U.S. markets closed
  • S&P Futures

    3,665.00
    -2.25 (-0.06%)
     
  • Dow Futures

    29,843.00
    -25.00 (-0.08%)
     
  • Nasdaq Futures

    12,463.50
    +9.25 (+0.07%)
     
  • Russell 2000 Futures

    1,837.50
    0.00 (0.00%)
     
  • Crude Oil

    45.19
    -0.09 (-0.20%)
     
  • Gold

    1,830.50
    +0.30 (+0.02%)
     
  • Silver

    24.02
    -0.06 (-0.25%)
     
  • EUR/USD

    1.2111
    -0.0004 (-0.04%)
     
  • 10-Yr Bond

    0.9480
    +0.0140 (+1.50%)
     
  • Vix

    21.17
    +0.40 (+1.93%)
     
  • GBP/USD

    1.3362
    -0.0014 (-0.10%)
     
  • USD/JPY

    104.4800
    +0.0560 (+0.05%)
     
  • BTC-USD

    19,021.51
    -215.33 (-1.12%)
     
  • CMC Crypto 200

    373.04
    +8.13 (+2.23%)
     
  • FTSE 100

    6,463.39
    +78.66 (+1.23%)
     
  • Nikkei 225

    26,743.33
    -57.65 (-0.22%)
     

Singular Research’s October 2019 Director’s Letter

SingularLogo
SingularLogo

Singular Research’s October 2019 Director’s Letter

 

Amidst a prolonged trade war with China, slowing European economies, domestic signs of a recession, and overall positive third quarter results (80% of companies in the S&P 500 surprising net income to the upside), investors are faced with mixed signs.  To add to the confusion in the month of October, the Fed lowered the federal funds rate by 25 basis points to 1.75% and initiated a fourth quantitative easing program.  The October Purchasing Managers Index (PMI) registered 48.3 percent, an increase of 0.5 percentage points from the September reading of 47.8 percent.  The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.1 percent in October to 111.7 (2016 = 100), following a 0.2 percent decline in both September and August, and a 0.4 percent increase in July.  On a positive note, the unemployment rate remained stable at 3.6%, one of the lowest rates since December 1969.

 

october monthly performance
october monthly performance

 

For the month of October, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 295 and 247 basis points, respectively.  Year-to-date, the Singular coverage list has outperformed the S&P 500 and the Russell 2000 by 1,206 and 1,688 basis points, respectively.  As the trade war with China continues and European markets falter, there appears to be an apparent shift to domestic small cap stocks that are not affected by international affairs.

 

october top 5 performers
october top 5 performers

ROKU, ANIK, and TRNS all performed well as investors were thrilled from continued growth stories.  Investors realized the September sell-off of ROKU was largely over-done and the stock price appreciated 45% for the month.  Transcat has continued to rebound as their recent acquisitions have increased revenue and bolstered margins.  ANIK, IRMD, and EHTH all added significant alpha for the month as investors cheered the growing global demand of their drugs and medical equipment.

 

october worst 5 performers
october worst 5 performers

 

FSTR took the largest hit for the month of October, posting a 16% decline, as a slowdown in the U.S. agriculture market and European economies have lowered revenue expectations looking ahead.  HBIO was also lower due to lower quarterly revenue results (-4% YoY), but the company’s adjusted operating margin increased 90 basis points, signifying a potential turnaround story for 2020.  ALG’s quarter ending results were similar to that of FSTR’s, showing signs of a slowdown from the U.S. agriculture market and a decreasing backlog; however, the company recently acquired Morbark, a leading manufacturer of forestry and tree maintenance equipment that we believe will support revenue growth in 2020.

october new initaitiations
october new initaitiations

 

For October, we launched coverage on eHealth, Inc. (EHTH), the parent company of eHealth Insurance Services, Inc. the leading online source of health insurance for individuals, families, and small businesses.  We wish to thank our clients for their support and belief in our process.  For a complimentary report for new subscribers, to provide feedback, or to share some valued insights, please e-mail me using the link below.

 

Limited discount offer through December 30th, 2019.

https://singularresearch.com/index.php/en/trial-offer 

Thank You

Robert Maltbie, CFA
Singular Research, President
818-222-6234(office)
research@singularresearch.com

Free subscription offer