Research

Thank you for visiting our Research page. Below is a list of research we have published on certain companies that we follow. We welcome your feedback. Additionally, we are thinking of launching a subscription service that would offer early access to our research, along with some other features that investors might find useful (i.e. general portfolio management strategies, live blog updates highlighting our reaction to breaking news, etc.). If you would be interested in subscribing to such a service, please let us know.

Date Published: July 16, 2020

Symbol: VRA

INVESTMENT THESIS: Vera Bradley (VRA) is a retailer that sells women's handbags, luggage and travel items, fashion and home accessories, and gifts. Prior to the COVID-19 sell-off, the stock traded consistently around $10.00/share for the past five years. We think the adequate balance sheet, the positive organic growth seen in the prior year, and the attractive valuation (based on withdrawn FY21 EPS guidance) all serve to separate this company from other high-risk retail stocks. A return to the $10.00/share level is a reasonable expectation, and we think VRA is a Strong Buy.

Date Published: June 22, 2020

Symbol: TSQ

Townsquare Media (TSQ) has not participated in the recent market rally after the COVID-19 sell-off. While the anticipated dividend cut, the high debt load, the lingering association with Live Events, and the suspicion over questionable financials are all somewhat justified risks, they have enough liquidity to last at least three years under current operating conditions. Even just assuming a return to free cash flow (FCF) generation of $40M+ (which the company has managed to accomplish for the past three years) makes for an attractive valuation. We think TSQ is a Buy.

Date Published: May 26, 2020

Symbol: ACRX

INVESTMENT THESIS: ACRX’s lead product Dsuvia, a 30 mcg sufentanil sublingual tablet for the treatment of moderate-to-severe acute pain, continues to gain hospital formulary wins, and management has finally begun to disclose dollar amounts for future orders from the Department of Defense (DOD). Another round of dilution remains a real possibility, as sales have ramped up much slower than investors were hoping for. But we remain bullish on Dsuvia becoming a successful niche product that can eliminate the need for IV morphine in certain instances. We think ACRX is a Buy.

Date Published: May 06, 2020

Symbol: OBSV

INVESTMENT THESIS: Lead candidate linzagolix is in phase 3 trials for both uterine fibroids and endometriosis. It will be third to market behind MYOV’s Relumina (relugolix) and ABBV’s Orilissa (elgagolix), but even very conservative market share estimates show how mispriced this stock is. The drift down from $18.00/share in September 2018 has been severe, and even assuming additional dilutive financing, this has been overly punished. We think OBSV is a Buy.

Date Published: March 31, 2020

Symbol: VCEL

INVESTMENT THESIS: After years of testing, new Grid products Resilient Electric Grid (“REG”) and Ship Protection System (“SPS”) are ready to move decisively from the R&D phase to the commercial phase. Initial orders from an electric utility and the US Navy validate the sizable opportunity of each respective market. The balance sheet is adequate, and the current liquidity position should be enough to get AMSC to profitability as REG and SPS sales ramp up. We think AMSC is a Strong Buy.

Date Published: March 02, 2020

Symbol: AMSC

INVESTMENT THESIS: After years of testing, new Grid products Resilient Electric Grid (“REG”) and Ship Protection System (“SPS”) are ready to move decisively from the R&D phase to the commercial phase. Initial orders from an electric utility and the US Navy validate the sizable opportunity of each respective market. The balance sheet is adequate, and the current liquidity position should be enough to get AMSC to profitability as REG and SPS sales ramp up. We think AMSC is a Strong Buy.

Date Published: February 11, 2020

Symbol: FENC

INVESTMENT THESIS: PEDMARK, FENC’s only candidate, is poised to fill a high unmet medical need in preventing hearing loss due to platinum-based chemotherapy. After reaching $14.00/share in 2018 on the heels of excellent efficacy results, a lack of catalysts and a delay in the completion of the NDA due to manufacturing issues sent the stock back down. The NDA (and MAA) have been submitted and approval decisions in both the US and EU are expected around 3Q20. The solid balance sheet, the compelling trial results and indication, and the upcoming approval decicions and launch make FENC a Strong Buy.

Date Published: January 28, 2020

Symbol: ALOT

INVESTMENT THESIS: The stock has drifted down from recent highs of $25+/share on near-term headwinds in both operating segments. Yet even with the decline, it still isn’t trading at an attractively cheap multiple. We will continue to monitor the news but at the moment we feel it is a Pass.

