 1.Superannuation Exposure: Superannuation FUM is higher growth and lower risk than traditional managed funds. Superannuation funds are regulated to grow at 9.5% due to the Superannuation Guarantee (the Australian Government mandated superannuation contribution). The regulatory framework could see this increase up to 12% in the medium-term and 14% in the long-term. For the purpose of our analysis, we have assumed a constant 9.5% contribution – so any increase would be additional upside. More importantly, excluding fulfilling conditions of release (i.e. death) an individual's superannuation cannot be withdrawn until retirement. Much like the Superannuation Guarantee, withdrawals are also mandated on a schedule that increases as a percentage of FUM with age (beginning at 4% and increasing to 14%). Consequently, the minimum inflows and withdrawals are predictable (and we note the vast majority of individuals do not deviate from these minimum levels due to inertia). Because of this mandated growth, Australia has the fourth largest pension sector in absolute terms and second largest relative to GDP (below). In 2020, the total superannuation pool is ~$2.1trn and growing. It is estimated that by 2040 superannuation assets could be as much as $9trn according to the Australian Treasury. https://preview.redd.it/wenevil56oj51.png?width=680&format=png&auto=webp&s=c2210a8e26816af1ebf798d82c414c61760c5d5e Alternatively, traditional managed funds are subject to redemption risk, caused (typically) by performance and myopic investor behaviour associated with general market movements. Therefore, FUM growth for traditional managed funds must be attracted through marketing and distribution channels. This inextricably links fund inflows and outflows to performance and marketing efforts, which in turn causes a clientele that is more expensive to acquire and retain, and a more volatile pool of assets. Alternatively, traditional managed funds may access capital through secondary capital raisings and the reinvestment of distributions; both of which are a country mile from a 9.5% government mandated contribution. Logically, we wondered which (listed) asset could provide us with exposure to the exceptionally robust superannuation tailwind. We will not spend too much time detailing the industry dynamics and public market players as there is a lot of information to be found in various prospectus’ (see Raiz or OneVue prospectus). The main thing to understand is that superannuation funds can be separated into five buckets: https://preview.redd.it/jyykix976oj51.png?width=680&format=png&auto=webp&s=07e96ebc246a565546e400ef87018d3d3360cd48 After screening for diversified financials and financials businesses on the ASX there were 53 players with at least some revenue linked to superannuation. The revenue exposure desired is revenue linked to superannuation FUM (explained further in the ‘Valuation’). However, it is important to understand that gaining access to this lucrative industry is difficult for several reasons: · Private industry funds – the gems of the industry have been private superannuation funds such as CBUS, Hostplus, and ESTA. We cannot access them as public market investors. · Conglomerate financials – it is possible to gain some retail superannuation exposure within the banking majors such as CBA, WBC, ANZ and NAB. However, they represent insignificant exposure by revenue and profit and the stocks are driven by other risk and growth factors. · Fund managers – fund managers may directly manage retail superfunds or SMSF funds such as Magellan, Platinum and Perpetual. However, there is limited visibility over superannuation FUM exposure. · Superannuation adjacency businesses – superannuation exposure can also be housed within wealth / platform advisers such as like HUB24, Netwealth and OneVue. However, to varying degrees, these businesses are not purely exposed to superannuation-FUM linked revenue. · Pure play sub-scale – the final example can be found in Raiz, which is a sub-scale business that has ~$450m in FUM of which 85% is funds management. It is possible to envisage this business as an AEF in 10-15 years with larger superannuation FUM exposure. Although the superannuation exposure representing $70m in FUM currently (vs. AEF $2.72bn) is vastly inferior to AEF. For this reason, AEF is the closest to a pure play (at scale) superannuation player. Putting this together, we believe AEF is likely to continue to grow its FUM at 20% p.a. YoY. This is principally due to AEF's ability to acquire new members and retain existing members. Therefore, to monitor this continued FUM growth going forward we encourage readers to look out of the number of superannuation members added in these upcoming results and beyond. AEF has grown its member base YoY consistently in an industry which has, on average, been relatively flat in terms of member growth. In 2019 AEF was the highest growing superannuation business in Australia across the previous 5-years. https://preview.redd.it/c4t7jx596oj51.png?width=226&format=png&auto=webp&s=51e47aa607470ce6482ed30352183a6cf6043bff 1.Ethical, Social and Governance (ESG): Beyond the obvious tailwinds in superannuation, AEF is also exposed to another important trend: ESG. Needless to say, ESG investing is becoming not only popular but almost mandatory for corporate money managers. Younger demographic investors are increasingly concerned with the ethical and social impacts of corporate activity. This report by Harvard and another by State Street provide some interesting commentary on the issue. ESG ETFs have been growing at a CAGR of >30%, and State Street forecasts that the global ESG ETF market will increase from US$170bn in 2020 to US$1.3trn in 2030. Momentum for ESG ETFs has been building specifically in Australia, where AUM surged almost 300% — from A$554.1m in 2017 to A$2.2bn in 2019. Whilst the ESG-shift has been occurring since the 2010s, State Street argue that COVID-19 will only further catalyse this shift by highlighting the inherent inequalities in society and health care systems, in turn, spurring social conscience. We note the following data points as indicators of this more recent catalyst: · Perpetual’s recent acquisition of Trillium, a US-based ESG fund, shows the desire of traditional asset managers to become exposed to this space. · BlackRock has started publishing more frequently and consistently on ESG trends and continued rolling out ESG products. · Forager’s investment blog received frequent commentary from investors talking about negative screening on their gambling holdings which has never been the case in the past. The key insight is that a growing proportion of the investment community through time is becoming concerned with ESG issues and this will drive fund flow. Industry data is pointing to the fact that this is a prolonged structural shift rather than a short-term trend. 2.Performance: AEF has improved upon their exposure to structural industry trends in superannuation and ESG through excellent fund performance. AEF's performance (below) has been consistently strong across all of their strategies (we highly recommend reading page 4 of Sequoia's June 15, 2020 "Investor Day Transcript" to highlight how governance and performance are complimentary). Such strong performance not only disincentivises members from switching to competitors and assists member acquisition, but also significantly enhances earnings at the group level. For instance, FY20 guidance provided on 7 July 2020 vs. 22 June had a midpoint difference of ~$2m. Given the long track record of the managers it is expected performance will remain strong. https://preview.redd.it/p6shg5nc6oj51.png?width=680&format=png&auto=webp&s=e65acb553371c6bc7c1f70ddfdf153e9e625117a https://preview.redd.it/mtn23k7d6oj51.png?width=680&format=png&auto=webp&s=9a7ba471248070f9f05216cdf5bbcab2a1f9102b Valuation Key: · FUM = funds under management · FUA = funds under administration · MA = managed accounts · FU\ = total funds (FUM + FUA + MA)* Valuing a Superannuation Member: Our valuation technique here will be somewhat unconventional. We will attempt to value the lifetime revenue per member (LRM) for AEF and for a traditional fund and then highlight