Meta earnings; Presentation on Enphase long and SolarEdge short; Damsel in Distressed; Dental student pulls 5-year-old girl from fiery wreckage of NYC crash
1) I was on stage giving a 45-minute presentation at the Stansberry Conference yesterday afternoon when one of the three stocks I was pitching, Meta Platforms (META), reported dismal earnings, causing the stock to crash today to a seven-year low.
When I came offstage and saw the news, I breathed a sigh of relief because I was worried that I had given the audience an idea that might run away from them before they could buy it – but instead the opposite has happened...
"But wait," you might be thinking... "Isn't Meta a horrible value trap/melting ice cube, destined to be replaced by TikTok, and therefore its stock should be avoided at all costs?"
It's possible – there's always a chance I'm wrong (and I've certainly been wrong on it this year!) – but I believe the stock's nearly 75% collapse from its peak a little over a year ago gives investors a tremendous buying opportunity. I'll share the details on why I think so in tomorrow's daily e-mail... Stay tuned!
2) One of the best presentations I saw at the Robin Hood Investors Conference two weeks ago was given by my old friend Jillian McIntyre of hedge fund 221B Capital Partners.
She pitched a paired trade in the solar energy sector: long Enphase Energy (ENPH), offset by a short of SolarEdge Technologies (SEDG).
As Jillian has been raising money this year, she has been sharing this as her best idea – and it's been a huge winner so far... Enphase is up 63% year to date while SolarEdge has tumbled 20%.
Jillian gave me permission to share her 21-slide presentation, which you can see right here. Here are two key slides:
Enphase reported earnings on Tuesday and the stock jumped 10% yesterday. I asked Jillian for an update, and she replied:
Enphase reported third-quarter earnings on Tuesday evening that further confirmed our thesis. At 221B, we continue to believe that Enphase is the best-positioned company in the secular theme we call "Winners and Losers in the Race to Energy Transition and Independence: Focus on Solar."
A few points from the earnings report: The company beat and raised estimates, which highlights great execution by management. The high end of the guide for revenues in the fourth quarter was 8.4% ahead of consensus.
We believe that part of its competitive advantage is in the deep relationships with its outsourced manufacturers services ("OMS") partners and its ability to scale up to meet the underappreciated demand for solar. Enphase confirmed its plan to build out U.S. capacity in 2023, which we anticipated from our work on hiring patterns. Its one-stop-shop solution will drive the share of wallets and lead to higher margins.
We find the biggest pushback is on valuation, but the lack of investable companies in renewable energy combined with consistent execution and earnings upgrades makes us confident in our view that this is a multi-year opportunity.
We maintain our price target of $500 based on fiscal year 2024 estimates.
Thank you, Jillian! (If you'd like to contact her directly, her e-mail is jillian@221bcapital.com.)
3) Speaking of women in hedge funds (of which there are far too few), I just finished reading this book, Damsel in Distressed: My Life in the Golden Age of Hedge Funds.
It's written by Dominique Mielle, who was one of the first employees and rose to become a partner at what is now one of the largest hedge funds in the world, Canyon Partners, which specializes in distressed debt.
The book isn't for people looking for advice on how to make money in the markets... It's more inside baseball on life inside a hedge fund, especially the challenges women face, and the evolution of the industry.
4) We all read so many stories about people acting badly, so I like to share wonderful stories of heroism when I can. Here's a recent one: Dental student pulls 5-year-old girl from fiery wreckage of NYC crash: 'It was a really, really bad scene'. Excerpt:
A man who watched a speeding car flip and explode into flames on a Manhattan highway pulled a young girl from the wreckage as her father lay bleeding on the pavement...
The driver was thrown from the vehicle and onto the pavement, his car ablaze nearby.
"I see him lying face down, not really moving," Rubinov said. "I thought he might have died. He was covered in blood."
As Rubinov tried to help the man, he dialed 911. The dispatcher asked him if anyone else was in the car.
"The car was on fire for about a minute between the crash and me looking," Rubinov said. "I see a little girl in the backseat."
The 5-year-old girl couldn't get out of her seatbelt on her own, Rubinov recalled.
"I lifted her up and took her out. By that time, her father basically got back to his feet."
Rubinov handed the girl off to a woman watching the chaos unfold and in that moment, the flames grew stronger.
"Then the car started exploding," he said. "It was a really, really bad scene."
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.