Weekend Update #028
Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
WAIVING COVID-19 VACCINE IP?
The U.S., as well as the EU, are considering briefly waiving intellectual property protections for COVID-19 vaccines as many countries worldwide are struggling to manufacture and provide vaccines for their citizens. These considerations come as cases in India continue to rise, reaching over 400,000 daily cases, while only 2% of their population has been vaccinated. While the waiver has seemingly gotten a multitude of support, critics say the technology, especially for mRNA vaccines which are the first of its kind, would be difficult to replicate even with the waiver and would only divert resources from existing production facilities. Thank you Nick Peart for reporting live.
— MARKET SNAPS —
This week the U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment rose to 144.3 million, an increase of 266,000 jobs added, which fell short of the 1,000,000 figure expected for the month. Nonfarm employment for April is down by 8.2 million (5.4%) from its pre-pandemic level in February.Despite a disappointing jobs report, the Dow and S&P 500 reached new highs this week, closing at 34,777.76 and 4,232.60 points, respectively.
On the commodities front, copper prices reached $4.77 per pound, surpassing their previous peak of $4.63 in February of 2011.
🪵
Meanwhile lumber futures are setting record highs of their own, settling at $1,686.00 per 1,000 board feet for May 2021 contracts.Yellen said earlier in the week interest rates may have to rise to keep the economy from overheating but the latest job report indicates more help may be needed before the Fed begins considering raising rates.
///
FINANCIAL MODELING
please join us as we model one of our HEROES
+ CHEGG +
while taking a quick bullpen inventory.
Financial Modeling 101:
Chegg, Inc: CHGG
Q1 2021
Tuesday
May 4, 2021
9:30 AM
BLUE ROOM
Investment Team Bullpen
__________ __________
🙏🏻
THANK YOU
— TWIN PEAKS —
for hosting our tribe at your amazing grain elevator.
AND
+ THANK YOU +
— KELLY & ERIKA —
for the incredible bread, baked goods, CROISSANTS & breakfast sandwiches from
Working together to find solutions that benefit the farmer > the cleaner > the miller > the chef > the tastebuds > the planet.
— Congratulations —
Jared Fenley!
Duke University, May 6, 2021
We applaud your hard work, determination and overall sound approach to work and life. Enjoy some beach time and we look forward to seeing you at Blue Room.
A
R
T
Inner World - Outer World
| 05.05.2021 - 06.05.2021 |
Embodied
| 05.08.2021 - 06.05.2021 |
VISIONS WEST CONTEMPORARY
Denver, Colorado
Thank you Visions West for hosting the Blue Room crew and giving us a personal tour.
We look forward to visiting the new exhibits (featured above).
“It is impossible to hold a puppy and bitter thoughts at the same time.”
- Nina Sohn
Mama and 7 pups.
Reach out if you are interested in adopting one of the seven Soul Dog pups.
+
San Luis Valley
+
__________
CHECK-IN
Kelly took it to the road to spend some time in the San Luis Valley with our 🌾 and the Jones Family.
REGENERATIVE PRACTICES FOR THE WIN.
2021 05 06 BLUE ROOM Meeting #050
Thursday
May 6, 2021
12 PM
BLUE ROOM
MEETING NUMBER 50
__________ __________
What do you think is your spiritual age (compared to your actual age)?
Or, do you think you have lived more than one life?
P L E A S E E N J O Y T H E
—WEEKLY—
company updates
from the BR intern team.