the incongruity of their relative valuations. The long-term nature of lifecycle retirement saving (and by virtue the true value of a superannuation fund) demands a long term perspective. Fortunately, the mandated nature of AEFs cash flows facilitates evaluating the lifetime value of a superannuation member. To estimate the LRM we consider the following: (i) life cycle expectations (i.e. retirement age and life expectancy); (ii) salary expectations; (iii) superannuation contribution rate; (iv) investment returns; (v) member "type;" (vi) fee structure; and (vii) a discount rate. We begin by assuming a member makes $5,000p.a. at age 20, which grows to $130,000p.a. through the middle of their working life (35-50) and then declines to $90,000p.a. at 65 (noting these are gross values not inflation adjusted). Since the average member account balance for AEF is ~$60,000 (FUM of $4.05bn ($2.72bn of which is superannuation) / 43,000 members = $60,000 as at 30 June 2019), we can roughly assume that the average age of their member is between 30-35, which places them at the profitable end of this member acquisition cycle. Further, this member regularly contribute 9.5% of their earnings to their superannuation, which compounds at a rate of 6% p.a. Moreover, the prototypical member starts working / paying superannuation into AEF at age 20, retires at age 65, and redeems according to the minimum withdrawal schedule until age 85. However, how many members live according to this prescribed lifecycle; supported by an uninterrupted working life? What about people that take time off to raise children, either returning to part-time work or full-time work? We can model these archetypes also, which assumes much lower income growth and some years of earning no income. If we assume that society is roughly split into thirds by these archetypes (i.e. 1/3 uninterrupted, 1/3 interrupted and return part time, 1/3 interrupted and return full time), then we can calculate a weighted average LRM for the average member. Compressing fees by more than half to 50bps and assuming a 7% discount rate we arrive a weighted average discounted LRM of ~$18,000. Whilst comparing this to the average member in another non-super fund is difficult for an array of reasons (i.e. average acquisition age, average income, average balance, average contribution, redemption allowance etc.), we can loosely estimate what this looks. Adopting the same framework as above, to estimate the LRM of an average managed fund member we must first define the managed fund member "archetype." First, we assume the average traditional fund member has a higher income profile (as lower income earners typically do not invest in managed funds). We tweak the income profile to peak at $180,000 between 35-50 and taper down to $120,000 by age 65. Second, we assume the acquisition age is 30 years rather than 20 to reflect that most individuals do not invest in traditional managed funds until later in life. Thirdly, we account for the non-compulsory nature of managed fund contributions. If we start with the marginal savings rate (10-year average of ~7%) as a proxy for available funds for investment and increase this to align with our ‘managed funds’ archetype who has higher income to 15%. We then assume that from this 15%, about 1/3 will be invested into a managed fun (or ~5%). Therefore, for our individual earning $180,000 during peak working years, this is an annual contribution of $7,200. Finally, we increase the discount rate to 9% since because redemptions are more likely in a traditional fund. Using these alternative assumptions, we arrive at a LRM of ~$5,000. The significant difference in LRM helps explain why a superannuation business can command a much higher multiple of FUM or earnings. Further, we believe our estimate of LRM for a traditional fund manager is quite bullish (i.e. overstated) due to the following: (i) it assumes the individual works full-time for their entire life; and (ii) it assumes the individual stays with the fund from age 30 to 65 and makes uninterrupted and stable contributions. Although dollar cost averaging is touted as an eighth wonder of the world, we are doubtful it is applied as often as it is spoken. Trading Multiples Valuation: Valuing AEF on a relative basis is difficult given the lack of peers. Against traditional fund managers (i.e. Magellan, Perpetual and Platinum), which trade between 5-20x earnings, and superannuation exposed platforms (i.e. Netwealth and Hub24), which trade between 25-40x earnings, AEF looks relatively expensive. We are acutely aware that AEF is currently (at ~$4.2) trading at 12.6% of FUM and ~51x earnings; and at its peak (~$9) was trading at 25% of FUM and 120x earnings. We believe the valuation difference is driven by the quality of the FUM managed and, therefore, the quality of the earnings growth. Given their high alignment to superannuation, NWL and HUB are the two most comparable firms to AEF. As the trailing figures show, AEF appears to be trading on par with its peers. However, an important nuance is the trailing figure for AEF is based on 2019 earnings, whilst for NWL and HUB it is based on FY20 earnings given they have already reported. As such, on a like-for-like basis AEF’s ‘trailing’ earnings multiple (based on the mid-point of management’s guidance) is actually ~51x. This means it is trading below NWL and HUB, despite the fact that the majority of those businesses’ FU* is linked to FUA rather than FUM, which has a lower monetisation rate. Not to mention, the split between superannuation and managed funds is not as clearly delineated as is the case with AEF. What is also evident is limited analyst coverage of AEF and lack of forecast guidance assisting the market to predict growth (as is the case with NWL and HUB). Relative to traditional fund managers (i.e. PPT, PTM and MFG), we note the substantial difference in FUM and business quality. AEF hosts the highest monetization rate (Rev/FUM), even whilst facing fee compression, with the highest FUM growth among its investment management peers. Furthermore, we expect EBIT margins will improve from ~30% toward its larger traditional fund managers peers due to economies of scale over time that we believe will more than offset any fee compression. AEF has also supported a very high ROE due to its sticky clientele and service-based business model. The combination of: (i) best in class monetization; (ii) high LTM and increasing membership base; (iii) improving margins; and (iv) high ROE will make for an incredible growth engine on earnings in the long term. Thus, AEF is a higher quality business with ~4x+ the LCM of a traditional fund trading at only a 2-3x premium using current ratios... https://preview.redd.it/nffeuvef6oj51.png?width=680&format=png&auto=webp&s=e0aed3fcb4464355aa965ed151d6dc2e484ff4b8 Risks We note the following investment risks with AEF:
Fee Compression – The funds management industry is subject to fee compression across both funds and superannuation funds. There has already been a lot of restructuring of AEF’s fees since 2016. The investment product(s) they advocate is also one that serves an ethical / moral dimension and can arguably be charged at a premium above market. Notwithstanding fee compression beyond that which we have considered would place downward pressure on margins.
Member Attrition – The stickiness of AEF's membership base is a hallmark of their competitive advantage although this could be reversed over time due to poor performance or corporate mismanagement. We encourage the reader to keep an eye on member growth and net inflows over time.
Product Reproduction – There is no official IP upon ESG investing and new products are increasingly being promoted to capture market share of this growing market. We believe AEF's early mover and strong brand serve to mitigate this risk.
Regulatory Risks – Changes in the superannuation regulatory environment can be material. This has long been debated within the public domain although it has been viewed as politically unfavourable to change the superannuation system without a reasonably long lead time and grandfathering provisions, which we hope would make any changes unlikely and less meaningful.
