Weekend Update #031
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.
AMC HAS RISEN
AMC has risen from the proverbial ashes. At the beginning of 2021, AMC shares were trading at $2.01. They reached $20.36 on January 27, 2021 but subsequently fell to $5.50 and later remained in the $8-$11 range in the months that followed. On Friday, May 28, AMC shares were trading at $36.36 at 9:34 ET.
( MORE FROM OMAR GUZMAN BELOW )
So now what’s going on with AMC?
Short interest is only about 20%—not over 100% like in the case of GameStop—but it too might see a meteoric rise in its share price thanks to the feedback loops that may unfold.
On May 21, 2021, it was announced that Dalian Wanda Group, a multimedia conglomerate based in Beijing, China, sold off most of its holdings in AMC—nearly $426.9 million worth of shares. Wanda had originally acquired all of AMC in 2012 and took the company public through a 2013 IPO while retaining a majority of AMC’s total outstanding shares—its stake is now just 0.002%.
About a week prior to that announcement, AMC had sold 43 million shares at $9.94 per share, allowing it to raise over $428 million in equity capital.
With newfound independence and an extra $400 million to boot, investors took notice and began buying shares.
“… I want to say a few words about Mike Mohan, who is participating today in his last earnings call as Best Buy's president and COO. When Mike shared that it might be time for him to leave Best Buy, I was met with many emotions. We've worked together for so many years and built a true friendship I have grown to cherish. As his friend, I was proud that he was ready to leave the company he loves and set out to pursue his desire to do more …”
— CEO, Corie Barry on Mike Mohan’s retirement from Best Buy
Zuora, Inc. provides cloud-based software on a subscription basis that enables companies in various industries to launch, manage, and transform into a subscription business. The company offers Zuora Central platform that acts as an intelligent subscription management hub that allows customers to orient order-to-revenue operations. Its products include Zuora Billing for subscription billing; Zuora RevPro, a revenue recognition automation solution; Zuora CPQ for configuring deals, pricing, and quoting in a subscription business; and Zuora Collect designed to handle the complicated function of collections associated with subscription-based businesses. The company also provides Zuora Marketplace that offers industry-specific tools and third-party applications for its customers. Zuora, Inc. sells its products through its direct sales force, global systems integrators, management consulting firms, resellers, technology and ecosystem partners.
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TARGET
BULLPEN INVESTOR PRESENTATION BY
+ TAURUS SAMUELS +
2021 05 26 — BLUE ROOM Investment Team Bullpen
Wednesday
May 26, 2021
9:30 AM
BLUE ROOM
INVESTMENT TEAM BULLPEN
__________ __________
Taurus Samuels presents Target : TGT.
BLUE ROOM TALK WITH
— ALEX KELLY —
FRIDAY BULLLPEN
PRECISION BIOSCIENCES
— New CFO —
DAY #2 ON THE JOB
A
R
T
Be Well Bunny, 2021
carbon pencil on paper
8 x 7 in
$750.00
Adonna Khare
Visions West Contemporary Gallery has just received some new works by Adonna Khare for the annual Mountain Standard Time exhibitions. Her work embodies the sensitivity of a surreal narrative by giving animals human-like characteristics. In each piece, she captures a particular sentiment in the glimmer of the eye of the protagonist and develops a story within the surrounding details. Both lighthearted and fun, her stories have a developed sense of artistic humor.
@adonnakhare
Elk and Birdhouse, 2021
carbon pencil on paper
8 x 6 in
$700.00
Sitting Wolf, 2021
carbon pencil on paper
10 x 7 in
$900.00
Owl and Goat, 2021
carbon pencil on paper
7 x 7 in
$700.00
++
INTERVIEW
/// SERIES ///
JON FRANKLIN
— WORLD PRO TOUR CEO —
Tuesday
May 25, 2021
9:30 AM
BLUE ROOM
INVESTMENT TEAM BULLPEN
Autonomous vehicles are the way of the future. Almost all automotive manufacturers have begun incorporating driver assistance systems into their vehicles in the form of blind spot monitors, automatic braking system, automatic parking and similar features. Many companies including Tesla and Google are developing fully autonomous driving technologies in which the vehicle can drive without any driver influence. As we grow closer to having autonomous cars becoming the vehicular norm, it is important and helpful to understand more about autonomous vehicles.
