Weekend Update #042

August 27, 2021 Emily Philpott

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.

A Tesla subsidiary earlier this month filed an application with the Public Utility Commission of Texas to sell power on the retail market as it intends to build two 250-megawatt batteries — one at its factory under construction near Austin, and the other near Houston. Millions of Texans were left without power this past winter due to statewide blackouts caused by harsh weather in addition to the state's grid being isolated from the rest of the U.S.; opening an opportunity for Tesla to expand its energy generation and storage segment. In the report, Tesla anticipates that electricity could be drawn from its grid or from Tesla home batteries, and Texans with solar panels on their homes could sell excess power to Tesla’s grid as well. Tesla was up 1.53% to $711.92 on Friday following the report, finishing up 4.65% on the week.

Thank you, Blue Room Analyst NICK PEART.

END OF THE WEEK
— Debrief —

On Monday the FDA fully approved the Pfizer-BioNTech COVID-19vaccine, now dubbed “Comirnaty” for the prevention of COVID-19 disease in individuals 16 years of age and older, allowing companies, schools and government agencies to impose vaccine requirements.

Also on Monday, Pfizer announced they’ve entered into an agreement to acquire Trillium Therapeutics (TRIL), an immuno-oncology company that develops therapies for cancer treatment, for an equity value of $2.26 billion, or $18.50 per share, in cash, pending regulatory approvals. The offer price represents a premium of 203.8% to Trillium’s closing price on August 20, setting a precedent of sorts for the types of premiums other small cap biotech companies can expect in future acquisition scenarios.

On Tuesday, Best Buy jumped after reporting earnings. They registered an EPS of $2.98 vs a consensus estimate of $1.85, a 61% beat, while generating revenues of $11.85 billion vs an expected $11.49 billion. Their stock price jumped from $112 to as high as $124 before closing the week at $117.50.

On Friday Fed Chair Jerome Powell reiterated it would be appropriate to begin tapering the $120-billion-a-month bond buying program before year-end, but also said the Fed is in no hurry to begin raising rates thereafter, stating that this decision remains dependent upon the inflation and unemployment environment.

Stocks rose upon the news—the S&P 500 reached new highs yet again, topping at an all-time high of 4,513.33 before settling at 4,509.37 while the NASDAQ reached highs of its own, reaching an all-time high of 15,144.48 before settling at 15,129.50

Thank you Blue Room Leader OMAR GUZMAN.

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.

Corporate Profile: Workday provides cloud applications for human resources and finance professionals. Serving more than 8,000 organizations, Workday provides organizations with software-as-a-service solutions to facilitate complex challenges in the business setting. Workday’s services facilitate the management of finances in a constantly evolving environment. Workday’s innovative suite combines finance, human resources, planning, and analytics into one suite which allows Workday’s products to cater to a wide array of businesses across several industries. From mid-sized companies to over 50 percent of fortune 500 companies. Workday follows a core set of values. Employees first, customer service second, innovation third, followed by integrity, fun, and profitability.

Thursday
August 26, 2021
12 PM
__________ __________

BLUE ROOM
MEETING NUMBER SIXTY THREE
__________ __________

UPDATES
+ + + +

— QUESTION —

Special People and Special Days and Special Moments

+ Who Is Someone Special You Would Like to Honor or Celebrate or Memorialize? And how would you do it?

+ Share with us, What are Special Days for You and What Makes It Meaningful to You?

+ Tell us about a Special Moment. How Did You Capture the Moment for Posterity? Is it an Experience to be Repeated?

__________ __________

Dear Blue Room:

This week, Interns begin investment team presentations.

I really love this part of the program, when it all comes together.

What we hope:

Teach how to tell a financial analytical story, which is a story of numbers, and instill the sense of confidence when able to wield this craft for purpose.

For Blue Room, we value fresh approaches to looking at investment opportunity. Building a portfolio of low correlation requires investment ideas, which are prospected, vetted, carefully one at a time.

