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

<ul>
<li>Key supports that we highlighted in last week's Compass (Sept. 7) held strong, including 3900-3910 on the SPX, $293 on the Nasdaq 100 (QQQ), $177-178 on the Russell 2000 (IWM).</li>
<li>We got the bounce where bulls needed to hold, but these levels could be tested again following this morning's hotter-than-expected CPI report.</li>
<li>As long as the aforementioned supports continue to hold, we continue to believe the lows are likely in for this bear market -- something we noted throughout late-July and August.</li>
</ul>


Key supports that we highlighted in last week's Compass (Sept. 7) held strong, including 3900-3910 on the SPX, $293 on the Nasdaq 100 (QQQ), $177-178 on the Russell 2000 (IWM).
We got the bounce where bulls needed to hold, but these levels could be tested again following this morning's hotter-than-expected CPI report.
As long as the aforementioned supports continue to hold, we continue to believe the lows are likely in for this bear market -- something we noted throughout late-July and August.


Supports to Be Tested Again Following CPI? Stick With Solar Stocks, Buying Manufacturing Names

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<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.


Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>New Covid cases across the world is surging. New Covid-19 variant found in South Africa and Botswana is adding to fears.</li>
<li>This will bring the focus back to molecular diagnostic companies due to increasing demand for Covid testing.</li>
<li>We have listed few global diagnostic companies, which should benefit from this backdrop.</li>
</ul>


New Covid cases across the world is surging. New Covid-19 variant found in South Africa and Botswana is adding to fears.
This will bring the focus back to molecular diagnostic companies due to increasing demand for Covid testing.
We have listed few global diagnostic companies, which should benefit from this backdrop.


New Covid Variant Raises Fear: Stocks to Own to Buck the Trend

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<ul>
<li>Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  </li>
<li>Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside </li>
<li>Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.</li>
</ul>


Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  
Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside 
Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.


SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Danaher designs, manufactures, and markets life science research tools, analytical instruments, reagents, consumables, and software as well as environmental  products and services. The company has over 20 businesses organized in three segments:  Life Sciences, with 51% of LTM revenues, Diagnostics with 32% and Environmental with 17%.
 We recommend selling DHR stock short (selling/avoiding for long managers).  The key elements of our short thesis are laid out below.
<ul>
<li>Sales spiked in Danaher’s Life Sciences and Diagnostics segments soon after the Covid pandemic surfaced.  These sales are unsustainable, in our view.</li>
<li>Danaher has weak organic growth, masked by a string of acquisitions.</li>
<li>
EBITDA margins added 1000bps over the past year, which we view as unsustainable.  </li>
<li>
The Covid pandemic will end through vaccination, therapeutics and natural attenuation resulting in the end of artificially inflated demand for Danaher’s products. </li>
<li>
We view estimates as too high with analysts largely extrapolating from current trends and levels.  
</li>
<li>
The stock is very expensive.  
</li>
<li>The company takes acquisition-related write-offs and benefitted from a reversion to lower tax rates last quarter.</li>
<li>
Potential Catalysts: We expect Danaher to show slower growth and lower margins which will cause a rerating of the stock and a cut in multiples.</li>
<li>
Risks:    Additional Covid variants could reignite the pandemic. We believe that is unlikely with the rapidly rising rates of global vaccination and the parallel development of therapeutics and additional vaccines.</li>
</ul>
 For further details, see the report below, and formatted PDF attached.

Danaher designs, manufactures, and markets life science research tools, analytical instruments, reagents, consumables, and software as well as environmental  products and services. The company has over 20 businesses organized in three segments:  Life Sciences, with 51% of LTM revenues, Diagnostics with 32% and Environmental with 17%.
 We recommend selling DHR stock short (selling/avoiding for long managers).  The key elements of our short thesis are laid out below.

Sales spiked in Danaher’s Life Sciences and Diagnostics segments soon after the Covid pandemic surfaced.  These sales are unsustainable, in our view.
Danaher has weak organic growth, masked by a string of acquisitions.

EBITDA margins added 1000bps over the past year, which we view as unsustainable.  

The Covid pandemic will end through vaccination, therapeutics and natural attenuation resulting in the end of artificially inflated demand for Danaher’s products. 

We view estimates as too high with analysts largely extrapolating from current trends and levels.  


The stock is very expensive.  

The company takes acquisition-related write-offs and benefitted from a reversion to lower tax rates last quarter.

Potential Catalysts: We expect Danaher to show slower growth and lower margins which will cause a rerating of the stock and a cut in multiples.

Risks:    Additional Covid variants could reignite the pandemic. We believe that is unlikely with the rapidly rising rates of global vaccination and the parallel development of therapeutics and additional vaccines.

 For further details, see the report below, and formatted PDF attached.

Danaher Corp (DHR):  Sell Short on an Overearning Thesis.

United States

Danaher Corporation designs, manufactures, and markets professional, medical, industrial and commercial products, and services in the sectors of test and measurement, environmental, life sciences, dental, and industrial technologies.

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Danaher (DHR UN)

Supports to Be Tested Again Following CPI? Stick With Solar Stocks, Buying Manufacturing Names

Supports discussed in recent weeks have held, including 3900 on $SPX, $293 on $QQQ, and $177-178 on $IWM. These levels could be tested again...

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

New Covid Variant Raises Fear: Stocks to Own to Buck the Trend

Amidst the rising fear for the new Covid variant, investors can focus on molecular diagnostic stocks, as testing demand will be increasing again.

Tina Banerjee

SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Despite the long timeline restructuring play, there is a good case to be made for investors to use the lull in the share price to jump onto the GE...

Robert Sassoon

Danaher Corp (DHR): Sell Short on an Overearning Thesis.

Megacap life science & diagnostic company Danaher (DHR) is overearning due to Covid. We highlight weak organic growth, unsustainable margins,...

Eric Fernandez, CFA

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