CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
FFO, NFFO, and AFFO Projections. We modestly adjusted our projections for Funds From Operations, Normalized Funds From Operations, and Adjusted Funds From Operations. Our prior estimates reflected a larger estimate for depreciation and amortization and other than we are now using. We are now projecting third quarter FFO at $0.31 per share, versus a prior $0.36, NFFO of $0.31 versus $0.37, and AFFO of $0.31 versus a prior $0.32.
No Change in Business Outlook. We are not currently expecting any major change in the business environment and our projections for revenue and EPS remain unchanged. ICE ADP has risen from below 20,000 in the spring to nearly 26,000 in September, while Southwest Border encounters exceeded 200,000/mth since March and likely will be up over 32% from the full fiscal year 2021.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
The Fundamental Reasons the Strength in Precious Metals May Continue
What’s happening with precious metals? Silver has been outshining gold the past few days as the rally in both precious metals (PM) has grabbed the attention of investors and perhaps caught those that were short silver off guard. Why are the metals rising, can the strength last, and what is the longer-term outlook for PM?
Silver reached a six-week high in the first week of October, and gold is at its highest level in three weeks. As financial markets are becoming more uncertain, the two metals are showing they never really lost their safe-haven status. The concerns have just not been high enough for many to rotate out of the investments they were in. The move to what has always been viewed as the highest level of safe, gold and silver. This rotation follows months of movement to $ U.S. dollar-denominated securities. The heightened level of safety was inspired by the media being focused on a potential financial crisis in Europe and discussions of Russia unleashing a nuclear weapon in Putin’s attempt to annex Ukraine.
Silver, Gold and Copper performance since September 1. Source: Koyfin
As if the words “nuclear bomb” aren’t enough to send some investors taking a larger allocation in safe-haven assets, there are rumors circulating that the global investment bank Credit Suisse may be in serious financial trouble. For many market participants, the rumblings about an investment bank having problems are reminiscent of 2007, the rumors of Bear Stearns, and the market troubles that followed. Revisiting the activity of the precious metals market that followed in 2008, silver outperformed copper, which outperformed gold.
As silver and gold rise, many speculators that were comfortable with short positions are finding themselves forced with the decision to decide to purchase to close out their short positions. Active hedge funds and other money managers will often play precious metals against the U.S. dollar. With the dollar at a 20-year high, the sentiment around metals was negative. If this is the beginning of a longer rotation into PM, the rotation could build into a strong short squeeze. Short covering serves to strengthen prices.
Other Fundamentals
Prior to Monday’s 7% increase in the price of silver and the 3% increase in gold, both with strong follow-up on Tuesday, some analysts were becoming more positive on the metals and miners category. In his quarterly Metals & Mining Review and Outlook, released on Channelchek pre-market Monday, Mark Reichmann, Sr. Research Analyst, wrote, “While higher rates and a strong U.S. dollar pose significant headwinds for gold, an inflection point may be reached as investors seek to preserve value amid deteriorating economic conditions, increasing geopolitical uncertainty, and market volatility.”
Reichmann seems to be long-term positive on metals, thinking gold and silver may turn first; he wrote, “Precious metals prices may strengthen in advance of industrial metals. Therefore, investors may desire to lean into precious metals mining names to benefit from a positive shift in investor sentiment.” He continued, “While it may take longer for industrial metals to recover, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.”
For a complete list and the most current research reports of producers of precious and industrial metals companies covered by Mark Reichmann, visit his analyst webpage here.
Take Away
The move earlier this year toward U.S. dollar denominated assets, to capture higher yields and low sovereign risk has been an ongoing investment trend since at least March. With the newly recognized potential of additional turmoil entering the market psyche, including Russia and whether they would use the bomb, and whether the recent about-face for England’s monetary policy indicates deep trouble beneath the financial world’s surface has created further allocations to precious metals.
The suddenness of the move may have caught some large investors who have been bearish on silver and gold to make unexpected decisions on short positions they had been carrying. This short-squeeze is likely contributing to the strength of both gold and silver as it plays out.
Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States. In addition, Great Lakes is fully engaged in expanding its core business into the rapidly developing offshore wind energy industry. The Company has a long history of performing significant international projects. The Company employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its over 131-year history, the Company has never failed to complete a marine project. Great Lakes owns and operates the largest and most diverse fleet in the U.S. dredging industry, comprised of approximately 200 specialized vessels. Great Lakes has a disciplined training program for engineers that ensures experienced-based performance as they advance through Company operations. The Company’s Incident-and Injury-Free® (IIF®) safety management program is integrated into all aspects of the Company’s culture. The Company’s commitment to the IIF® culture promotes a work environment where employee safety is paramount.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
More Awards. In the last week of the Federal government’s fiscal year, Great Lakes was the recipient of additional work. The Department of Defense contract awards reports four additional significant wins totaling a cumulative $109.8 million of potential new business.
Sole Awards. The Company received a $26.6 million award for dredging with work to be performed in Savannah, Georgia; Brunswick, Georgia; Wilmington, North Carolina; Morehead City, North Carolina; and Charleston, South Carolina; a $12.195 million contract for dredging with work to be performed in Irvington, Alabama; and a $21.531 million award for beach re-nourishment in Cape May, New Jersey.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the bottom of the report for important disclosures
Mining companies outperform broader market. During the third quarter, mining companies (as measured by the XME) declined 2.1% compared to a loss of 5.3% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were down 11.9% and 7.9%, respectively. Gold, silver, copper, zinc, and lead futures prices fell 6.8%, 6.2%, 8.5%, 8.8%, and 0.4%, respectively. The commodity price declines reflect expected impacts of Federal Reserve monetary policy on interest rates, U.S. dollar strength, and the economic environment.
Outlook for precious metals. The U.S. Dollar Index rose 7.1% during the third quarter, while the yield on a 10-year treasury note increased from 3.0% to 3.8% as of September 30. While higher rates and a strong U.S. dollar pose significant headwinds for gold, an inflection point may be reached as investors seek to preserve value amid deteriorating economic conditions, increasing geopolitical uncertainty, and market volatility. While down 7.9% year-to-date through September 30, the price of gold has remained relatively resilient this year despite challenging headwinds. Not being able to benefit from strengthening gold prices, investors have focused more on silver’s industrial applications which make it more sensitive to economic expectations.
Industrial metals demand expected to remain challenged. The decline in industrial metals prices reflect concerns about economic growth in the U.S. and abroad. While the long-term investment case for owning industrial metals mining companies remains favorable, industrial metals prices may remain challenged into 2023.
Putting it all together. Precious metals prices may strengthen in advance of industrial metals. Therefore, investors may desire to lean into precious metals mining names to benefit from a positive shift in investor sentiment. While it may take longer for industrial metals to recover, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.
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ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.” FINRA licenses 7, 24, 63, 87
WARNING
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RESEARCH ANALYST CERTIFICATION
Independence Of View All views expressed in this report accurately reflect my personal views about the subject securities or issuers.
Receipt of Compensation No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.
Ownership and Material Conflicts of Interest Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.
Bassett Furniture Industries, Incorporated manufactures, markets, and retails home furnishings in the United States. The company operates in three segments: Wholesale, Retail, and Logistical Services. It is involved in the design, manufacture, sourcing, sale, and distribution of furniture products to a network of company-owned and licensee-owned Bassett Home Furnishings (BHF) retail stores, as well as independent furniture retailers; and wood and upholstery operations. As of September 16, 2017, the company operated a network of 91 company-and licensee-owned stores. It also provides shipping, delivery, and warehousing services to customers in the furniture industry. In addition, the company owns and leases retail store properties. It also distributes its products through other multi-line furniture stores, Bassett galleries or design centers, specialty stores, and mass merchants. Bassett Furniture Industries was founded in 1902 and is based in Bassett, Virginia.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q22 Results. Revenue for the fiscal third quarter ended August 27, 2022 was $118 million, up 12.5% over the prior year period. Wholesale revenue rose 8.3% to $79 million, while Retail revenue rose 21.0% to $70.9 million. Excluding a $4.6 million one-time gain, operating income was $6.1 million, up 22.1%. Bassett reported net income from continuing operations of $7.8 million, or $0.84 per share, compared to net income from continuing operations of $3.4 million, or $0.35 per share, in the prior year. We had forecast revenue of $120 million and EPS from continuing operations of $0.65.
