Singular Research November Director's Letter
Singular Research’s November 2020 Director’s Letter
In November, the first signs of a successful vaccine sent markets higher as investors could see a future when economies were once again normal. Pfizer/BioNTech, Moderna, and AstraZeneca all had strong results in the efficacy of their vaccines. However, the good news of the vaccines was also paired with growing Covid cases throughout the United States. On November 4, the U.S. reported, for the first time, 100,000 new Covid cases in a single day. States and counties throughout the U.S. have enacted harsher Covid restrictions in an attempt to keep hospitalization rates from growing out of control. The news was torn between a dark winter with increasing Covid cases and a release of vaccines, but the market continued higher.
The October Purchasing Managers Index® (PMI) registered 59.3 percent, an increase of 3.9 percentage points from the September reading of 55.4 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.7 percent in October to 108.2 (2016 = 100), following a 0.7 percent increase in September and a 1.4 percent increase in August. Both the PMI and LEI strengthened from September as investors were enthusiastic over economic expansion from a successful vaccine. The unemployment rate fell to 6.9% in October (7.9% in September) as businesses have started the rehiring process. The November PMI and LEI were not available at the time of this writing.
For the month of November, the Singular coverage list continued to outperform the S&P 500 and the Russell 2000 by 736 and 10 basis points, respectively. Year-to-date, the Singular coverage list has underperformed the S&P 500 and outperformed the Russell 2000 by 209 and 130 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 315 and 299 basis points, respectively.
For November, MGNI has continued to receive market enthusiasm from RUBI’s merger with Telaria. The firm announced that their Connected TV (CTV) revenue grew 50% in the third quarter. MGNI has been our top performer for the second consecutive month. Similarly, LUNA, ROKU, and TA all had strong months as they announced better than expected earnings for the third quarter. KIRK also performed well as vaccine hopes encouraged investors to purchase retail. It is worth noting that this month marks TA’s second consecutive month on the Top Five Performers list.
NAK was our worst performer for the month as the company failed to obtain a key permit from the U.S. Army Corps of Engineers. SA and AMRK, although posting good quarters, did not fare well in November because of investors’ enthusiasm to economies re-opening and growth ideas. BYND posted earnings and revenue results below market expectations; however, many investors viewed BYND’s selloff as a buying opportunity and the stock has made a strong recovery.
For the month, we initiated coverage on EBIX, EVC, and NAK. EBIX is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial, and healthcare industries; EVC is a Spanish-language media company owning diversified television, digital media, and radio assets that reach Hispanic consumers across the U.S. and parts of Mexico; NAK is a mineral exploration company and holds an interest in mining claims in southwest Alaska.
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Robert Maltbie, CFA
Singular Research, President