In today’s briefing:
- AAPL and MSFT Support Breaks that Would Implode the US Cycle
- FB: “Planning to Slow the Pace of Our Investments” In the Metaverse.
- Buy High, Sell Low
- Aristotle Capital Management Global Equity 1Q 2022 Commentary
- Graftech Q1 2022: Debt Deleveraging Continues, LTA Pricing Overhang An Issue
- Palantir 1Q22 Earnings: War Supposedly Good for Business?
- Revisiting Long Ideas: Match Group
- Positioning and Imbalances
- Aristotle Capital Management Value Equity 1Q 2022 Commentary
- Weekly Stock Bullfinder- Week of 5/9
AAPL and MSFT Support Breaks that Would Implode the US Cycle
- Apple and Microsoft are pressing on pivotal supports that would weigh on the US equity cycle after the April 26 red flag for defensives and resource stocks to sell off.
- Mounting to break AAPL and MSFT key supports at 150 and 270 that would inflection the SPX cycle further given the SPX is flirting with a key break below 4,100/4,030.
- AAPL and MSFT support breaks target AAPL 120 and MSFT 220.
FB: “Planning to Slow the Pace of Our Investments” In the Metaverse.
- Meta Platforms surprised investors in Q1 but not because the quarter was outstanding. Rather, it wasn’t as bad as some had assumed.
- In an unusual turn of events, Zuckerberg’s earnings call appearance resulted in whispering sweet nothings into investors’ ears
- However great that might be, the quarter provided no conclusive update on the loss of signal from Apple’s iOS updates, with management offering on-platform messaging/commerce as a potential sidestep
Buy High, Sell Low
- Markets have been polarised in their opinion about star stock picker Cathie Wood and her investment fund Ark Invest over the last few years.
- ARK’s growth-heavy ETFs surged at the height of the pandemic only to see a steep drop recently.
- While Cathie Wood’s investment strategy in innovation-driven companies will likely outperform markets over the long run, her entry and exits in certain stocks have been highly perplexing.
Aristotle Capital Management Global Equity 1Q 2022 Commentary
- For the first quarter of 2022, Aristotle Capital’s Global Equity Composite posted a total U.S.
- dollar return of -9.19% gross of fees (-9.28% net of fees) The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management.
Graftech Q1 2022: Debt Deleveraging Continues, LTA Pricing Overhang An Issue
- GrafTech International Ltd (EAF US) reported solid results for Q1 2022. The stock still continues to look cheap at 4.7x FY22 PE.
- The debt deleveraging target of 400 mn USD a year seems on track, and the company will be zero debt by FY23. FCF yield is 24% at the current price.
- The company also bought back 30 mn USD of stock (3 mn shares @9.88 USD/share representing 1.1% of the outstanding shares) in Q1 2022.
Palantir 1Q22 Earnings: War Supposedly Good for Business?
- Revenue growth ex-SPAC decelerated to 19% this quarter, 11% below consensus.
- 1Q22 20% operating margins vs. consensus 27% margins as the company invests to reaccelerate growth in 2H from rising government contracts due to war.
- Alex Karp warns that nuclear war in Ukraine is being dramatically underestimated.
Revisiting Long Ideas: Match Group
- Match is down 52% over the past 6 months and at $71, Match trades at a 5% FCF yield, ~17x Fwd EBITDA, for ~20% growth / ~35% EBITDA margin
- Covid restrictions lifted in Japan (2nd biggest market) should be tailwind for 2H22
- New CEO from Zynga brings unique mobile monetization skillset ideally suited for coming Tinder Coins summer launch.
Positioning and Imbalances
- Efforts to identify peak inflation and yields or lows in growth stocks and new investments have not worked in 2022.
- The assumption has been that prices should revert towards the mean once they have moved 3-5 standard deviations away as they have done in the last decade.
- If we use what has happened to yield in the last 35+ years as a framework. You would continue to look for peak yields as soon as we start approaching the trend channel or key resistance and plotting the next financial crisis to coincide with yield reversals.
Aristotle Capital Management Value Equity 1Q 2022 Commentary
- For Q1 2022, Aristotle Capital’s Value Equity Composite posted a total return of -7.19% gross of fees.
- The labor market continued to improve and inflation continued to rise, resulting in tighter monetary policy.
- The labor markets continued to improving and inflation continues to rise.
Weekly Stock Bullfinder- Week of 5/9
- Lost in all the hoopla of the annual Berkshire Hathaway annual meeting this past year was the significant investments Warren Buffett has made over the past 6 months in the oil and gas energy sector.
- MGP Ingredients, Inc., together with its subsidiaries, produces and supplies distilled spirits, branded spirits, and food ingredients.
- The Chemours Company provides performance chemicals in North America, the Asia Pacific, Europe, the Middle East, Africa, and Latin America
Before it’s here, it’s on Smartkarma
