Singular Research Director’s Letter : September 2014

Month to Month Up and Down Continues

Continuing the pattern of recent months, the Russell 2000 index rallied in August, recouping much of the loss from July.  For the month, the Russell 2000 was up 4.8%.  Thus far in 2014 we have seen four up months and four down months for the Russell 2000 with the net gain for the year at 0.9%.  Notably, this compares with the S&P 500 which has performed better with six positive months versus two in the red for a net gain of 8.3%.

On the economic front, Durable Goods Orders had an eye-catching headline print of 22.6% but closer review reveals the gain was driven primarily by aircraft orders at Boeing.  Motor Vehicle Orders were also positive at 10.2% for July.  However, ex-transportation, Durable Goods Orders slipped 0.8%.  Even so, June revisions were positive and the general sentiment is that overall, manufacturing is picking up, which helped drive the indices higher.

 

For August, the S&P 500 was up 3.7%, the Russell 2000 was up 4.8% and the aggregate Singular List was up 4.1%.  For the trailing twelve months, the S&P was up 16.9%, the Russell 2000 was up 11.4%, and the Singular Research List was up 12.4%.  We had two new initiations in August – both BUY rated.  We initiated coverage of IT provider Black Box Corporation (BBOX) with a $31 price target and industrial electrical supply company American Electric Technologies (AETI) with an $8.40 price target.

Our top five performers in August include companies from a variety of industries with all of the five easily outpacing the gain of the Russell 2000, delivering significant alpha.  As our table shows, the top performing company on the Singular List in June was SA.  We increased our price target on the shares from $10.15 to $14 as the company received approval for its environmental assessment application from provincial regulators for the KSM project.  At the margin, as we note in our coverage of the company, its mining resources are located in relatively safe areas from a geopolitical perspective and given the recent global hotspots, investors may be according incremental value to this factor.

As with our top performers, our worst performers in August were also from a variety of industries and with a range of reasons for the declines.  Our worst performer was BONE, which conducted a secondary offering at a fairly sizable discount following a reverse split.  The company is still working to get its sales force realignment clicking but we remain confident that management has the track record to get the job done.

At Singular Research we continue to seek out investment ideas that have minimal to no Wall Street coverage.  There are a number of uncovered and under-covered names we have been investigating, and we plan to launch coverage on several names in the coming weeks.  We thank our clients for your support of independent equity research.

 

Sincerely,
Jeremy Hellman, CFA
Chief Operating Officer

Barrons.com: LSB Industries’ Value Could Nearly Double

LSB Industries’ Value Could Nearly Double > Click to read the latest article at Barrons.com

Symbol: LXU

Singular Research Director’s Letter : July 2014

Small Caps Post Strong Advance

 

Following a volatile May, small caps found resolution in terms of direction with a solid advance in June. Although final Q1 GDP came in even lower than anyone expected at -2.9%, the market shrugged the data point off, with small caps leading the charge higher. External geopolitical events continue to feature in the news but with small caps less exposed internationally than larger cap peers, the xRussell 2000 index outperformed the S&P 500 by roughly 3%.

In looking for an explanation for the June performance, continued jobs growth looks to be one point that investors can hang their hats on. The most recent non-farm payrolls reading in June came in at 288,000, up from 224,000 in May and 304,000 in April. Overall, the employment report indicates that job growth is gaining momentum which, in turn, bodes well for Q2 GDP.

For June, the S&P 500 was up 1.84%, the Russell 2000 was up 4.94% and the aggregate Singular List was up 3.78%. For the trailing twelve months, the S&P was up 18.3%, the Russell 2000 was up 19.7%, and the Singular Research List was up 18.8%.

We initiated coverage on two companies during June, Nature’s Sunshine (NATR) and QUAD/Graphics (QUAD). Both are BUY-rated, with NATR having a price target of $20 and QUAD a target of $29.25.

Our top five performers in June include companies from a variety of industries and are all BUY rated ideas. As our table shows, the top performing company on the Singular List in June was SA. On a macro level, rising gold prices during the month created a favorable environment for gold-related companies such as SA. On a company-specific level, SA announced a new drill program at its KSM mine.

As with our top performers, our worst performers in June were also from a variety of industries and with a range of reasons for the declines. Given the overall upward trend in the market, our SELL-rated ideas faced a natural headwind which, coupled with company specific news, result in rising share prices during the month. We continue to believe our theses are correct on these companies. VMC, for example, faces the imminent threat of the Federal Highway Trust Fund running out of money, which could be problematic.

At Singular Research we continue to seek out investment ideas that have minimal to no Wall Street coverage. There are a number of uncovered and under-covered names we have been investigating, and we plan to launch coverage on several names in the coming weeks. We thank our clients for your support of independent equity research.

Sincerely,

Jeremy Hellman, CFA
Chief Operating Officer

Aceto to Join S&P SmallCap 600

Congrats to ACETO (ACET). Another one of our uncovered companies inducted into S&P Smallcap 600, Aceto, launched @ $6 in in Nov,2011 now @ $21!

Aceto engages in the marketing, sale and distribution of products for human health, pharmaceutical ingredients and performance chemicals. Headquartered in Port Washington, NY, the company will be added to the S&P SmallCap 600 GICS Trading Companies & Distributors Sub-Industry index.

Singular Best Ideas Web Call- Vertex Energy (VTNR)

Topic: Singular Best Ideas Web Call- Vertex Energy (VTNR)
Date: Thursday, March 27, 2014
Time: 12 noon ET / 11 am CT / 9 am PT

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Singular Top Picks Web Call March 2014

top-picks-web-call-march-2014Singular Research Web Call Links Now Available for:

  • Acme United (ACU) – Walter Johnsen, Chairman & CEO
  • Atlas Financial (AFH) – Scot Wollney, President & CEO
  • Arabian American Dev. (ARSD) – Simon Upfill-Brown, President South Hampton Resources

Topic: Singular Top Picks Web Call
Date: Thursday, March 13, 2014
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You can contact me at:
wjones@singularresearch.com
267-987-2082

Best,
Bill Jones, CFA
Singular Research
wjones@singularresearch.com
www.singularresearch.com

Best of the Uncovereds 2013 Photos

Here are a few photos from the 8th Annual Singular Research Best of the Uncovereds Conference.

Opportunist Magazine Interview of Robert Maltbie, CFA, Managing Director of Singular Research

Opportunist Magazine interviews Robert Maltbie

Robert Maltbie, CFA, Managing Director of Singular Research, talks with the Opportunist’s Managing Editor Leslie Stone about why he prefers under-covered companies, he Facebook IPO and what he believes might accelerate America’s economic rebound.

Smart Insider Trading Screens

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