- 🟨 The Yellowbrick Road
- Posts
- Today's top stock ideas (Fri, Dec 1)
Today's top stock ideas (Fri, Dec 1)
Connor Van Ooyen
December 01, 2023
About // Sponsorships // Twitter
👋 Good Morning!
Welcome to the 108 new readers who joined yesterday!
Our AI read and summarized 65 stock ideas, 1152 news articles, and 66 insider trades and found:
A stock idea with a 16% dividend (featured stock idea)
Pending home sales drop to record low (news)
Earn rewards just by owning stock (links you’ll love)
The $ABNB founder sells more of his stock (insider trade)
3 bonus stock ideas
and much more…
Happy Friday! Have a great day and a great weekend!
Connor
* If you missed yesterday’s email, don’t forget to read it here
TODAY’S SPONSOR
+15 POINTS FOR CLICKING SPONSORED LINK - WEEKLY TOURNAMENT
Transform your selfies into AI headshots
Get stunning professional headshots without the hassle! Never pay for a photographer again.
Aragon AI’s tech is built by leading AI researchers and delivers the best results within 90-minutes. Just upload some selfies to see for yourself.
Please support my sponsors. It’s how I pay the bills to keep this newsletter free :)
FEATURED STOCK IDEA
Portfolio Restructuring Opportunity in $CCIF
Carlyle Credit Income Fund is a close ended fixed income mutual fund launched and managed by Vertical Capital Asset Management, LLC.
Ticker: $CCIF | Price: $7.72 | Price Target: $9.81 (+27%) | Timeframe: 1 year
🏦 Fixed Income Fund | 💰 16% Dividend | 🚨 Event Driven | 📈 Bullish Idea
$CCIF, a Closed-End Fund (CEF) managed by Carlyle, is expected to yield a 30% Internal Rate of Return (IRR) in the next year as it repositions its portfolio towards Collateralized Loan Obligations (CLO) equity. With a Net Asset Value (NAV) of $8.20 and a stock price of $7.48 (91% of NAV), it offers a significant 16% dividend yield. The fund's total assets amount to approximately $148 million, including $92 million in CLOs and $55 million in cash. It has $52 million in liabilities, including a recently raised $50 million at 8.75% preference shares, resulting in a NAV of $96 million against a market cap of $88 million. Compared to its peers trading at 104-105% of NAV, $CCIF's valuation at 91% suggests potential for appreciation, especially with Carlyle's backing. CLO equity is appealing due to its resilience during the Great Recession, offering returns of 18-20% before defaults. However, there is a risk in the current climate of weaker credit documentation. Carlyle's significant ownership in $CCIF and their reputation as a major asset manager ($400 billion AUM) are encouraging signs, particularly with recent insider buying by Carlyle employees. The fund's total return potential includes the current price, a year of dividends, and the potential to trade at 105% of NAV, culminating in a significant 31% total return.
Read the full article here. Read time: 4 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
PDD Holdings ($PDD)
🟩🟩⬜️⬜️⬜️ - Buy (35%)
🟥🟥🟥⬜️⬜️ - Pass (43%)
🟨🟨⬜️⬜️⬜️ - Watchlist (22%)
As usual, the Chinese stocks are very controversial. The bear case is that China is a very risky country to invest in because the US may prevent US companies/consumers from working with them (as pointed out by emoj***, jfchew***, steveng***, alpo****, alex***, and more readers) or the Chinese government might just do something dumb to hurt businesses. The bull case is that the company is very cheap and growing quickly (as pointed out by anthony***, dawn***, garfa***, and others).
* There are more stock ideas later in the email!
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results: 60% (+3%)
Yellowbrick Road readers were 3 points more bullish yesterday than the day before (up to 60% bullish) while the Fear v Greed index went up 2 points. However, the news sentiment is down for the second day in a row.
STOCK MARKET NEWS
Jobless claims tick higher, continuing claims highest in two years - Market Watch
Pending home sales drop to a record low, even worse than during the financial crisis - CNBC
Fed's favorite gauge shows inflation rose 0.2% in October and 3.5% from a year ago, as expected - CNBC
Inflation will be sticky enough to keep the Fed from cutting rates in '24, says Citi's Hollenhorst - CNBC Television
Stock trading platform Robinhood to launch in UK after two failed attempts - CNBC
Activist investor Nelson Peltz seeks two seats on Disney board - CNBC
* If you want all of the day’s most important stock market news, sign up for my free, daily email called Market Mornings.