For Investors, they will value investments in their portfolios which have low correlation to their existing risk exposures. Therefore, one strategy is to focus our growing analytical capability on stock ideas which are not already widely owned (Apple, Amazon, Facebook, Microsoft, etc).

The Value, Therefore, is in Being Different

linkedin.com/pulse/protest-financial-calvinism-thinking-differently-minyoung-sohn

NXPI:NXP SEMICONDUCTORS

BULLPEN FINANCIAL MODELING

+ DAVID KOGAN +

Monday

August 23, 2021
__________ __________

My name is Caroline Burnham and I have been an intern for Blue Room this summer. I am from Bryn Mawr, PA, a suburb of Philadelphia. Growing up so close to Philly, I fell in love with baseball and the Phillies. I still remember one of my first games: Roy Halladay threw a complete game shutout against the Mets. Later that month, he threw the 20th perfect game in baseball history. Later that year, he threw the second postseason no-hitter in baseball history, and it was his first postseason game! Safe to say I became a bit of a baseball fanatic in 2010. One of the unique attributes of baseball as a sport is its availability of statistics. In school I had always had a special appreciation for my math classes, so that along with my love for baseball sparked a quantitative interest in me.

As a rising sophomore at Dartmouth, I plan on studying economics and mathematics. I am drawn towards the quantitative applications of economics and really enjoy seeing the two disciplines intertwine. My interest in finance specifically has really grown this summer at Blue Room as I gain a greater understanding in how I can use quantitative and qualitative information to value a company. This summer I have been covering Allogene Therapeutics in the biotechnology industry. It has been so interesting to delve into the financials and try to learn a bit of the science in order to predict what the future might look like for the company. I also have enjoyed being able to discuss aspects of the company with my family at home. Both of my parents are doctors, so they have helped understand more about the clinical trials. Additionally, my grandpa and great grandpa worked in finance, so my dad understands that side of the company too. We have had plenty of discussions while walking our dogs (a goldendoodle named Sneakers and a bernedoodle named Rocky) about Allogene and the many attributes of the company.

Outside of school, I am involved in Club Lacrosse, Chabad and Hillel, Women in Business, and Sports Analytics. In high school I played lacrosse and tennis, so I enjoy being active. When I can’t be on a team, I also enjoy running. These past 10 weeks as a Blue Room intern have been immensely rewarding. I’ve loved getting to know the whole team as well as learning so much about equity research. It has been an amazing summer!

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_MCA

“HOW ART IS BORN” PODCAST LAUNCH PARTY

The Museum of Contemporary Art Denver presents How Art is Born, a podcast that delves deep into the creative process with artists representing the spectrum of artmaking. Join host R. Alan Brooks, an artist himself, for a conversation with a different creative person each episode, learning about their artistic practice. How and where are their ideas generated? Which ideas become art and which ones stay on the cutting room floor? How did their careers as artists begin? Get the story behind the artist and how their art is born.

___

Come toast with us as we celebrate the debut of the museum’s first major podcast! On August 31, MCA Denver will launch the first two episodes of “How Art is Born,” a ten-episode podcast about the origins of artists and their creative and artistic practice. Have a drink with the host, comic book writer R. Alan Brooks, chill with some artists who are upcoming guests of the podcast, listen to music, and win prizes! Trust us, you won’t want to miss this.

First drink is on us for the first 100 guests! Those under 21 are welcome. A food truck will be available with noms for purchase.

P L E A S E E N J O Y T H E

—WEEKLY—

company updates
from the BR intern team.

