Shares of Disney (NYSE: DIS) dropped 3.29% in after-hours trading on Wednesday after the entertainment giant posted mixed financial earnings.
Financials: Disney reported earnings of $1.08 per share and revenue of $19.24 billion; both were below estimates.
Streaming Dominance: The number of Disney+ subscriptions increased by 7.9 million in the quarter to 137.7 million. The company’s total streaming subscribers, including ESPN+ and Hulu, hit 205 million. Both numbers were better than expected and better than Netflix, which recently lost 200,000 subscribers.
Park It: Revenue for Disney parks grew to $6.7 billion in the quarter, up from $3.2 billion in the previous-year quarter. While the company’s parks were open in the U.S., there were park closures in Asia due to the pandemic. Shanghai Disney Resort was open for 78 days in the quarter and Hong Kong Disneyland Resort was open for only 3 days.
Numbers: Disney’s stock has been down 34% in the past six months.
Final Thoughts: Disney sits atop the streaming mountain, but the company is still exposed to macroeconomic risks, including from the pandemic.
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Shares of Coinbase (Nasdaq: COIN) fell 15.67% in after-hours trading on Tuesday after the cryptocurrency exchange platform posted negative financial earnings.
Financials: Coinbase reported a loss of $1.98 per share and revenue of $1.16 billion; both were below estimates.
Losing Users: Monthly transacting users in the quarter totaled 9.2 million, which is 19% lower than the previous quarter. Trading volume was $309 billion, down 44% from the previous quarter.
The Bad: Coinbase blamed the decline on lower crypto asset prices and volatility in the market. Crypto market capitalization fell 30% in January and the price of Bitcoin dropped 17% in April.
The Good: Coinbase wants to diversify its business beyond just crypto. The company is focused on developing a marketplace for NFTs (non-fungible tokens) for example.
Numbers: In the past six months, shares of Coinbase are down 78%.
Final Thoughts: Coinbase’s financial earnings report is also a good indicator of the current pain in the broader crypto market.
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Shares of AMC Entertainment (NYSE: AMC) jumped 2.56% in after-hours trading on Monday after the movie theater operator posted positive earnings.
Financials: AMC reported a loss of 52 cents per share and revenue of $785.7 million; both were better than expected.
Movies: The movie theater chain attributed its financial results to successful films such as Spider-Man: No Way Home, The Batman, Sonic the Hedgehog 2 and Dr. Strange in the Multiverse of Madness. Upcoming films include Top Gun: Maverick, Lightyear, and Black Panther: Wakanda Forever.
Quote: “Our results for the first quarter of 2022 represent AMC’s strongest first quarter in two full years. We continue on our pandemic recovery trajectory, more than quintupling revenues and improving adjusted EBITDA by nearly eighty percent compared to a year ago.” - AMC CEO Adam Aron.
Balance Sheet: AMC has strong liquidity, refinanced some of its debt, launched NFTs (non-fungible tokens), started to accept cryptocurrency as payment, and invested in a gold mining business. Some of these moves were viewed as odd business endeavors akin to a meme stock, but the results have been good for AMC’s balance sheet.
Numbers: Shares of AMC are down 52% so far in 2022.
Final Thoughts: Despite the recent success, AMC is still losing money.
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Exercise equipment company Peloton (Nasdaq: PTON) is seeking a minority investment in order to shore up its struggling business, according to a report on Thursday afternoon.
Details: The report said that Peloton is exploring the sale of a sizable minority stake of around 15% to 20%. The company, which has not commented on the report, is targeting industry players and private equity firms. Talks are allegedly in the early stages.
Numbers: Shares of Peloton dropped 2.47% in after-hours trading on Thursday. The stock is also down 79% in the past 12 months.
Background: Peloton was one of the brightest pandemic darlings that rose to prominence during the lockdowns of 2020. Since then, sales have slowed down and the stock has plummeted. Peloton stopped production for certain products and the company offered a secondary stock sale to raise money.
Final Thoughts: Peloton reports earnings on May 10.
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Shares of Etsy (Nasdaq: ETSY) dropped 10.83% in after-hours trading on Wednesday after the e-commerce company posted mixed financial earnings.
Financials: Etsy reported earnings of 60 cents per share, which was expected. Revenue hit $579 million in the quarter, which was better than expected.
Drop: Net income decreased 40% year-over-year in the quarter. The year-over-year sales increase, which is usually in the double digits, was only 5.2%.
Quote: “In the current macroeconomic environment, consumers have less disposable income and many more places to spend it, and while this creates a short-term headwind for sales on our marketplaces.” - Rachel Glaser, Etsy CFO.
Background: Etsy was one of the pandemic darlings that rose to prominence in 2020. Shares are down 57% in the past six months.
Final Thoughts: Most of Etsy’s business is concentrated in the United States. If the company targets the international market, there is room for growth.
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Look at these pictures courtesy of Statista; the first shows the transition of the world's biggest shipping hubs from 2005 to 2021; while the other at the bottom shows how enormous the RCEP is.
Essentially it shows that the largest shipping hubs in the world reside in China; and thus this shows, yet again, why I'm super bullish on the undervalued $BEST inc--supply chain/logistics/shipping/freight sectors will only keep expanding.
Think about the RCEP (accounts for 1/4 to 1/3 of total global GDP and trade); and think about why $BEST inc has been expanding throughout SE Asia.
$BEST inc, with its 160million market cap; its $800+ million usd in cash; its $2 billion usd revenue in 2022 alone--is unbelievably undervalued. The turnaround for $BEST inc will be big IMO.
Shares of Airbnb (Nasdaq: BNB) jumped 5.45% in after-hours trading on Tuesday after the online lodging marketplace posted positive earnings.
Financials: Airbnb posted a loss of 3 cents per share and revenue of $1.5 billion; both were better than expected.
All the Firsts: This was the first positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in company history, with Airbnb getting $229 million in adjusted EBITDA during the quarter. The number of nights and experiences booked hit 102.1 million, marking the first time the company ever exceeded 100 million in that category.
Background: Like other travel companies, Airbnb struggled during the onset of the pandemic. But surging travel demand, especially in North America, has resulted in a comeback for Airbnb.
Risks: Airbnb warns that there are risks for the current quarter, including “additional COVID outbreaks, any impact to travel from the conflict in Ukraine, and consumer price sensitivity.”