Retail the Star. Once again, Bassett’s retail network was the quarter’s star performer, with “best ever” third quarter deliveries of $70.9 million and $4.5 million of operating profit. Segment operating profits in the first nine months exceed any full year performance to date.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Axcella is a clinical-stage biotechnology company pioneering a new approach to treat complex diseases using compositions of endogenous metabolic modulators (EMMs). The company’s product candidates are comprised of EMMs and derivatives that are engineered in distinct combinations and ratios to restore cellular homeostasis in multiple key biological pathways and improve cellular energetic efficiency. Axcella’s pipeline includes lead therapeutic candidates in Phase 2 development for the treatment of Long COVID and non-alcoholic steatohepatitis (NASH), and the reduction in risk of overt hepatic encephalopathy (OHE) recurrence. The company’s unique model allows for the evaluation of its EMM compositions through non-IND clinical studies or IND clinical trials. For more information, please visit www.axcellatx.com.
Robert LeBoyer, Vice President, Research Analyst, Life Sciences , Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Axcella Announced Positive Interim NASH Results. An interim analysis from the Phase 2b EMMPACT Study of AXA1125 in non-alcoholic steatohepatitis (NASH) showed improvements in measures of liver fibrosis and liver fat. The data presented was from patients who had been treated for 12 and 24 weeks of the 48-week treatment period. The study is continuing as planned, and we believe the interim data raise the probability of success for the trial.
Study Design and Analysis. The EMMPACT study was designed to test two doses of AXA1125 against placebo. Patients receive either placebo, low dose (45.2g/day), or high dose (67.8g/day) twice daily for 48 weeks. It has a target enrollment of 270 patients with biopsy-confirmed Stage 2 or Stage 3 NASH, divided into three arms with 90 patients each. The interim analysis used non-invasive tests to evaluate reduction in liver fibrosis and inflammation.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Nobel Prizes, Election Outcomes and Sports Championships – Prediction Markets Try to Foresee the Future
Who will win Nobel Prizes in 2022? Wikipedia posits a handful of contenders for Physiology or Medicine, about 20 different possible winners for the Peace Prize and several dozen potential winners of the Literature Prize. But since the Swedish Academy never announces nominees in advance, there are few insights indicating who will win, or even if the eventual winner is on a given list.
Are there ways to predict the future winners?
The Delphi approach, named after the oracle in ancient Greece, gathers multiple rounds of opinions from a group of experts to generate a prediction. Gambling firms provide betting odds on the likelihood that specific competitors will win. Crowdsourced competitions, such as the Yahoo Soccer World Cup “Pick-Em,” have participants predict individual contest winners and then aggregate the results.
Another approach is a prediction market that provides insight into what people expect will happen in the future by creating a stock market-like environment to capture the “wisdom of the crowd.” Groups and crowds often are collectively smarter than individuals when many independent opinions are combined.
This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of Daniel O’Leary, Professor of Accounting and Information Systems, University of Southern California.
As an accounting and information systems professor at the University of Southern California, I investigate issues related to the crowd both in my research and in my teaching. Here’s how prediction markets harness what the crowd thinks to forecast the future.
The Wisdom of the Market
In prediction markets, participants buy and sell stocks. Each stock’s price is tied to a different event happening in the future. Information about the future is captured in the stock prices.
For instance, in a prediction market focused on the Nobel Peace Prize, maybe Greta Thunberg is trading at $0.10 while Pope Francis is trading at $0.15, and the stocks for the entire group of candidates add up to sum to $1. The prices reflect the traders’ aggregated beliefs about the probability of their winning – a higher price means a higher perceived likelihood of winning.
Examples of Prediction Markets
Anyone can get in on the prediction game by trading on one of these markets or even just checking out which stocks are up or down.
Prediction markets have various ways of setting stock prices. The Iowa Electronic Markets took following approach during the 2020 U.S. presidential election:
Stock DEM2020 pays off $1 if the Democratic candidate wins, and $0 otherwise,
Stock REP2020 pays off $1 if the Republican candidate wins, and $0 otherwise.
The stock prices capture the probabilities of each candidate winning, in two mutually exclusive events. If the price of DEM2020 is $0.52, then that is treated as the probability of that event occurring – a 52% chance. If DEM2020 is $0.52, then REP2020 is $0.48.
