Monthly Index March 2014

Small Caps Hit and Air Pocket

 

March saw equities, and small cap stocks in particular, give up some of February’s advance. While events in the Ukraine might be viewed as the primary risk point on the global stage, we view that as more of a coincident catalyst as small caps may have simply been due for a pullback. Given the stellar performance in 2013 it is not difficult to view the market segment as needing some time to consolidate those gains relative to corporate fundamentals. In that context, a sideways move with attendant back and forth swings around a flat-line is not hard to fathom.

Looking at key macroeconomic statistics, the most recent round of unemployment data indicated a positive downward trend continues. Obviously such data needs to be viewed over a continuum and in concert with myriad other data points. Even so, as we sift the data looking for clues on which direction the market may trend, growing employment could be one point supporting the notion that the market is consolidating before a next leg up.

Jobless Claims

 

For March, the S&P 500 was up 0.67%, the Russell 2000 was down 0.67% and the aggregate Singular List was up 3.8%. For the trailing twelve months, the S&P was up 19.2%, the Russell 2000 was up 23.3%, and the Singular Research List was up 19.2%.

We initiated coverage on two companies during March, both with SELL ratings. The first was Abbott Labs (ABT), which we initiated with a $30 price target, and the second was Syntel (SYNT), which we started with a $76 price target.

Our top five performers in March include companies from a variety of industries. The top performer was Vertex Energy, up 70.1%. The company announced a significant, accretive acquisition followed by strong Q4:13 earnings. Orion Energy was up 30.1%in March. After reporting earnings in February there was no news to directly account for the solid performance leaving us to conclude investors are methodically warming to the story. SELL-rated SolarCity was down 26.2%. Absent any specific news, we attribute the decline to the overall weakness seen in many high-risk names in March. Bacterin was up 25.3%, following a similarly strong February, driven by a solid earnings report. SELL-rated Pandora declined 18.9% as Amazon emerged as the latest threat in the music-streaming space.

Our worst performers in March are from a variety of industries and for differing reasons. Despite the adverse moves in the near term, we believe our theses are sound on all of them, offering significant alpha from here. Reed’s was down 26.3%in March. The company reported earnings which disappointed although we feel the issues that weighed on earnings can be cured. Global Ship Lease was down 18.1% despite the lack of an observable catalyst. Seabridge Gold was also down 18.4% following a decline in gold for the month. Arabian American Development was down 11.3% following the release of earnings early in the month. Hudson Technologies was down 10.5% in March as the shares continued to slip following a nice gain last December following the EPA’s latest ruling on coolant phase out regulations.

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


March 2014 Performance Research Calls (as of 4/01/2014)

