Singular Research January 2021 Director's Letter
Singular Research’s January 2021 Director’s Letter
In January, new Covid cases grew to their highest levels largely from holiday gatherings in December. However, these new cases quickly declined; on January 8, new cases in the U.S. were 308,000. As of the end of January, new cases had decreased to 111,000. As a result, states have begun re-opening businesses that were once closed due to lockdown measures. Domestically, small cap stocks outperformed large cap stocks with the hope that Biden will induce more spending and stimulus measures. The vaccine is being administered throughout the U.S., but the rate of vaccinations cannot come fast enough as there are still new cases and deaths every day.
The December Purchasing Managers Index® (PMI) registered 60.7 percent, an increase of 3.2 percentage points from the November reading of 57.5 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.3 percent in December to 109.5 (2016 = 100), following a 0.7 percent increase in November and a 0.9 percent increase in October. Both the PMI and LEI increased which suggests investors and businesses are encouraged by vaccinations and reopening plans. The unemployment rate remained at 6.7% in December (6.7% in November) as businesses have started the rehiring process.
For the month of January, the Singular coverage list continued to outperform the S&P 500 and Russell 2000 by 1,351 and 740 basis points, respectively. Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 3,641 and 2,353 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 493 and 408 basis points, respectively.
For January, NAK took the spotlight as our top performer as the firm filed a ‘Request for Appeal’ for their recent negative decision by the U.S. Army Corps of Engineers against their Alaska Pebble project. VYGVF also performed well as the company is experiencing exponential growth in AUM and new accounts; interestingly, the company had such a high influx of new accounts from disgruntled Robinhood traders that they had to create a waitlist. Similarly, BYND excited investors with their newly released partnership agreement with PepsiCo. There was not much news for SALM and KIRK, but one could argue that their monthly gains were due to shorts covering as their short volume ratios were 67% and 37% at the end of January.
LGL was our worst performer for the month as investors may have taken profits after a three-month 27% run. The same could be said about ANIK as the stock ran 7% on December 20, only to be sold off in January. TA released franchise site opening plans for 2021 that may not have been up to investors’ expectations; however, the stock has rebounded since its January lows and is currently above $30. SA was not viewed favorably as the price of gold declined off its January 5 high of 1,953 per ounce.
For the month, we did not have any new initiations.
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.
Robert Maltbie, CFA
Singular Research, President