Caroline Burnham

Ticker: ALLO
Name: Allogene Therapeutics
Number of Shares Outstanding: 141.5M
Market Capitalization: $3.014B

Stock Price History:

August 9, 2021 $22.63

August 10, 2021 $22.03

August 11, 2021 $21.25

August 12, 2021 $21.17

August 13, 2021 $21.44

August 16, 2021 $21.15

August 17, 2021 $22.17

August 18, 2021 $21.76

August 19, 2021 $21.01

August 20, 2021 $23.45

August 27, 2021 $24.40

Allogene Therapeutics Company Update

Allogene Therapeutics is a biotechnology company currently developing allogeneic CAR T cell product candidates for the treatment of various cancers. One of the most interesting aspects of their anti-B cell maturation antigen (BCMA) program is the dual trials for ALLO-715 and ALLO-715 with nirogacestat. The addition of nirogacestat is due to a partnership with SpringWorks Therapeutics. ALLO-715 is currently being tested in patients with relapsed or refractory multiple myeloma. According to the company’s most recent 10-K, they believe “nirogacestat has the potential to increase the cell surface density of BCMA and reduce levels of soluble BCMA, thereby enhancing the activity of ALLO-715” In their BCMA program, Allogene hypothesizes that nirogacecstat will increase the target cell density, allowing the CAR T cells to have greater potency and durability. An update on the ALLO-715 clinical trial is expected in late 2021.

Lisa Wong

Ticker: TGX
Name: 10x Genomics, Inc.
Number of Shares Outstanding:87.27M
Market Capitalization: $20.855B

Stock Price History:

August 16, 2021 $160.08

August 17, 2021 $162.75

August 18, 2021 $157.81

August 19, 2021 $154.16

August 20, 2021 $155.72

August 23, 2021 $163.67

August 24, 2021 $169.11

August 25, 2021 $166.73

August 26, 2021 $160.07

August 27, 2021 $164.21

10x Genomics, Inc. Company Update (8/28/21)

10x Genomics is a biotechnology company focused on producing genetic sequencing technology. A leader in the single-cell sequencing industry, its pioneering Chromium and Visium products and technologies have won numerous scientific accolades and helped to further societal understanding of biological structures. Chromium products allow for detailed analysis of hundreds of thousands of cells and biological units. Visium products are centered around spatial transcriptomics, which is genetic sequencing that uses detailed spatial resolution. Visium Spatial products therefore ensure greater understanding of biological units within the context of larger functional systems and processes.

The company recently announced its first-ever winner of the 10x Genomics Early Career Investigator Award for Excellence in Alzheimer’s Disease and Related Dementia (ADRD) Research. Dr. David Gate, a researcher at Northwestern University, will receive TXG products with a value of $35,000 to assist him in his research investigating the connection between the immune system and ADRD. Selected from among 160 nominees, this award allows Gate to further explore the relationship between T cells and neurodegeneration in the hopes of discovering potential therapies to treat Alzheimer’s Disease,

Melanie Gong

Ticker: CMCSA
Name: Comcast Corporation
Number of Shares Outstanding: 4.58B
Market Capitalization: $269.68B

Stock Price History:

August 2 $58.47

August 16 $59.47

August 17 $59.03

August 19 $58.96

August 20 $59.41

August 23 $59.80

August 24 $59.53

August 25 $59.48

August 26 $59.00

August 27 $59.40

Comcast Corporation Company Update

Comcast Corporation is a media, entertainment and communications company providing video, internet and phone services. The company was founded by Ralph J. Roberts in 1963 and is headquartered in Philadelphia, Pennsylvania. Segments Comcast operates include Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, Theme Parks and Sky. The Cable Communications segment provides video, Internet, voice and security services through Xfinity. The Cable Networks segment consists of national and international cable networks, regional sports, news networks and cable television studio production operations. The Broadcast Television segment includes NBC and Telemundo broadcast networks. The Filmed Entertainment segment is involved in the production, acquisition, marketing and distribution of filmed entertainment. The Theme Parks segment manages Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. Finally, the Sky segment consists of Sky, one of Europe's largest B2C entertainment companies providing video, internet, voice and wireless phone services.

Comcast Corporation announced that it will be purchasing Masergy, a Texas-based pioneer in software-defined networking (SDN) and cloud platforms for global enterprises. This acquisition will help accelerate Comcast’s growth and better serve mid-size and large companies with multi-site global operations.

