⁠InsideArbitrage
🚨 $NNDM Nano Dimension terminates CEO Yoav Stern effective immediately.

Yoav Stern, CEO since Jan 2020, was not re-elected as a director at the Dec 6, 2024 AGM.

- Appoints Julien Lederman as Interim CEO. Julien Lederman currently serves as the company's VP of Corporate Development since 2021.

- The Board is conducting a comprehensive search for a permanent CEO.
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⁠Stock Analysis Compilation
Silver Beech on WillScot $WSC US

Thesis: WillScot’s industry leadership, margin expansion, and cash generation create a strong foundation for continued growth

(Extract from their Q3 letter) https://t.co/R82TvAPKcx
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⁠Startup Archive
Vinod Khosla: “70% of investors add negative value to a company”

When junior team members at Khosla Ventures ask Vinod if they can serve on portfolio company boards, Vinod responds:

“You haven’t earned the right to advise an entrepreneur. Just because you got an MBA and joined a venture firm doesn’t mean you’re qualified to advise an entrepreneur.”

Vinod believes one of the best ways to earn that right (but not the only way) is to build a large company yourself:

“Have you gone through how hard it is, how uncertain it is, how traumatic it is to go through?… If somebody has never dealt with this decision-making under ambiguity, they’re not qualified to help you… Whose advice to trust on what topic is the single hardest decision an entrepreneur makes. It’s also where the right investors can really help you.”

He gives the example of asking a marketing executive at IBM for marketing advice:

“They’ve never dealt with things where the market isn’t established… They’re not qualified to invent whole new markets.”

He also recalls a recent argument with a co-investor who wanted their healthcare portfolio company to hire a healthcare executive from an established company:

“They wanted this healthcare person who had never dealt with change beyond 2% a year, and I’m like, experience doesn’t matter. The rate of learning matters [for a role like this].”

Video source: @ycombinator (2019)
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⁠CapMrkt KGB
Searchlight Capital IV (Oct-22)

https://t.co/xmVJJOOMGH
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⁠Stock Analysis Compilation
Diamond Hill on Huntington Ingalls Industries $HII US

Thesis: Huntington Ingalls’ unique position as a key U.S. Navy supplier ensures long-term demand visibility and growth opportunities

(Extract from their Q3 letter) https://t.co/Nvq45BnUXQ
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⁠Value Spotlight (Andrew Sather)
10-K Footnotes Deep Dive (Part 2 of 3)

How a company's ROIC can be inflated, because its Invested Capital is under-reported (Tutorial) $F

Found this Nugget from the Company Model tab on the @NewConstructs platform, which outlines the exact line-items you need for NOPAT, ROIC. https://t.co/EZRvuzSUOr
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⁠Stock Analysis Compilation
Artisan Partners on Coherent $COHR US

Thesis: Coherent is capitalizing on AI-driven demand and operational improvements to unlock margin expansion and revenue growth

(Extract from their Q3 letter) https://t.co/l8FrzJ9iyj
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⁠Dimitry Nakhla | Babylon Capital®
5 months ago I stated:

“Today at $429💵 $MA appears to be a strong consideration for investment”

Since then, $MA shares rallied +25% ✅

As I stated in the post attached below 👇🏽

“As you can see, $MA appears to have attractive return potential EVEN if we assume greater or equal to 28x earnings (well-below the 10-year mean & more than justified given its quality & growth rate)

$MA is such a high-quality business & has the potential to compound in the mid teens for the next 5 years & companies with strong & consistent earnings growth tend to look cheap years later (even if investors thought they were “expensive” or even better, slightly undervalued, at the time)”

A sober valuation analysis on $MA 🧘🏽‍♂️

•NTM P/E Ratio: 29.16x
•10-Year Mean: 31.32x

•NTM FCF Yield: 3.48%
•10-Year Mean: 3.41%

As you can see, $MA appears to be trading below fair value

Going forward, investors can receive ~7% MORE in earnings per share & ~2% MORE in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $MA is a super business

BALANCE SHEET✅
•Cash & Short Term Inv: $7.66B
•Long-Term Debt: $13.54B

$MA has a strong balance sheet, an A+ S&P Credit Rating & 19.79x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 62.9%
•2020: 40.6%
•2021: 45.7%
•2022: 58.5%
•2023: 61.1%
•LTM: 64.1%

RETURN ON EQUITY✅
•2019: 141.4%
•2020: 102.5%
•2021: 124.7%
•2022: 144.0%
•2023: 167.4%
•LTM: 186.3%

$MA has excellent return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $8.31B
•2023: $25.10B
•CAGR: 11.68%

FREE CASH FLOW✅
•2013: $3.98B
•2023: $11.61B
•CAGR: 11.30%

NORMALIZED EPS✅
•2013: $2.61
•2023: $12.26
•CAGR: 16.73%

PAID DIVIDENDS✅
•2013: $0.29
•2023: $2.37
•CAGR: 23.37%

SHARE BUYBACKS✅
•2013 Shares Outstanding: 1.21B
•LTM Shares Outstanding: 939M

By reducing its shares outstanding ~22.4%, $MA increased its EPS by ~28.8% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 100.0%
•LTM Operating Margins: 58.1%
•LTM Net Income Margins: 46.1%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~7% MORE in EPS & ~2% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MA has to grow earnings at a 14.58% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be slightly more than the (14.58%) required growth rate:

2024E: $14.27 (16.4% YoY) *FY Dec
2025E: $16.57 (16.1% YoY)
2026E: $19.33 (16.7% YoY)

$MA has a good track record of meeting analyst estimates ~2 years out, but let’s assume $MA ends 2026 with $19.33 in EPS & see its CAGR potential assuming different multiples

31x P/E: $599.23💵 … ~14.9% CAGR

30x P/E: $579.90💵 … ~13.4% CAGR

29x P/E: $560.57💵 … ~11.9% CAGR

28x P/E: $541.24💵 … ~10.6% CAGR

As you can see, $MA appears to have attractive return potential EVEN if we assume greater or equal to 28x earnings (well-below the 10-year mean & more than justified given its quality & growth rate)

$MA is such a high-quality business & has the potential to compound in the mid teens for the next 5 years & companies with strong & consistent earnings growth tend to look cheap years later (even if investors thought they were “expensive” or even better, slightly undervalued, at the time)

Today at $429💵 $MA appears to be a strong consideration for investment

Given that $MA has historically bottomed near 26x earnings, I'd also leave some room to purchase additional shares if the stock were to trade at that multiple, which would be about 10% lower, or around $386💵

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 [...]

𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲. - Dimitry Nakhla | Babylon Capital® tweet