Date Published: January 7, 2020

Symbol: SPPI

INVESTMENT THESIS: The December 2019 phase 2 data readout for exon-20-mutant NSCLC showed that poziotinib will likely not be the miracle drug that the market had been hoping for. Nevertheless, it should still capture some market share. After taking a renewed look at Rolontis, we conclude that the punishment has been excessive. This is no longer a top pick, but the great cash position make SPPI a Buy.

Date Published: December 10, 2019

Symbol: GALT

INVESTMENT THESIS: The NASH market is expected to be very lucrative, with estimates pegging its eventual market size at $25B-$35B, driven by increased rates of diabetes and obesity. While there are many companies running trials in this space, GALT is the only company thus far to show positive results in NASH cirrhosis patients. These results, along with the $20M investment by the Chairman during a recent financing round, make GALT a Strong Buy.

Date Published: November 19, 2019

Symbol: AKBA

INVESTMENT THESIS: Commercialized drug Auryxia (approved in the US for hyperphosphatemia in adults with dialysis-dependent chronic kidney disease (DD-CKD) and iron deficiency anemia (IDA) in adults with non-dialysis-dependent (NDD) CKD) has blockbuster potential, but after several years on the market, annual sales are only about $100M. However, they have another potential blockbuster candidate, vadadustat, which is in several phase-3 trials around the globe. The hope is that it can become the standard of care in the $6B+ market for anemia due to CKD in adults with DD-CKD and NDD-CKD. Our valuation for vadadustat alone justifies a position in AKBA.

Date Published: November 13, 2019

Symbol: XIN

INVESTMENT THESIS: XIN is a Chinese real estate developer and property manager that is trading at a very depressed valuation, which is common for Chinese companies of this nature. But we feel that the real estate projects outside of China (i.e. NYC, UK), the substantial investment by global private investment firm TPG (2% of shares outstanding as of 9/29/19 according to Yahoo Finance), and the 31 consecutive quarters of paying a dividend significantly de-risk a position in XIN. It may take awhile (if ever) for the market to give XIN’s stock a fairer valuation, but in the meantime, patience can be rewarded via the 10% dividend.

Date Published: October 25, 2019

Symbol: BYSI

INVESTMENT THESIS: The recent capital raise that sent BYSI's stock down over 20% offers a great entry point for new investors. NDAs for lead candidate Plinabulin in both the US and China are set to be submitted during 2020, meaning that commercialization is right around the corner. An improved safety profile demonstrated thus far indicate that Plinabulin should be able to differentiate itself in a crowded CIN field. Additionally, its anti-cancer properties could potentially position it to be a part of not just NSCLC combo therapies, but across various tumor types. We think BYSI is a Buy.

Date Published: September 23, 2019

Symbol: XIN

INVESTMENT THESIS: XIN is a Chinese real estate developer and property manager that is trading at a very depressed valuation, which is common for Chinese companies of this nature. But we feel that the real estate projects outside of China (i.e. NYC, UK), the substantial investment by global private investment firm TPG (3.1% of shares outstanding as of 9/23/19 according to Yahoo Finance), and the 31 consecutive quarters of paying a dividend significantly de-risk a position in XIN. It may take awhile (if ever) for the market to give XIN’s stock a fairer valuation, but in the meantime, patience can be rewarded via the 9%+ dividend.

Date Published: September 23, 2019

Symbol: TSQ

INVESTMENT THESIS: In 2018, the continuing operations of TSQ generated about $44M of “adjusted EBITDA less interest, capex, and cash taxes” (a proxy for free cash flow to equity (FCFE)). Based on the results for 1H19 and management’s 2019 adjusted EBITDA guidance, we should see about $42M of FCFE for 2019. With a diluted market cap of $262M, this gives a forward P/FCFE multiple of 6.3x. While two of their digital offerings (Townsquare Interactive and Townsquare Ignite) could see substantial revenue growth and each reach annual revenues of $100M in the next 3-5 years, we think the current operational results, along with the 4.2% dividend yield, make this a strong buy right now.

Date Published: September 23, 2019

Symbol: VOXX

Date Published: August 9, 2019

Symbol: SPPI

INVESTMENT THESIS: A sum-of-the-parts analysis shows VOXX to be clearly undervalued. VOXX has an incredibly strong balance sheet and exciting products across all segments. However, investors are not yet convinced that the recently announced new employment agreements go far enough in aligning the interests of shareholders to management, given the multi-year underperformance of the stock. Still, we think the net assets per share limit the downside, and this makes VOXX a Buy.