Investment Roadmap Peers’ Earnings Updates: In summary, the FY20 results of peers indicate that businesses with revenues dependent on investment funds have performed quite strongly during this period. https://preview.redd.it/np04rasg6oj51.png?width=680&format=png&auto=webp&s=0de02bee60036e9bd71068815e618c2f3711db24 Earnings Announcement: Earnings release on 26 August 2020 should provide for the first catalyst to remind the market of the AEF's fundamental performance. The key figures here will be superannuation FUM, superannuation members and FY20 earnings. AEF will also provide ongoing quarterly FUM announcements, with the following update due in early October. We may also see a mid-August FUM figure in the most recent announcement. Finally, AEF has historically provided updated FUM in back-dated results announcements. Evidence of this occurring can also be found in HUB's most recent announcement: https://preview.redd.it/jz8frxfi6oj51.png?width=680&format=png&auto=webp&s=325d7973e1eb6c98e714dea69306b1ebf8ab0cc7 Private Market Activity: Whilst we think that a private equity buyout is unlikely for AEF, further media exposure and transaction data points should help the public value these assets. There have been some recently executed and rumoured deal activity in the space through 2020. Notably, KKR – one of the largest US-based global private equity funds – bought a 55% stake in Colonial First State valued at ~$3bn from CBA. The implied valuation was ~16x EBITDA, despite the quality of business model and LTM of members being substantially weaker than AEF. There is similar PE interest in NAB’s MLC Wealth, with US funds CC Capital and FC Flowers on second round bids for the asset. NAB's MLC Wealth business caught the attention of Carlyle, BlackRock, and KKR earlier in the year although deals were not executed. The interest from KKR in Colonial is particularly notable, given Scott Bookmyer (KKR partner) who refers to Australian superannuation as the ‘the envy of the western world’. We believe AEF may benefit indirectly from private equity interest, which will confirm both the long-term value and viability of their business model.
Idol-Rapper Analysis #1 - 4th Gen Boy Groups 1: ATEEZ, Oneus, A.C.E
Hello! i thought it would be fun to start trying to do some technical analyses of kpop idol-rappers and enough other ppl seemed to enjoy the idea so here i am! Very self centered of me to think you care about my opinion but if you don't care about it you don't have to read this! It costs zero dollars to click away from here!
here is my original post outlining a lot of Hiphop terminology/concepts/analysis
here is my post where ppl submitted the rappers they wanted to see analyzed
Some Disclaimers: This post is fxckin long This post will cover both technical aspects of rapping and some more critical analyses including my own personal opinion. I will try and justify my opinion as best possible but in the end, the opinion belongs to me and only me, if you enjoy a rapper I don't, or if you don't enjoy a rapper I do, that is all ok! Additionally if you are uncomfortable seeing your faves criticized this might not be the post for you! All of our faves have flaws and room for growth and pointing them out does not diminish their talents or hard work. If you disagree with my analysis I'd love to hear your thoughts! If i get something incorrect please feel free to correct me in the comments! I am open to criticism and correction! !!!!!!I will do my best to point out both an idols strengthsandweaknesses, but I will not water down my opinion to do so. !!!!!! My preparation for this post was listening to ALL the tracks the group had available on streaming, if the rappers have their own subunit or solo work i looked at that too. I didn't watch all of their live performances, but if there was a track i was referencing and it had a live version i tried to watch that for reference. Many of these rappers are very limited in the amount of long-form work they've put out. All my analysis should be taken with a grain of salt because of this.
Today's analysis will break down:
ATEEZ's Hongjoong and Mingi
Oneus' Ravn and Leedo
ACE's Wow and Byeongkwan
ATEEZ: Hongjoong + Mingi
About ATEEZ: Their music is highly dramatic, heavy emphasis on drops and a real "world music" feel with sounds derived from Australia, the Middle East, Latin America, and the Caribbean all with strong trap beats and more recently industrial style beats as a pillar of production. Their songs are usually composed with the focus on the performance and so have longer instrumental sections. Lyrically the majority of ATEEZ songs center around reaching their dreams and one day being the best. Standard stuff for an idol group. The two rappers of the group are also known for their "tom and jerry" style delivery meaning they often trade off verses one after the other and have two radically different sounds. Hongjoong: High C/Low B tier Hongjoong is the leader of ATEEZ and has been involved in writing every song they've released and had a growing production role throughout ATEEZ's time as a group. He has a pretty high timbre and usually prefers well defined stacatto deliveries mixed with a lot of well defined melodic movement in his verses. Strengths:
Good breath control/placement which allows him to do some longer passages without getting off or losing the beat. A good example of him doing this live and acapella is right here, no clue what this performance is from or why he was doing an Eminem cover. It's not mind-blowing performance or anything but it's a good show of consistent breath placement while still being high energy.
Really excellent rhythmic sense, doesn't fall off the beat and is probably the best in this post at riding the beat on a regular basis which relates back to having really good breath control. Even if he needs to pause to breath he immediately gets back on without fumbling. I haven't seen a single performance by him where he gets off.
Consistently uses his melodic range as a feature of his rap verses and has made that his signature style and flow. It works for him, it stands out among other idol rappers, and he changes it up enough in response to each song that it doesn't become boring or repetitive for the most part. Of all the folks in this post Hongjoong is definitely the one with the strongest and most consistent style across his group's work.
Despite many ATEEZ songs relying on a similar underlying beat or instrumental motif Hongjoong really pushes himself to give something different for each song. His flows don't sound super repetitive and are changed up to suit each songs he's not perfect, there are some verses that sound very similar but overall I never found myself thinking that I'd heard that verse a million times before. He always adds little flourishes to make them distinct
Unexpected and fun transitions between straight and melodic deliveries and another, like here on Twilight or here on Mist (which is one of his best verses by far imo)
I just love his delivery on Illusion.... i don't really have anything else to say, it reminds me a lot of what I used to love about E'dawn in Pentagon songs, almost childish and singsongy not because it's basic but just because it's a lot of fun.
Hongjoong is able to get into a good groove which works well with Ateez's tropical groove based songs. He always knows how to stress the downbeat to achieve truly bouncy goodness like here in If Without You. Despite his fast delivery he's still paying good attention to where he puts emphasis rather than just delivering it all straight without any variation
I only hesitate to give Hongjoong a full B tier not for technical reasons but because I just haven't seen enough variety from him yet. If he were to start releasing solo or unit tracks in different styles, or if Ateez branched out a bit more in sound and he still sounded good I think he'd be well into B-tier. Hopefully as his production skills continue to grow we get to see more of that experimentation.
Because of his high tinny voice when he does attempt to sound higher energy he can end up sounding quite childish and very un-powerful. The Kcon Thailand is a good example of this. It's high energy but very juvenile in sound Another example would be in the live performance of Dazzling Light, he starts the verse fairly strong albeit pretty out of tune, but his yelling at the end sounds like a kid's. The recorded version doesn't have this problem so it seems to be something he falls into more during live performances than while recording. A better example of him going loud and passionate without sounding childish would be here on Desire where he throws in some growling and doesn't stay at a high pitch.
Although his play with melody and rhythm is good and provides interest, Hongjoong still struggles with a full dynamic range. He rarely goes very quiet and, as mentioned, his loudest setting sounds awkward. This means he usually finds himself stuck in a middling volume and relies entirely on changing rhythm to convey the energy flow of a song. He still does that fairly well but he could definitely work to improve his ability to move through his dynamic range more fully.
There are times when the beat he's on provides SO MUCH amazing stuff to play off of that gets underused because he chooses to play it safe. A great example of this is on Horizon which is not a bad verse by any stretch but THIS is what the beat of that song sounds like and he chose to strip it away entirely in favor a really basic trap section. It's less that the result is awful and more that he's not using the song or instrumental to its full potential.