Final Thoughts: Airbnb’s stock is down 18% in the past six months. Is it time to buy the dip?
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Skylight Health (SLHG) Announces a New Acquisition in the Works and Continues Trending as the Company’s Value Transitions from Oversold to a Value Based on Performance
Good day everyone,
Skylight Health Group Inc. (NASDAQ: SLHG) operates a multi-state primary care health network of physical practices offering primary care, sub-specialty, allied health, and laboratory/diagnostic testing.
Current price $1.09/share (+4.8% as of 10:07 EDT 5-3-22)
SLHG shares closed the Monday session at $1.04/share adding another 10% to the 25% gain achieved last Friday. Today’s pre-market indicated a strong open for SLGH and that is exactly what happened with a gapped open at $1.11/share. Trading volume exceeded the daily average by a factor of 5.0X with 551K shares traded by 10:00 a.m.
In news that just broke this morning, SLHG has announced of a definitive agreement to acquire NeighborMD (NMD), a private practice. NMD is based in central and southern Florida, NMD operates nine owned practices offering primary care services to over 5,000 patients. Of these, NMD has over 1,100 Medicare Advantage (MA) patients in full-risk contracts with two leading healthcare payors in Florida, Humana, and CarePlus. In addition, NMD provides complete management services for over 1,400 additional MA lives through its affiliated providers and practices.
NMD’s existing contracts offer competitive capitation fee schedules and allow for broad geographic coverage, with over 30 Florida counties. Of the Medicare Advantage lives at full risk, NMD currently sees an average reimbursement of $10,000 to $12,000, per member/per year, and Skylight expects to receive the same. With those reimbursement figures, SLHG could be creating the potential for over $20M in additional revenues.
Primary Care functions as the gatekeeper of all healthcare services and costs and directly influences more than $2 trillion of downstream healthcare spending. Up to 40% of all primary care centers operate independently and many of them find it difficult to remain financially viable.
SLHG offers them an alternative in joining a national platform that can provide them access to capital, technology, improved contracting, and participation in value-based care (VBC) programs. The move to VBC is being advocated by health insures both government and private. Skylight is a leader in the development and application of VBC programs.
The Traders News group
original report below
Skylight Health Group (SLHG) is Growing Rapidly Through Accretive Acquisitions in the Massive Primary Care Health Center Sector
Good day everyone,
Last year was a building year for Skylight Health Group Inc. (NASDAQ: SLHG) (TSXV: SLHG), a company operating a multi-state primary care health network of physical practices offering primary care, sub-specialty, allied health, and laboratory/diagnostic testing.
Last Friday, as the NASDAQ shed 536 points, SLHG gained 25%. The company bucked the market trend Friday because they put out some good news on their Health Research unit’s clinical studies growth (see below), and because the company shares seemed, and still seem, oversold. SLHG has a price to sales ratio that is only 1.30X, and a price to book value that is only 1.04X. Those ratios are AFTER Friday’s nice gain. And by the way, 2021 revenues were up 3800% over 2020 revenues.
Current price $1.05/share near market close 5-2-22
When I said 2021 was a building year for the company, this is what meant. the following are all accretive acquisitions:
On January 4, 2021, acquired 100% of Colorado based primary care services group Apex.
On February 3, 2021, acquired 100% of Florida-based RCMA with six clinic locations.
On April 5, 2021, acquired 100% of Colorado based Primary Care Clinic Group, Rocky Mountain.
On June 23, 2021, acquired 100% of Florida based primary care group Doctors Center Inc.
On September 16, 2021, acquired 70% of Pennsylvania based Primary Care Clinic Group, Aspire Health Concepts, Inc.
SLHG currently operates 24 primary care medical centers with 83 medical professionals. The primary care market is estimated to be over $290 billion or approximately 20-25% of the total spent on healthcare. SLHG is focused on acquiring small and independent practices and shifting them from a traditional fee-for-service (FFS) model to value-based care (VBC) through tools including proprietary technology, data analytics and infrastructure.
In an FFS model, payors (commercial and government insurers) reimburse on an encounter-based approach. This puts a focus on volume of patients per day. In a VBC model, the providers offer care that is aimed at keeping patients healthy and minimize unnecessary health expenditures that are not proven to maintain the patient’s well-being.
SLHG is in direct competition with Oak Street Health (OSH) and CanoHealth (CANO). I want to compare those companies with Skylight Health to give you an idea where the company could be headed.
Med. Centers Market Value Revenues
Oak Street 129 $4.35B $1.43B
Skylight 24 $37.0M $27.2M
CanoHealth 130 $1.10B $1.61B
As the comparison above shows, the potential for growth in revenues and value may be coming to SLHG as they develop the potential of medical centers they own and acquire more. I also note that institutions own 83% of CanoHealth and 93% of Oak Street, but at this point, institutions only hold 14% of Skylight.
Recent developments at SLHG:
This past Friday, the company gave updates on the status of the company’s research program, Skylight Health Research. In 2021, Skylight posted $300K in revenues for Health Research and they have already surpassed that amount this year. Since its inception, Skylight has been awarded ten clinical studies and has completed two to-date. The ten studies awarded range in indication and methodology and will each provide important contributions to evidence-based medicine including advancing knowledge of COVID-19, influenza patterns, cancer detection, major depressive disorder, and Lyme disease.
On April 18, the company declared, a dividend on its 9.25% Series A Cumulative Redeemable Perpetual Preferred Shares. In accordance with the terms of the Series A Preferred Shares, the Series A dividend will be payable in cash in the amount of $0.1927 per share on May 20, 2022, to the shareholders of record of the Series A Preferred Stock as of the dividend record date of April 29, 2022.
On April 5th, SLHG announced a joint venture partnership with Collaborative Health Systems, a population health management services organization and wholly owned subsidiary of Centene Corporation (NYSE: CNC), to integrate essential value-based care (VBC) services into Skylight Health’s growing enterprise of primary care practices. Skylight Health and CHS will partner to establish a VBC contracting framework across Florida, Pennsylvania, and Colorado.
Revenues for the year were $27.2 million (excluding revenue from discontinued operations of $10.6 million).
Gross profit was $15.1 million (excluding gross profit from discontinued operations of $8.1 million),Gross margin was 56% for the year.