Prediction markets may use real money, or they can use play money. Google’s market used what it called “Goobles,” while the Hollywood Stock Exchange uses Hollywood Dollars. The Iowa Electronic Markets and PredictIt, both sponsored by universities, use real money. Researchers have found that there are no differences in the performance of markets using real money versus those using play money.
Although using play money makes it possible for many people to participate, one potential challenge for prediction markets that don’t use real money is gaining and maintaining interested participants. Despite using different devices to keep up engagement, such as leader boards indicating who has accumulated the biggest portfolio, there is literally no money on the table to keep participants interested in the market.
Market participants who know more about the game might better predict winners. Image Credit: Marco verch (Flickr)
Participants Bring Their Knowledge to the Market
Prediction markets and crowdsourcing do not function in a vacuum.
Researchers have found that information about events finds its way into the prediction processes from various sources. For example, when I analyzed the relationship between the betting odds and the Yahoo Pick-Em crowd’s guesses for the 2014 FIFA World Cup, I found that there was no statistical difference between the proportion of correct guesses in each. My conclusion is that either the crowd’s guesses incorporated the betting odds information or the crowd’s guesses added up to the same result by some other means.
Generally, prediction markets use play money or are run by non-profit universities to study markets, elections and human decision making. Although gambling houses can take bets for many activities, external prediction markets are more restricted in the activities they can be used to investigate, and are typically limited to elections. However, internal prediction markets – run within a corporation, for instance – can explore almost any topic of interest.
Typically, prediction markets function better with informed participants. Although using so-called inside information is illegal in some markets, including the New York Stock Exchange, there generally are no such limitations in prediction markets, or other crowdsourcing approaches. If those with inside information were to participate in a prediction market, it would likely lead to more accurate stock prices, as insiders make trades informed by their knowledge. However, if others find out that a participant has inside information, then they may very well try to gain access to that info, follow the insider’s actions or even decide to leave the unfair market.
The accuracy of prediction markets depends on many factors, including who is in the market, what their biases are and how heterogeneous the participants are. Accuracy can also depend on how many people are in the market – more is generally better – and the extent to which they are informed about the events of interest.
Researchers have found that prediction markets have outperformed polls in presidential elections roughly 75% of the time. But accurate results are not guaranteed. For example, prediction markets did not correctly predict that Donald Trump would win the U.S. presidency in 2016.
Who Will be in Stockholm for the Ceremony?
In 2011, Harvard University economics faculty had a real-money prediction market site, referred to as “the world’s most accurate prediction market.” The site had been used for predicting the Nobel Prize in Economics, but Harvard advised the site to shut down.
I couldn’t find any current public prediction markets active for the 2022 Nobel Prizes.
For the moment, perhaps the closest to participating in a Nobel prediction market would be to place a bet at one of the gambling houses that takes bets on the Nobel Prizes. Or find a Nobel Prize Pick-Em site, propose such an event to an existing prediction market or build your own prediction market using some of the available software.
Inflation Still Surprisingly Strong and Economy Weak
Two important numbers were released on the last day of September. One was based on old news but significant in its finality; it’s the final revision to GDP for the second quarter. The next is viewed as the Fed’s preferred inflation gauge, the PCE deflator. The final GDP number will make it more difficult for public officials or pundits to suggest we can avoid a recession in 2022, and the second did not give any hope that the Fed will have any reason to change course on tightening.
A Recession By Any Other Name
Gross domestic product (GDP) is the indicator that reflects the amount of output produced quarterly in a country. In the U.S., the Bureau of Economic Analysis (BEA) releases two estimates of quarterly GDP, known as the advance and preliminary estimates, in the two months before the release of the final number. So until the final number prints, the number GDP measure is subject to revision.
On September 30, 2022, the Final GDP report for the second quarter was released by the BEA. The report shows that GDP decreased at an annual rate of 0.6 percent in the second quarter of 2022 (table 1). This decline in economic output follows a decline of 1.6% in the first quarter of 2022.
Do two-quarters of a receding economy, based on GDP, indicate the U.S. is in the recessionary part of the business cycle? Most textbooks would agree with that definition. However, there is a Business Cycle Dating Committee within the National Bureau of Economic Research (NBER) that determines and labels where the nation is within the economic cycles; they have not made any declaration.