Kelley Jiang
Ticker: LB
Name: L Brands, Inc
Number of Shares Outstanding: 278.9M
Market Capitalization: $18.62B
Stock Price History
April 19, 2021 $65.90
April 20, 2021 $64.12
April 21, 2021 $65.31
April 22, 2021 $66.07
April 23, 2021 $67.38
April 26, 2021 $66.45
April 27, 2021 $67.59
April 28, 2021 $67.44
April 29, 2021 $66.65
April 30, 2021 $66.00
May 03, 2021 $67.63
May 04, 2021 $65.85
May 05, 2021 $65.69
May 06, 2021 $65.94
L Brands, Inc is a segment retailer focused on personal care goods, women’s intimate and other apparel, beauty and fragrance products. Based in Columbus, Ohio, L Brands hosts the flagship brands of Victoria Secret, PINK and Bath & Body Works under its name. With more than 3,000 stores across the globe, the company is focused on inspiring an aspirational lifestyle by making their customers feel bold and powerful.
Riding the news of a potential sale with Victoria’s Secret, L Brands’ stock valuation fluctuated around $67 before dropping around 100 basis points to $65.94 on May 6th, 2021.
In addition, Bank of America recently reported on the potential transactions of VS, commenting that they believe L Brands’ management will opt for a spinoff if Victoria’s Secret cannot obtain an offer from $4 to $5 billion. They also believe that with the potential spinoff or sale of VS, L Brands will greatly amplify the expansion of the Bath & Body Works brand.
Emma Leary
Ticker: MSFT
Name: Microsoft Corporation
Shares Outstanding: 7.542B
Market Cap: $1.865T
Stock Price History
April 29, 2021 $255.46
April 30, 2021 $249.74
May 3, 2021 $253.40
May 4, 2021 $250.97
May 5, 2021 $249.06
May 6, 2021 $246.45
Microsoft Corporation develops, licenses and supports software, services, devices and solutions worldwide. MSFT has been a notable leader in the technology industry for decades now as the company was founded when the era of personal computers was emerging in 1975. The company currently offers three main segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
This past week, news relating to Microsoft has been largely related to its gaming segment, especially pertaining to its Xbox consoles. In January, Microsoft released its plan to drop its fees for game developers by 12%, which would be a huge disruption to Microsoft’s competitors such as Apple and Google. The company also publicized internal documents in connection with the Epic vs. Apple trial (where Microsoft has since sided with Epic), which revealed that Microsoft was planning to decrease game-related fees on Xbox to 12% as well. While Microsoft has publicly sided with Epic against Apple, Epic has denied Microsoft’s game streaming service access to Fortnite, its most popular video game. The competition between Microsoft’s Xbox Cloud Gaming and Epic’s Game Store offerings on PC is most likely the reason Epic was reluctant to hand over their greatest revenue generator. A recent Microsoft statement said that the company was not going to change the revenue shares for console games, but this does not mean it won’t happen in the future.
Microsoft also acquired Kinvolk this week, an enterprise-grade open cloud native slack, following their acquisitions of Nuance and ZeniMax Media. While some of the company’s other acquisitions looked to increase influence in other industries, this most recent acquisition of Kinvolk expands Microsoft’s cloud computing efforts. Kinvolk builds and maintains open source projects based on expertise that spans all layers of the cloud native stack.
Finally, Microsoft’s record Q3 earnings are starting to plateau after a 19% increase in revenue year over year, but their most recent earnings report augured the future success of the company and high demand for their products and services.
Julian Martelly
Ticker: AMGN
Name: Amgen, Inc.
Number of Shares Outstanding: 577.57M
Market Capitalization: $136.844B
Stock Price History
April 16, 2021 $255.71
April 19, 2021 $255.97
April 20, 2021 $259.14
April 21, 2021 $258.78
April 22, 2021 $256.69
April 23, 2021 $257.03
April 26, 2021 $255.52
April 27, 2021 $255.13
April 28, 2021 $236.71
April 29, 2021 $234.71
April 30, 2021 $238.34
Amgen, Inc. Executive Summary (5/01/21)
A biotechnology pioneer since 1980, Amgen is a values-based company dedicated to delivering innovative human therapeutics to areas of highly unmet medical need. These areas include: cardiovascular disease, oncology, bone health, neuroscience, nephrology and inflammation. Over the years, they have grown into one of the world’s leading independent biotechnology companies, reaching millions of patients around the globe. Most recently, Amgen launched a new program called Biomarker Assist, designed to help more patients with non-small cell lung cancer gain access to biomarker testing. “Approximately half of all patients with non-small cell lung cancer have oncogene biomarkers, yet despite the integral role that biomarkers play in lung cancer to identify patients who may benefit from targeted therapies, many patients are not tested,” said Darryl Sleep, M.D., chief medical officer and senior vice president of Global Medical at Amgen. This biomarker testing is a clinical first step in getting patients the right treatment. Thus, Biomarker Assist, aims to close the gap in testing rates and allow eligible patients to save on biomarker testing.