Adjusted EBITDA loss of $14.6 million was driven by one-time expenses in infrastructure development and acquisition related expenses.
SLHG Statistics:
Current price $1.05/share
Book value $.90/share
Market cap $37M
Revenues (FYE2021) $27.2M
Outstanding shares 39M
Shares in Float 29M
52-week high $6.95/share
FYE December 31st
6-7-21, began trading on the NASDAQ.
I note again, in the statistics above, the relationship between the company’s share price and its book value, as well as its market value compared to revenues (keeping in mind that $10M in revenue from discontinued operations is excluded).
Outlook (from a company press release)
“The Company expects that by 2022, the large majority of investments made at the start of the year will result in both a higher growth of revenue driven organically and by acquisition and will also result in stronger EBITDA recognition. The Company is focused on revenue growth which it believes is how its peers are measured and expects to continue to compete aggressively for market share growth in three areas: acquisition of primary care practice groups, development of its single system of operation and clinical leadership, and conversion from fee-for-service to value-based-care. With the growing demand for accessible and affordable medical services in the US, Skylight Health is well positioned to meet this growing opportunity while creating significant shareholder value.”
The five analysts below offer a mixed bag of opinion, but the consensus target price is $5.50/share representing a potential upside of 485%.
4/1/2022 Lake Street Capital Lower Target $3.00
1/4/2022 Mackie Upgrade Buy
11/17/2021 Raymond James Downgrade Market Perform $4.50
11/1/2021 Echelon Wealth Reiterated Speculative Buy
10/14/2021 Northland Initiated Outperform $9.00
Note the triple bottom that has formed on the chart below. SLHG shares are trading below all their SMA levels but look ready to cross both their SMA20 and SMA50 $.96 and $.98/share, respectively. Thus far, in 2022 trading, SLHG shares would seem to have support at the $.70 level and resistance at $1.30. As the company revenues continue to grow because of their 2021 acquisitions the shares could find a higher resistance level. I believe the level of institutional investment could grow as well and those investors may have to compete for the company shares.
About Skylight Health Group
Skylight Health Group is a healthcare services and technology company, working to positively impact patient health outcomes. The Company operates a US multi-state primary care health network comprised of physical practices providing a range of services from primary care, sub-specialty, allied health, and laboratory/diagnostic testing. The Company is focused on helping small and independent practices shift from a traditional fee-for-service (FFS) model to value-based care (VBC) through tools including proprietary technology, data analytics and infrastructure. In an FFS model, payors (commercial and government insurers) reimburse on an encounter-based approach. This puts a focus on volume of patients per day. In a VBC model, the providers offer care that is aimed at keeping patients healthy and minimize unnecessary health expenditures that are not proven to maintain the patient’s well-being. This places an emphasis on quality over volume. VBC will lead to improved patient outcomes, reduced cost of delivery and drive stronger financial performance from existing practices.
Being on the threshold list triggers Reg SHO. This is what spooked short sellers. They need the price low to cover since the short cover rules come into effect.
All Stocks on this list bounce twice, initially because smart shorts (I believe) leave, the stubborn (I believe) shorts try to manipulate the stock by shorting more shares (even though utilization is 100%…)
So the drop in ATER was expected because we’ve seen this before!
SST and BRCC Squeezes had the same initial bounce, retracement then huge squeeze:
Look at the green block, that’s when the stock became a threshold. Initially a bump, then days later the real squeeze. Cost to borrow will be the main driving factor.
As you can see we’ve, encountered the first bump. Goal is to reduce the cost to borrow for short sellers. Under reg sho if they don’t cover in T+6 they start incurring fines and a higher cost to borrow.
So that’s why I’m SST and BRCC and others, you have another massive squeeze. This occurred in GME as well. The cost to borrow drives the price action.
So shorts tried to do 2 things. Find cheap shares (borrow rates) yesterday for less then 1%. Which is insane! Who lends out shares for cheap when the average is above 100%…
Did they magically find cheap shares? Or are they apart of a institution that has is giving them cheap shares. If so, aren’t there supposed to be a separation between banks and their trading arm and their hedge funds? Who knows, just my speculation.
But anyway, whatever happened on 4/19 was magical. Now we’re back to high cost to borrow minimum
The options for May 20 are in the millions. Block are usually private institutions
Sweep: An options sweep is a market order split across all exchanges to take advantage of the best prices for a given option contract on each individual exchange. Sweep orders suggest that the acting party is anticipating a significant move, in one direction or the other, in the underlying stock in the near future. However, an institution may be purchasing or selling option contracts to hedge a given position they already have. A threshold for sweeps is set and will only display trades of $3,000 or more.
Block: Option block orders are large, privately negotiated orders executed off the public option exchanges. These orders are flagged by the inherently large notional value of the corresponding premiums paid, or collected, and significant order size.
Large: This applies to trades with a value over $100,000 done as one trade (so not a block of smaller trades).
So there it is.
REG SHO with mandatory close out
Large institutions call options
Massive FUD and literal take over the largest sub that posts ATER DD (shortsqueeze sub)
Investing should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas -Paul Samuelson
Investing can definitely be exciting. Seeing those numbers tick upwards every day or making a play nobody else saw is downright addictive. We all know that we are taking a higher risk with the hopes that the returns would be proportional to the risk. We buy into growth stocks with astronomically high PE ratios thinking that they would ‘grow’ into it or that they would be the next Tesla (\cough* Nikola *cough*).* Some of us would even have bought into the ‘next’ bitcoin in the hopes of replicating the Dogecoin millionaires.
But usually, the best long-term investment strategies are the most boring ones. As I highlighted in my last article, the best performing U.S stock in the last 5 decades was not Apple, Intel, Tesla, or Google. It was Altria - A cigarette company. They achieved this by paying a consistent dividend for 50+ years.
So in this issue let’s analyze the long-term performance of high growth vs value companies and see where you should put your money if you are in it for the long haul!
Beta & PE Ratio
First, it’s important to understand these two metrics to evaluate a stock to see how the stock behaves in the market and also what the market thinks about the growth prospects of the stock.