So far, in 2022, the economy has not experienced any economic growth. If the six months of contraction is eventually deemed an official recession, it will thus far have been a shallow one, characterized by strong employment.
Price Increases Higher than Expected
Inflation is still on many investor’s radar. The Fed is targeting reducing inflation to its 2% target. The inflation measure they use for this target is the PCE Deflator. That measure was released this morning, and it validates the aggressive actions being taken by the Federal Reserve. And suggests the Fed has a lot more work to do.
The personal consumption expenditures price index (PCE), which the Fed targets at 2%, rose 6.2% in August from a year earlier, the Commerce Department reported. Underlying inflation, as measured by a core reading that excludes food and energy prices, rose 4.9% from 4.7% previously.
These numbers are well in excess of the Fed’s target and seemingly trending upward. Expectations are the Fed will provide up to another 150 bp increase (1.50%) over the coming months. This would cause the Fed Funds rate to trade near 5%. There is nothing in today’s release that would likely cause expectations to change.
Stagflation?
High inflation and negative growth have many repeating the word “stagflation”. Stagflation has one more element missing, which is high unemployment. The current economic conditions in the U.S. include high demand for workers, this shortage actually helps feed into the inflation the Fed is trying to tame.
Take Away
The economy contracted slightly in the second quarter of 2022. The decline in production was smaller than measured during the first quarter. Federal Reserve policymakers saw one more reason to keep applying the economic brake pedal by taking money out of the economy, increasing upward rate pressures. The Fed caused rates to rise from 40-year lows faster than any time since the 1980s.
Stock market participants are factored into the Fed’s policy only to the extent that market moves may impact inflation or employment. The markets (stocks, bonds, real estate, gold) are negative on the year. There are some who suggest the Fed will use this as a signal to alter policy, if the Fed bowed to any of the markets listed here, the sign of weakness might actually cause a market collapse in stocks and bonds.
It’s a small world, and as we’ve seen, if something happens with one trading partner, it impacts them all.
Rapid moves and turnarounds in the U.S. Treasury market, considered the bedrock of all other markets, have increased the volatility in equity markets, commodities trading, and, more directly to, currency exchange rates across the globe. The uncertainty has caused investment capital to gravitate to U.S. markets; however, prolonged gyrations, especially in “risk-free” U.S. Treasuries, could put many investors on the sidelines and weaken asset prices globally.
The U.S./U.K. Example
At the end of 2021, the ten-year U.S. Treasury note was yielding 1.5%. Earlier this week a ten-year U.S. Treasury (backed by the same entity that backs the U.S. Currency) rose to yield 4%. That’s a 270% rise in the yield – for bondholders, prices of bonds decline as yields rise. So while the stock market frets over what a Federal Reserve increase in rates may do for equities, bond market investors can usually pull out a calculator and get a fairly precise answer as to how bonds will reprice. If the reaction is radically different, an important foundation is lost. The reaction has been unpredictable.
While the ten-year did hit 4% this week, after lingering around 3.50% the prior week, the yield abruptly dropped after news from across the Atlantic that England’s central bank, the Bank of England (BOE), was taking steps to halt rate increases, effectively implementing quantitative easing. The BOE buying bonds puts pound sterling into their economy and adds to inflation pressures. The immediate reaction was for rates to come down, there, in the U.S., and in other economies that have been tightening. This provided a feeling of relief from equity markets, as it was a sign that the central banks may one by one abandon their plans to fight inflation, choosing instead to fuel it.
The BOE’s move to buy bonds “on whatever scale is necessary” to stabilize its bond market, a move that followed large tax cuts last week by the U.K. government, despite double-digit inflation, many believe indicates a possible problem with a major financial institution or pension fund.
The world’s markets don’t trade in a vacuum. The sudden reversal in the U.K. to stop interest rate hikes and perhaps lower rates brought a positive tone to stocks and bonds in U.S. markets, each having historically challenging years. The conversation in the U.S. is that the Fed may have to pause its own aggressive direction. This would be either because increased rates would further strengthen the dollar, or because the U.S. may have its own underlying time bomb(s), institutions that would fail or bubbles that could burst.
The rallies in the U.S. stock and bond markets gained momentum after the BOE move as the Chicago Mercantile Exchange (CME) data showed reduced expectations of a terminal or neutral Fed Funds rate of 5%, with expectations now for the policy rate to top out around 4.25-4.5%.
