Singular Research Director’s Letter: January performance 2020
Singular Research’s January 2020 Director’s Letter
In January, markets went lower as there were many troubling headline stories. Trump impeachment talks carried on throughout the month with a near end in sight favoring a Trump acquittal. Threats of war with Iran heightened and quickly eased as a drone strike killed General Soleimani. And lastly, the introduction of the Corona virus ended the month with a threat to bring major economic turmoil to China and the rest of the world. Domestically, the January Purchasing Managers Index (PMI®) registered 50.9 percent, an increase of 3.1 percentage points from the December reading of 47.8 percent. The PMI® returned to expansion territory for the first time since July 2019. Similarly, the Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.8 percent in January to 112.1 (2016 = 100), following a 0.3 percent decline in December and a 0.1 percent increase in November. The unemployment rate increased fractionally to 3.6% (3.5% in December), one of the lowest rates since December 1969.
For the month of January, the Singular coverage list underperformed the S&P 500 by 253 basis points and outperformed the Russell 2000 by 57 basis points, respectively. For 2019, the Singular coverage list outperformed the S&P 500 and the Russell 2000 by 904 and 1,367 basis points, respectively. As the U.S./China trade war shows positive signs combined with better than expected earnings results from domestic corporations, investors may be favorably looking to 2020’s growth prospects. For January, growth stocks returned 4.8% more than value stocks.
BYND was our top performer in January after the company became the top candidate to supply plant-based burgers to McDonald’s. Growth prospects for BYND remain strong as more and more restaurants and fast food chains adopt plant-based meat. Investors cheered NVEE for their acquisition of Quantum Spatial. RUBI also had a good month as the company announced the acquisition of Telaria which would create the world’s largest independent, sell-side advertising platform.
HSC was our worst performer for the month as the company announced weaker than expected preliminary fourth quarter guidance. The stock has been hit hard in the past couple months as investors remain cautious over the company’s transition from Industrial to Clean Earth. ANIK had a rough month as investors were not thrilled of the company’s acquisitions of Parcus Medical and Athrosurface. In late January, the company’s President and CEO, Joseph Darling, passed away. Investors have remained cautious of growth and profitability at GEOS as a result of the recent decline in the price of oil (lowest level since December 2018).
For January, we initiated coverage on Beyond Meat, Inc (BYND). Beyond Meat is a producer of plant-based meat products that enable consumers to experience the taste, texture, and other sensory attributes of animal-based meats. As plant-based meat becomes mainstream in society, we believe BYND has the growth capacity and research capabilities to become the industry market leader. 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