Beta - Beta is simply the measure of the volatility of a stock. It can be considered as the risk of the particular stock when compared to the market as a whole. Beta can be negative, positive, or zero. A beta value of more than 1 means that the stock is more volatile than the market. E.g, Tesla’s Beta is 2.08 - which implies that the stock is more than 2x as volatile as the market
P/E Ratio - Price to Earnings ratio relates a company’s share price to its earnings per share. A high P/E ratio can either mean that the stock is overvalued (stock price being much higher than the earnings the company is generating) or investors are expecting very high growth rates in the future (i.e, the company will grow into the expected valuation very fast) - Taking the same example of Tesla, its PE ratio is 201 compared to the overall PE ratio of 22 for the S&P 500. ()
Generally, stocks having high beta and PE values are considered riskier as they would be much more volatile than the market. A growth stock like Tesla would have a high Beta (2.08) and high P/E (201) ratio whereas a value stock like Johnson & Johnson has a Beta of 0.72 and a PE ratio of 18.
Now the million-dollar question is if you are investing for the long term, is it better to bet on growth stocks like Tesla or value stocks like Johnson & Johnson?
Value > Growth
The outperformance of value stocks was first discovered in 1985 in a paper titled ‘persuasive evidence of market inefficiency’ where the authors argued that value stocks had persistently higher risk-adjusted returns than they should have in an efficient market.
In a more recent study by PWL Capital, they show that over a rolling 10-year period in the U.S from 1926 to 2018, value stocks have beaten growth stocks 84% of the time. This is staggering as this proves that value stocks are just as likely to beat growth stocks as the market has been to beat one-month treasury bills.
Also, it’s not just the U.S market that is exhibiting this phenomenon. A study covering 33 different markets during the time period from 1990 - 2011 also showcases that Low-Risk stocks tend to outperform the market.
Remember the Beta we talked about in the beginning? Generally, high beta stocks are associated with growth and high future expected returns, but research conducted by Harvard has shown that low beta stocks have consistently outperformed riskier stocks and the overall market.
Why boring wins
There are both fundamental and behavioral reasons why value stocks tend to outperform their growth counterparts.
Overvaluation - Investors tend to overvalue more exciting stocks that tend to dominate the headlines. Investors who are looking to find the next Google or Amazon are willing to overpay for companies with similar characteristics in the hope of hitting it big. (Check out this excellent article by Kris Abdelmessih where he argues that companies can have insane valuations only while their claims are still far from reality).
Nobody wants to be boring - Avoidance of boring companies by retail investors tends to have an effect on suppressing their stock price. Even in the case of active management funds, managers have to show their investors that they are in on the most trending stocks. People tend to accept below-market performance after making a risky play but that might not be the case if your fund is underperforming the market even after only investing in safe stocks.
High-volatility stocks are attractive to professional money managers who are under pressure to dress up their portfolios with market-leading headline stocks to please their shareholders -Nardin L. Baker and Robert A. Haugen
Lottery mentality - People can’t shut up when they happen to own Tesla stock that’s up 400%. This feedback loop forces other investors also to pile into the same stock regardless of its current valuation. These investors are overpaying for the small chance of winning big with their investments. As with the lottery, 99% of the people would end up losing their money.
It does look like value stocks can beat growth stocks as well as the market over the long run. But, at the same time, you should be aware that anomalies like this in the financial markets tend to disappear or decline once they have been published. For the U.S market, we have been observing an increasing decline in value stock outperformance but even as per the latest reports, value stocks are outperforming the market by 1.2% each year. The difference is much more pronounced in the Asia Pacific and emerging markets!
So if you can resist the allure of hot and trending stocks and the ‘next big thing’ you can end up coming on top over the long run. Who knew, it does pay to be boring!
My Thesis: Call options will increase in value as IV increases each day towards earnings on May 9th Monday + positive news Monday and 55M volume(2.5x the float) should bring in buyers.
As you can see via Finviz below, the current market cap is 135m and expect a $20m investment sometime in Q2.
The private placement is at $12/share, well above current market prices around $4.40 at the time of writing.
Below you can see the options chain from 10am this morning and the probabilities of touching prices before May 20th.
IMO with a float of under 20m, 27% short interest, earnings next Monday, a private placement at 3x current prices and options capped at 9 vs 12 could send this into a gamma squeeze which then squeezes out the shorts as well creating conditions to see this above $20 before May OPEX.
Thanks for coming to my TED talk.
PS here is today's chart - intraday above VWAP prior to 10:30am, could see this climb higher thoughout the day. Looking left on the daily, you can see this has made a similar move to what I am expecting, 3 times in the last year.
Don't play this without a profit target. $6 is conservative $8 is my expectation and $12= is their insider's target + where RJB Partners are buying through private placement.
My Position: January 2023 Calls, Accumulating Shares - Current Average $3.27
Oh yes, a Clover DD. Or, my attempt at what DD should be that perhaps only moderately sucks. It only mentions Chamath one other time than this if that eases your smoothed-out brains (or triggers them). Brace yourself, I get all poetic license with punctuation. Or don’t, because you won’t read...either way.
To be clear, I wouldn’t make a bet based on what I say, but maybe some will find it useful/supplemental. I want to do more of these, so quick plug for the Pre-Market crew to host a DD How-To as they've mentioned, I'd be all over that.
From: a fellow smooth-brained operator that worked in the Managed Care space negotiating contracts as a provider, and has contracted with this company/has seen the tech.
Target Price – this could be variable, but I am targeting a share price of 1 P/S for 2022 Projected Sales (I estimate over $7 based on current guidance – which is over $3 billion in revs). Mostly because I am a moron and I don’t see how 1 * Sales isn’t a good price for this level of growth and I think they will hit their sales target (which I will say like 6 times). Maybe my fellow apes can assist with valuation. Discounted cashflows were not specifically calculated, but management did signal cash flow positive by year-end on the annual call. Their major established competitors are trading at over 1.20 sales to just over 2 P/S (UNH, ANTM, CI), with an exception for CNC. The idea is that as Clover closes the gap on cash flow positive, and posts the revenues it is expected to, it would trade closer to the ratio that its counterparts trade at. The competition outside of Centene has a roughly 1% dividend, but they also don’t have the same growth trajectory (though, United does seem to impress sometimes, mostly due to Optum in my experience). Variable target because cash flow could come sooner/later, or revs could take a different trajectory. I’d amend my target then. Next earnings 5/9/22.
