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Recent Articles
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Market Whipsaw: Crypto Collapse and a Lower-than-Expected Inflation Print
Nov 10, 2022
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Image: Uncertainty in the cryptocurrency markets has surged with concerns over the liquidity of a key exchange. Investors are weighing the spillover effects of crypto with the view that the pace of inflation may have peaked.
The U.S. equity market continues to be highly volatile as it whipsaws between concerns over the health and sustainability of cryptocurrency and optimism over lower-than-feared inflation readings. We maintain our bearish/defensive stance on equities, but at the same time, we continue to be “fully-invested” across the simulated newsletter portfolios in part because we don’t want to miss out on days like today, November 10, when the markets are soaring ~2.5%-5.5% depending on which index you are monitoring. We’re also not ruling out a Santa Claus rally through the end of the year. Merry Dow Jones, as they say!
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Oracle’s Long-Term Outlook Remains Bright
Nov 10, 2022
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Image: Oracle has some lofty targets for fiscal 2026, and we were encouraged by recent commentary from the firm. Image Source: Oracle.
There are always risks to achieving mid-cycle expectations, but even if Oracle comes up a bit short of fiscal 2026 targets, we like the company’s encouraging outlook. A strengthening U.S. dollar could hurt performance a bit and while we’ve expressed concerns about the company’s ~$91.6 billion debt position in the past, the company has sufficient liquidity as it optimizes its business following the Cerner transaction. In the event that dividend growth slows in the coming years due to debt service obligations, we won’t hesitate to reevaluate our views on shares, however.
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Taiwan Semiconductor’s Operations Remain Solid But Uncertainty Has Punished the Stock
Nov 9, 2022
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Image: Taiwan Semiconductor’s shares have faced considerable pressure during 2022, despite strong operational performance.
We’re disappointed with the performance of Taiwan Semiconductor’s stock during 2022. Operational performance has been strong, but uncertainty stemming from weakness across the tech space to rising Sino-American tensions have punished shares. We continue to monitor its equity performance closely.
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ALERT: Replacing Disney with Republic Services in BIN Portfolio
Nov 9, 2022
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Image Source: Valuentum.
With content costs on the rise and the potential for the streaming business to become irrational as rivals fight for the incremental customer, Disney has a tough road ahead of it, in our view. Its ‘Parks, Experiences and Products’ segment is recovering nicely from the COVID-19 lockdowns, but losses in its ‘Media and Entertainment Distribution’ business remain very concerning in a difficult advertising environment. Disney has already cut its dividend payout, and while the firm remains free cash flow positive, we’re not fans of its massive net debt position. Our updated fair value estimate of Disney now stands at $93 per share, and it no longer fits the bill of a best idea. We’re replacing it with Republic Services in the simulated Best Ideas Newsletter portfolio. The change will be reflected in the next edition of the Best Ideas Newsletter.
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