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
The 'Big Mac Index' is a novel way to measure purchasing power parity between two currencies. Which magazine introduced this concept? |
Yesterday’s Question (link): Which company, initially created as an audio cassette manufacturer, evolved into a leading global electronics and entertainment company?
Answer: Sony! They actually started with transistor radios when Sony was still called Tokyo Tsushin Kogyo K.K. But then as bucl*** pointed out, “in the 1960s, the 8 track stereo cassettes were very popular. Almost every teenager was installing 8 track tape players under the dash of our cars and speakers in the doors and under the rear window shelf.”
INSIDER TRADES
The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones.
The Walton siblings each sold another $120M of Walmart stock. Don’t worry, that’s not even half of a percent of their holdings (link)
The former founder and current director at AirBnB ($ABNB) sold 31% of his holdings ($22M) (link)
The CEO of Ralph Lauren ($RL) sold 51% of his holdings for $12M (link)
Fund1 Investments bought $6.2M of Citi Trends ($CTRN) which increased their holdings by 28% (link)
A director at 3D Systems ($DDD) bought $265k of the stock which increased their holdings by 24% (link)
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
Real home prices are 10% more expensive than the peak in 2008 and almost 2x the historic average
* Sponsored link
SECRET QUESTION
+10 POINTS - WEEKLY TOURNAMENT
If you read this far, reply to this email with your answer to gain points for the weekly tournament. (Or if you’d rather not answer but still want the points, you can just reply and say hi!)
Secret Question: Any big weekend plans? We finally have a pretty chill weekend after a bunch of busy ones in a row. Only plans are to hang out with some friends Saturday evening.
Attention Gmail Users: Gmail (and a few other email clients) cut off long emails and will probably cut off this email in the next section. You can read the rest of the email on the website by clicking the button below.
* If you don’t want any more of these emails, unsubscribe here.
BONUS STOCK IDEAS
BLOG POST
A Quick Read on Adyen
Adyen N.V. operates a payments platform in Europe, the Middle East, Africa, North America, the Asia Pacific, Latin America.
Ticker: OTC: ADYEY | Price: $11.64 | Price Target: N/A | Timeframe: N/A
🏦 Payments | 🇬🇧 London | 📈 Bullish Idea
Adyen's Capital Markets Day reflected a strategic recalibration, with the company adjusting its revenue growth and EBITDA margin targets to more realistic figures, aiming for net revenue growth in the low to high twenties and an EBITDA margin of over 50% by 2026. This adjustment, aligning with current market conditions, seems to have restored investor confidence shaken by previous earnings issues. Adyen's Q3 results exceeded expectations, with processed volume (TPV) growing 21% year-over-year to €243bn and net revenue up 22% to approximately €414m, indicating not just recovery but growth acceleration. The company's operational strategies now demonstrate a balanced approach, particularly in hiring and cost management, focusing on strategic investments rather than significant cost-cutting. Adyen's shift to providing quarterly business updates marks a commitment to transparency and accountability, addressing previous shortcomings in investor communication. Despite lower revenue growth forecasts, Adyen continues to invest in staffing, particularly in sales, to support future expansion, avoiding drastic cost reductions. The company has also decided against dividends and share buybacks in the near term, opting instead to reinvest in the business, especially in expanding its embedded finance offerings. Adyen's response to the competitive US market, emphasizing the value of its services over aggressive pricing, indicates a strategic approach to handle competition. Lastly, the focus on embedded finance is pivotal, aiming to enhance service value and competitive positioning, particularly against firms like Stripe. Adyen's strategy and recent adjustments suggest a long-term vision for success in a growing and fragmented market, positioning the company as a key player in the future.
Read the full article here. Read time: 3 min
BLOG POST
AURINIA and Mr. X close to announce a Merger?
Aurinia Pharmaceuticals Inc., a commercial-stage biopharmaceutical company, focuses on developing and commercializing therapies to treat various diseases with unmet medical need in the United States.