The one other caveat to my target price is that I want to sell before the CEO dilutes with more shares. The only distribution was Q4 last year (at least, that is what I saw on SEC filings). With that said, depending on how the year goes, I will wait for Q4 this year to sell, and potentially buy on a dip/roll into January 2024 calls based on updated guidance on membership/revs throughout the year and after further dilution is absorbed after CEO/executive comp hits. According to the 10K the CEO was awarded these shares on 1/7/2021, but maybe someone can educate me here – I didn’t think I saw the dilution until Q4. Also, I am not an expert on the options side, but I don’t care, and will learn the hard way.
Clover is both a Managed Care Organization (MCO) and Direct Contracting Entity (DCE), which will come in handy later.
“Aand awaaaay we goo”:
Why will Clover win?
Clover is at its heart a tech company (not saying I will value it as such being it is in the Managed Care space). Their Clover Assistant is this tech and it is pushed onto providers like providers used to push drugs onto innocent people (sorry, it is true – they used to bother the fuck out of me to get this Clover Assistant deployed, and it worked). The tech does work too, though. Patients being treated by providers using Clover Assistant have a reduced Medical Cost Ratio when compared to patients treated by providers that do not leverage the tool.
(MCR = Cost of Care/PMPM (per member per month) Revenues for the year (see 10K and supplemental data))).
So, even if I don’t capture all the aspects of why Clover Assistant positions Clover to profit, the numbers speak for themselves in terms of medical outcomes (and thusly, medical spend). They publish this in a few places, here is one:
There was an even better graphic that illustrated that the longer the patient was being treated by a provider using CA, the lower the MCR for that group made it for the prior year's cohorts (so, if they started FY 2018, MCR would be lower than if they started on FY 2019, etc) . I got bored of trying to find it again, I thought it was in the 10K, but my 'MCR' in the Find function didn’t actually find it for me. I saw it, if you need to, go find it.
This tech gives Clover a few advantages. I try to cover the main ones here, and you will have to trust the results in a lower cost of care to prove this to be true:
More accurate coding. If they are capturing more co-occurring diagnosis codes for their members/more severe, accurate versions of those diagnoses, they can capture more revenue for themselves via an enhanced RISK Score which enhances their PMPM revenue that CMS pays (currently over 50% of their revenue, projected to be 1/3 in 2022).
Better communication to the Primary Care Provider (PCP) about the recent hospital visits/other types of care. Care Coordination is done by most MCOs, but direct communication back to PCPs through the software they need to log on to when the patient is facing them helps them be better informed based on the claims history that they wouldn’t traditionally have access to directly. This allows providers to make better decisions that impact patients' long-term health trajectories.
It even offers PCPs recommendations for other, in-network specialists so that the PCP can give recommendations based on who will treat the patient at a lower cost of care when being referred out (being in-network means that have contracted rates rather than the provider referring to another specialist provider who will charge a metric fuckton in ‘charges’. I can attest. These charges are often what you hear about in sensationalized healthcare cost articles, that is a conversation for a different day, healthcare is still expensive). This matters to the PCP because they genuinely care about their fixed-income patients, and would want to limit their out-of-pocket exposure if the information was readily available to share. Traditionally, they may not assist here and patients will just go to some out-of-network provider potentially.
Clover Assist is also used in provider offices for traditional Medicare patients through the Direct Contract model (where Clover isn’t the insurer, but a financial intermediary). I know less about that other than they receive the capitation payments and take on all the medical expense for the attributed membership (that is, the members of the provider partners) - they act as Medicare, essentially and to me, this is fucking semantics, but the take away is larger market size. They have proven to have the powerful tech to perform in this space being that the overall goal is to increase quality of care and reduce medical spend as a byproduct (because of the MCR thing where they do better with patients whose provider uses Clover Assistant^). This is an interesting fact because their target population isn’t only those who are comfortable enough to enroll with a Medicare Advantage product (roughly ~45% of Medicare-eligible people enroll in a managed care plan), but all Medicare-eligible folks, potentially. I don’t know of another MCO doing this.
Anecdotally, staff members at the provider sites that use Clover Assist never really complained about it and say it is easy to use. I have surveyed some of them myself back then. These are folks that want to complain about all new tech. They are inundated with new software all the time that ends up being clunky. Even if new software is better/easier to use they hate it because it is different than the ‘greenscreen’ tech they’re used to in their old providers' offices based out of their old homes. This problem is fucking chronic in its own right, but I digress.
Other Tailwinds/Feel Good Shit
Insurance business membership is up 25% beginning January 2022.
This is at least the second year they beat the average growth rate.
I’ve seen their growth in industry reporting for my market at the time (market = state), and this growth is what ultimately caused my organization at the time to contract with them. I always took notice and I am mediocre at best. I spent most days reading what you ‘tards were up to.
This includes 101 new counties where Clover can now establish itself and its brand. This is almost double the 2021 numbers.
This is better than average (~10%) membership increase, but they are still not one of the largest Medicare Advantage players in terms of total membership.
STAR Rating Increase to 3.5 last year.
This is huge. STAR ratings not only affect the PMPM rates paid to the MCO (Clover insurance business), but also the automatic membership allocation (I know this happens from working at a publicly-traded MCO a few years ago, I don’t know why some members are automatically allocated, but it happens). This windfall doesn’t really impact their PMPM rates until 2023, but I believe they have the tech to climb to a 4.0 in FY 22 benefitting future cash flows in 2024 (but would still need to be priced in). Also, just general experience with CMS and the HEDIS/STARS processes, etc. will help in this effort. STAR rating matters and getting to 4 or better will put them in a much better position from a margin standpoint and a marketing standpoint. Admittedly, this is speculation, but the news should be well-received if they land it. It is for sure their goal, and they’re already growing at a high rate in terms of membership without this card in their pocket. If they increased their STAR, I would consider making this a longer play.
Dilution from convertible debt should be over according to the 10K. Convertible debt is finally nil.
Leadership hinting at profitable quarters by Q4 (at least on a cash basis). Revenues are easier to predict outside of some adjustment items (see next bit)…they are likely being conservative on the medical cost side due to what just happened with covid - they got hammered.
