EVENTS:   The Roaring 2020s or a Rerun of the 1970s? - Edward Yardeni/Yardeni Research - 24 Mar 26   Best Equity Short Ideas Conference Call 13 - Thomas Chanos/Badger Consultants & Dr. Aaron Fletcher/Bios Research & Jonathan Telgener/Channel Dynamics & Ed Steele/Iron Blue Financials & John Zolidis/Quo Vadis Capital & Mark Hiley/The Analyst - 26 Mar 26     ROADSHOWS: Chinese Equity Ideas & Channel Checks Across 50 sub-sectors - Don Ma /Horizon Insights   •   London   23 - 27 Mar 26       Long Short European Equity Research - Harry Grist /The Analyst   •   New York   26 Mar 26       Fundamental US Healthcare Short Ideas - Dr Elliot Favus /Favus Institutional Research   •   London   27 - 27 Mar 26      
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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