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https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
Value Spotlight (Andrew Sather)
ROIC vs WACC (Tutorial): Donuts Gone Stale.
Stay away from this value trap. One of the 18 Most Dangerous Small Caps on @NewConstructs platform for Dec 24. S/O to @finchat_io for their always quick and beautiful charts. https://t.co/9YTJYf4AN2
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Stock Analysis Compilation
Bell AM on Nvidia $NVDA US
Thesis: NVIDIA is a strong investment opportunity despite recent setbacks, supported by confident growth prospects in AI infrastructure and conservative consensus estimates on GPU demand.
(Extract from their September letter) https://t.co/c8udq0ubiX
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Startup Archive
Jeff Bezos on the problems with proxies and managing to metrics
“One of the things that happens in business is that you develop certain things that you’re managing to—a typical case would be a metric. And that metric isn’t the real underlying thing.”
To illustrate his point, he suggests a hypothetical example of company that designates “customer returns per units sold” to be an important metric:
“The person who invented that metric and decided it was worth watching had a reason. And then when you fast forward five years, that metric is the proxy. In this case, it’s a proxy for customer happiness. But that metric is not actually customer happiness.”
He continues:
“Five years later, a kind of inertia can set in and you forget the truth behind why you were watching that metric in the first place. And the world shifts a little. And now that proxy isn’t as valuable as it used to be—or it’s missing something. You have to be on alert for that.”
You have to keep in mind that you don’t really care about the metric. What you care about is customer happiness, and the metric is only worth putting energy into and scrutinizing to the extent that it actually improves customer happiness.
“It’s very common and it’s a nuanced problem—especially in large companies—that they are managing to metrics that they don’t really understand. They don’t really know why [these metrics] exist. And the world may have shifted out from under them a little, and the metrics are no longer as relevant as they were when somebody ten years earlier invented them.”
You need metrics and can’t ignore them, but you have to make sure you really understand them and why they were invented in the first place.
“This is a way to slip into day 2 thinking — managing your business to metrics that you don’t really understand.”
Video source: @lexfridman (2013)
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Ahmad Jivraj
The FOMO Unwind today
$IONQ -42%
$RGTI -48%
$QUBT -47%
$DATS -64%
$LAES -33%
$WIMI -30%
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Quiver Quantitative
RT @QuiverCongress: JUST IN: @SenTedCruz has introduced legislation to create congressional term limits.
Follow here for updates. https://t.co/j3L8msY9jW
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InsideArbitrage
Transcarent to Acquire Accolade $ACCD for $621 Million -
✴️Transcarent will acquire Accolade for $7.03 per share in cash, representing a premium of 109.85% from the stock’s last close.
✴️Once the acquisition is completed, expected in Q2 2025, Accolade will become a privately owned company.
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Investing visuals
Palantir $PLTR quarterly revenue per employee is $192.000 as of Q3 '24 and the highest it's ever been.
That's $768.000 on a yearly basis🤯 https://t.co/C2uuzQA8ag
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InsideArbitrage
Cintas Makes $CTAS $5.1 Billion Takeover Offer for Uniform Supplier UniFirst $UNF - WSJ
👔Cintas proposed acquiring all of UniFirst’s outstanding common and Class B shares for $275 apiece, in cash.
👔Cintas plans to publicize its offer imminently after UniFirst’s board refused multiple times to engage further in any deal talks.
👔UniFirst's discussions with Elis SA in October 2024 had ended without the companies reaching any agreement.
Elis SA made an informal takeover proposal to U.S. peer UniFirst $UNF - Bloomberg
⏩UniFirst reached out to Elis to gauge its appetite for a deal after Elis’s takeover approach to rival Vestis $VSTS became public last month.
⏩Elis made a non-binding proposal for UniFirst, whose board rejected it in recent days, and the companies aren’t currently in talks.
⏩It remains to be seen whether the interest in UniFirst will be revised.
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InsideArbitrage
Getty Images $GETY and Shutterstock $SSTK to Merge in a $3.7 Billion Deal -
📸Shutterstock shareholders can choose one of three options at closing: $28.85 in cash per share, 13.67 shares of Getty Images stock per share, or a combination of 9.17 Getty Images shares and $9.50 in cash per Shutterstock share.
📸The merged company will be called Getty Images Holdings, Inc. and will keep trading on the New York Stock Exchange under the symbol “GETY.”
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Hidden Value Gems
Food for thought from Ruchir Sharma via @FT
🧵 👇🏼
Ten trends to watch in 2025
1️⃣ Return of the contrarians
History shows that the global economy and markets move in cycles, not straight trend lines. Contrarian investing is rooted in these patterns.
