Daily BriefsUnited States

United States: Microsoft Corp, Silver, Teladoc Health, Inc., US Treasury (10 Yr Generic), Atkore Inc, Social Capital Suvretta Holdings Corp and more

In today’s briefing:

  • Microsoft’s Activision Acquisition Is a Stupendous Deal
  • Microsoft – Thinking Through the ATVI Acquisition Further
  • Silver’s Bullish Break
  • Teladoc (TDOC US): Membership Add and Expanding Product Penetration to Drive 25–30% Top Line Growth
  • U.S. Equity Strategy: Market Sending Mixed Signals; Stick With Value; Energy Stocks Highlighted
  • Review of Current Short Ideas
  • The Nightcap from SPAC Track

Microsoft’s Activision Acquisition Is a Stupendous Deal

By Aaron Gabin

  • A blizzard of cost synergies we conservatively estimate at $500MM from lower distribution commissions, hosting costs, and cutting ATVI’s highly paid C-Suite.
  • Multiple strategic benefits: Catalyzes Microsoft’s XCloud streaming game service and Game Pass subscription offering….potentially offers greater leverage for app store negotiations with Apple and Google.
  • Accretive on valuation alone…MSFT is paying a 10% discount to ATVI’s 23x average forward PE from last few years. MSFT’s 11x forward P/S vs. ATVI’s 5.5x revalues ATVI’s revenues 2x.

Microsoft – Thinking Through the ATVI Acquisition Further

By Mio Kato

  • Our initial thoughts on Microsoft’s bid for Activision Blizzard were on the sceptical side given various signs of trouble at the company. 
  • In contrast the majority of commentary on the deal has been somewhere between positive and euphoric though there are monopoly concerns from customers. 
  • Yet the more we examine the implications the less we like this deal for Microsoft.

Silver’s Bullish Break

By Shyam Devani

  • Silver’s rally through& close above $23.43 amounts to a bullish break which should open the way for a move to at least the 200 day moving average, currently at $24.63.
  • The more important level from a medium term perspective is $25.40
  • What is quite note-worthy is that the recent rally came on a day when the USD was higher

Teladoc (TDOC US): Membership Add and Expanding Product Penetration to Drive 25–30% Top Line Growth

By Tina Banerjee

  • Teladoc Health, Inc. (TDOC US), the whole-person virtual care industry leader in scale, clinical breadth, and outcomes, reported 70% revenue CAGR over the last three years.
  • The company expects 25% annual expansion in revenue per member, which together with 1–5% per year growth in membership will lead to 25–30% revenue CAGR during 2021–2024.
  • Teladoc has a strong growth opportunity amid a large TAM of 298 million total insured lives in the U.S., of which the company has penetrated just 30%.

U.S. Equity Strategy: Market Sending Mixed Signals; Stick With Value; Energy Stocks Highlighted

By Joe Jasper

  • The market continues to send a mix of risk-on and risk-off signals, though most of the risk-on signals are centered around value Sectors.
  • Value Sectors such as Energy, Financials, Manufacturing/Industrials, and Materials are currently our favorite areas for investment, and also Consumer Staples.
  • Some of our big picture supports are being violated, including the Russell MicroCaps (IWC) which is breaking below $134 as the Russell 2000 (IWM) tests support at $207.50-$208.

Review of Current Short Ideas

By Eric Fernandez, CFA

  • 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.

The Nightcap from SPAC Track

By SPAC Track

  • Social Capital Suvretta Holdings Corp. III (DNAC: no warrants, common +0.01%) & ProKidney
  • Vishal Garg, founder and CEO of digital mortgage lender Better, [merging with Aurora Acquisition Corp. (AURC)] is staying on as CEO
  • Shares of SoFi rallied as more than 16% in after-hours trading on Tuesday following news that the fintech cleared its final regulatory hurdle in becoming a bank.

Before it’s here, it’s on Smartkarma