Ticker: AUPH | Price: $8.64 | Price Target: N/A | Timeframe: N/A
💊 Pharma | 🚨 Event Driven | 📈 Bullish Idea
Aurinia Pharmaceuticals may be on the verge of announcing a merger, possibly with GSK, as suggested by a series of events and speculative observations. In November 2021, GSK denied interest in Aurinia, but in June 2023, Aurinia initiated a strategic review, possibly due to shareholder pressure. Since then, no updates have been given. Speculatively, a GSK team from London was in Washington, D.C., near Aurinia's headquarters, on November 14, 2023. Post this visit, Aurinia's stock rallied significantly without clear cause. Further intrigue arose when Aurinia unexpectedly did not co-sponsor a lupus conference on November 18, breaking from its usual pattern of sponsorship throughout the year. This unusual move could hint at merger talks, especially considering antitrust implications, as Aurinia has the only drug specifically approved for lupus nephritis. The absence at the conference could be a cautious legal move to avoid pre-merger market perceptions of a unified entity. This theory remains speculative, but the shift in Aurinia's sponsorship behavior may indicate a significant upcoming corporate announcement.
Read the full article here. Read time: 3 min
HEDGE FUND
[SHORT REPORT] NINGI Research: AERSALE CORP. (NASDAQ: ASLE)
AerSale Corporation provides aftermarket commercial aircraft, engines, and its parts to passenger and cargo airlines, leasing companies, original equipment manufacturers, and government and defense contractors, as well as maintenance, repair, and overhaul (MRO) service providers worldwide.
Ticker: ASLE | Price: $14.40 | Price Target: N/A | Timeframe: N/A
🛩️ Aircraft Parts | 📉 Bearish Idea
We are shorting AerSale Corporation (Nasdaq: ASLE) due to misleading practices and unfulfilled promises since its IPO. The company's overhyped AerAware product has not received FAA approval despite multiple announcements, casting doubt on the management's credibility. Additionally, AerSale faces a significant patent infringement lawsuit from Jetaire Aerospace regarding its Aersafe product, with potential damages exceeding $41 million, possibly reaching over $100 million. Our research indicates that AerAware is unlikely to receive large orders from major airlines due to its inferiority to existing technologies, significant implementation costs for airlines, and competitive disadvantages. Furthermore, AerAware faces stiff competition in a market with established players and cheaper, more reliable alternatives. The company's core business, characterized by volatility, is unlikely to be offset by the recurring revenue from Aersafe and AerAware due to the injunction risk and a small addressable market for these products.
Read the full article here. Read time: 15 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ CPI Property Group ($O5G.DE) [44%]
🟨🟨⬜️⬜️⬜️ Creative Realities ($CREX) [30%]
🟥⬜️⬜️⬜️⬜️ Anima Holding ($ANIM.MA) [26%]
WEEKLY TOURNAMENT
Gain points and earn prizes every week just for voting on the quizzes/polls, replying to this email, and clicking on ads/sponsored links!
🏆 This Week’s Leaderboard
bucl**** (180 points)
dmorr*** (180 points)
dr.swi**** (180 points)
Scoring
+3 points for voting in each poll
+10 points for replying to this email
+15 points for clicking on an ad/sponsored link
+50 points for referring a friend
* Learn more about the Weekly Tournament here
MY OTHER FREE NEWSLETTERS
Market Mornings (link): The fastest way to get the top stock market news each morning. We only send the headlines, so there is no fluff, politics, etc.
CEO Watcher (link): I built a tool that tracks all insider trades AND calculates their historical returns so that we know which insider trades are worth copying. The top insider trades are sent every Friday.
Intentional Dollar (link): Simple thoughts, tools, and questions to help move your money forward → published weekly, for free, from a professional Financial Advisor and CFP® (written by my friend)
INVITE YOUR FRIENDS
+50 POINTS - WEEKLY TOURNAMENT
If you enjoy the Yellowbrick Road newsletter, please share it with a friend :). Plus, you’ll get points for the Weekly Tournament!
THAT’S ALL FOLKS
+3 POINTS - WEEKLY TOURNAMENT
Thank you so much for reading today’s email! Your support is the only way I can write this email for free every day. Give me feedback in the poll below to earn 3 points for this week’s tournament.
Connor (@connorvo on Twitter)
How would you rate today's newsletter?If you vote 1 or 3 stars, please leave a comment with what you didn't like so I can improve it! |
Reply