In other news, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation for Amgen’s bemarituzumab, a first-in-class investigational targeted antibody acquired through Amgen’s acquisition of Five Prime Therapeutics back in early March 2021. Bemarituzumab will be used as treatment for patients with fibroblast growth factor 2b (FGFR2b) overexpressing and human epidermal growth growth factor receptor 2 (HER2)-negative metastatic and locally advanced gastric and gastroesophageal (GEJ) adenocarcinoma in combination with modified FOLFOX6 (fluoropyrimidine, leucovorin, and oxaliplatin). Overall, this is a great step forward in their Oncology portfolio, and it will be interesting to see what comes next.
Julia Martin
Ticker: TSLA
Name: Tesla, Inc.
Number of Shares Outstanding: 963.33 M
Market Capitalization: $639.208B
Stock Price History
April 26, 2021 $738.20
April 27, 2021 $704.74
April 28, 2021 $694.40
April 29, 2021 $677.00
April 30, 2021 $709.44
May 3, 3021 $684.90
May 4, 2021 $673.60
May 5, 2021 $670.94
May 6, 2021 $663.54
Tesla, Inc., produces electric vehicles and clean energy generation, storage and consumption solutions. Tesla is focused on accelerating the integration of clean energy transportation and production into society in order to more quickly achieve a zero-emission future. Additionally, all of the new automotive products include self-driving capabilities, and continuing to develop this Autopilot capability is at the core of Tesla.
Since Tesla announced their 2021 Q1 earnings on April 26, its stock price has steadily dropped, despite reporting strong numbers. On the Q1 earnings call, Tesla management shared their plans to finalize construction of the Berlin Gigafactory in the coming months. This facility would help further develop Tesla’s role in the European electric vehicle market and would be a source of significant production for 2021. However, now the Berlin Gigafactory won’t be functional until early 2022, due to an inability to accommodate necessary battery production. This setback will most likely negatively affect Tesla’s goals for 2021 and will further the development of competition in Europe.
In other news, Stellantis, a multinational automotive manufacturer that was formed from the merger of Fiat Chrysler Automobiles and the French PSA Group, will exit a European emissions-credit agreement with Tesla. Many governments have environmental emissions standards to regulate companies and pollution, and often give out credits to automakers that produce electric vehicles. Since Tesla solely produces and sells electric vehicles, it possesses a surplus of these credits, while other companies are below minimum regulatory requirements. Consequently, Tesla is able to then sell its extra credits to other automotive companies. For example, Fiat Chrysler agreed to purchase $1.27 billion in credits from Tesla in order to meet its own requirements. As Tesla receives these credits for free and has so many of them, selling credits has been a large if subtle source of revenue for Tesla historically. While the end of this agreement with Stellantis will negatively impact Tesla’s revenue stream in the short-term, it signals that, in the long-term, Tesla’s credit-revenue stream will continue to shrink as more automotive companies become competitive in the electric car market.
Asher Nyhoff
Ticker: NKE
Name: NIKE, Inc.
