EVENTS:   Best Equity Short Ideas Conference Call 12 - Zach Shannon/Corto Capital Advisors & Craig Huber/Huber Research Partners & Thomas Beevers /Forensic Alpha & Ed Steele/Iron Blue Financials & Bill Campbell/Paragon Intel - 12 Nov 25   Will AI Deflate the World? Macro Lessons from Three Industrial Revolutions and China - Manoj Pradhan/Talking Heads Macro - 13 Nov 25     ROADSHOWS: Forest Products Sector Equity and Commodity Research With Expertise in Distressed Debt - Kevin Mason /ERA Research   •   London   12 - 14 Nov 25       Buyside to Buyside Forum and Expert Calls across TMT, Consumer, Healthcare and Fintech - Andrew Peters /Revelare Partners   •   London   17 - 19 Nov 25       Fundamental US Healthcare Short Ideas - Dr Elliot Favus /Favus Institutional Research   •   London   17 - 19 Nov 25      

Fortnightly Publication Highlighting Latest Insights From IRF Providers

Company Research

Suspicious Overearners: Buckle (BKE), HCA Healthcare (HCA) & Owens & Minor (OMI)

Two Rivers Analytics

Two Rivers’ model seeks companies that are potentially “over-earning” - defined as companies with unusually high margins relative to their own history or relative to the industry. Provides fertile hunting ground for shorts if the reasons for the margin increase are either unsustainable or fraudulent. The best short candidates include:

BKE - No sales growth pre-Covid. Gross margins have since risen from 40% to 48% and EBITDA margins from 14% to 25%.
HCA - Incremental gross margins have reached 40% vs. sub-20% GAAP. Trades at record high EV/S and EBITDA multiples.
OMI - Stock trades based on the continuation of very high margins. Insiders are suddenly and sharply selling off shares.

Edition: 116

- 06 August, 2021