1/11 https://t.co/wkMwOKI2Lp
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InsideArbitrage
🚀 $ULTA Ulta Beauty announced that David C. Kimbell has stepped down as CEO and Board member, effective January 6, 2025.
Kecia L. Steelman, currently President and Chief Operating Officer, has been appointed as the new CEO. Kimbell will remain with the company as an advisor through June 28, 2025
Kecia Steelman has been with Ulta Beauty since 2014, holding key roles such as Chief Store Operations Officer and COO.
💼 Steelman’s compensation as CEO includes a base salary of $1.35 million
📈 David C. Kimbell, who served as CEO since 2021, led Ulta to achieve over $11 billion in annual revenue and a 55% return on equity.
Strong Financial Performance: Under Kimbell’s leadership, the company delivered strong financial performance, with current earnings per share at $25.04.
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InsideArbitrage
Ansys $ANSS entered an agreement to sell its PowerArtist business to Keysight Technologies $KEYS -
✴️Ansys and Synopsys $SNPS determined that the sale of PowerArtist was necessary to obtain regulatory approval for Synopsys' acquisition of Ansys.
✴️Synopsys' acquisition of Ansys is pending regulatory approvals and is expected to close in the first half of 2025.
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Quiver Quantitative
RT @QuiverCongress: JUST IN: @RepBrianFitz has introduced legislation to create congressional term limits.
It would limit Representatives to 6 terms, and limit Senators to 2 terms.
Follow here for updates. https://t.co/Cba8E8l21d
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Dimitry Nakhla | Babylon Capital®
Less than 2 months ago I stated:
“Today at $672💵 $ASML appears to be a STRONG consideration for investment, albeit with extreme volatility”
$ASML shares increased +14% since ✅
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See the analysis below for a detailed explanation of WHY it was a strong consideration then👇🏽 https://t.co/AKReJSOSHA
A sober valuation analysis on $ASML 🧘🏽♂️
•NTM P/E Ratio: 27.32x
•10-Year Mean: 31.07x
•NTM FCF Yield: 3.41%
•10-Year Mean: 3.11%
As you can see, $ASML appears to be trading below fair value
Going forward, investors can receive ~13% MORE in earnings per share & ~10% MORE in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)
BALANCE SHEET✅
•Cash & Short Term Inv: $5.57B
•Long-Term Debt: $5.24B
$ASML has a strong balance sheet & 31x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 17.5%
•2020: 21.6%
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•LTM: 38.0%
RETURN ON EQUITY✅
•2019: 21.4%
•2020: 26.9%
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•LTM: 49.2%
$ASML has excellent return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2013: $7.22B
•2023: $30.42B
•CAGR: 15.46%
FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
NORMALIZED EPS✅
•2013: $3.17
•2023: $21.65
•CAGR: 21.18%
SHARE BUYBACKS✅
•2018 Shares Outstanding: $426.40M
•LTM Shares Outstanding: 393.80M
By reducing its shares outstanding ~7.6%, $ASML increased its EPS by ~8.2% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 51.1%
•LTM Operating Margins: 30.7%
•LTM Net Income Margins: 26.4%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~13% MORE in EPS & 10% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 13.61% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (13.61%) required growth rate:
2024E: $20.22 (-4.0% YoY) *FY Dec
2025E: $24.66 (21.9% YoY)
2026E: $31.31 (27.0% YoY)
2027E: $38.22 (22.8% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~8% below current estimates) & see its CAGR potential assuming different multiples:
29x P/E: $1,015💵 … ~15.2% CAGR
28x P/E: $980💵 … ~13.9% CAGR
27x P/E: $945💵 … ~12.6% CAGR
26x P/E: $910💵 … ~11.2% CAGR
As you can see, $ASML appears to have attractive return potential EVEN if we assume greater or equal to 26x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)
Today at $672💵 $ASML appears to be a strong consideration for investment, albeit with extreme volatility
Additionally, we have some margin of safety by relying on a lower multiple, lower growth rate
As I’ve stated before, given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬[...]