Number of Shares Outstanding: 1.27B
Market Capitalization: $210.91B
Stock Price History
April 27, 2021 $132.11
April 28, 2021 $130.71
April 29, 2021 $133.26
April 30, 2021 $132.62
May 3, 2021 $133.03
May 4, 2021 $131.55
May 5, 2021 $132.21
May 6, 2021 $133.49
May 7, 2021 $137.81
On May 6, NIKE announced a quarterly cash dividend of $0.275 per share, payable to shareholders on June 1, 2021. This dividend falls in line with the previous two dividend payouts of $0.275 on both April 1, 2021 and December 29, 2020. Dividend issuance can signal a firm has adequate cash flow and, as such, large and well-established firms tend to issue regular dividends.
Overall, NIKE’s stock performance has trended upwards throughout the beginning of May and has almost consistently reached higher closing prices following the relative uncertainty of April. The contract shakeups of the late Kobe Bryant’s estate and Simone Biles earlier this quarter no doubt played a role in lower stock valuation. In terms of long-run outlook, analysts remain unsure as to whether the active consumer habits that defined the past six months will continue to buoy retailers like NIKE through the summer.
Elizabeth Orecchia
Ticker: HLT
Name: Hilton
Shares Outstanding = 277.45M
Market Cap = $34.52B
Stock Price History
April 16, 2021 $128.05
April 19, 2021 $125.23
April 20, 2021 $122.22
April 21, 2021 $123.91
April 22, 2021 $125.50
April 23, 2021 $127.40
April 26, 2021 $127.57
April 27, 2021 $130.01
April 28, 2021 $129.11
April 29, 2021 $129.90
Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia. They own, lease, manage, develop, and franchise hotels and resorts. It operates through two segments, Management and Franchise, and Ownership. The company engages in the hotel management and licensing of its brands. As of December 31, 2020, the company had approximately 6,478 properties operating under the Hilton label, with over 1,000,000 rooms in 119 countries and territories.
Number of hotel rooms = 1,019,287
Market capitalization of the company at 52 week high stock price = 35,768,854,000
Market capitalization of the company at 52 week low stock price = 17,332,301,500
Market capitalization of the company at 52 week high stock price / Number of hotel rooms = 35,092
Market capitalization of the company at 52 week low stock price / Number of hotel rooms = 17,004
Recently at HLT: Hilton released their 2020 ESG report last Tuesday, April 20,th reinforcing their commitment to positive global impact
Through Hilton’s Travel with Purpose program, the company continues to take important steps to integrate positive social impact and environmental stewardship throughout its operations, communities and supply chain.
Named the 2020 Global Industry Leader on the Dow Jones Sustainability Indices, the most prestigious ranking for corporate responsibility and sustainability performance, for the second consecutive year’
Recognized just last week as one of the Best Companies to Work For in the U.S. by Great Place to Work and Fortune for the sixth consecutive year, including earning the #1 spot in 2020 and #3 in 2021 – as well as being ranked the #3 World’s Best Workplace and achieving a #1 ranking in seven countries around the world in 2020
Ranked #2 on DiversityInc’s Top 50 Companies for Diversity list; and
Named to the 100 Best Corporate Citizens of 2020 list, the only global hotel brand recognized.
Q1 2021 Earnings Release Date: Pre-Market on May 5, 2021
Kat Paradise
Ticker: NTRS
Name: Northern Trust Corporation
Number of Shares Outstanding: 208.11M
Market Capitalization: $24.57B
Stock Price History
April 23, 2021 $109.53
April 26, 2021 $109.16
April 27, 2021 $111.18
April 28, 2021 $111.84
April 29, 2021 $114.41
April 30, 2021 $113.80
May 3, 2021 $114.79
May 4, 2021 $114.79
May 5, 2021 $115.32
May 6, 2021 $117.46
The Northern Trust Corporation is a preeminent global financial institution that provides asset servicing, investment management and wealth management services for institutions along with, high-net worth individuals and families. In recent news, Northern Trust announced that it has finalized its acquisition of Parilux Investment Technology, LLC, completing its investment in the firm and its technology that was initiated in 2018. This acquisition underscores Northern Trust’s commitment to its Front Office Solutions business, which provides a holistic data management platform for in-house investment teams managing complex, global multi-asset class portfolios. Northern Trust’s Front Office Solutions branch integrates Parilux’s software with a proprietary cloud-based web and mobile interface. The leading-edge technology, combined with Northern Trust’s global-operations expertise and service, will deliver innovative capabilities across data aggregation, enhancement and analytics to support asset owners in their investment decision-making, execution and administration. Also, Northern Trust hired Julie Moret as global head of sustainable investing and stewardship. In this newly created role, Moret will oversee the firm’s sustainable investing and global engagement policies, foster research and product development agendas and advance portfolio integration across asset classes.