Although I enjoy his melodic delivery overall, Hongjoong is not a singer... and sometimes he veers far into the singer territory and ends up sounding very weak or even unpleasant such as here in My Way. He is also occasionally out of tune which, if you're going to be a melodic rapper causes issues.
A problem that he falls into as a result of ATEEZ's rather limited sonic and emotional palette is that I have almost no idea how good his emotional delivery/range or his versatility on different types of genre/concepts is overall. This obviously isn't a weakness for him per se, because he's not in total control of ATEEZ's concept or sound, but it limits his potential to be ranked any higher because I've can't begin to judge how he would handle beats outside the standard ATEEZ realm.
Mingi: Mid E tier Mingi is credited as a writer on all the ATEEZ tracks on which he appears. He is considered the lead rapper and leans heavily on his distinctive low vocal timbre. Mingi's delivery is very centered on a focused and continuous amount of power, occasionally he uses melodic lines but usually he prefers straight delivery with some higher inflections thrown in. He has a very low and throaty tone to his voice and sometimes ranges into an almost spoken delivery. Strengths:
Mingi has a voice that stands out a lot in his group, it often provides the backbone to ATEEZ songs with his parts in the chorus and when he uses his voice almost like a percussive instrument.
His voice has, I think almost a "foreign" feel? I don't really know how else to say it, but he definitely has a vocal tone that Korean media seems to associate with rappers and specifically with non-korean rappers. His sound reminds me most of a Latin trap artist which makes him fit in well with the sound and worldwide aesthetic that ATEEZ usually presents. Sometimes you can even hear other members of the group try and imitate that in songs by tightening their throat and widening their vowels but for him that seems to be the way his voice naturally sounds.
Although Mingi is not considered the top performer of ATEEZ (mostly because ATEEZ are some of the strongest performers currently active) he is no doubt a very good performer and is most definitely able to sell a lot of his delivery through charismatic live performances and his excellent dance skills.
When he wants to he has the capability to do lower volume and more whispery tones which are quite pleasing to listen to like his performance in Treasure (though admittedly he switches back to shouting not 15 seconds later but i'll take what i can). He has another laid back delivery on Pirate King during the first verse which works quite nicely with the track as well. Sunrise is another example where he starts the track at an appropriately low level.
Because ATEEZ does have quite a few purely hype tracks, Mingi's voice and delivery works perfectly well in plenty of situations. Inception is an example where listening to him makes me feel a ton of energy and excitement at an appropriate place in the song
I noticed while listening to ATEEZ's tracks start to finish that he does seem to be improving. On their most recent album I heard the most variety from him on more than one track, and it seems like he's clearly interested in getting better and more time and effort is only doing good things for him. Fever was a good example of his slightly more melodic sound coming out that doesn't sound just like it's him doing Hongjoong's lines for him. Thanxx probably having my favorite verse from him so far, short but dynamic, and the last two lines of To the Beat being honestly, kind of addictive in the almost slimy way he delivers them. I like that and i hope he goes into it more.
Weaknesses (this is gonna be a little brutal... Atinys proceed with caution) :
GOOD LORD he sounds the same in almost every song. This is not just a problem with his vocal tone (although that can be a factor, because his voice is almost overwhelming to other stylistic decisions he makes) but the man almost never changes it up dynamically, in his phrasing, he never really plays around with enunciation or melody to any notable extent.
SHOUTY BOYS! Which is the term i use for kpop boys who shout the majority of their rap lines and Mingi suffers from this to a pretty large extent. This is true both on wax and in live performances and it means that his dynamics are very weak in the majority of songs. Mingi seems to have exactly 3 settings: loud talking, full shouting (his default), and EXTRA LOUD SHOUTING usually reserved for live stages. There's rarely any smooth transition between these, in fact he is likely to use only one of them in any given song.
Relating to that last point, what is the worst side effect of this is that REGARDLESS of the vibe of the song Mingi remains almost identical in how he performs. As I was listening to some of their songs it would start and be a chiller more downbeat track and I'd think "oh no he's still gonna shout isn't he" and then Lo and Behold, the shouting man would enter
A particularly egregious example of this can be found in Mist, i'm not even going to timestamp to his verse, listen to that beautiful Wooyoung intro and then listen to the way he chooses to deliver his verse immediately after... someone pls try to make that choice make sense artistically. This is the true issue of having a rapper who doesn't change things up, it's not that the style he does have is out and out terrible or inappropriate in all contexts, but it simply isn't what all of their songs require. It's absolutely throws the feeling of the song out of the window and genuinely makes, what could be one of Ateez's best songs into something almost frustrating to listen to.
Here's an example where he does his loud delivery it multiple times in a song, one which works and one which doesn't just so i can demonstrate the difference. In Treasure he has this shouting high energy delivery right in that first verse when the song and instrumental hasn't moved anywhere yet. Right after he finishes the song actually starts to build for the prechorus but the energy is already off because he was SO high energy before the prechorus began. Then during the prechorus he comes back for a short shouted line which does work because that's the place you're supposed to be building up the energy. basically his energy is all over the place regardless of where in the song we are and it makes the flow of the song messy
Although his vocal tone is really recognizable it's not what I'd call uncommon. Other examples of this vocal tone in kpop are Wooseok of Pentagon, Leedo of Oneus (also in this post) and IM of MonstaX. Being a "deep voiced rapper" simply is not enough to stand out.
He consistently loses the beat during live performances often because of poor breath control and placement, here he is on MixNine sprinting after the beat and not really making it back on. Here he is doing a live street busking performance and sounding breathless after about 2 lines, i. There are songs where i really like his verse, like Dancing Like Butterfly Wings where his rap is groovy and bouncy in the official recording but when performed live he still loses the beat and can't keep his breath even... it is genuinely baffling to me to see someone sound out of breath, 4 bars in, at the START of the song, Even in recordings he sometimes has issues finding the beat like on Desire where he never seems to quite hit the right mark.
I know some people are going to get on me or feel hurt for placing him so low, it's not that I think Mingi is hopeless, untalented, or without any potential, nor do I think every bar of his is terrible when viewed in a vacuum. However I find that his parts consistently mess up the flow of the song and they tend to stick out in a negative way when viewed in the context of the track, that is why I ranked him this way but I really only hope to see him get better as time goes on.