Stock Analysis Compilation
Polen Capital on Exlservice $EXLS US
Thesis: Exlservice is leading the charge in data transformation with 95% renewal rates and strong AI partnerships—discover why this overlooked tech player is a must-watch
(Extract from their Q3 letter) https://t.co/d0Pltn6pQV
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App Economy Insights
RT @EconomyApp: 📈 How to Analyze a Stock
6 questions to ask before you click “buy” 👇
https://t.co/HroFFEvo9F
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Investing visuals
Alphabet $GOOGL: A Cloud giant and ads market leader for a reasonable price👌 https://t.co/SswXmIoW5a
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Dimitry Nakhla | Babylon Capital®
Let’s take a look at $MA & $MA impressive 10-year track record (2014-2024) 💳
As you can see below, $MA & $V have delivered excellent returns relative to the broader market, with a higher Sharpe ratio meaning they’ve achieved a better risk-adjusted return 📊 https://t.co/UazJvwQkz5
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Stock Analysis Compilation
Baron Fifth Avenue Growth Fund on KKR $KKR US
Thesis: KKR & Co. Inc. is a leading alternative asset manager poised for significant growth through its diversified investment strategies and expansion in less penetrated markets like Asia.
(Extract from their Q3 letter) https://t.co/efA7sbDKEH
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Stock Analysis Compilation
Hedge funds' best ideas #26 is in your inbox 🔥
(link in bio)
Includes links to the Q3 letters & articles from Artisan Partners / Hotchkis & Wiley / Liontrust / Madison funds / Mar Vista / Mayar Capital / Newbridge AM / Orbis / Parnassus / Perritt CM / Polen Capital / Rewey AM / Riverwater Partners / Royal London AM / Royce IP / RS Investments / THB AM
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Quiver Quantitative
JUST IN: Representative Virginia Foxx just disclosed a sale of up to $100K of stock in Pembina Pipeline, $PBA.
$PBA is a Canadian pipeline company.
Probably bearish for trade between the US and Canada. https://t.co/wGXkoGFrQw
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Quiver Quantitative
RT @QuiverCongress: JUST IN: Representative David Schweikert just introduced legislation to let authorized AI models prescribe drugs.
Follow here for updates. https://t.co/bjrDgI7Zez
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InsideArbitrage
Poseida Therapeutics $PSTX announced that it filed a Premerger Notification and Report Form under the HSR Act on December 6, 2024, for its merger with Roche.
The waiting period under the HSR Act expired on January 6, 2025.
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Startup Archive
Naval Ravikant: “The future will be almost all startups”
“I firmly believe that the efficient size of a company is shrinking very rapidly, and so the future will be almost all startups.”
In the clip below from a 2012 interview, Naval speculates that information technology will reverse the centralizing force of economies of scale following the Industrial Revolution.
“I think the contract work trend is going to increase, and I think the size of your average company is going to decrease. I think we’re going to see more and more billion dollar businesses built by four or five people, and it’ll stay at that.”
He doesn’t think we’ll see many more companies like Facebook or Google with tens of thousands of employees:
“I think any entrepreneur worth their salt could today build Facebook with a few hundred people… Facebook and Google are in the situation that large companies end up in where the founders know that 80% of the people are not really needed, they just don’t know which 80%.”
Video source: @PandoDaily (2012)
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InsideArbitrage
Stryker $SYK Acquires Inari Medical $NARI in an All-Cash Deal Worth $4.9 Billion :
🩺Under the terms of the agreement, Stryker will commence a tender offer for all outstanding shares of Inari’s common stock for $80 per share in cash, representing a premium of 60.74% from the stock’s last close.
🩺The deal is expected to close by the end of the first quarter of 2025.
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Quiver Quantitative
RT @QuiverCongress: NEW: @RepMikeLevin has introduced legislation to provide a tax credit for purchases of safe gun storage devices. https://t.co/SK1r7ZUzwv
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App Economy Insights
$AMD reveals next-gen chips at CES:
💼 Dell Pro PCs: 1st with Ryzen AI PRO.
💻 Ryzen AI 300/200: AI for all budgets.
🖥️ Ryzen AI Max: 128GB memory, 50 TOPS.
🎮 Ryzen Z2 & 9950X3D: New gaming CPUS.
What caught your eye?
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𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲. - Dimitry Nakhla | Babylon Capital® tweet
Dimitry Nakhla | Babylon Capital®
A snapshot view of $BKNG & $ABNB ✈️
$BKNG NTM P/E: 24.13x
$ABNB NTM P/E: 33.05x
$BKNG 3-Year EPS CAGR*: 17.02%
$ABNB 3-Year EPS CAGR*: 19.91%
Is $ABNB 37% valuation premium over $BKNG justified? … 💬
*Forecasted EPS Growth 2025-2028 📊 https://t.co/RPZoGEofXL
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Quiver Quantitative
Intapp stock has now risen 101% since Representative Josh Gottheimer's purchase in April.
He is the only member of Congress who we have ever seen trade $INTA. https://t.co/Ld3hNE3MPy
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