Singular Research December 2020 Director's Letter
Singular Research December 2020 Director's Letter
In December, the story of the month was much like November as countries began to adopt and administer vaccines all while faced with increasing cases and deaths. However, the main differentiator between the two months is that two new strains of Covid-19 were discovered in the UK and South Africa, leading to more global lock-down measures and investor unease. Domestically, small cap stocks outperformed large cap stocks with the hope that Biden will induce more spending and stimulus measures. The road to a Covid-free environment will not be smooth and we are just starting to see how rough the ride could be.
The November Purchasing Managers Index® (PMI) registered 57.5 percent, a decrease of 1.8 percentage points from the October reading of 59.3 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.6 percent in November to 109.1 (2016 = 100), following a 0.8 percent increase in October and a 0.7 percent increase in September. The PMI decreased while the LEI strengthened from October as investors may have been more enthusiastic than businesses in regards to Covid’s effect on the near future. The unemployment rate fell to 6.7% in November (6.9% in October) as businesses have started the rehiring process.
For the month of December, the Singular coverage list continued to outperform the S&P 500 and the Russell 2000 by 892 and 410 basis points, respectively. For the year, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 764 and 592 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 370 and 325 basis points, respectively.
For December, VYGVF took the spotlight as our best performer as the company reported exponential asset growth; at the end of November, VYGVF’s AUM was $150 million. As of January 10, VYGVF reported AUM of $350 million. MGNI also performed well and 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 and investors have shown enthusiasm for MGNI’s growth potential. Similarly, GMBL performed well as the company announced the acquisition of online casino operator Lucky Dino; GMBL also reached a multi-year deal with the Philadelphia Eagles as the NFL’s first Esports Tournament Club provider. GNPX announced the successful completion of a technology transfer for its lead drug REQORSA; this technology transfer will make the production of REQORSA more efficient and profitable.
ZM was our worst performer for the month as the company reported strong earnings, but anticipates a higher-than-normal churn rate in the fourth quarter as compared to historic churn levels since a higher percentage of customers purchased monthly subscriptions than normal. AMRK did not fare well in December because of investors’ enthusiasm to economies re-opening, growth ideas, and the vaccine roll-out; this month was AMRK’s second consecutive month on the worst performers list. Similarly, investors were still grappling with NAK’s November failure to obtain a key permit from the U.S. Army Corps of Engineers.
For the month, we initiated coverage on VYGVF. Voyager Digital Ltd. is a crypto-asset broker that provides retail and institutional investors with a platform to invest and trade in digital assets. Through its mobile friendly platform, users can invest in more than 50 cryptocurrencies and earn interest on 22 different digital assets.
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Thank You
Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
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