In today’s briefing:
- Small-Caps Starting to Lead; Short-Term Flag Patterns on Major Indexes; Ideas in Energy & Materials
- Shockwave Medical Inc (SWAV US): An Emerging High-Quality Cardiovascular Devices Idea
- Why Would A16z Launch a $4.5B Investment Fund Now?
- Diamond Hill Mid Cap Fund Q1 2022 Market Commentary
- Rhizome Partners Q1 2022 Investor Letter
- Diamond Hill Large Cap Concentrated Fund Q1 2022 Market Commentary
- Diamond Hill Large Cap Fund Q1 2022 Market Commentary
- Horizon Kinetics 1st/2nd Quarter Interim Commentary
Small-Caps Starting to Lead; Short-Term Flag Patterns on Major Indexes; Ideas in Energy & Materials
- We continue to see the current environment as a bear market rally with the potential for it turn into something more following bullish breadth thrust signals.
- The SPX and NDX have been treading water for a week (bull flags?), but the Russell 2000, DAX, Hang Seng, MSCI China (MCHI), and KWEB have continued to move higher.
- We are also seeing major bullish reversals on Europe’s STOXX 50 and Japan’s Nikkei 225, topside 6- and 9-month downtrends, respectively. These are far from bearish signs.
Shockwave Medical Inc (SWAV US): An Emerging High-Quality Cardiovascular Devices Idea
- Shockwave Medical Inc (SWAV US), with its differentiated local delivery of sonic pressure waves for the treatment of calcified plaque, seeks to establish a new standard of care through IVL.
- The company is advancing IVL system for multiple large addressable markets totaling over $8.5B. Shockwave’s revenue has five-year CAGR of 244%, with continued improvement in gross margins.
- Ongoing clinical programs to expand geographies and indications should further accelerate growth. Recently, the company obtained marketing approval in China and Japan.
Why Would A16z Launch a $4.5B Investment Fund Now?
- We believe in certain inalienable truths from this industry that seem independent from any economic cycle
Crypto is highly efficient. Protocols running on distributed networks achieve things that would otherwise require massive investments in hardware and software services and teams.
Crypto is also one of the most attractive destinations for high-quality, high-drive talent. In the last years, the inflow of capital from VCs has made Web3 compete head to head with Web2
Diamond Hill Mid Cap Fund Q1 2022 Market Commentary
- Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
- Amid a rocky market quarter overall, Diamond Hill Mid Cap Fund’s negative returns still outpaced the Russell Midcap Index by a healthy margin in Q1.
- After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
- From current levels, equity market returns over thenext five years are likely to be below historical averages.
Rhizome Partners Q1 2022 Investor Letter
- Rhizome Partners LP is a Delaware limited partnership, aims to achieve long-term capital appreciation while limiting the risk of loss.
- For the first quarter of 2022, Rhizome Partners generated a net loss of 9.9% versus a 4.6% loss.
- We may be experiencing a regime change in the market in 2022.
- Investors seem to have started to favor profitable companies trading at low multiples of existing cash flow over companies with uncertain payoffs in ten years.
- We still favor good businesses with healthy margins, good balance sheets, structural moats, high returns on invested capital, rational competitors, pricing power, and reasonable growth.
Diamond Hill Large Cap Concentrated Fund Q1 2022 Market Commentary
- Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
- During a volatile quarter, Diamond Hill Large Cap Concentrated Fund performed roughly in line with the Russell 1000 Index.
- The market environment in Q1 provided a meaningful opportunity for us to initiate positions in high-quality names.
- From current levels, equity market returns over the next five years are likely to be below historical averages.
Diamond Hill Large Cap Fund Q1 2022 Market Commentary
- Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
- During a volatile quarter, Diamond Hill Large Cap Fund held up better than the Russell 1000 Index by a decent margin in Q1.
- After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
- From current levels, equity market returns over the next five years are likely to be below historical averages.
Horizon Kinetics 1st/2nd Quarter Interim Commentary
- Horizon Kinetics LLC, founded in 1994, is an independently owned and operated investment adviser. With a long-term absolute return mindset, and based on first-hand research, our portfolios tend to be concentrated and avoid tracking or mimicking any benchmark or index.
- Texas Pacific Land Corp is entering into a strategic alliance with two cryptocurrency mining companies to develop a mining operation on some of TPL’s land.
- The public discussion has now turned to how “aggressive” the central bank will be in raising interest rates in order to try to stem inflation.
- Debt-to-GDP ratio can increase for a very prolonged period of time, like the 39 years from1980 to 2019, without the economy experiencing serious inflationary pressures.
- If the supply of oil were to grow even as high as 2% a year, while the supply of currency to pay for it is growing at 12% a year, then the price of oil measured in currency is going to go up.
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