Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>Atkore's key products retained their unusually high prices last quarter, resulting in another strong quarter and raised guidance.</li>
<li>But key PVC prices are starting to weaken with the resumption of production in the US Gulf Coast.  Prices will fall much further.</li>
<li>Record high margins will contract meaningfully.  Estimates and valuations continue to be unrealistic leading us to maintain our short.</li>
</ul>


Atkore's key products retained their unusually high prices last quarter, resulting in another strong quarter and raised guidance.
But key PVC prices are starting to weaken with the resumption of production in the US Gulf Coast.  Prices will fall much further.
Record high margins will contract meaningfully.  Estimates and valuations continue to be unrealistic leading us to maintain our short.


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Dow Jones Industrial Average / Technical Analysis

<ul>
<li>The S&amp;P 500 has marginally surpassed the 4300-4325 area which we have anticipated would cap upside for 2023. </li>
<li>As noted in our 6/6/23 Compass, we are vigilant at these levels given we expect inflation to remain elevated, but we <em><strong>cannot be bearish</strong></em>if the SPX is above 4165-4200</li>
<li>Breadth has continued to improve within the Russell 2000, and the $IWM is approaching our first target of $190 following the breakout above $180. Also see breadth improving within SPX.</li>
</ul>


The S&amp;P 500 has marginally surpassed the 4300-4325 area which we have anticipated would cap upside for 2023. 
As noted in our 6/6/23 Compass, we are vigilant at these levels given we expect inflation to remain elevated, but we cannot be bearishif the SPX is above 4165-4200
Breadth has continued to improve within the Russell 2000, and the $IWM is approaching our first target of $190 following the breakout above $180. Also see breadth improving within SPX.


Dow Testing 1-Year Resistance at 34,280 Ahead of FOMC; Buy Ideas Within Manufacturing/Industrials

<ul>
<li>This presentation runs through six current short ideas presented on a Smartkarma webinar on 22nd December.</li>
<li>These are:  Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and Renewable Fuels (REGI).</li>
<li>The presentation also summarizes Two Rivers' short idea generation process.</li>
</ul>


This presentation runs through six current short ideas presented on a Smartkarma webinar on 22nd December.
These are:  Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and Renewable Fuels (REGI).
The presentation also summarizes Two Rivers' short idea generation process.


Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p>For our next Webinar, we are delighted to welcome <a href="https://www.smartkarma.com/profiles/eric-fernandez-cfa" target="_blank" data-smartkarma-citation="accounts:28390" rel="noopener">Eric Fernandez, CFA</a>. Eric will outline some of his top short trade ideas in the US market, based on his unique and comprehensive framework for identifying short sale candidates. </p>
<h3>The webinar was hosted on Wednesday, 22 December 2021, 17:00 SGT/HKT.</h3>
<p>Watch the session here:</p>
<p><iframe src="https://www.youtube.com/embed/4Fg8BY_AB30" width="560" height="315" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></p>
<p>Or subscribe to our podcast feed and listen on the go:</p>
<p><iframe src="https://open.spotify.com/embed/episode/3VTVMP16LaF4qNADYdHsb7?utm_source=generator" width="100%" height="232" style="border-radius: 12px;" frameborder="0" allowfullscreen="allowfullscreen" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture"></iframe></p>
<p>Eric Fernandez has 30+ years of research and investment banking experience in company modeling, equity valuation, and credit, which forms the backbone of Two Rivers Analytics' analytical approach. He founded Two Rivers to remedy a shortfall of traditional short idea generation which relies primarily on thematic, top-down processes. Instead, Two Rivers combines a methodical framework to sift through the universe looking for markers of various types of short candidates, which are subsequently vetted via traditional fundamental analysis.</p>

For our next Webinar, we are delighted to welcome Eric Fernandez, CFA. Eric will outline some of his top short trade ideas in the US market, based on his unique and comprehensive framework for identifying short sale candidates. 
The webinar was hosted on Wednesday, 22 December 2021, 17:00 SGT/HKT.
Watch the session here:

Or subscribe to our podcast feed and listen on the go:

Eric Fernandez has 30+ years of research and investment banking experience in company modeling, equity valuation, and credit, which forms the backbone of Two Rivers Analytics' analytical approach. He founded Two Rivers to remedy a shortfall of traditional short idea generation which relies primarily on thematic, top-down processes. Instead, Two Rivers combines a methodical framework to sift through the universe looking for markers of various types of short candidates, which are subsequently vetted via traditional fundamental analysis.

Smartkarma Webinar | Short Trade Ideas in the US

<ul>
<li>ATKR saw a spike in the sales price of key PVC products and was able to extract large price increases from customers.  Sales rose by 122% and EBITDA quadrupled.</li>
<li>Now, upstream PVC resin plants are coming back online.  Atkore’s competitors will become relevant again as supply and demand rebalance over the seasonal slowdown.</li>
<li>Multiples nearly ignore the upcoming reversion.  The stock trades at record multiples of FY2 and FY3 sales, EBITDA and earnings, long past when PVC prices and margins should normalize.</li>
</ul>


ATKR saw a spike in the sales price of key PVC products and was able to extract large price increases from customers.  Sales rose by 122% and EBITDA quadrupled.
Now, upstream PVC resin plants are coming back online.  Atkore’s competitors will become relevant again as supply and demand rebalance over the seasonal slowdown.
Multiples nearly ignore the upcoming reversion.  The stock trades at record multiples of FY2 and FY3 sales, EBITDA and earnings, long past when PVC prices and margins should normalize.


United States

Atkore Inc. manufactures and supplies metal products and electrical raceway solutions. The Company offers steel tubes and pipes, electrical conduit, armored wire and cable, cable trays, metal framing systems, and building components. Atkore International Group serves customers globally.

Atkore Inc (ATKR US)

Atkore Inc (ATKR): Stay Short

An Atkore short provides great opportunity created by a spike in product prices which will be resolved over the coming quarters. Estimates and...

Eric Fernandez, CFA

Dow Testing 1-Year Resistance at 34,280 Ahead of FOMC; Buy Ideas Within Manufacturing/Industrials

Dow $DJI Testing 1-Year Resistance at 34,280 ahead of FOMC. Breadth continues to improve within the Russell 2000 $IWM, and breadth improving within...

Vermilion Research

Review of Current Short Ideas

Current short ideas presented here: Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and...

Eric Fernandez, CFA

Smartkarma Webinar | Short Trade Ideas in the US

On 22 December, 5pm SGT, join our webinar on US short trade ideas. Insight Provider Eric Fernandez, CFA will outline his top ideas based on his...

Smartkarma Research

Atkore Inc (ATKR): Sell Short

Atkore is overearning due to a temporary supply shock which will reverse shortly. Sales & margins will drop. Estimates & valuations have not...

Eric Fernandez, CFA