In today’s briefing:
- RH: A One-Of-Its-Kind Business
- Short Idea – BigBear.ai (BBAI-US)
- Ford Stock – Risk Factors To Consider
- Shift To Defensives as $ACWI Makes Push for $93; Remain Overweight Europe; Opptys in China/HK, Japan
- Boom, Bust, Reboot, Rebalance: ESG Index Funds And “Greenwashing” Regulations
- PACCAR Inc.: Initiation of Coverage – Business Strategy & Key Drivers
- PACCAR Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- IAC/InterActiveCorp: Detailed Credit Analysis & Financial Strength Evaluation Report
- AECOM: Detailed Credit Analysis & Financial Strength Evaluation Report
- IAC/InterActiveCorp: Initiation of Coverage – Business Strategy & Key Drivers
RH: A One-Of-Its-Kind Business
- RH is the only luxury lifestyle brand at scale on this planet;
- Both qualitative and quantitative evidence point to the emerging and probably widening economic moat around the business;
- We see rich optionality regarding RH’s growth trajectory moving forward;
Short Idea – BigBear.ai (BBAI-US)
- Another smallish one, but EV of ~$500m (bigger than PRST but still illiquid b.c. low free-float).
- Equity is probably not worth much more than $0. I’m not short this yet, because I fear that management still has some fight left in it to ride the AI-hype.
- I want to get my timing right. It is a heavily shorted stock which has been the victim of squeezes multiple times in the past. And I don’t much fancy getting my head ripped off.
Ford Stock – Risk Factors To Consider
- The company’s financial statements reveal a few critical concerns relating to a receivables build-up, increasing credit allowances, and high short-term borrowing.
- The firm’s misfortunes were due to non-core events such as impairments, marketable security losses, and abnormal inflation.
- The economy is on a knife’s edge, and cyclical stocks such as Ford Motor Company (NYSE:F) look like 50:50 bets.
Shift To Defensives as $ACWI Makes Push for $93; Remain Overweight Europe; Opptys in China/HK, Japan
- The MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), EAFE (EFA-US), and EM (EEM-US) are all reversing topside their 2-month downtrends.
- Despite this being a bullish short-term development, we still expect $93 to cap upside on the ACWI-US, leaving about 4-5% upside from here (at time of writing)
- As a result, we would use any further strength as an opportunity to get more defensive. Actionable Themes: REA-AU, GFL-CA, GFL-US, Consumer Staples, Health Care, and Gold Miners
Boom, Bust, Reboot, Rebalance: ESG Index Funds And “Greenwashing” Regulations
- Whatever one calls it – a boom-going-bust, a bubble bursting, a market correcting – the ESG party that has raged for years appears to be winding down for certain investors.
- Some partygoers have over-indulged in the ESG Kool-Aid, and regulators have the perfect elixir to sober them up – new and often confusing “anti-greenwashing” investing regulations.
- Particularly consequential for indexed ESG funds. Index providers and asset managers struggle to comply, evidenced by recent methodology changes, reconstitutions, and fund closings.
PACCAR Inc.: Initiation of Coverage – Business Strategy & Key Drivers
- This is our first report on PACCAR, the largest manufacturer of medium and heavy-trucks in the world.
- Pretax earnings at PACCAR Parts reached $380 million, a 23% increase over the same time in the previous year.
- Fourth quarter revenues at PACCAR Parts were a solid $1.47 billion and the company delivered an all-around beat.
PACCAR Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- PACCAR is among the world’s largest manufacturers of medium and heavy trucks.
- PACCAR saw an increase in truck production as well as the completion of almost all the cars that still needed components.
- Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.
IAC/InterActiveCorp: Detailed Credit Analysis & Financial Strength Evaluation Report
- IAC/ InterActiveCorp is a major media and internet player publishing original and engaging digital content in the form of articles, illustrations, and videos and images across various fields.
- They had a HomeAdvisor that connected customers with service providers based on what the customer wanted to be done and what the service provider was qualified to accomplish.
- Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.
AECOM: Detailed Credit Analysis & Financial Strength Evaluation Report
- AECOM is one of the largest professional infrastructure consulting players in the world.
- AECOM’s management is focusing on its investments to go after transformative growth opportunities where it has a competitive edge.
- Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.
IAC/InterActiveCorp: Initiation of Coverage – Business Strategy & Key Drivers
- This is our first report on IAC, a major media and internet player publishing original and engaging digital content in the form of articles, illustrations, and videos and images across various fields.
- They had a HomeAdvisor that connected customers with service providers based on what the customer wanted to be done and what the service provider was qualified to accomplish.
- Looking forward, IAC’s management intends to increase margins by generating additional revenue from a fixed-cost basis and they anticipate double-digit revenue growth in the coming quarters.
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