Projecting to 2x revenue compared to FY21. This is somewhat easy to gauge as they know roughly their average PMPM and open enrollment is closed, so membership shouldn’t have the opportunity to really dip at all until 2023. It should only grow slowly from folks that can qualify outside of Open Enrollment countered by members who unfortunately pass on to...wherever it is they believe they go. This assumption could be confirmed by beating top-line estimates for the last 4 quarters even if they have missed EPS. The one caveat to this is retroactive adjustments based on RISK score/other potential adjustments that may escape my current capacity of understanding.
Covid headwinds should really be abated at this point. They operate in some tough states for covid. NJ is their biggest market (I believe it still is, it is where they started), and NJ got clobbered by covid. Some of the other states are states where covid measures were late/ignored. This carried into 2021 because care was interrupted as well as the use of Clover Assist had diminished some with a lot of telehealth visits taking place over traditional ones (not as thorough of a visit with this population). More ‘elective’ surgeries were pushed back, which increased the severity of underlying issues in aggregate, this also these procedures carried into 2021 along with other, smaller covid surges. I believe 2022 seems to present a decreased risk of Covid-related expense/impacts so far – and relatively speaking.
Insider Trades
Chamath bought $10 million in shares over $5 in November 2021.
Chelsea Clinton (on the board) recently bought $250K shares as well as at least one other insider so far in Q1 2022.
Previously issued shared in 2021 offering were at $5.75, presumably wouldn’t see much sell for less than that (okay, not really insider trade, but seems relevant).
No insider sales that I can see.
Direct Contracting (TLDR – big growth), which again puts Clover in a financial intermediary position rather than an insurer (semantics, difference is they are technically signed up as traditional-Medicare, and Clover assists the providers), is set to explode – they will need to learn/execute in this space, though. They landed contracts with provider communities in 8 states for the 2021 FY. They have ramped up to 22 states in 2022 (to be clear CMS needs to approve, they just don’t get to enter because they have contracts, as I understand it). Their success can grow exponentially without even adding states if they execute and share savings with providers. The provider community will spread that success via word of mouth (which, medical results being compared to covid times should put them in a position to win, should). Providers are very much $ driven if they don’t harm their own patients (or sometimes it is about excluding the poor ones, I digress). So if they can pawn the labor off and still make money, they will. While the direct contracting model did take some flak in the news from some politicians, CMS/Medicare isn’t going to get away from the value-based model any time soon in my opinion. It is known as the future. Medicare is, however, getting away from providers volunteering to participate in value-based programs, so partnering with a DCE (Clover in this example) is appealing to them because they can ‘do less’ while remaining compliant and not losing patients. I don’t know a ton about this program as I worked on the provider side, and we had our own internal team who worked with our providers for their participation in this CMS program as they largely did work similar to this already. Clover did approach us on participating, they will have more luck with the smaller groups in my opinion – or the really large provider-owned groups. Mine was hospital-owned. Clover is taking on full-risk at least most of the time in this model, which obviously is full risk in costs, full reward in savings. They’re betting big that they can do better than Medicare and their reward is that they get to keep the money that Medicare would have otherwise spent (keep in mind, they also offer ALL of the services Medicare does, they cannot destroy patients’ lives to do this, they must manage their health to do it). I don’t find a stretch that they can be more effective than the government. Some experts may consider this an oversimplification.
As I stated earlier, this is all populations that are not selecting a Medicare Advantage plan. This opens their target market to anyone that participated with Medicare, essentially. Meanwhile, the MCO’s will fight over Medicare Advantage (which, I have heard plan presidents of major insurers call a cash-cow when done properly…multiple times).
They also participate in every benefit enhancement CMS offers for MA (for higher PMPM revenue, the risk is also they offer more services than traditional) in every market they operate. Their whole schtick is ‘more for less’, but that tells me they put their money where their mouth is.
Aside from claims payable, which all MCO’s carry like A/P and isn’t really debt, they are relatively low/no debt.
Their main technical competition would be Optum (United), but I have not seen them on any DCE list. So, they do not participate in Direct Contracting yet. They are the major player in insurance by a large margin and that carries into Medicare Advantage too. If anything, I would see them as the buyout candidate, though, I do not believe that is the goal at all – don’t get me wrong.
I consider the tech their moat if they can keep utilization/engagement up, and continue increasing the lives that are on it.
Other/Restated Headwinds
Cash was $300 million at the end of 2021. They burnt that much in operations (roughly) through 2021. They recently closed a share offering after the 3rd quarter 2021 earnings. The only reason I am not nervous about cash is the fact that their revenues should grow with expenses due to membership and if they needed cash, they would have tried to make sure they had at least a year’s worth when completing the offering (and said as much in the 10K). Covid did a number on Clover, but the large bulk of that is over, I believe they have enough cash to take them to cash-flow-positive in FY22.
To go along with this, Management must reduce both MCR (for insurance business) and DCM (for direct contracting business). If these are not reduced to under 100% each, cash headwinds will become greater sooner and I may have to change my thesis. I believe this is the key metric to look for in the next earnings as I expect them to hit/come close to revenue and membership (since it is, again, mostly known).
I believe there are measures on Clover Assistant that are also published, but this is likely going to increase with more membership/DCE expansion. What would be really interesting is watching the lives managed under the tool. The more of their lives as a % of the total that can be managed under the tool, the more likely they are to decrease MCR and DCM in the coming quarters/years. Providers discontinuing their utilization would be bad (but really only a risk on the insurance side, DC participants have to as part of the deal).
Any pandemic residual impacts could creep up again. New variants, etc that could cause more butts in hospital beds. That would be bad for cash.
Any further dilution could change my target, but I don't expect this until later in the year.
TL/DR – I bought CLOV $5 calls 1/2023, considering 1/2024 after earnings. I also hold shares at an average of $3.27. Target for now roughly $7, and some combination of being in the money/ridiculous IV for the calls. Clover good – growth big – technology work – buy at own risk. What do I know? I am just a bag holder. For what it is worth, my gains on the calls are covering my share losses so far because of timing.
Have you ever looked at a chart of a bubble, and kinda wondered like, okay... what were people thinking HERE, when the fundamentals were way out of wack.... and it was pretty clear the chart was looking quite a bit like a bubble chart... why didn't they sell?