Masergy has over twenty years of experience in managed network, cloud, and security services and currently serves 1,400 customers in 100 countries. This new acquisition will help combine Comcast’s leading advanced fiber network and Masergy’s innovative services to help customers manage their international operations and networks more efficiently. Comcast Business’s acquisition of Masergy is subject to regulatory approval and other customary conditions. Financial terms of the acquisition are not yet disclosed.

Julia Martin

Ticker: TSLA
Name: Tesla, Inc.
Number of Shares Outstanding: 990.01 M
Market Capitalization: $639.208B

Stock Price History:

August 16, 2021 $686.17

August 17, 2021 $665.71

August 18, 2021 $688.99

August 19, 2021 $673.47

August 20, 2021 $680.26

August 23, 2021 $706.30

August 24, 2021 $708.49

August 25, 2021 $711.20

August 26, 2021 $701.16

August 27, 2021 $711.92

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.

Tesla announced last week that it will partner with Japanese based power company Global Engineering and an engineering firm Ene-Vision to construct an energy storage facility in Hokkaido (northern Japan) to work to stabilize the local power system as renewable energy is on the rise. Tesla’s Megapack battery technology will be supplied for this project, which is projected to start operating in 2022 and to cost around $2.7 million.

Tesla’s Model Y has begun deliveries in Europe, earlier than investors expected it to begin. It was originally planned for Model Ys to be supplied by the Berlin Gigafactory to European customers. But, as the Berlin Gigafactory has yet to be completed, Tesla has relied on the Shanghai Gigafactory to produce and deliver these vehicles. The Model Y has already been available in American and Chinese markets; it is part of Tesla’s expansionary goals to sell the Model Y in each major auto market in the world. This contributes to Tesla’s goal of 50% average annual growth in vehicle deliveries as announced in their quarter 1 and quarter 2 earning calls for 2021.

Both the upcoming factory and early release of Model Y vehicles signal Tesla’s continued commitment to growth as a company and investment in the future.

ELI HAYNES

Ticker: RGLD
Name: Royal Gold

Number of Shares Outstanding: 65.5 M

Market Capitalization: $7.3B

Stock Price History

August 16, 2021 $114.56

August 17, 2021 $113.44

August 18, 2021 $110.20

August 19, 2021 $109.68

August 20, 2021 $108.66

August 23, 2021 $112.10

August 24, 2021 $111.28

August 25, 2021 $109.79

August 26, 2021 $109.28

August 27, 2021 $112.58

Royal Gold Company Update

Royal Gold is a Denver based company focused on acquiring and managing precious metals royalties and streams, which seeks to provide investors exposure to precious metals with less risk. Royal Gold owns interests on 187 properties in 5 continents, including interests on 41 production stage mines and 16 development stage projects. While royalties and streams have been around since the 1980’s and early 2000’s, respectively, these funding mechanisms are still considered relatively novel alternatives to traditional debt and equity mining financing.

Royal Gold is poised for another solid year of revenue growth with the addition of their Khoemacau mine streaming agreement, as well as their NX Gold mine stream agreement, both of which are set to begin full production in the beginning of calendar year 2022. Alongside potentially rising gold prices, this increase to their GEO production should add nicely to their consistent production from their principal properties. This should put Royal Gold back on track towards production levels of over 350,000 GEOs, which is a really good sign for the company moving forward.

Logan Chang

Ticker: ATVI
Name: Activision Blizzard, Inc.
Number of Shares Outstanding:777.02M
Market Capitalization: $64.11B

Stock Price History:

August 16, 2021 $83.85

August 17, 2021 $83.37

August 18, 2021 $82.83

August 19, 2021 $83.17

August 20, 2021 $82.63

August 23, 2021 $82.22

August 24, 2021 $81.79

August 25, 2021 $80.81

August 26, 2021 $81.25

August 27, 2021 $82.43

Activision Blizzard Company Update

Activision Blizzard announced its plans to release the next premium title in the famed Call of Duty franchise on November 5th of this year. The game—titled Call of Duty: Vanguard—will offer players the opportunity to experience World War II like never before. Like most other Call of Duty games, Vanguard will offer a single-player campaign mode, online Multiplayer compatibility, and a Zombies co-operative mode. Multiplayer mode will have 20 maps upon release: the most multiplayer maps on day one ever. Vanguard will also be the first Zombies crossover experience for Call of Duty players between the traditional Call of Duty games and the zombie-based games in the franchise.