MAY 28, 2021
— SHOUT OUT —
///
TO PEOPLE FOCUSED ON SHARING
GOOD STUFF
>>>
RAIN DROPS
x
MATH
=
MUSIC
JUST OUR CUP OF TEA
++
— ON THE ROAD —
__________
ANNOUNCING
DELIVERY & DISTRIBUTION
__________
ISSUE #01
{ OF }
THE DRY STORAGE FLEET
= PURVEYOR OF =
/ flour
/ grain
/ bread
REGENERATIVE PRACTICES FOR THE WIN ++ PERFORMANCE / FLAVOR ++ #CHEF-LED
🌾 from the San Luis Valley.
— watch it grow —
May 27, 2021 BLUE ROOM Meeting #053
Thursday
May 27, 2021
12 PM
BLUE ROOM
MEETING NUMBER
#53
__________ __________
Memorial Day Special
__________ __________
Dear Blue Room.
Welcome to Meeting #53.
Let's begin with the following formal program:
I. Operational Updates: Emily
II. Research and Internship Program Updates: Omar, Ian and Nick
III. Liminal Space Update
IV. Dry Storage Update
V. Twin Peaks / Supply Chain Update
VI. Art Update
VII. Vietnam Update
VIII. Other Professional Updates
Question(s): Memorial Day is about honoring and recognizing the men and women who have made the ultimate sacrifice for our way of life.
+ Can you identify for us a specific historical sacrifice which you would like to commemorate?
+ How do you think of / or experience national pride or patriotism?
+ Are there sacrifices which should be made, and or what cause?
+ Open ended.
Spring 2021 Internship Update
It is already almost time to say goodbye to the spring class.
In actuality, two interns have already capped off their internship with company presentations. On Wednesday, Taurus Samuels presented Target (TGT). And last week on Friday, Kelley Jiang presented Lbrands (LB). Both TGT and LB are well run companies and could present an opportunity for Blue Room to invest on behalf of clients, so the efforts here are much appreciated. Kudos to Omar, Ian and Nick for making sure each intern had success this term.
Target (TGT)
vimeo.com/555319884
Lbrands (LB)
vimeo.com/553434724
Last week's meeting:
Meeting #52
May 20, 2021
vimeo.com/553044064
My name is Max Pumilia, a spring intern at Blue Room from Denver, Colorado. I am a junior at Dartmouth College double majoring in Religion and History modified with Medieval and Renaissance Studies. While I certainly enjoy my work in the classroom, my academic research outside the classroom has been the most meaningful element of my intellectual development at Dartmouth. Over the past three years, I have completed a number of extra-curricular fellowships with professors across the Religion and History departments. These projects have culminated in my senior thesis focusing on relations between historical Isma’ili Muslim regimes and Eastern Christian communities. While primarily significant for the role it plays in filling a gaping hole in the existing academic discourse, this project also engages with concepts like identity, division and societal hierarchy that are especially relevant today.
Outside of my academic work, I am engaged in a number of other activities at Dartmouth. As president of my fraternity, I strive to ensure that my organization makes positive contributions to the broader community. This responsibility entails communicating organizational needs with Dartmouth administration, adjudicating on individual conduct violations, maintaining an active dialogue with faculty and balancing a multi-hundred thousand dollar annual budget without placing an undue burden on current undergraduate members. I also ski race and play ultimate frisbee for club teams at Dartmouth. In my free time, I love to birdwatch, hike and read.
Professionally, I bring past internship experience in corporate finance and data analysis as well as private equity to Blue Room. I came to Blue Room with very little knowledge concerning public markets, and this lack of experience is actually what drew me to the firm. I wanted to learn how to understand publicly traded equities and, ultimately, how to manage my own money as I age into adulthood. Over the past two months, my energy has been primarily devoted to covering Lowe’s stock (LOW). In this work, I have most thoroughly enjoyed the primary research associated with understanding the home improvement industry, and surprisingly, the skills and processes needed to understand annual kitchen remodeling trends aren’t all that different from the ones I use to analyze 12th-century Islamic sects.
Thanks to the entire Blue Room team for a great experience!
P L E A S E E N J O Y T H E
—WEEKLY—
company updates
from the BR intern team.
Aidan Fetterly
Ticker: TTWO
Name: Take-Two Interactive Software, Inc.