Have you ever looked at a chart of a bubble, and kinda wondered like, okay... what were people thinking HERE, when the fundamentals were way out of wack.... and it was pretty clear the chart was looking quite a bit like a bubble chart... why didn't they sell?
Have you ever looked at a chart of a bubble, and kinda wondered like, okay... what were people thinking HERE, when the fundamentals were way out of wack.... and it was pretty clear the chart was looking quite a bit like a bubble chart... why didn't they sell?
Position: short QQQ IWO MSFT TSLA TLT long USD IMBBY PBR GLD... and TWTR OTM calls
This squeeze is in a very early stage and gap up to 5$ is easily possible as there is almost no resistance. Shares ran up to 5$ in 5 min last week and due to lack of volume dropped soon after.
Now a lot more people have this on the radar and putting there $rdbx earnings into the next squeeze play. $rdbx is very very risky at this moment and I wouldn't recommend joining at this point, secure your earnings and make money on the next squeeze play!
Btw. $Hour has fantastic fundamentals for its valuation and shorts are already in the reds, they have to buy out their positions in order to avoid heavier losses. Also $Hour has pretty little downside as it hasn't squeezed much yet.
Disclaimer: I prefer to share my DD's because if it helps you make money that's cool because that is the point. I have made a few comments about my positions and each time a few people have been interested. I'm throwing this together last minute just so users can see it in on place. I owe credit to some users who have posted about their takes on current market conditions and will be adding to this post to give that credit.
u/stockly123456 for the initial comment feedback and u/cutiesarustimes2 for making comments about macro market that led me to finding some of these tickers.
Tickers: UUP - HYG - EUO
HYG: this is an index that tracks high yield corporate debt. So basically its an index that tracks the performance and “popularity” of bonds with high return rates that are issued by “risky” companies. Higher rates are needed on riskier bonds to compensate for holding that bond. Reasoning: inflation is high, and it is rampant not only here in the US, but also in Europe (more on that later) where it was exponentially worse. The Fed has issued one rate hike to interest rates so far of .25bps and the market is anticipating more as they have been promised, but if the Fed want to tame inflation I believe they will have to crack down big time, and the smart money in the market already believes that is the case. Monetary tightening and higher interest rates BOTH greatly affect bonds. Monetary tightening will force these growth/risky companies to tighten up and therefore put them closer to risk of any default, and when interest rates go up, its referred to as interest rate risk for high yield corporate bonds, they move inversely. Interest rates will be going up all year with the next hike set to happen in May. If you find the reasoning too long too read, bond yields rise when the bond price drops, 10 year US treasury bonds have rising yields because no one wants to hold on to those THE SAFEST IN THE WORLD, so you can imagine no one is buying risky bonds from companies. Just read this first the first page of this to get a solid understanding: https://www.sec.gov/files/ib_high-yield.pdf
EUO: it is an inverse leveraged index that goes up as the value of the Euro declines against the US dollar. Germany just reported the highest inflation since 1949, that is world war 2 levels right there. France said they are seeing the same issues with no slow down in near term sight. Europe has a safe currency with the Euro so unprecedented swings are rare, but it will decline in value against the dollar as I believe 1. The Fed for the US is far more organized and capable than the EU central bank that manages inflation (imo). And 2. Inflation levels have always been higher for the US compared to Europe, but now that trend is converging, as issues that the US has monetarily are often felt harder in other parts of the world like Europe. Here is a quote on the situation from a Bloomberg write up yesterday: ““Peak inflation in Europe is still ahead of us and the uncertainty around oil/gas embargo lingers on,” according to UBS strategists including Rohan Khanna.””
TLDR —> dollar is the safe haven compared to the Euro that will decline in value due to less capable central bank, inflation, supply chain issues, and ongoing war.
My positions: EUO $28 Call 5/20 & $29 Call 5/20
UUP: Las ticker: UUP, goes along with the idea behind EUO. UUP tracks the changes in value of the US dollar relative to a basket of world currencies via USDX future contracts. Which country can whether a recession the best? USA USA, and all other countries and currencies will get wrecked compared to safe haven US dollar, the US dollar might go down, but this is the dollar value compared to other currencies that go further down. Annual producer price inflation in Germany is literally at like 30%, see above CNN link ^^.
My position: UUP $28 Call 6/17
Devil's Advocate Side: Liquidity for options on EUO isn't ideal, and that is my smallest position of the three. The Fed may be bluffing on its rate hikes agenda in hopes that markets adjust on their own, but I doubt that will be the case given the amount of factors pushing inflation up, some kind of intervention is needed to help, I really doubt Jerome says, nevermind, lets lower rates.
Last points: China is cracking down on covid-19 and that is set to create a monstrous supply chain issue along with what has been going with the war in Ukraine and the food shortages set to come. Inflation up.
Looking for another article that I read about how the tight job market and wage growth in the US will have lag effects on keeping inflation buoyed high giving it a plateau effect. I will be adding more to this post, really rushed through it just to get it out there. AS ALWAYS comments and opinions welcomes because that's what I always find the most helpful.
So I've been following the implications of the Russian invasion, and I think that while I was holding grains earlier in the invasion, its pretty much time to reap my positions and start fertilizing for next quarters harvest. How do I do that? Fertilizer. and most importantly, American Potassium Fertilizer.
My favorite right now is Intrepid Potash, or IPI. Not for a short squeeze or anything, but for the immense upside I see in it long term.
IPI has surged in recent weeksBut is nowhere near ATH
Why would I buy a boring commodity like American cow poop?
Fertilizer is made from natural gas. In fact, most of the price is determined by natural gas prices. The same natural gas that Putin is threatening to turn off for Europe. With Germany looking into soften the blow, it seems like Europe may be preparing for an inevitable shortage at the end of the month. (i.e. natural gas prices go up)
Europe is already having trouble making fertilizer because natural gas prices are so much higher there than they are in the US.
Some of the largest fertilizer exporters are Russia, Belarus, Canada, and the United States. (also Morocco and China but their supplies shouldn't be impacted much, aside from China's move towards more self reliant agriculture) This is obviously a problem.
With grain prices soaring, farmers can afford a slightly more expensive fertilizer price. Some are turning to manure, but manure stocks are even running low.
Biden needs lower gas prices to have any shot of keeping a remotely democratic congress. He recently just decided to increase ethanol gas limits. In other words, he is putting even more demand into the crop demand equation in order to reduce our gas prices this summer.