Date Published: July 5, 2019

Symbol: OMER

INVESTMENT THESIS: OMER has one of the most promising candidates in all of biotech in narsoplimab, currently in three phase 3 trials targeting three indications with a high unmet need. The commercial success of ALXN’s Soliris, which had $3.6B in global sales in 2018, validates the opportunity for narsoplimab given that they target indications of similar patient sizes. Liquidity may become an issue after October 1, 2020, when pass-through status for Omidria is set to expire. Until then, however, we feel confident that Omidria will continue to bring in $100M+/yr in sales, which will fund the development of narsoplimab and the expected launch (pending approval) in 2020.

Date Published: June 13, 2019

Symbol: TLDR

INVESTMENT THESIS: The flagship brands of TLRD (Men’s Wearhouse and Jos. A Bank) are battling two very disruptive trends in men’s fashion: the growing acceptance of more casual dress in the office setting, and the growing popularity of custom suits. Management is aware that their traditional business model, which consisted of large stockpiles of off-the-rack suits, is losing ground. While it’s too early to tell if the changes they are making can stabilize or reverse the negative trend in comps, the severe punishment the stock has received this year seems to already price in a dividend cut (or elimination). Further downside seems unlikely given the already low forward P/E of under 6x, and any improvement in the top-line in the coming quarters could offer a nice boost to the stock price.

Date Published: May 31, 2019

Symbol: MDR

INVESTMENT THESIS: MDR’s 1Q19 results saw no new changes in cost estimates for legacy CBI projects. In addition, the backlog continues to grow nicely, and the $475M in annual savings from the merger synergies have all been actioned and will be fully realized in 2020. However, this good news was overshadowed by an increase in cash usage for 2019 due to higher integration, restructuring, and divestiture costs, delayed initiation of LNG production at the Cameron facility, and delayed receipt of an advanced payment for an expected mega-project award. The long-term upside remains unchanged, and this is a buying opportunity.

Date Published: May 30, 2019

Symbol: AKBA

INVESTMENT THESIS: Commercialized drug Auryxia (approved in the US for hyperphosphatemia in adults with dialysis-dependent chronic kidney disease (DD-CKD) and iron deficiency anemia (IDA) in adults with non-dialysis-dependent (NDD) CKD) has blockbuster potential, but after several years on the market, annual sales are only about $100M. However, they have another potential blockbuster candidate, vadadustat, which is in several phase-3 trials around the globe. The hope is that it can become the standard of care in the $6B+ market for anemia due to CKD in adults with DD-CKD and NDD-CKD. Our valuation for vadadustat alone justifies a position in AKBA.

Date Published: May 28, 2019

Symbol: ODP

INVESTMENT THESIS: After climbing to above $3.50/share in early April, ODP has sold off almost 50%, driven by the lower than expected operating performance at the CompuCom division. Even though 2019 annual guidance was reduced following 1Q19 results, the valuation based on the lowered adjusted EBITDA guidance is still attractive, and the 5% dividend is well-covered by the $300M+ in free cash flow (FCF).

Date Published: May 22, 2019

Symbol: PBYI

INVESTMENT THESIS: PBYI dropped about 8% when the EU/Africa licensing deal with Pierre Fabre was announced for potential blockbuster candidate Nerlynx, which is currently approved in the US and EU for HER2+ breast cancer treatment (post-Herceptin).

Date Published: April 11, 2019

Symbol: PBYI ("Editor's Pick")

Investment Thesis: PBYI dropped about 8% on the EU/Africa Nerlynx licensing deal news, likely because investors wanted an immediate buyout. But the risk/reward profile is favorable, given that the current stock price is fully supported from reasonable Nerlynx sales estimates in the US and EU for the currently approved indication alone (HER2+ post-Herceptin breast cancer). Any realized milestones (up to $345M from the EU/Africa deal) or expanded approvals in other variants of breast cancer would unlock even more value.

Date Published: March 21, 2019

Symbol: TLRD

Investment Thesis: The poor comps guidance for 1QFY19 caused another sharp drop (this time over 25%). But we still see healthy cash flow, a favorable forward P/E, and a safe 9% dividend even if comps at Men’s Wearhouse and Jos. A. Bank stay at -4% for the entire year. This retailer is not “dying” and has been overly punished.