Number of Shares Outstanding: 115.11M
Market Capitalization: $21.568B
Stock Price History
May 17, 2021 $168.22
May 18, 2021 $167.69
May 19, 2021 $179.35
May 20, 2021 $185.08
May 21, 2021 $184.36
May 24, 2021 $185.02
May 25, 2021 $184.62
May 26, 2021 $185.67
May 27, 2021 $186.48
Over the last two weeks, TTWO shares have experienced a profound recovery, with the share price rising more than 10% since its earnings call on May 18. Reporting on both fourth-quarter and full-year results for its 2021 fiscal year, CEO and Chairman Strauss Zelnick, President Karl Slatoff, and CFO Lainie Goldstein announced that Take-Two achieved nearly $3.6 billion in net bookings for the year ended March 31, marking not only a 20% increase year-over-year, but also a record high for the company. Further, the company reported that Q4 net income reached $219 million, exceeding previous guidance by nearly 100%. While the company's officials stressed impending moderation of the positive industry trends ignited by stay-at-home orders, the historically conservative Zelnick openly touted Take-Two's potential moving forward, highlighting the firm's 60-game pipeline and current, immersive-core titles as catalysts that will allow the company to "establish new records of operating results, even above the spectacular performance [they] delivered this past year." A full transcript of the earnings call can be found here:
LINK: https://docs.google.com/document/d/1YY8YyCW2Fq9jMsDNgUra6ZQJ-8MsSeC3366rC-ISl6w/edit?usp=sharing
Emma Leary
Ticker: MSFT
Name: Microsoft Corporation
Shares Outstanding: 7.53B
Market Cap: $1.878T
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.
Recent Stock Price History:
May 17, 2021 $246.55
May 18, 2021 $246.27
May 19, 2021 $239.31
May 20, 2021 $243.96
May 21, 2021 $247.57
May 24, 2021 $247.79
May 25, 2021 $251.77
May 26, 2021 $251.43
May 27, 2021 $251.17
Microsoft is trading at around $250 this week which brings the company out of its period of lower prices this month. MSFT continues to focus heavily on transitioning its company brand from hardware products to cloud computing software. As the primary Microsoft competitor, Apple, continues to lead the laptop and mobile device market, Microsoft has begun to redirect its focus in an effort to shift competition away from Apple. This shift has been discussed in Microsoft’s Q3 earnings call and a recent BWG Microsoft Q&A where all of the company’s representatives have emphasized research and development in new and different areas of technology. These developments included the company’s acquisition of Nuance last month, release of new artificial intelligence and virtual reality software – specifically the partnership with La Liga to increase online sports game viewing, – and significantly increased investment in the Azure cloud computing segment of Microsoft products. As Microsoft continues to redirect its approach, its competition with Apple decreases while its new competition may include other technology companies such as Tesla or Amazon that are also working to expand into new technological territory.
Julian Martelly
Ticker: AMGN
Name: Amgen, Inc.
Number of Shares Outstanding: 577.57M
Market Capitalization: $145.371B
Stock Price History:
May 14, 2021 $251.38
May 17, 2021 $252.38
May 18, 2021 $250.86
May 19, 2021 $248.63
May 20, 2021 $251.93
Amgen, Inc. Executive Summary
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, it has grown into one of the world’s leading independent biotechnology companies, reaching millions of patients around the globe. Most recently, Amgen is in the drug application process. Two examples of this can be seen with the U.S. Food and Drug Administration’s (FDA) acceptance of Amgen’s supplemental new drug application for Otezla – a product designed to address adults with mild to moderate plaque psoriasis, and that has the potential to be the first and only approved oral therapy for the mild to moderate population. The second example is the submission of a Biologics License Application (BLA) to the FDA for tezepelumab, a product shared equally between Amgen and its partner AstraZeneca, designed to be a potential first-in-class medicine for severe asthma. Moving forward, it will be interesting to see how the FDA responds to these applications, as it can truly determine where Amgen lies among its competitors.
Julia Martin
Ticker: TSLA
Name: Tesla, Inc.
Number of Shares Outstanding: 963.33M
Market Capitalization: $607.71B
Stock Price History
May 18, 2021 $577.87
May 19, 2021 $563.46
May 20, 2021 $586.78
May 21, 2021 $580.88
May 24, 3021 $606.44
May 25, 2021 $604.69
May 26, 2021 $619.13
May 27, 2021 $630.85
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.
This week, Tesla started to roll out “Tesla Vision”, which is Tesla’s transition to an entirely camer-based autonomous driving system. The Autopilot system has historically relied on both camera and radar sensors in order to detect objects in the vehicle’s surroundings to allow for the self-driving capability. Tesla has now ditched the radar sensors and is producing Model 3 and Model Y vehicles with only camera sensors. They have already started deliveries of these updated Model 3 and Y vehicles despite, but the transition to Tesla Vision has caused temporary limitations of certain self-driving features: Autosteer will now be limited to a maximum speed of 75 mph, and Smart Summon and Emergency Lane Departure Avoidance will be disabled for the time being. Over the next coming weeks, Model S and Model X vehicles will be equipped with Tesla Vision technology.