ONEUS: Ravn + Leedo
About Oneus: Before writing this I had not listened to a full Oneus album but i'd really enjoyed their title tracks and was pretty stunned by their RTK performances. I had heard a lot about member involvement in a lot of the elements of their work, overall I was really excited for this post as a prompt for me to go and fully listen to their B-sides. Anyways all that said I am about to trash on Oneus' music a little so ToMoons I'm sorry. I have a lot of good things to say about them too, I promise. ........ ok I know I'm here to review rapping but I promise this is relevant..... the beats to the vast majority of Oneus b-side songs are quite boring and same-y like that vaguely trop-house/dancehall/electro-house sounds with a trap breakdown occasionally thrown in (there are a few exceptions obviously). Looking at the track producers it starts to make sense since most of them are RBW inhouse producers and they stay the same on most of the non-title tracks. Again I know I'm not here to do a music review but I think a big takeaway from Oneus is how much a good or great beat can elevate even a mediocre rap performance, or really pull the best possible material from its performers, and how, on the flipside boring generic beats can turn what could be a fine rap performance into something totally unremarkable. Oneus tends to have much stronger production on their title tracks but the b-sides keep almost none of that energy and it really hurts their overall ranking and ability. By FAR the most interesting officially released song they've had from and beat/rapping perspective is Crazy & Crazy which is produced by the Onewe member Cya who honestly impressed a lot, he definitely outdid the other two on that track. But this isn't about Onewe so i'll get on to actually talk about the Oneus members. Ravn: High C tier Ravn is the lead rapper for Oneus and has participated as a writer on every single song they've released thus far and participated as a producer on Hero from their debut album. He released a number of songs and projects on Soundcloud under his tag pls9ravn starting in 2017 Some of them are rap tracks, some of them are vocal covers, some instrumentals, and a lot of the originals are alongside the aforementioned CyA of Onewe. The songs tend to be lofi or related genres with a big emphasis on vibe and more laidback delivery. Ravn's voice is midtone and fairly husky. He often incorporates intentional vocal fry and melody as notable parts of his style. (On a non-rap not i'm also huge fan of the production on his instrumental SC tracks, i hope Oneus releases a whole track in that vein at some point i feel like it would really fit their vibe) Strengths:
"Ra spit out flames" is objectively the best rapper tag an Idol rapper has ever had. That's just a fact.
On his soundcloud tracks, which fall largely into the lofi/cloud/chillhop/occasional synthwave or vaporwave tracks are an excellent match to his style. Genuinely, listening through his Soundcloud was a real joy, probably the biggest treat of working on this project so far. So many gems on there and so very in my style
Ravn has shown an ability to play around with weird and unconventional deliveries like on the track flame.... i mean he's obviously taking a lot of inspiration possibly even ripping directly from other rappers like Juice Wrld (rest in peace) or Vinxen but I don't mind it. I particularly like what he does starting at 0:45 like... throwing his voice forward really suddenly, it gives the track a lot of tension and weird emotion and then into the section where he's basically just speaking with only a barely there adherence to the rhythm. It's really cool I dig it
I don't really know what the emotion of bufferingonmymind is supposed to be but I felt it
Good ability to switch flows while keeping the track continuous like here on LIKEACHEEZ (great title btw)
He has shown potential in more vibey but somewhat energetic and party oriented tracks like here on Billboard. Admittedly i think the vocal effects are a little over the top on this one but i would absolutely vibe to this song while getting drunk no question. Similarly Like a has an excellent vibe. Eraser sounds like it could be a jhope solo release for all that bouncy energy. And Good life is meant for smoking a blunt by the beach. All of these songs have such excellent and clearly defined vibes and Ravn's production and voice work very well in tandem.
Ravn on some of Oneus' groovier tracks is excellent. That's clearly the lane he is most comfortable, well-versed and personally interested in and it shows, he thrives on songs like Plastic Flower Plastic Flower is easily my favorite he's ever sounded on a full group track, but the second verse of Hide and Seek shows this off as well.
Ravn is one of the only idol-rappers whose shouting voice i like, heard in his opening in Warriors Descendent he uses it as an occasional tool like god intended. it's very effective and piercing I actually wouldn't mind if he used this more in the future s p a r i n g l y
I'll mention this with Leedo as well but I think the C rating might be misleading when it comes to the ability he's shown. The issue is not that Ravn doesn't have talent nor that there isn't proof of his talent out there. I really do think his work releasing work independently speaks very well to his creativity and ability, it just isn't the whole story.
Even his most exciting and experimental choices are well within the lane of expected flows and deliveries. I won't call them totally basic but i think he has potential to push the envelope more than he does. A good example is his verses in Come Back Home which had a lot more potential than he pulled out of them. There's something to be said for making the most of every line but I feel like Ravn has a rather unfortunate amount of throwaway verses for someone of his talent level.
I often feel like Ravn is floating somewhere over the beat rather than fully sinking into it. I don't really have an example for this it's just something i notice.
One of his best verses, Crazy & Crazy, commits the cardinal sin of using "hakuna matata" in his lyrics and then trying to end the line with "bibitibobity boo" which not only doesn't rhyme, but also sounds corny as hell. The rest of the verse is great but that ending does spoil it a bit.
When he tries for that real ~emotional~ delivery it lacks almost any real punch and mostly sounds very cheesy, other emotional songs see him falling into the same problem i mentioned with Hongjoong of sounding sort of unenthused rather than any other emotion, his verse in Now is a good example it just sounds very impersonal and unemotional overall.
He also suffers from something very common to idol rappers which is that, they might be able to do one style well or even really well, but they lack a lot in the way of versatility and struggle to find a place within the music their group makes. The job of kpop artist is being able to adapt to different contexts, and Oneus has a very clear sonic signature which I don't think Ravn has found a way to thrive in or fully adapt to. That to me is a major issue and severely downgrades where he could be.
Leedo: High D tier Leedo is ... apparently the Main Rapper (i assumed that was Ravn but idk) apparently NOT a lead dancer, and also can sing like this!!! Basically the man is full of surprises. He has written lyrics for every Oneus track on which he has appeared and also featured on some predebut soundcloud releases with Ravn and Cya. He is a deep voiced rapper with about half and half melodic and straight delivery and a powerful but more restrained style. Strengths:
Leedo seems to have a strong sense of musicality and quite a bit of creativity. Although as I said, many Oneus tracks are pretty bland in basic in production and don't lend themselves as well towards experimentation of the performers, when given the chance Leedo has shown an aptitude for coming up with new ways to deliver. He plays around with melodic delivery, he has a lot more dynamic range than one might expect, and he doesn't rely 100% on his deep voice as the main or only feature of his rapping. That said his voice is a feature he uses, Light Us being a good example of him using it to good effect and atmosphere.
On the topic of musicality he's very responsive to the type of track he's rapping on. His Lit verse is very well paced and full of excellent little details and changeups that make it really quite fun to listen to.
Despite having a voice that would lend itself strongly to shouty boy rap, Leedo is actually very non-shouty for the most part. Like his verse in Now is nothing revolutionary but i was 100% anticipating full yell power and instead got a pretty good little segue section.
There's a real sleepy quality that he can take on, tracks like wrkwrkwrk at 2:15 show this off. It's not fully developed at this point but it's something I'm interested to see him play with more and a cool direction to hear him go in.
