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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>Political policies could affect markets across the spectrum.</li><li>The incoming administration’s more hawkish attitude when it comes to potentially destabilizing implementation of tariffs as a political rather than economic tool could result in greater volatility when it comes to commodity and finished goods pricing and availability, while its greater focus on domestic energy production and onshoring of supply chains could provide opportunities and lead to lower energy and logistics costs.</li><li><p>Lower energy and feedstock costs could drive margin improvement. </p></li></ul>

Political policies could affect markets across the spectrum.The incoming administration’s more hawkish attitude when it comes to potentially destabilizing implementation of tariffs as a political rather than economic tool could result in greater volatility when it comes to commodity and finished goods pricing and availability, while its greater focus on domestic energy production and onshoring of supply chains could provide opportunities and lead to lower energy and logistics costs.Lower energy and feedstock costs could drive margin improvement. 

WTR Small-Cap Spotlight Recap - Trends That Could Shape Chemicals and Materials Industries in 2025

<ul><li>WTR-CMI last week. Driven by the recovery in lithium stocks, our WTR-CMI index of 30 specialty chemicals and materials technology stocks rose 1.7% for the week, handily outperforming mostly flattish performance of large cap tech-heavy S&amp;P 500 as well as the broader Russell 2000 indices.</li><li>YTD the WTR-CMI continues to outperform the Russell 2000 (13.6% vs. 9.8%) and on YoY basis our index nearly kept up with S&amp;P 500’s strong 33.8% rise by appreciating 31.1% compared to Russell 2000’s 24.6% improvement.</li><li>Hurricane season kicks into high gear. While the impact of hurricane Helena are still being assessed, Francine’s impact on oil and gas production and barge traffic are already being felt in the markets, with gulf coast oil production down nearly 40% and natural gas production down nearly 50%, with barge fleets staying away from the region until weather settles, which now looks to be delayed due to Helena’s destructive path.</li></ul>

WTR-CMI last week. Driven by the recovery in lithium stocks, our WTR-CMI index of 30 specialty chemicals and materials technology stocks rose 1.7% for the week, handily outperforming mostly flattish performance of large cap tech-heavy S&amp;P 500 as well as the broader Russell 2000 indices.YTD the WTR-CMI continues to outperform the Russell 2000 (13.6% vs. 9.8%) and on YoY basis our index nearly kept up with S&amp;P 500’s strong 33.8% rise by appreciating 31.1% compared to Russell 2000’s 24.6% improvement.Hurricane season kicks into high gear. While the impact of hurricane Helena are still being assessed, Francine’s impact on oil and gas production and barge traffic are already being felt in the markets, with gulf coast oil production down nearly 40% and natural gas production down nearly 50%, with barge fleets staying away from the region until weather settles, which now looks to be delayed due to Helena’s destructive path.

Mat-Chem Notes -  Hurricanes, Port Strikes, Geopolitics, and Crosscurrents in EVs

<ul><li>WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.</li><li>YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- <span style="font-size: var(--content-font-size);">plus declines.</span></li><li>Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.</li></ul>

WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- plus declines.Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

<ul><li>We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.</li><li>Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.</li><li>WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.</li></ul>

We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.

Water Tower Hour Recap -  2023 Review and 2024 Outlook

<ul><li>Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.</li><li>WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.</li><li>Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. </li></ul>

Changes to WTR-CMI. Following the completion of Livent’s merger of equals with Allkem, the new company, with the new name Arcadium Lithium plc, is now trading under the symbols ALTM-NYSE and LTM-ASX, and has replaced LTHM in our index.WTR-CMI last week. The S&amp;P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.Our WTR-CMI Index declined 1.2%, dragged down by double-digit losses in lithium stocks and the continuing decline in the value of synthetic graphite maker EAF. 

Mat-Chem Notes - For the Week Ended January 19, 2024

United States

Compass Minerals International, Inc. produces highway deicing salt in North America and the United Kingdom.  The Company also produces general trade salt and sulfate of potash.  Compass Minerals sells its highway deicing salt primarily to state, provincial, county, and municipal highway departments for deicing applications.

Compass Minerals International, Inc (CMP US)

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Compass Minerals International, Inc (CMP US)

WTR Small-Cap Spotlight Recap - Trends That Could Shape Chemicals and Materials Industries in 2025

On the latest WTR Small-Cap Spotlight, we discussed our high-level views of the specialty chemicals and materials technology industries heading...

Water Tower Research

Mat-Chem Notes - Hurricanes, Port Strikes, Geopolitics, and Crosscurrents in EVs

Driven by the recovery in lithium stocks, our WTR-CMI index of 30 specialty chemicals and materials technology stocks rose 1.7% for the week

Water Tower Research

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

YTD, the S&P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming...

Water Tower Research

Water Tower Hour Recap - 2023 Review and 2024 Outlook

WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the...

Water Tower Research

Mat-Chem Notes - For the Week Ended January 19, 2024

WTR-CMI last week. The S&P 500 appreciated 1.2% last week, while the broader Russell 2000 managed to stay relatively flat, losing 0.3% of its value.

Water Tower Research

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