Model portfolios outperform by 32% YTD
After beating the market by 71% in 2021, New Constructs research pays off again for clients so far in 2022 - underscoring just how important reliable fundamental research is in turbulent markets their long portfolio contributed 5% while their short portfolio contributed 27% of the outperformance vs. the S&P 500 through 3Q22. New Constructs’ latest piece focuses on why Wall St analysts are far too bullish on third quarter earnings expectations (Street overstates EPS for 340 S&P 500 companies) and lists 5 companies including Twitter who are most likely to miss expectations.
Edition: 146
- 14 October, 2022
Financials
Has been one of the best performing large cap bank stocks in recent years, but at current prices, the stock is not discounting potential capital constraints, a reduced buyback (Charles Peabody expects it to be cut in half), and near-term risks that include capital markets challenges and the Twitter ‘hung loan’. At 2x TBV the stock is more expensive than JPMorgan yet offers discounted returns. For dividend yield support there are other sources of high yields among other banks with less risk.
Edition: 146
- 14 October, 2022
Communications
MDC's “Event-Driven Legal℠" service is following Twitter litigation against Elon Musk in the Delaware Court of Chancery - on July 19th, the Chancellor Granted Twitter's Motion to Expedite. A five-day Trial will be scheduled for October 2022. The Chancellor mentioned that she does not think that Damages would be an appropriate remedy in this case. So, it seems that either there will be "Specific Performance" or not. MDC currently believes that a deal will eventually be done at a higher price than current, but likely from a Settlement. MDC speculates that Twitter has misrepresented its "mDAU" metric.
Edition: 140
- 22 July, 2022
Communications
Price of free speech - TWTR's board caves to shareholder pressure, but Elon Musk is unlikely to make any money from this deal. Richard Windsor expects a complete management and board clear-out and much greater clarity on content moderation policies. He sees Musk’s offer as very generous and shareholders should take the opportunity to sell given the shares are probably worth closer to $20. TWTR’s best growth is behind it and would need to generate ~$3.4bn in FCF every year in order to justify the offer price (it has averaged about 1/3rd of this level over the last 3 years).
Edition: 134
- 29 April, 2022
Communications
CEO diligence report - evidence suggests Parag Agrawal will struggle to enact needed changes to TWTR’s organisation. Paragon Intel have assessed Agrawal’s capabilities and personality in the context of his ability to reaccelerate user growth, increase the velocity of new product introductions and tap into larger digital advertising pools: 1) Agrawal is a product-focused technologist with limited leadership experience. 2) He is well respected within the company, but ill-prepared to be the public face. 3) He is more contributor than leader and is unlikely to be a change agent. 4) Considered largely hands-off, he has not managed large teams or set goals during his tenure.
Edition: 131
- 18 March, 2022
Equities still offer great value...if you look in the right places
Will Nutting continues to focus on contrarian and forgotten cyclical 'value'. Stocks featured recently in his widely read Nutstuff report include Lloyds, Avacta, Greggs and Glencore in the UK. In the US, Consol Energy (+64% in last 2 weeks) - investors are finally waking up to the world's need for coal. CNH Industrial - cycle is just beginning, farmers are feeling good and are increasing spending. ViacomCBS is another too cheap to ignore / misunderstood opportunity (60%+ upside), while Twitter is also back on the Nutstuff Buy radar…
Edition: 110
- 14 May, 2021