Leedo on a fucking OLD SCHOOL EAST COAST BEAT i actually screamed. the track Sh#t is the shit, VERY similar in sonics to A Tribe Called Quest's Electric Relaxation but I don't care. the beat, the delivery, the way the two of them contrast, the whispered refrain. MORE OF THIS GOD PLEASE MORE OF THIS, more of this in Kpop more of this for Leedo and Ravn pls i am begging
His more melodic deliveries are some of his most enjoyable probably because Leedo is, as discussed, a really great vocalist, Crazy & Crazy being probably him at his best in this respect. It's very pleasing to listen to but his work with Cya in general usually hits the mark on melodic flows
Honestly he's probably the one on this list that surprised and impressed me the most and the one i see the most potential in. I don't think it shows in the rating but I actually find a lot of his work quite enjoyable and I see him growing and pushing himself. So for me a Mid-D just represents where I think he is RIGHT NOW with the tracks they've released thus far, but I wouldn't be surprised to see him get a lot higher than that
Although I can sit here and praise his delivery on the best tracks, the fact is that the vast majority of Oneus' catalog is not that. For every good performance that i referenced here there are 4+ absolutely forgettable songs with forgettable deliveries. The songs being bland is not completely an excuse for the rappers to be bland. It's obvious to me that they do their best work when they have a song or instrumental that pushes them to be creative, but without that drive Leedo simply slips back into being a low-tone rapper without much of a trademark.
I think his flows and experimentation are still quite rudimentary for the most part and his individual style is limited on the majority of tracks. In many cases this is to the point that he could be mistaken for other rappers of a similar ilk like Felix or Mingi.
Even on his best tracks Leedo has not shown an overall aptitude towards emotional delivery.
This list of weaknesses might seem rather short for someone in D-tier, but i'm going to lay out his main issue: while Leedo has great potential he just doesn't have an established and consistent individual voice. I'm not going to take the time to link a bunch of things that aren't there, instead i'm just going to link a bunch of songs that i think show what i'm talking about which is a general lack of a uniqueness or ability to really stand out on the track:
This is his biggest problem by far in my opinion, and if he can overcome that and find his individuality more consistently I think he has really excellent potential. He's already shown potential and ways in which his voice can differ from others, but he needs to be confident enough to commit to it and actually take some risks in order to actually reach the potential he has. This is probably a note that could be given to a lot of idol-rappers but its one i think that is particularly apt in Leedo's case.
A.C.E: Wow + Byeongkwan
About ACE: First of all this is one of my favorite groups, so if you were wondering whether I'm willing to talk smack on my faves hopefully this section answers that question. ACE has a much smaller discography than others but they also tend to be much less keyed into one particular concept and have gone all over the place in both title and bside tracks Additionally with only a few exceptions, members have not yet expressed much interest for lyric writing or production. The only song where I saw any writing credit to the members is Wow on Take Me Higher. Wow: Mid/High D tier Wow's official position besides main rapper is main performer and that is where much of his strength as an idol lies, he is a really dynamic and talented performer. As a rapper he has a mid to low tone and a pretty straightforward style of delivery usually not melodically driven and usually fairly lowkey. Strengths:
Probably Wow's best strength and the thing that makes him (to me) much more enjoyable to listen to than even some B tier rappers is that he has a good sense of dynamic control and really good sense of a songs energy at a particular moment and has good sense in how to match that through his delivery.
Some examples of this are Holiday with a more laid back delivery, Take Me Higher where Wow performs the bridge is a great display of less in-your-face sort of confidence (and his best verse to date by quite a sizable margin), and Savage is a good example of him using both a softer delivery initially and then later a full volume/energy delivery for the benefit of the song. He also manages to rhyme Meenie Miny Moe, Kawi Bawi Bo, and Rock and Roll without it being a total cringefest. WOW!
He has a very pleasant slightly husky mid-tone voice to listen to which lends itself well to delivery and fits into ACE's songs nicely. I never feel undersold by his lines in their songs nor do I feel that they are misplaced. In other words, he feels comfortable in his role, he's not overly forcing it, and his sections don't feel awkwardly short or awkwardly delivered. Under Cover is a good example of this, he puts just enough individual flair on it that it stands out, but it's not overbearing and it doesn't overstay its welcome.
Even his longer sections flow nicely. Here's a section from If You Heard where he goes for !!!!8 bars!!!! there's nothing really stand out about it but it really works in the song and transitions in and out nicely.
Wow is really good at emotional delivery overall and his rap is surprisingly adept at it too. Even if the bars aren't complicated they do a good job conveying the overall feeling of the song. So Sick is like half rap half sung but it's a good example of this.
Wow's main weakness is that he doesn't seem to have any desire to go beyond the bare minimum of rhythmic delivery. His flows are very easy and predictable, Almost every weakness I could name, could be summed up as: he's doing basic stuff in a basic way. He's not pushing any boundaries. And technically when it comes to his abilities in speed, rhyming, wordplay or use of emphasis and alliteration he's simply not playing the game. His focus is purely on presentation, not technical skill.
Although I mentioned his dynamics being his strongest suit, there are times when he loses grips on this. Black and Blue is a great example, he goes full shouty boys on this track and it's exactly what that instrumental doesn't need and it's weird because he almost never does this otherwise. Truly a baffling decision. but you can't win them all.
There's plenty of boring stuff that he does when the song doesn't have a clear emotional edge or conceptual backing. In Holiday he has twoverses that sound nearly identical and go nowhere. This is where being very unobtrusive is a real fault because that track needed some spice that Wow simply could not provide.
Wow is like tofu, if there is not already spice (via the song) he will sound very bland, if there is spice he will soak it up and take on the correct flavor of the dish but he does not bring the spice.
Unlike the other folks i've talked about in this post, i don't get the sense that Wow is actively and aggressively trying to get better as a rapper. I don't notice a great deal of improvement over releases and I don't really expect to going forward. I think he's in a comfortable enough spot and not really interested in experimentation as a rapper. He's always getting better as a performer but I think rap is very secondary for that. It's not surprising and honestly, he could stay at this level and it wouldn't really effect the overall quality of any of their songs.
Byeongkwan: E tier Byeongkwan is perhaps the best representation this post has of "dancer who they made a rapper because they needed a second rapper", he's not outwardly awful... sometimes???, but rapping is clearly not his passion. Byeongkwan is an EXCEPTIONALLY good dancer (put him in your 4th gen top 10 cowards!!!) and he's also a really skilled vocalist, so the rapper role feels especially secondary for him. Still, he's rapped enough times on enough tracks that it deserves comment Strengths:
Like the majority of dancers-turned-rappers in kpop Byeongkwan has a very well developed rhythmic sense and tends to find the pocket without trouble. Now... does he do anything interesting or good in the pocket? No. But you cannot deny that he's in it :)
Because of Byeongkwan's unique vocal tone I actually think the less he tries at rapping the more he sells it. So there are parts of Savage where... I don't know if he's technically rapping or not but his delivery is somewhere in between rap and vocal and those parts work well for the vibe of the song like here, or here in If you Heard where he acts as a segue and it's nice.
One time he did this and it was pretty good but i can't find the full performance and also it's a cover
Unfortunately Byeongkwan does not write his own raps and the raps that he gets are... so basic. Painfully basic. That combined with the fact that his delivery skills are preschool level makes for a lot of uninteresting sections to songs
When BK really puts it on as a rapper he sounds like a try-hard in the truest sense. That opening verse to Under Cover..... wacks up the beginning of an otherwise perfect song, it's rough, it's trying way too hard, it is not doing a great job of selling it
Dynamics emotional delivery and variety are almost non-existent across tracks. After saying Wow had pretty good emotional sense on So Sick here's BK's verse, very flat in comparison with no emotional edge to it whatsoever.