Take Away
While the Fed taking its foot off the brake pedal would be a remarkable turnaround after Chairman Powell’s efforts to be clear about his intent to tighten, the reasons for the CME data shift are twofold. First, the Fed won’t be able to keep aggressively raising rates ad simultaneously reducing bond holdings (shrink its balance sheet), because the strong U.S. dollar is disrupting global markets. Secondly, as mentioned before, checking the health of major institutions, housing, and pension funds in the U.S. may be prudent before administering more economic medicine.
Uncertainty has the effect of investors pulling assets out of markets and businesses acting with more caution. Hopefully, clarity, one way or the other, soon presents itself so volatility is reduced and investors can better understand the playing field.
Voyager Digital Ltd.’s (TSX: VOYG) (OTCQX: VYGVF) (FRA: UCD2) US subsidiary, Voyager Digital, LLC, is a fast-growing cryptocurrency platform in the United States founded in 2018 to bring choice, transparency, and cost-efficiency to the marketplace. Voyager offers a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe. To learn more about the company, please visit https://www.investvoyager.com.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Auction Completed. Voyager announced the completion of the Company’s auction process. The Company has selected West Realm Shires Inc. (“FTX US”) as the highest and best bid for its assets. The Official Committee of Unsecured Creditors supports FTX US’s winning bid.
The Winning Bid with a Caveat. FTX US’s winning bid for Voyager’s assets was for $1.422 billion, which comprises the fair market value of all Voyager cryptocurrency at a to-be-determined date in the future, which at current market prices is estimated to be $1.311 billion, and additional consideration that is estimated as providing approximately $111 million of incremental value. However, FTX US has the potential to be outbid over the next couple of weeks, as the objection deadline is the final day of allowing higher bids to be placed.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Lee Enterprises, Incorporated provides local news, information, and advertising primarily in midsize markets in the United States. It publishes 49 daily newspapers, as well as offers 300 weekly newspapers and specialty publications in 23 states. The company also provides online advertising and services; and online infrastructure and online publishing services for approximately 1,500 daily and weekly newspapers and shoppers. In addition, it offers commercial printing services. The company has a strategic alliance with Yahoo!, Inc. to provide its classified employment advertising customer base the opportunity to post job listings and other employment products on Yahoo!�s HotJobs national platform. Lee Enterprises, Incorporated was founded in 1890 and is based in Davenport, Iowa.
Michael Kupinski, Director of Research, Noble Capital Markets, Inc.
Patrick McCann, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Non-Deal Roadshow Highlights. CEO Kevin Mowbray and CFO Timothy Millage were in St. Louis to host meetings with investors. The duo highlighted that for 11 consecutive quarters Lee has been the fastest growing digital subscription platform in local media, the company has a favorable debt arrangement with debt that has been significantly reduced over the last 2 years, and a favorable runway for margin and revenue expansion.
Digital Transformation. Digital advertising now accounts for 51% of total company advertising. In addition, Total Digital revenue accounts for 31.5% of total company revenue. Importantly, its Digital business grew a strong 26.8% year over year in the latest quarter. We project that its Digital business should continue strong double digit revenue growth for the foreseeable future.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Musk’s Lawyers Call SEC Agreement a “Government Imposed Muzzle”
Elon Musk has had enough of being gagged. It has been over four years since he tweeted to his 22 million Twitter followers that he could take Tesla private, at $420 per share (a substantial premium to its trading price at the time), and that funding for the transaction had been secured, adding the only remaining uncertainty was a shareholder vote. On September 27, 2018, the SEC charged Musk, CEO of Tesla Inc., with securities fraud for a series of false and misleading tweets about a potential transaction to take Tesla (TSLA) private.
Part of the resolution with the Commission was that the CEO and chairman would not use Twitter and mention business without each tweet being vetted by a lawyer. Apparently, the provision restricting open communication with followers is difficult for Elon, who is quite active on the social media microblog platform. The easier part is the $40 million in cash that was part of the settlement ($20mm Musk, $20mm Tesla), and his resignation as Chairman of the Board.
