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new stocks for 2023 & recap ?3
19:01 30-Dec-22
One last update for 2022: apparently I'm not the only one taking an interest in CHPT lows; a fund associated with a Director of the company hoovered up well over 1.4M shares at prices between $8.14 and $8.50 on Tuesday and Wednesday. That almost a tenth of the daily volume, and counts as a well-timed OMIB.
BGC has provided its typical quarterly business update, saying that revenue should come in above the midpoint of its previous guidance. It also says the metric would have been $14M higher but for the strong dollar. However, I note that the euro touched $1.07 this afternoon, having appreciated since the end of September. I would take issue with any projection that returned the currency to historical ranges some 5-15% higher than that over the medium term. I also continue to be wary of big banks stringing BGC along on the FMX launch.
I might have let the BGC news slide until the new year, but I had meant to document rebate rates in the note below. MRDB sports a rate in excess of 40%, while CHPT is just under 10%. The rate or HIMX is about 4.5%. These can add a little value for investors whose brokerages allow them to take advantage, and may lead to short squeezes.
On 12/30/22 11:29, Esekla wrote:
The year end opportunity that I'd anticipated has played out more or less as expected. Although indexes are down today, I see that as mostly a function of my warnings against mega-cap investments. I'm looking for a stock-pickers paradise in 2023, and am adding two broken SPACs to the GRoDT section for the new year:
- MRDB: I'll probably be adding positions in MariaDB today. The company went public on December 19th, raising over $800M in funding, which should represent around $22.50 per share counting outstanding options. I'm aware of the base code throughout my programming career and can say that the legacy code is broadly used and well-regarded. I also think it will be well-suited to the new SkySQL installations of the product using persistent memory, which should generate high-margin recurring revenue. That business line should be supported by Intel, which has disclosed a 9.4% stake in the company. Would-be investors should make sure they note the medium and long term price caps in the summary and also note that volume in the tens of thousands of shares per day represents an additional risk factor, which may not be amended until publicly tradable options become available. For the short term, the 180 day lockup expires on Saturday, June 17th by my calculation. Even so, I do think year end prices below $4 could improve significantly in the new year as the company begins to report.
- CHPT: I've taken positions in Chargepoint on year-end declines as projected. As noted there, I'm hoping that the CP6000 broadens sales and improves overall margins, but the latter will need to monitored. Critics who cite low subscription revenue levels have a point, but I'm hoping for a scenario where an American company can out-compete in the European market. In any case, I think that those who were expecting a subscriptions to ramp in the first few years were being unrealistic. My guess is that a 2023 P/S ratio around 7 represents a value for a high growth industry. Regardless of how any of that materializes, I continue to think that monitoring the company will provide excellent data on electric vehicle adoption.
I note that neither of these is necessarily better than my current GRoDT favorites: AMSC and AKTS. I think the timing and market are good for such investments, but as shown by Xebec & Polestar, the category remains very risky. Thus, GRoDT investments should be generally smaller and far more diversified than those in other categories.
I'll conclude with a recap for the other sections. HIMX remains my favorite Growth stock, especially on declines today. The company issued yet another CES press release yesterday, on a smart agriculture platform using WiseEye1, which I didn't comment on in real time for fear of exactly the reaction we're seeing. Nonetheless, I think the new technology offerings are compelling for the long term and that the company is taking display driver share from Magnachip, which seems to be focusing more on the power supply side of its business. I also think LUMN is oversold and will pay attention to next week's first public presentation by the new CEO.
For Yield investors, there's TU, KNTK & NFE. Today looks like as good a day as any to take advantage of tax loss selling on TU, and it's certainly the last where that factor will apply. Kinetik underscores how long, unpredictable and important the wait for options trading can be. New Fortress simply needs to execute on its plans and prove its dividend is sustainable. CWEN(A) remains an option for those who aren't afraid of the Fed and are willing to wait on renewable energy build out.
In the middle we have Intel and Virtu, both of which are beaten down to offer significant yield at 5.5% and 4.6% respectively. Intel fully deserves the beat down, but it taking the right long term steps. I suspect that the drop in VIRT is overdone but concede that the details on how the targeting of some of Virtu's customers will flow through are currently unclear.
Happy New Year everyone!