Most other leaders in the autonomous driving space do not solely rely on camera sensors for their respective technology. However, Elon Musk has been very vocal that he believes that autonomous technology can be successful with just camera sensors. The transition to Tesla Vision indicates that Tesla is continuing to make significant strides in the autonomous driving field, aiming for complete automation in the near future.
Asher Nyhoff
Ticker: NKE
Name: NIKE, Inc.
Number of Shares Outstanding: 1.27B
Market Capitalization: $216.345B
Stock Price History:
May 7, 2021 $136.41
May 18, 2021 $135.56
May 19, 2021 $132.96
May 20, 2021 $133.27
May 21, 2021 $132.66
May 24, 2021 $134.06
May 25, 2021 $134.32
May 26, 2021 $136.89
May 27, 2021 $136.93
NIKE, Inc. is the largest seller of athletic footwear and apparel in the world. NIKE sells its products primarily through brick-and-mortar stores, however, NIKE has increasingly focused on digital sales through its direct-to-consumer strategy.
Coming off of a previous week of low stock prices, NIKE experienced a mid-week bump from $134.06 per share on Monday to $136.93 on Thursday. Positive market sentiment can likely be attributed to the continuation of high spending on footwear and apparel during the pandemic. NIKE’s direct to consumer online sales rose from 32% of total revenues in fiscal year 2019 to 35% of total revenues in 2020.
This week, in terms of partnerships and brand development, Naomi Osaka, international tennis champion, released an apparel collection with NIKE. Osaka was involved in designing the collection which will be released for sale by the end of the month. This collection debuts just before the French Open, beginning on May 30. The ongoing return of live sports will continue to buoy the NIKE brand throughout the summer.
Elizabeth Orecchia
Ticker: HLT
Name: Hilton
Shares Outstanding = 277.45M
Market Cap = $34.52B
Stock Price History
May 7, 2021 $123.44
May 10, 2021 $121.58
May 11, 2021 $121.83
May 12, 2021 $118.29
May 13, 2021 $120.16
May 14, 2021 $123.61
May 17, 2021 $121.71
May 18, 2021 $120.79
May 19, 2021 $120.57
Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia. It owns, leases, manages, develops and franchises hotels and resorts. It operates through two segments: Management and Franchise, and Ownership. The Virginia-based company engages in the hotel management and licensing of its brands. As of December 31, 2020, it had approximately 6,478 properties operating under the Hilton label, with more than one million 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
Kat Paradise
Ticker: NTRS
Name: The Northern Trust Corporation
Number of Shares Outstanding: 208.11M
Market Capitalization: $24.92B
Stock Price History:
May 17, 2021 $120.62
May 18, 2021 $117.38
May 19, 2021 $117.34
May 20, 2021 $118.47
May 21, 2021 $118.16
May 24, 2021 $119.88
May 25, 2021 $120.27
May 26, 2021 $120.95
May 27, 2021 $121.46
May 28, 2021 $120.69
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 (Nasdaq: NTRS) has been appointed to provide a range of asset servicing solutions to Coal Pension Trustees Services Limited (CPT). CPT is the in-house executive company owned by the British Coal Staff Superannuation Scheme and the Mineworkers’ Pension Scheme – two closed defined-benefit schemes representing members who previously worked across the United Kingdom (UK) Coal industry. Their combined assets of $26 billion (USD) place the Coal Schemes in the top 10 pension funds by size in the United Kingdom (source: Pension Funds and Their Advisors, 2019/20 edition). CPT invests these assets on behalf of the two schemes, with the objective of delivering sustainable long-term returns for their members’ retirement provisions. Northern Trust is providing CPT with valuation reporting, performance measurement, securities lending, foreign exchange and global custody services. This includes operational and data solutions to support the oversight and governance models – including specialist fund administration and analytics for its private markets portfolio.
Max Pumilia
Ticker: LOW
Name: Lowe’s Companies Inc
Number of Shares Outstanding: 715M
Market Capitalization: $137.62B
Stock Price History
May 17, 2021 $194.13
May 18, 2021 $192.75
May 19, 2021 $190.72
May 20, 2021 $193.41
May 21, 2021 $192.47
May 24, 2021 $190.66
May 25, 2021 $193.02
May 26, 2021 $193.60
May 27, 2021 $195.04
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.