As expected, Call of Duty’s free-to-play battle royale game—Call of Duty: Warzone—will integrate components of Vanguard. Warzone will feature the new maps from Vanguard, along with unique elements from Vanguard’s storylines and novel additions to the franchise’s new title. We can also expect similar integration experiences between Vanguard and Call of Duty: Mobile.

Currently, Activision Blizzard has kept Vanguard gameplay footage under wraps as the game was not presented at this year’s E3 expo—the annual premier video game expo. Many gaming critics speculate the game will have downloadable player content in the form of seasonal battle passes. From an investor’s perspective, I am bullish on the effect Vanguard’s release will have on Activision Blizzard’s revenue. Vanguard will provide the most gameplay depth upon release of any Call of Duty game, and delta variant concerns could increase the potential size and retention of the game’s player base. Call of Duty: Vanguard is available for pre-order now. The title will be available on PlayStation 4 and 5, Xbox Series X and S, Xbox One, and PC via Blizzard’s digital marketplace: battle.net.

Mary Kate McIntyre

Ticker: NVDA
Name: Nvidia Corporation
Number of Shares Outstanding: 2.49B
Market Capitalization: $483.35B

Stock Price History:

August 16, 2021 $199.50

August 17, 2021 $194.58

August 18, 2021 $190.40

August 19, 2021 $197.98

August 20, 2021 $208.16

August 23, 2021 $219.58

August 24, 2021 $217.93

August 25, 2021 $222.13

August 26, 2021 $220.68

August 27, 2021 $226.36

NVIDIA Company Update — 08.28.21

On Tuesday, Nvidia announced the global availability of its NVIDIA AI Enterprise products, allowing hundreds of companies to run AI software on industry standard servers. NVIDIA AI Enterprise, or EGX, is a software suite of different AI tools and frameworks that can deploy, manage, and scale different sized workloads on mainstream, NVIDIA-Certified servers, including Dell Technologies, Lenovo, Hewlett Packard, and dozens more.

The machine learning algorithms included in EGX allow computers to autonomously improve its own performance by learning from, interpreting, and storing large swaths of data. This self-improvement nature of machine learning has huge implications for the growth of AI in the coming years across multiple different industries. Nvidia’s latest inclusion of EGX access to hundreds of thousands of enterprises in the middle market instead of just industry pioneers was described as “the beginning of a new chapter in the age of AI”, according to Manuvir Das, head of Enterprise Computing at Nvidia. Indeed, this press release is right on track with Nvidia’s goals of becoming the market leader in Artificial Intelligence Computing. As middle market companies become the earliest adopters of any type of AI technology, Nvidia has once again proved its ability to stay on top of new disruptive technology solutions. EGX is sold as a license, with a starting price for a one year subscription of $2000 and can range to nearly $4000 for perpetual licenses.

10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.

END OF THE WEEK— Debrief —

NXPI:NXP SEMICONDUCTORS

+ DAVID KOGAN +

NVDA: NIVIDIA

+ MARY KATE MCINTYRE +

MAC: Macerish

+ Kendall Smart +

ALLOGENE THERAPEUTICS

+ CAROLINE BURNHAM +

TXG: 10X Genomics

+ LISA WONG +

QUALCOMM

+ JACKSON BLAUFELD +

Royal Gold, Inc.

+ ELI HAYNES +

ART

_MCA

“HOW ART IS BORN” PODCAST LAUNCH PARTY

—WEEKLY—

END OF THE WEEK
— Debrief —

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