Singular Research Director’s Letter: July performance 2020
Singular Research Director’s Letter: July performance 2020
In July, the Corona virus continued its rampant spread in the areas and states that tried to reopen too early. Specifically, in California, Florida, and Texas, new cases per day surged recklessly out of control as governors and mayors who once had grand reopening plans had to curtail those ideas. On July 10, the United States reported 63,247 new cases, the country’s largest one day advance during the pandemic. Soon after on July 12, Florida reported 15,300 new cases, the largest one-day increase for any state. With testing averaging more than 600,000 new tests per day and with more testing performed on those younger than fifty, positivity rates have increased, but mortality rates have declined, suggesting a new chapter in the Corona virus pandemic; however, it appears the media continues to fuel widespread fear by failing to recognize the lower mortality rates in the younger age groups.
By the end of July, there were positive results for Covid vaccines that have encouraged many investors to look to a brighter day when we can all have a facemask free lifestyle. However, the path towards that day will not be trouble-free as millions of Americans are still out of work with the $600 dollar per week unemployment additional benefit expiring at the end of the month. Globally, the United States, Brazil, and India are the top three countries for new Corona virus cases and growth of these new cases does not appear to be slowing any time soon.
The July Purchasing Managers Index® (PMI) rebounded to expansion territory, registering 54.2 percent, an increase of 1.6 percentage points from the June reading of 52.6 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 2.0 percent in June to 102.0 (2016 = 100), following a 3.2 percent decrease in May and a 6.3 percent decline in April. Both the PMI and LEI gained strength from June and investors saw optimism in the results. The unemployment rate fell to 10.2% (11.1% in June) as businesses have started the rehiring process.
For the month of July, the Singular coverage list underperformed the S&P 500 and the Russell 2000 by 286 and 11 basis points, respectively. Year-to-date, the Singular coverage list has underperformed the S&P 500 and the Russell 2000 by 1,245 and 23 basis points, respectively. Over the last twelve months, the Singular coverage list has underperformed the S&P 500 and outperformed the Russell 2000 by 1,325 and 211 basis points, respectively. As new Corona virus cases grew both domestically and globally and as several vaccine candidates showed promising signs, investors were overall enthusiastic that an end to the pandemic was on the horizon, but still favored companies that would not be as affected from future Corona virus turmoil.
For July, SALM had a great month as one of Salem’s Radio Hosts, Dr. Sebastian Gorka, was appointed to the National Security Education Board. SALM also had one of its talk show hosts, Larry Elder, be nominated for induction into the Radio Hall of Fame. Similarly, ROKU had a strong month as the Peloton app launched on their platform. ROKU also released a study that found one in three households now have cut the cord. Finally, AMRK had another great month as the price of gold is at alltime highs and continues to increase because of inflationary fears.
EHTH was our worst performer for the month as the company reported strong earnings, but a higher Medicare Advantage plan churn rate than compared to historical observations. ZEUS trended lower as fears of an economic slowdown and lower prices of steel hurt investor sentiment. MGNI had a negative month as the company is in the early stages of a large merger, thus creating some unknown for investors.
For July, we initiated coverage on Silvercrest Asset Management Group (SAMG). SAMG is a fullservice wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors.
We wish to thank our clients for their support and belief in our process. To learn more about Singular Research and register for a 14-day trial offer, please follow the link below.
Thank You
Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
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