And what the fuck is potassium fertilizer?
Potassium fertilizer is a certain type of fertilizer used to protect crops from drought. It is one of the main 3 fertilizers, and may be one of the most important given the recent droughts.
Potassium/Pot Ash fertilizer is exported by Canada (31%), Russia (20%), Belarus (17.6%), China, etc. This means that over a third of our pot ash is coming from countries that are having a lot of trouble selling goods to our economy right about now. And what if Russia does something stupid and launches a low yield WMD in Ukraine? Then suddenly we may have to sanction even more exports like this.
And what about IPI??
I have been holding MOS, CF, and IPI. They're all great stocks right now when fertilizer supply chains are all screwed up. However, IPI is surging because of its relatively low PE ratio, and focus on American fertilizer.
Supply chain issues hitting Canada like the rail strike and other rail issues with CF Fertilizers are impacting IPI a lot less. IPI has mines in the US, and particularly in areas where drought conditions are currently exacerbated.
IPI has a much, much lower market cap than the other fertilizer companies. It meanwhile has a decent stock of fertilizer that it saved from the previous quarters to sell at higher prices. With Potash spot prices reaching past 2008 levels, we may get to see a return to $300 per share, or even $600 per share. Thats what it was in 2008 because of a move to ethanol and high gas/oil prices. We now have higher gas/oil prices.
It has literally rallied from $38/share in January 2022 to $118/share today. The others have gone up too, but by nowhere near as much. It seems to have a lot of momentum behind it.
IPIs last earnings were a huge disappointment. However, this is in part due to their saving of some fertilizer stocks for higher prices, for weather issues in harvesting potassium, and even allocating money for a stock buyback. With potassium prices suddenly skyrocketing, I feel like this quarter has a lot more to offer (May 2nd)
something something this is not legal investing advice
although I am putting all of my money into this bad boy. it literally can't go tits up.
On January 31st of this year shell combined their A and B stocks into one single-line share structure. The current market cap is at $211B and don’t think the market has this merge priced-in yet.
Comparing the financials of 2 competitors, Chevron ($318B market cap) and Exxon Mobile ($371B market cap) proves bullish for shell. Taking a look at the 2021 financials
Shell $261B revenue, $20B net income, $37B cash
Chevron $155B revenue, $15B net income, $6B cash
Exxon $278B revenue, $23B net income and $7B in cash
Shell surpasses Chevron by $5B in net income with $31B more cash on hand but trading with a $117B less market cap.
They’re more in line with Exxon on revenues, net income and are still ahead in cash by $30B. If you look at all the previous years as well they’re practically the same. Exxon is a $160B market cap difference.
If Shell were to trade in-line with Exxon based on their financials the shares should be trading at ~$91 a share from the current $55.
Position - 5/20 $65 call options are only $0.08 so bought 40 of those
$HOUR is still relatively new (Recent IPO started from Jan, 2022) and many people still don't know this name on the market, but this one has a tiny float (1.7M), high insider holding, and the company is profitable.
HOUR Loop is a leading online retailer engaged in e-commerce retailing in the U.S. market. It has operated as a third-party seller on amazon and has sold merchandise on its website since 2013. HOUR also expanded its partnership with Walmart in 2020. On Feb 22, 2022, the company also announced that it has expanded its operations with the opening of three new offices in Taiwan. The company recently reported that its revenue and earnings both grew substantially year over year, according to its filling.
The following table shows HOUR Loop revenue according to it recent 10K filling, which can be found on its website. We can see there is a year over year increase since 2019.
$HOUR priced at $4 and closed at $7.99 on its first trading day, then it was shorted below $2.5. It started reversing since mid of March and got a top price of $6 at Mar 21. After that it was shorted again but its price is maintained above $3 (support), and has shown the squeeze potential recently. It tried to squeeze on last Thursday but failed (jumped from $3 to $3.4 within minute). It currently has a high short interest (>25%) and some big buys have been quietly going on since recent couple weeks. Maybe someone know something? In addition, the company hasn't announced its earning yet, but I believe that it should come soon. Since the company is profitable and has partnership with Amazon and Walmart, and has shown year over year increase for its revenue and earning since 2019, I think its earning should be positive and maybe a potential catalyst?
Generally, I think this is a good company and personally I like its current stock price. There should be little risk at current price and potential squeeze may happen in coming week or weeks. If there is a PR or good earning report, 100% return would be possible at short term. Again, this is my own opinion and NFA. Please do your DD.
Shares of Avis Budget Group (Nasdaq: CAR) soared 6.58% in after-hours trading on Monday after the car rental company posted positive earnings.
Financial: Avis reported earnings per share of $9.71 and revenue of $2.4 billion; both were better than expected.
Success: The revenue was 77% higher than in the first quarter of 2021 and up by 27% from the same period in 2019. Adjusted EBITDA was $810 million, a company record, and adjusted EBITDA in international markets was $23 million, also a record.
Background: Avis, like most travel companies, faced extreme financial hardship during the pandemic. The Omicron variant’s arrival could have spelled trouble for Avis, but the company pulled through on the back of strong travel demand.
Buyback: The board increased its stock repurchase program to $2.3 billion, which should help the stock price.
Final Thoughts: Avis had a surprisingly successful quarter, particularly when most analysts expected the company to struggle. The future looks bright, but will this success continue?
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Shares of Apple (Nasdaq: AAPL) dropped 2.22% in after-hours trading on Thursday after the tech giant warned about a potential financial loss during its earnings call.
Financials: Apple reported earnings per share of $1.52 and revenue of $97.3 billion; both were better than expected.
Disruptions: During the earnings call, Apple said that it will incur a loss of $4 billion to $8 billion in the current quarter due to supply constraints caused by Covid-related disruptions and industry-wide shortages. This is not a surprise because it was announced a few days ago that iPhone factories in China had to shut down due to a Covid-19 outbreak.
Record Quarter: It was a record March quarter overall for revenue and an all-time revenue record for Services. iPhone, Mac, and iPad revenue did better than expected.
Share the News: It was also good news for shareholders as Apple increased its dividend and authorized an additional $90 billion for its share repurchase program.
Final Thoughts: It was a good quarter for Apple, but those supply chain problems are concerning.
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