Singular Research Director’s Letter :December 2014

Oil Slide Dominates Headlines

 

Exiting the month of November it certainly seemed as though all attention was focused on the price of oil as its slide continued with OPEC opting to make no cuts to its production plans.  For many sectors this represents a positive as consumers can expect to have a little more money in their pockets for holiday shopping, thanks to lower gas prices.  Other industries, such as airlines, also stand to benefit although lower fuel prices have yet to show up in the form of lower ticket prices.

At Singular we’d also like to thank everyone who attended our NYC Summit on November 20th and also congratulate everyone on the team for all their hard work in hosting the event.  We had quite a number of quality companies present, offering conference attendees an opportunity for value-added one on one meetings as well.

We return to highlighting our MMI indicator which, as shown in the chart below, displays strong correlation with the Russell 2000.  As a reminder, an index score for our MMI indicator of 60 or higher is considered bullish; 50 to 60 is neutral; and under 50 is bearish.  In the chart below we plot our weekly MMI readings since early May versus the level of the Russell 2000 index.  After falling through September, our indicator bottomed early in October before rallying into neutral territory where it has remained since.

For November, the bifurcation between large and small caps continued as the S&P 500 was up 2.2%, the Russell 2000 was down 0.03% and the aggregate Singular List was down 6.2%.  For the trailing twelve months, the S&P was up 15.8%, the Russell 2000 was up 6.2%, and the Singular Research List was down 2.4%.  Year to date the S&P 500 is up 11.5 %; the Russell 2000 is up 0.9% and the Singular list is down 6.8%.

Our top five performers in November represented a variety of industries, from gold to technology. As our table shows, the top performing company on the Singular List was Seabridge Gold (SA).  After seeing the company at our recent NYC Summit we are all the more convinced that management has the right plan in place to build shareholder value as the company continues to further its resource development efforts.

As with our top performers, our worst performers in November were also from a variety of industries and with a range of reasons for the declines.  As is often the case with development-stage biotechs, investment success is a binary outcome which aligns with success (or lack thereof) with the company’s clinical trials.  This was the case with NYMX as negative trial news drove shares down sharply and led us to discontinue coverage.

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 continue to track with an eye on helping our clients gain an edge.  We thank our clients for your support of independent equity research.

Sincerely,

Jeremy Hellman, CFA
Director of Research/Chief Operating Officer