Date Published: March 15, 2019

Symbol: TSQ

Investment Thesis: TSQ is a very underfollowed stock that exhibits a lot of volatility. But the core marketing solutions segment has been largely responsible for generating $40M+ of cash the past two years, and guidance indicates that 2019 will be no different. With a market cap of only $104M and a 5% dividend, this is a great buying opportunity.

Date Published: March 04, 2019

Symbol: CHK

Investment Thesis: CHK’s 4Q18 results showed demonstrable progress on the two main transformation drivers: increased oil production (as a percentage of total production volume) and increasing adjusted EBITDA (per boe). They will still be FCF negative for 2019, but the market’s reaction indicates that it sees very solid earnings in 2020 and beyond.

Date Published: February 5, 2019

Symbol: SVVC("Top Idea")

Investment Thesis: SVVC is a publicly traded venture capital fund. Just like GSVC, another publicly traded venture capital fund, it has historically traded at a steep discount (50%) to the NAV/share of its combined holdings. Based on some recent IPOs of 3 of its top 5 holdings (one of which has increased in value astronomically), the calculated NAV/share has increased significantly since the last update from management. But the stock now trades at a 70%+ discount to NAV/share, creating a very compelling buying opportunity.

Date Published: January 4, 2019

Symbol: ODP

Investment Thesis: The December market downturn clipped 30% off the market cap. The last 3 earnings reports have seen guidance either reaffirmed or raised, but the stock has now given back all the previous gains. With bankruptcy off the table, ODP is now focused on integrating CompuCom and continuing its transition into services, aiming to become a one-stop-shop for small and medium-sized businesses to obtain help with marketing, IT, accounting, etc. The safe 4% dividend, $100M share buyback that started January 1, and the low forward PE make this a top pick.

Date Published: November 15, 2018

Symbol: OTIC

Investment Thesis: This is a very long-term investment, as the follow-up phase 3 Otividex trial will not read out until 2020. But the cash situation remains excellent, and the commercial prospects remain unchanged. The drift down from $6/share at the beginning of 2018 presents an excellent entry and accumulation point.

Date Published: October 2, 2018

Symbol: IRIX

Investment Thesis: IRIX offers much less risk than what is usually found among stocks of such small market cap size. Prior to the drop from the recent public offering (which derisked the balance sheet), two consecutive earnings reports showed very strong growth from their Cyclo G6 laser platform, making it clear that they are on their way to disrupting the global glaucoma treatment market.

Date Published: July 11, 2018

Symbol: AMSC

Investment Thesis: The market was clearly not happy with the court settlement, given that after more than five years of litigation, AMSC was only able to recoup $58M in damages, even though losses in annual revenue stemming from IP theft at the hands of Chinese wind giant Sinovel totaled more than $500M. However, while news regarding the wind segment is pushing down the stock price, the company's other operating segment is set to begin commercialization of a technology that could revamp the electric grid nationwide, allowing neighborhoods that lose power from a storm or terrorist attack to regain it much faster than legacy technology allows.

Date Published: July 6, 2018

Symbol: KERX

Investment Thesis: The commercial prospects of KERX’s lead drug Auryxia and AKBA’s lead candidate Vadadustat remain unchanged post-merger announcement. At a minimum, the value of the combined company should be equal to the value of each company separately, given the expected $250M in synergies. The downward market reaction seems unjustified, and offers a good entry point.

Date Published: June 8, 2018

Symbol: STDY

Investment Thesis: The recently announced merger with UTHR was a nice reward for investors who bought the dip in September 2017. But the likelihood of Treyvent hitting the pre-specified commercial milestones seems high (given its advantages over market leader Remodulin in the pulmonary arterial hypertension space). Our NPV calculations show that STDY is still a great buy at this elevated price.

Date Published: April 22, 2018

Symbol: TUSK

Investment Thesis: Puerto Rican officials were justified in voicing strong criticism over the TUSK subcontractor that caused back-to-back blackouts across the island due to negligent electrical work. But the 15% hit to the market cap seems like an overreaction, given that the subcontractor has already been fired, and prior to the dip, TUSK's stock price had been on a tear, driven largely from their quality work rebuilding Puerto Rico's electrical grid, which had garnered them several contract extensions.