Singular Research Director’s Letter : December 2015

A Relatively Quiet, but Positive, November

Following a move lower early in the month the indices tracked higher over the balance of November, with the S&P 500 finishing just ahead of flat at +5bps while the Russell 2000 fared better at +3.1%. The relative quiet in the market stood in contrast to what we saw in the world at large, with the terrorist attacks in Paris at the top of the list. Despite the specter of continued violence perpetrated by religious fanatics, US markets shrugged off the news.

Here in the US, much attention continues to be paid to the political theater as candidates in both parties are starting to joust more aggressively ahead of their respective primary races. With 11 months to go until the actual Presidential election the best for investors is likely to be in finding the “arms dealers” that stand to benefit from the massive campaign spending. We count once such company in our coverage universe at Singular Research – Salem Communications (SALM:BUY) – and urge our readers to stand by for more as we look for additional opportunities in the space.

Recapping the table above, for November, the S&P 500 was up 0.05%, the Russell 2000 was up 2.98% and the aggregate Singular List was up 2.47%. For the trailing twelve months, the S&P was up 0.55%, the Russell 2000 was up 3.64%, and the Singular Research List was up 3.21%.

Digging into the companies on our coverage list, as our table below shows, the top performing company on the Singular List was Liberator Medical (LBMH). A key leg of our thesis in our recent initiation on the company was that it was likely to get acquired given management’s prior track record of exits. However, that happened quite a bit sooner than expected – a mere three weeks following our initiation. Our other top performers were generally up in response to Q3 earnings.

Our worst performers in November saw their monthly returns driven by various factors although disappointing reactions to earnings tended to be the primary cause. In some cases, such as with CMT, the decline looks to be an overreaction and thus provides a quality entry point for long-term investors.

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.


Jeremy Hellman, CFA
Director of Research/Chief Operating Officer