Research

Every day the business newswires are filled with sell-side stock analyst ratings, rating changes, and price target changes.  As we write this report, an analyst just posted a $1.00 price target on Carvana (CVNA) –a year ago, a different prominent analyst published a $400 target on the same stock.  While that is an extreme example,…

Attached is a monthly document that highlights important points for bottom-up stock pickers. It includes : Changes to macro variables that alter our gross exposure recommendations Risks Changes to profit margin and earnings expectations and multiples KPIs – like inventory levels Sector recommendations and important data Stock ideas Highlights include: Macro and gross exposures: Our…

Nearly a decade ago when we were at Morgan Stanley, we coined the phrase “bad is good and good is good” to articulate how no economic news could make equity markets go lower at that time. Bad economic news meant there would still be accommodation from the policy makers, and good news meant things were…

This past summer we wrote multiple times about the inverted yield curve. There have only been five times in the last half century where the 10-year yield was below the 5-year yield, and the 5-year yield was simultaneously below the 2-year yield, for a period that lasted more than a year. When this more recent…

With private companies (BX) finding value in public companies (EMR) earlier this month and a substantial correction in the market year-to-date, we thought it prudent to evaluate and put context around how much the price-to-forward earnings, FCF yield, and EV-to-forecasted sales ratios have contracted and look for relative opportunities within the equity market. The median…

Earlier in the summer of 2022 there was an emerging narrative that the consumer might be in robust enough condition for the Fed to engineer a softish landing. Belief was at its highest following the July market rally and earnings results that were not as dreadful as some felt were possible after the Q2 market…

What does a CEO want said about them a decade from now when they step down?  We surmise that very high on that “legacy list” is that they were good stewards of capital, and that their decisions about capital use directly benefited shareholders and employees. Over the past several months we have researched the implications…

In September, we wrote about how the market was experiencing incredibly high volatility of stock returns this cycle. Our long-term view is that US equities will return an average of 5-7% per year, a touch lower than the historical average of 7-9% per year. The algorithm for this return is organic earnings growth of 2-4%,…

This document is meant for those who want to sit down for 60-90 minutes, once a month, and take full stock of major issues impacting US equities.  It includes a summary of all our idea generation, risk management, and macro data and services. For further information on our Quantitative Frameworks or to view our full…

We have been surprised at how well the industrials sector has performed year-to-date.  Typically, when the market is down, industrials lag, as they are economically sensitive and often have high fixed costs which can be decremental to profits. Before 2022, industrials had underperformed the market 13 of the previous 14 times, (and the last eight…