Last Wednesday (5/19), Lowe’s announced its Q1 earnings. While the report exceeded investor expectations with YoY revenue growth of almost 26%, they fell significantly short of Home Depot’s numbers. On Tuesday, Home Depot reported over 30% revenue growth compared to Q1 2020. Hence, in spite of exceeding earlier projections, Lowe’s earnings proved disappointing. This sentiment combined with broader market conditions to drop valuation over the course of the past week. Since last week’s earnings, the stock has been quite stagnant.
Taurus Samuels
Ticker: TGT
Name: Target Corporation
Number of Shares Outstanding: 497.57M (as of May 20, 2021)
Market Capitalization: $103.B (as of May 20, 2021)
Stock Price History:
May 07, 2021 $214.01
May 10, 2021 $213.34
May 11, 2021 $208.56
May 12, 2021 $202.30
May 13, 2021 $207.93
May 14, 2021 $210.48
May 17, 2021 $209.34
May 18, 2021 $206.43
Dividend Paid ($0.68)
May 19, 2021 $219.01
May 20, 2021 $221.66
Target Corporation is a retailer based in Minneapolis, Minnesota, founded in 1902. As of January 30, 2021, it has over 1,500 stores across the United States. It offers an array of products to its customers, such as various merchandise, everyday essential items, clothing and food. In many of its locations, it has also partnered with other companies, such as CVS Pharmacy, Inc., to provide its customers with access to a pharmacy when shopping at their stores.
Target Corporation had its Q1 earnings call on the morning of May 19, 2021. It reported an adjusted earnings per share of $3.69, growing 525% from the previous year. Its total revenue was reported at $24.4B, also growing 23.4%, with sales growth growing 23.3% and other revenue growing 30.4%. Although 2020 was an inflated year for TGT, with sales surging, even when Q1 of 2021 is compared to the 2019 Q1, its numbers are still very impressive. Target’s sales were up 37.26% when compared to 2019, and its operating income was up 111.45% as well.
Target also reported that its increased sales were led by the Apparel category, which saw 60% of growth. Although 60% growth is huge, the growth itself is not at all surprising. The stimulus checks have fueled many consumers’ wants to get back out and shop in person. This, the vaccine rollout, and the news of many states opening back up in the summer, have collectively been a huge reason why apparel was the category that saw the biggest growth, because many consumers are wanting to buy new clothes to go out in this summer.
This American Life made an episode called The Daily, which was then broadcast on The Daily podcast. It’s about life’s daily practices and what you learn from doing a thing every day — this particular example struck us in its embodiment of Togetherism.
Ira Glass
The people on 118th Street in New York City are doing this thing that almost nobody in New York or around the country is doing. And to figure out why-- what's it about their block-- I asked a longtime resident, Ivette Rodriguez, to tell me about the place.
And she told me that, when she and her mom moved to the block back in 1965-- this is the very neatly-kept 400 block of East 118th Street, with brick houses and low iron fences where the property line hits the sidewalk. Back when she moved here, the south side of the street was mostly Latino. Her side of the street, the north side, was mostly Italian.
…
Ivette Rodriguez
We got this apartment because I told my mother, don't say a word. Let me talk. Because if they would have found out that we were Puerto Rican, they would not have rented to us. So I just kept really quiet. She kept quiet.
Ira Glass
So you guys were passing as Italian.
Ivette Rodriguez
Yeah. Yeah.
Ira Glass
Her mom now owns the building. These days, Ivette says most of the old Italians are gone, and the block is a mix of Latino, white, and Black. There are lots of retirees-- people who arrived decades ago, like Ivette. And younger people are moving in. So we're talking, and I glance at the clock in her apartment and realize the time.
I was worried about the time because I was there to record something that starts at 7:00. You remember, early in the pandemic, how people would lean out their windows, or go out at 7:00 PM and cheer for the healthcare workers and other essential workers? OK, most blocks around New York City, most blocks everywhere, stopped doing that long ago. But for some reason, not this block. They stayed at it for over 400 days, everyday.
…
Frances Mastrota, Ivette’s 83 year-old-neighbor
Because we are a very special block, and we watch out for each other. If they don't see I come out at 7:00, they look for me.
Ira Glass
So is one of the reasons why it's still going on because people are checking on each other?
Frances Mastrota
If I don't come out, this lady comes, that lady comes, the people over there come.
Ira Glass
Someone will knock on your door to see how you are?
Frances Mastrota
If I don't come out at 7:00 pm or if I don't pick up my New York Times paper at 6:00am they look for me. They know I'm alone.
Ira Glass
Some nights, do you just feel tired, and you don't want to come out?
Frances Mastrota
I have to. I have to. (come out, or) They will come here! [CHUCKLES]
…
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.