Singular Research March 2021 Director's Letter
Singular Research’s March 2021 Director’s Letter
In March, there was greater than expected fiscal stimulus and vaccine rollout progress. In the last week of the month, nearly 2.8 million doses were administered every day. The stimulus at the end of 2020 ($900 billion) and the relief package signed in early March ($1.4 trillion) make up nearly 14% of U.S. GDP. The American Jobs Plan, signed on the last day in March, proposes fiscal spending of $2.25 trillion aimed at improving America’s transportation, communication, and infrastructure. With this news combined, markets moved higher despite fears of inflation; value outperformed growth by 420 basis points. The recovery path ahead may be bumpy, but a greater-than-expected vaccine rollout and fiscal stimulus should further support equity markets.
The March Purchasing Managers Index® (PMI) registered 64.7 percent, an increase of 3.9 percentage points from the February reading of 60.8 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.2 percent in February to 110.5 (2016 = 100), following a 0.5 percent increase in January and a 0.4 percent increase in December. Both the PMI and LEI increased which suggests investors and businesses are encouraged by vaccinations and reopening plans. The unemployment rate dropped to 6.0% in March (6.2% in February) as businesses have started the rehiring process.
For the month of March, the Singular coverage list continued to outperform the S&P 500 and Russell 2000 by 311 and 619 basis points, respectively. Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 9,458 and 5,719 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 580 and 495 basis points, respectively.
For March, VYGVF was our leader for the second consecutive month. VYGVF had a great month as their AUM and February preliminary revenue surpassed $1.7 billion and $20 million, respectively. ZEUS also had a stellar month as the firm is mainly expected to benefit from the American Jobs Plan and economic reopening. Similarly, EBIX rebounded from February lows as investors believed the stock may have been oversold. Investors cheered AMRK as they closed their recent acquisition of JM Bullion.
NAK was our worst performer for the month largely from investors’ disappointment that NAK’s request for appeal on their Pebble Project will take longer than expected. As growth-oriented stocks, ROKU, GDNP.V, QNST, and ZM were all hit hard in March from inflation and rising interest rate fears. In fact, ZM reported great earnings at the beginning of the month with fourth quarter revenue up 369% year-over-year.
For the month, we initiated coverage on RSI, BBKCF, and DMYD. RSI operates online gaming and sports betting in the U.S. under the Rivers, SugarHouse, and Rush Street brands. BBKCF owns and operates cryptocurrency related businesses. The firm owns two operating companies: Netcoins, a cryptocurrency brokerage, and Blockchain Intelligence Group, a suite of forensic and analytic solutions to mitigate risks associated with cryptocurrency transactions. DMYD (Genius Sports Group) is the official data, technology, and commercial partner that powers the global ecosystem connecting sports, betting, and media.
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Robert Maltbie, CFA
Singular Research, President