I am not going to absolutely cream this man into the ground because A) he actually doesn't rap that much overall and B) he doesn't really present himself as a rapper. His inclusion here is really only because someone requested it and all i have to say about him is... rapping is like 4th on his list of roles (1: dancer, 2: vocalist 3: best boy 4: rapper) so..... I hope he stays being vast majority a vocalist!!!! Pls!!!
I opened a margin account by mistake instead of a cash account. My objective is only to DCA in some ETFs for long term holding. I’m now scared of using the margin instead of the cash amount that I having to pay it back. How can I change to a cash account ? I can’t find that option in account settings. I don’t understand why I have amounts under ExLiq ...
Thesis: SIGA Technologies, an anti-bioterror pharmaceutical company, will double their stock price in a year and triple or quadruple it in two years. They are in an incredibly strong financial position: zero debt, future US government purchases that may be greater than their market cap, and low expenses for operations and forward research. They also have amazing future growth prospects as foreign governments will buy their meds to prepare for future pandemics. Their drugs treat smallpox which is both more contagious and deadly (IFR ~30%!) than the Wuhan plague. Do you think absolutely no political or military leader will learn their lesson about pandemic preparedness? Do you think business leaders are going to put the pressure down since the cost of unpreparedness is orders of magnitude greater than preparedness? That’s what this play is all about. The play: Buy $SIGA stocks and hold for 2 years.
Market cap: $560 million Style: Value, when compared to other biotechs Products: Their primary product is an FDA approved oral antiviral (TPOXX) that treats all orthopox viruses (e.g. the dreaded smallpox). They are currently developing additional products for IV and pediatric treatment, another small molecule drug for treating orthopox viruses, and are developing therapeutics that use orthopox viruses for delivery of anticancer antigens. How SIGA makes money: 1) US government contracts to supply the Strategic National Stockpile, 2) US government contracts for research, 3) sales to foreign governments and potentially private parties. Note that their business doesn't care about prevailing market conditions and all of these are multi-year contracts. Debt: $0. They paid off an $86 MM loan in March. Cash holdings: $77.4 MM Total assets: $118.6 MM Net cash flow 2019: -$18.2 MM, as discussed below, 2019 was a transition year between govt contracts hence the low income. They made $400MM from closing contracts in 2018. Net cash flow 2020, my estimate: +$53 MM, see cash flow section below for how I got this figure
How this play can win
- The US govt through BARDA accelerates their purchasing of TPOXX to be and look more prepared for future pandemics. - Foreign governments purchase TPOXX for their own pandemic preparedness. Canada announced an intent to purchase in December. Others are likely to follow. IMO, the stock will hit $10 when 3 additional countries announce purchasing and $20 when they have a network of 10 purchasing countries plus additional research. The US gets a discount on TPOXX because they funded the initial research, others will likely pay three times as much per dose. - The US govt offers much more research funding to SIGA to design antivirals for other possible pandemic viruses. 10 years ago they had a small BARDA contract to look into antivirals for Lassa fever, a nasty rat flu boogaloo. They might renew or add to this type of research. - TPOXX gets additional approvals for IV use and prophylactic use (i.e. give to people in contact with infected, first responders or first city) and US buys more. They recently received a new $23 MM contract for developing this use. - A larger pharmaceutical company announces that they will purchase SIGA for $10-$15 share in a year. SIGA already has connections with Pfizer. - Large amounts of additional income help them pump with stock buybacks or fat dividends. I am totally convinced they are going to buyback or spit dividends in a year from now.
- Foreign governments don’t purchase TPOXX or don’t approve its safety/efficacy and rely on the vaccine for smallpox (but 1 in 5 people can’t take the vax and lots of deaths in first wave without TPOXX). - US govt does not add to stockpile, only keeps refreshing expired TPOXX. - US govt does not invest in additional pandemic preparedness research/invests only in competitors. - TPOXX may later be discovered to have a severe side-effect. (Oral formula is already FDA approved though). - There’s more risks listed in their 10-K, but I do not think they are significant enough to list here.
I’m going to start off this section by answering the arguments you’ve already thought of. Who gives a shit about some old timey disease? The world militaries. Smallpox is a nasty disease. It's basic reproduction number, R0, is between 3-6, like the Wuhan coronavirus. It similarly has a 7-14 day lag time before symptoms show, although it is not known to be infectious for the first several days. Smallpox is also exceptionally deadly, ranging from 15-30% fatality rate depending upon the strain and in children and the elderly can reach a 75% mortality rate. Survivors are usually permanently scarred and may have life-long complications from the disease. A smallpox epidemic would actually make corona look like "just the flu." Infection around day 20 mark. Bangladesh, 1973. Bioterrorism or biowarfare with smallpox is a massive threat to the military and people and an obvious first choice of weapon for a bioterrorist. Careful governments will plan for it. Isn't smallpox eradicated? Yes. But. 1) There are still many samples across the world in government labs across the world. 2) The genome exists on computers in said labs. 3) Many other orthopox viruses exist such as cowpox and monkeypox. Monkeypox in particular has had more cases in subsaharan Africa in the last few years. There have even been small outbreaks in the US, UK, and Singapore within the last 20 years. What about vaccines?
Maybe you recall that in the 1790’s Edward Jenner discovered the first vaccine by giving people the milder cowpox to prevent smallpox. The state of the smallpox vaccine has not evolved significantly since then. The modern vaccine uses a two-prong poker to deliver a live smallpox virus that has been engineered to be very weak. However, it is still a real virus that can causes symptoms or spread the disease to others. One in five Americans have underlying conditions that prevent them from receiving this vaccine due to the symptoms it causes.
What do you do when smallpox starts spreading rapidly? You need to be able to treat the potentially 100s of thousands of people who will be infected before the immunization takes effect. The US is well-prepared with the vaccine having 300 million doses, nearly enough for every American. But you need a treatment as part of the defense strategy.
TPOXX is in the process of being approved as a prophylactic. I.e. if smallpox were to spread then people could be given both the vaccine and TPOXX at the same time to make sure they don’t get sick if they were exposed prior to vaccination. Prophylactic treatment could be extremely important to first-responders, military, and people in the most badly affected zones.
I am no expert in reading 10-K filings, but SIGA's 10-K is not too complicated. I encourage you to do your own DD before making this play and if you've never read a 10-K filing before this is a great one to cut your teeth on. SIGA only has one key product line and their debt is uncomplicated (nonexistent); the only tricky parts is following the government money. Balance sheet from most recent 10-Q Balance sheet So the things to look at here are:
SIGA has plenty of cash. Enough for two years operating expenses without any sort of austerity. Even if the economic downturn affected their business model, they would weather it easily.
They have $16 MM in inventory. That’s mostly TPOXX they’ve already manufactured. This is great because it means they will have low costs for meeting the current BARDA contract supply request for this year and that if they get more orders they can dedicate their supply chain to filling them.
No debt. There’s no risk of them going tits up soon. Unlike your other favorite plays against highly-leveraged trash companies (looking at you Zillow), SIGA can ride out a credit crunch with ease.