Company Ticker Research
Call
Released
Date
6-12
Month
Target
Feb-14
Price
Current Price Mar
Return
Performance
Mar
Russell
2000
Performance
Aceto Corp. ACET Buy 11/22/11 $ 24.00 $ 18.29 $ 20.09 9.84% -0.84%
Abbott Labs ABT Sell 03/10/14 $ 30.00 $ 39.57 $ 38.51 -2.68% -1.28%
Acme United Corp. ACU Buy 09/29/04 $ 16.00 $ 15.93 $ 16.42 3.08% -0.84%
Advanced Emissions Solutions ADES Buy 06/22/13 $ 31.00 $ 26.95 $ 24.54 -8.94% -0.84%
Angie’s List ANGI Sell 08/21/13 $ 11.00 $ 13.91 $ 12.18 12.44% -0.84%
Anika Therapeutics ANIK Buy 06/27/12 $ 38.00 $ 39.37 $ 41.10 4.39% -0.84%
Arabian American Development ARSD Buy 09/01/11 $ 15.00 $ 12.24 $ 10.85 -11.36% -0.84%
Atlas Financial AFH Buy 10/24/13 $ 16.00 $ 12.20 $ 13.69 12.21% -0.84%
Bacterin BONE Buy 02/03/12 $ 5.00 $ 0.67 $ 0.84 25.37% -0.84%
Balchem Corp. BCPC Buy 02/14/08 $ 41.00 $ 50.51 $ 52.74 4.41% 2.17%
Banco Latinamericano de Exportaciones BLX Buy 04/03/08 $ 30.00 $ 25.49 $ 26.41 3.61% -0.84%
Bolt Technologies BOLT Buy 04/11/11 $ 17.00 $ 20.02 $ 20.59 2.85% 2.17%
Edgewater Technology EDGW Buy 12/17/12 $ 7.00 $ 6.84 $ 7.15 4.53% -0.84%
Erickson Air-Crane EAC Buy 11/09/13 $ 26.00 $ 21.53 $ 19.31 -10.31% -0.84%
Flexsteel FLXS Buy 01/17/14 $ 42.50 $ 37.15 $ 37.62 1.27% -0.84%
Global Ship Lease GSL Buy 08/30/13 $ 6.30 $ 5.31 $ 4.35 -18.08% -0.84%
GSI Group GSIG Buy 01/09/12 $ 13.00 $ 12.55 $ 13.06 4.06% -0.84%
Hudson Technologies HDSN Buy 03/09/12 $ 6.75 $ 3.13 $ 2.80 -10.54% -0.84%
INTL FCStone INTL Buy 05/27/11 $ 27.00 $ 18.19 $ 18.81 3.41% -0.84%
KB Home KBH Sell 09/05/13 $ 10.50 $ 20.40 $ 16.99 16.72% -0.84%
LSB Industries LXU Buy 09/28/12 $ 55.00 $ 32.69 $ 37.42 14.47% -0.84%
LSI Industries LYTS Buy 02/27/12 $ 11.00 $ 8.29 $ 8.19 -1.21% -0.84%
Manitex MNTX Buy 11/20/13 $ 16.00 $ 14.99 $ 16.30 8.74% -0.84%
Mulit-Color LABL Buy 07/30/13 $ 42.00 $ 33.87 $ 35.00 3.34% -0.84%
NetSol Technologies NTWK Buy 07/10/12 $ 15.00 $ 4.67 $ 4.64 -0.64% 2.17%
Newtek Business Services NEWT Buy 03/27/13 $ 4.85 $ 3.02 $ 2.88 -4.64% -0.84%
NN, Inc. NNBR Buy 07/20/12 $ 20.00 $ 19.29 $ 19.70 2.13% -0.84%
Nova Measuring Instruments NVMI Buy 05/09/12 $ 14.00 $ 11.33 $ 11.20 -1.15% -0.84%
Nymox Pharmaceutical NYMX Buy 06/22/10 $ 18.00 $ 5.45 $ 5.46 0.18% -0.84%
Orchids Paper Products TIS Buy 01/27/11 $ 36.50 $ 31.71 $ 30.60 -3.50% -0.84%
Orion Energy Systems OESX Buy 01/27/14 $ 10.00 $ 5.53 $ 7.25 31.10% -0.84%
Pandora P Sell 07/09/13 $ 13.00 $ 37.42 $ 30.32 18.97% -0.84%
PhotoMedex PHMD Buy 12/06/11 $ 19.50 $ 14.64 $ 15.83 8.13% -0.84%
Reed’s REED Buy 10/23/13 $ 9.50 $ 7.73 $ 5.69 -26.39% -0.84%
Rock Mountain Choc Factory RMCF Buy 05/29/12 $ 16.00 $ 11.87 $ 11.74 -1.10% -0.84%
Salem Communications SALM Buy 02/24/14 $ 13.00 $ 9.09 $ 9.99 9.90% -0.84%
Seabridge Gold SA Buy 07/21/09 $ 50.00 $ 8.68 $ 7.08 -18.43% -0.84%
SolarCity SCTY Sell 05/31/13 $ 30.00 $ 84.96 $ 62.62 26.29% -0.84%
Sparton Corp SPA Buy 07/16/13 $ 28.00 $ 32.40 $ 29.28 -9.63% -0.84%
Syntel SYNT Sell 03/20/14 $ 76.00 $ 92.05 $ 89.90 -2.34% -1.89%
TESSCO Technologies TESS Buy 12/31/12 $ 40.00 $ 38.08 $ 37.36 -1.89% -0.84%
University General Health System UGHS Buy 02/25/13 $ 1.00 $ 0.19 $ 0.19 0.00% -0.84%
Vertex Energy VTNR Buy 07/22/13 $ 4.40 $ 3.79 $ 6.45 70.18% -0.84%
Viad Corp. VVI Buy 08/01/13 $ 38.00 $ 24.05 $ 24.04 -0.04% -0.84%
VOXX VOXX Buy 09/10/13 $ 22.50 $ 13.00 $ 13.68 5.23% -0.84%
Vulcan Materials VMC Sell 06/12/13 $ 25.00 $ 67.93 $ 66.45 2.18% -0.84%
Total (Average) 3.83% -0.67%
Year to Date Performance of Singular Research List
January Performance -7.06% -2.82%
February Performance 2.39% 4.41%
March Performance 3.83% -0.67%
April Performance
May Performance
June Performance
July Performance
August Performance
September Performance
October Performance
November Performance
December Performance
Year to Date Performance -1.19% -1.98%
(1) Adjusted for dividends

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