In a brief filed with the 2nd U.S. Circuit Court of Appeals in Manhattan, on the fourth anniversary of the SEC’s charges, Musk’s lawyers called the pre-approval mandate a “government-imposed muzzle” that inhibited and chilled his lawful speech on a broad range of topics. The brief also said the requirement imposed by the SEC violated the U.S. Constitution and undermined public policy by running “contrary to the American principles of free speech and open debate.”
The SEC is expected to respond by filing its own brief with the appeals court.
Elon had filed an appeal previously to terminate the settlement agreement he had as CEO of Tesla with the SEC. That request was denied in April of this year. The denial was awkward as Mr. Musk was moving forward to acquire Twitter for $44 billion.
When on November 6, 2021 Musk asked Twitter followers whether he should sell 10% of his Tesla stake to cover tax bills on stock options, the SEC opened a probe and subpoenaed documents related to his compliance with the earlier settlement.
It’s time to rein in the SEC, according to the filing by Musk’s attorneys. It said the ruling is keeping Musk under “constant threat” as the Commission might reject his view as to which tweets require pre-approval from legal staff.
“Under the shadow of the consent decree, the SEC has increasingly surveilled, policed, and attempted to curb Mr. Musk’s protected speech that does not touch upon the federal securities laws,” the lawyers wrote.
In other events related to Twitter and the Tesla founder, Twitter has sued Musk to complete his purchase of the company. A nonjury trial is scheduled for October 17 in Delaware Chancery Court.
Ark Invest’s New Disruptive Technology Fund has a Unique Value Proposition
Not all companies worth owning are publicly traded. Yet, many still need capital, and some could serve smaller investors well. Cathie Wood’s latest fund, which launched on September 27, is intended to bring venture investing to those with $500 or more to invest. The focus is on private companies.
The fund’s launch is on a platform provided by Titan which itself is a young disruptive company, providing advantages to many investors and potentially disrupting the old methods.
About the Fund
The Ark Venture fund will be an interval fund. This means it is a closed-end fund that doesn’t trade on a stock exchange. Interval fund restrictions are most often used when many of the holdings in a fund are illiquid (i.e., don’t trade on the open market). The restrictions make it easier for the fund to focus on return without worrying about managing inflows and outflows.
The ARK Venture Fund will invest in early to late-stage private tech companies and venture capital funds. Public tech companies are also permitted. Access to the fund investments will occur on Titan. Titan is a disruptive platform on phone apps and tablets that allows investors to curate strategies created and managed by popular investors.
As with other Ark Invest funds, the fund’s investment theme is disruptive innovation. ARK defines “disruptive innovation” as the introduction of a technologically enabled new product or service that potentially changes the way the world works. The platform Titan itself is an example of disruptive technology.
Image Source: Titan.com
About Titan
The first thing you see on Titan’s home page is a line that reads, “Investment management, made modern.” It invites you to use its platform to, “Build a portfolio of managed stocks, crypto, real estate, private credit, venture capital & more.”
The innovative idea behind Titan is it uses technology to provide an investment platform that enables individuals to orchestrate a portfolio made up of “titans”: a set of curated investment strategies, spanning public equities to real estate to credit to crypto, each created and managed by professionals or “titans” like the CIO of ARK Invest.
The overriding purpose of Titan is to provide access to investments retail investors had been held away from.
About Venture Capital
Venture capital is a form of non-public capital provided to companies by investors that have enough confidence in management and the company’s business model to expect above-average earnings. Because these companies don’t trade on public exchanges, investments, usually from family offices, well-off investors, and investment banks, have been the traditional sources of capital.
Though it is deemed risky for investors to commit funds to VC, the potential for above-average returns is an attractive inducement for investors. For new companies or ventures that have a limited operating history, this is the market they often turn to.
Take Away
ARK’s step into less-liquid assets departs from Wood’s earlier strategies, the success of which elevated her to all-star investor status as the value of ARK ETFs like the ARK Innovation ETF (ARKK) soared last year. ARKK has plummeted 60% so far in 2022, a much steeper decline than the 21% decline in the S&P-500-tracking ETF, the SPDR S&P 500 ETF Trust (SPY).
ARK has struggled on offerings this year. The firm announced the closure of its Transparency ETF (CTRU) at the end of July, and its eight remaining ETFs, including the ARK Innovation ETF (ARKK) have dramatically underperformed broader markets.
Related Information
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