Stockholders’ equity aka book value. At a price to book of 5:1 this is a cheap biotech company, one of the reasons I see them as a value buy. Also of note, their property includes patents on TPOXX in virtually every country.
Cash flow In 2019, SIGA took a $7 million loss while in 2018 they punched a $422 million gain. How did that happen? Their entire business runs on multi-year govt contracts. 2018 saw an older BARDA contract end with the orders completely filled to stuff the strategic stockpile. 2019 was a transition year.They have a new contract with BARDA to replenish expiring TPOXX and research then purchase new formulations for IV and pediatric use. So, looking at their 201910-K their earnings look abysmal, but their forward looking earnings are much better given their recent news releases. Let’s look more at that contract since it is a principal revenue source. SIGA’s most recent 19C contract gives BARDA (Biomedical Advanced Research and Development Authority) the ability to purchase up to $602.5MM worth of product. The base contract guarantees $51.7 MM and BARDA announced the exercise of an additional $127.1 MM in purchasing for the next year as of a few weeks ago. Due to drug expiration and future preparedness, my opinion is that BARDA will exercise all of the purchasing options over the next 10 years. Here’s my 2020 cash flow estimate, I am inexperienced at this sort of analysis. Pro 10-K readers, please give me some criticism. -$24 MM from expenses for sales, admin, research, services ,patents. Average of last 2 years -10% because research activity is shut down -$7 MM from additional costs of terminating loan. 10-Q +$2 MM from part 1 of Canadian order. Press release +$75 MM from three quarters of $101 MM exercise of BARDA contract. Estimated because they will supply TPOXX the next three quarters of 2020 and Q1 2021, press release -$3 MM additional costs to fulfill orders. Estimate from BARDA contract’s allocation for supply costs +$10 MM from contracts for research. Estimate by Q1 research revenue x 4 ? a new $23 MM research contract with the department of defense was announced in June, unclear when they will receive the money at this time $0 from stock buybacks and dividends, they have never had a dividend, but did do $800k in buybacks last year. They might have paid down their debt to put them in a position to do a lot more buybacks, so this is subject to change. Total: +$53 MM I expect the next few years to be cash flow positive now that they are out of the development phase and into the deployment phase. As they get additional international buyers they will also need to service their expiring stockpiles. This puts them at a forward price to earnings estimate of 10:1, still a value play in the current environment. The high future cash flow is why I expect them to start pumping dividends or buybacks in a year. Since their research activities are primarily supported by the US government, they won't have other useful activities for the cash other than to return it to shareholders. Also, the guys who founded SIGA in the 90's probably want to retire on a fat dividend pretty soon. Dividends and buybacks are a big factor in how many analysts calculate stock prices so either development will push the share price up a lot. International Sales This is where SIGA make us gigatendies. The US sales are the bread and butter that will keep them afloat for years to come. International sales are where they grow. Their contracts with the US government let them sell TPOXX at about $350 per course because they funded the initial research, whereas Canada is paying about $950 per course giving SIGA a massive estimated 95% margin. Let's see who might be interested in buying TPOXX as the China flu crisis unwinds: we've got most of western Europe/NATO--UK, France,Italy, Austria, Sweden, Switzerland, Germany, Spain; Pacific countries wary of being in the China sphere--Taiwan, South Korea, Japan, Singapore, Australia,Malaysia, Vietnam, Indonesia; and wealthy Middle Eastern countries that need to hedge against instability--Israel, Turkey, Saudi Arabia, UAE, Qatar; a smattering of other countries getting wise to viral threats--Russia, India,Brazil, South Africa, Mexico. That's a lot of potential buyers and it will only take a few for SIGA's price to shoot up. Also note that SIGA does not market internationally themselves, they are partnered with Meridian, a Pfizer subsidiary, for international sales. SIGA also has an excellent moat internationally. They have patents for TPOXX and its analogs almost everywhere but China. Of course, there are still risks associated with international expansion, but the upside potential is yuuge. Let's hear it from the horse's mouth and see what SIGA had to say on their 2019 Q4 conference call:
Now let's discuss the international markets. The pursuit of international sales for oral TPOXX is a key focus for us at SIGA. Our partnership with Meridian Medical Technologies that we announced last June has been excellent. However as I've said many times the sales cycle is long for international government procurement of these types of products and each country has its own set of internal dynamics. ... I have been asked why we do not provide a country-by-country update on sales progress. We do not comment on specific progress with countries for two main reasons. First, we respect the confidentiality of our customers who would not want their deliberations to become public. And second, we would not want to signal to competitors which countries may be undergoing an expansion in their spending for biodefense. With that context in mind, we are pleased to share a progress report regarding the Canadian military, who announced in December and intend to issue contracts to support a Health Canada, regulatory filing and thep urchase of up to 15,825 courses of oral TPOXX for the Canadian military. A procurement order of this size would represent about 25%of the active military forces in Canada. Although this is a relatively modest number of courses it is precedent for military preparedness by a U.S. NATO ally.
What can we gather from that? They've got multiple sales in the works, but are keeping mum about it. Also, that it takes time to cut through government tape and announce these sales. Here's the single largest risk for this play: that it takes too long for international contracts to be announced. For this reason, I recommend buying stocks and not calls. The near term future is too unpredictable. Research Activities SIGA's main drug, oral TPOXX, is already completely FDA approved as safe in humans and effective in animals. A quirk of their niche is that since smallpox is eradicated, they can't ethically test the drug for effectiveness in humans. This helps their bottom line because they basically get to skip some of the trials of a typical drug development cycle. SIGA's most important upcoming products are TPOXX for IV, liquid pediatric, and prophylactic use. Due to the current pandemic, all human trials are postponed, but the barriers for these trials are quite low. They only need to demonstrate human safety for the alternate ROA drugs. For prophylactic TPOXX, SIGA needs to demonstrate that TPOXX does not interfere with immunity acquisition from the smallpox vaccine. That way a potentially exposed person can both be treated and vaccinated at the same time. If they fail to meet these research goals, then I doubt the BARDA contract will be exercised for full value. Because of the delay in these results due to corona, I doubt that they threaten the trade that I'm proposing. Orthopox viruses to deliver cancer therapeutics and older Lassa fever antivirals. I honestly don't know enough about their activities in these areas to make a comment. I think they are irrelevant to the base play, but could provide some surprise upside if there was a development. Insider trading The execs did more selling than buying last year which is perhaps bearish, but their most recent move was to buy a lot of stock in December after announcing the Canada deal. They sold stock at ~$5.80 in early 2019. Now, they're holding even though it is past $6. I think the COVID pandemic has massively increased SIGA’s value and their key people are holding at a price where they previously sold knowing that a lot more cash is coming in. I think there's also some possibility of acquisition at higher share price, being debt free makes them attractive to a buyer--just pick up all the shares, no liabilities to clean up. Positions I have 5% of my IRA in SIGA and a couple of long dated $10 calls (volume is shit FYI) in my funny money account. Thank you for reading my novel. Disclaimer: Just because I can write two coherent paragraphs on a play does not mean I know what I'm doing. Do your own due diligence.
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