Max Pumilia
Ticker: LOW
Name: Lowe’s Companies Inc
Number of Shares Outstanding: 731M
Market Capitalization: $148.7B
Stock Price History
April 26, 2021 $199.19
April 27, 2021 $199.05
April 28, 2021 $196.06
April 29, 2021 $198.44
April 30, 2021 $196.25
May 3, 2021 $199.20
May 4, 2021 $200.30
May 5, 2021 $200.00
May 6, 2021 $205.94
Lowe’s Companies, Inc. is an American retailer specializing in home improvement products. With almost 2,200 locations and more than 300,000 employees across the U.S. and Canada, Lowe’s has firmly established itself as the second-largest retailer in its industry, trailing only Home Depot. In 2020, Lowe’s posted its most successful year ever, servicing approximately 20 million customers weekly and generating $90 billion in annual sales. These sales, a product of the consumer’s increased interest in home improvement through the COVID-19 pandemic, represent an almost 24% increase in revenue year over year. Comparatively, between 2016 and 2019, revenue saw under 3% annualized growth. Valuations have reflected the operational success of this period: stock prices have grown more than 50% since the start of 2020 and more than tripled since the low point of the pandemic.
While the previous week has been rather uneventful for Lowe’s, the stock has seen an increase in valuation of around 5%. This growth has been driven by investor optimism surrounding the upcoming release of Lowe’s earnings on May 19. Investors foresee a strong report from the home improvement retailer, and this optimism has driven substantial press coverage surrounding the positive trajectory of the industry. Looking forward, this trajectory puts even more pressure on the upcoming earnings, for investors have raised their expectations.
Taurus Samuels
Ticker: TGT
Name: Target Corporation
Number of Shares Outstanding (as of May 06, 2021): 497.57M
Market Capitalization (as of May 06, 2021): $105.98B
Stock Price History
April 23, 2021 $206.01
April 26, 2021 $203.63
April 27, 2021 $204.36
April 28, 2021 $204.46
April 29, 2021 $207.38
April 30, 2021 $207.26
May 03, 2021 $211.28
May 04, 2021 $211.61
May 05, 2021 $212.41
May 06, 2021 $213.00
Target Corporation is a retailer based in Minneapolis, Minnesota, founded in 1902. They offer an array of products to their customers, such as various food assortments, apparel and accessories for men, women and children, baby care products, household essentials, home decor, furniture, toys for children, electronic, beauty products, school and office supplies, musical instruments and many everyday essential items.
Target’s stock, TGT, recently hit a 52-week high on May 6, 2021 with shares at $213.85. Some investors may think the stock is overvalued right now, however, Target has taken many actions to continue to grow on it’s strong 2020 FY. They have made very strategic moves, such as partnerships with plant enthusiast and interior designer, Hilton Carter, and three different dress designers, which will allow them to generate more revenue and traction through their stores. Another thing that Target has done to help generate more revenues is the release of their new brand, Favorite Day, which will feature an array of different products such as food, ice cream and beverage mixers. These will all allow Target to continue to build on the momentum they have created due to the pandemic, and will give investors confidence that the company will continue to have success.
One area of concern will be among their competitors, such as Amazon, which has dominated the digital advertising space. Since Amazon is mainly an e-commerce company, digital advertising sales contributed to much of its profit in 2020 due to many customers shopping online because of Covid. Many companies spent much less money on in-store advertisements in 2020 because many stores were closed, and if they were still open, not many customers were inside. Instead, money was relocated to digital ads, and in-store advertising dropped dramatically. However, Amazon has had such a strong hold on the market because of its online presence and small amount of physical stores compared to Target. As Target continues to look to strengthen its online presence, it will face stiff competition from a very successful opponent in Amazon.
About Hilton Carter:
Carter is a plant enthusiast and interior stylist who is celebrated for his love and advocacy of plants. He started his career through Instagram and has now built an array of more than 200 plants. He has also written three books titled Wild at Home (2019), Wild Interiors (2020), and Wild Creations (2021). Carter’s goal is to inspire everyone through his collection of plants and accessories. He plans to inspire Target customers through his plants and bringing the beauty of outside into their homes.
My name is Taurus Samuels and I am from San Diego, California. I am currently a junior on the men’s basketball team at Dartmouth College where I am majoring in Psychology and minoring in Markets, Management and Economy. My interest in Psychology stems from the fact that I love to interact and work alongside people. As I was growing up, I would meet many different people with different backgrounds through school and basketball. It was interesting to see how different people responded differently to similar situations and also learning what motivates different people. But what was the most intriguing to me was how individuals would interact with other individual people as compared to how they would act within bigger social groups. Because of this, some of my favorite classes that I have taken at Dartmouth have been about Social Psychology and how social pressures can affect people. Other than being on the men’s basketball team at Dartmouth, I am also a member of the Student Athlete Advisory Committee, where I am the Co-chair for the Athlete Outreach Committee. I am also the Co-head of professional development for the Dartmouth Black Student Athlete Alliance as well as working as the Jaeger Civic Intern for Dartmouth, a role in which I help student athletes find community service opportunities in the surrounding areas of Dartmouth College.
I was particularly interested in working as an intern for Blue Room because I have always wanted to combine my passion for psychology with the world of finance and business. I think that Blue Room is the perfect spot for that. In my opinion, the psychology of people has a lot to do with investing. People need to be confident in their decision making and whether or not they should invest into a company. However, even more important, as an investor, one must also know that the current news has a major affect on investors’ confidence and you must know how investors will react to certain things, regardless of if it is good or bad news. This internship is allowing me to combine my interest in entering into the world of business and finance while also being able to carry along with me my passion for understanding people and the psychology behind their behaviors. My time at Blue Room so far has been very educational and rewarding. I did not have a lot of financial savviness before this internship, nor did many people in my family. I wanted to educate myself more on finance and learn how I can set myself up for success, and I truly feel that the tools and knowledge I am gaining through my work at Blue Room, as well as the mentorship and guidance of the full-time staff, will allow me to have the skills to do just that.
Togetherism™ is Blue Room™’s nonprofit arm and today we would like to highlight
Linda Lipsius
THE EXECUTIVE DIRECTOR OF
— DENVER URBAN GARDENS —
We had the honor of hosting Linda at Blue Room and learning all about her background and what she is doing now.
Linda is the Co-Founder of Teatulia Organic Teas, a B Corp. She works with her partners in Bangladesh to bring premium, 100% Organic, direct-sourced teas & herbs from our 3,000 acre regenerative organic tea garden to the United States. Teatulia produces innovative and award-winning hot teas, iced teas and canned teas that are sold throughout the US in grocery, mass, foodservice, online and as an ingredient. We give her kudos for having built a universally-respected brand known for doing things better and using business as a force for good.
Linda is currently the Executive Director of Denver Urban Gardens (DUG). Started 35 years ago, DUG is one of the country's largest community garden organizations with over 180 gardens across 6 counties in Metro Denver accounting for 31 acres greened, 17,500 gardeners and over 40,000 people impacted through DUG's education, food access and volunteer programs.
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.