Top Marquette AIM Equity Holdings for October 2021

 October produced some big returns in the AIM Small Cap and International Equity Funds

The Marquette AIM student-managed funds had a strong month of October. Check out the top performers in the Small Cap and International Equity Funds.

Marquette AIM Fund To Performers (YTD 2021 thru 10/31)

Marquette AIM Equity Funds Continue Impressive Return Performance (as of 10/31/21)

 The fundamental equity analysis employed by the students in the Marquette AIM program works!

The Marquette AIM Student-Managed Equity Funds continue to produce impressive return performance. As of 10/31/21, both funds exceeded their benchmarks for the month, YTD, and 3-years. Although not reported here, the funds also have outperformed their benchmarks on a 5-year, 10-year, and 15-year basis. These resulted are even stronger on a risk-adjusted basis.

Marquette AIM Equity Funds Performance Report
Total Return (%)
	Small Cap Fund	Russell 2000	Excess Return
October 2021	7.31	4.25	3.06
YTD 2021	20.12	17.78	2.34
3 Years	75.33	62.93	12.40
	International Fund	MSCI ACWI	Excess Return
October 2021	5.48	2.45	3.03
YTD 2021	17.76	8.80	8.96
3 Years	61.72	44.89	16.83

Dominic Brisson -Hillenbrand (HI) AIM Equity Presentation

Mitch Kamm-Emergent Biosolutions (EBS) AIM Equity Presentation

A Small Cap Equity holding: BlackLine, Inc (BL, $126.23): "BlackLine’s Bottom-Line Surprise" By: Graham Pedersen, AIM Student at Marquette University

 BlackLine, Inc (BL, $126.23): "BlackLine’s Bottom-Line Surprise"

By: Graham Pedersen, AIM Student at Marquette University

 

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• BlackLine, Inc. (NASDAQ:BL) operates a cloud-based software platform designed to transform accounting and finance operations for organizations of all types and sizes.
• For Q2 2021, BL reported an EPS of $0.15, beating a consensus of $0.08, resulting in an earnings surprise of 87.5%.
• The implementation of the recently introduced ‘BlackLine Optimization Academy’ aims to scale the business and broaden customers’ depth of its offerings.
• BL expanded its customer base by 3.3% in Q2 2021, a net gain of 116 new customers.
• The firm’s SAP offering, SolEx, delivered its strongest quarter since its inception.

Key points: BL reported Q2 2021 earnings of $0.15 per share, beating the consensus estimate of $0.08 per share, representing an earnings surprise of 87.5%. BL posted $102.12 million in revenues for the quarter ending June 2021, surpassing the consensus estimate of $101.1 million. BL showed revenue growth of 22.6% year-over-year, and its price-to-earnings ratio is currently 193.5. The company has outperformed consensus EPS forecasts four times over the last four quarters.

The BlackLine Optimization Academy consists of training sessions that focus on nine foundational accounting processes to improve efficiency in automation with BL. In addition, the initiative seeks to help customers get the most value out of BlackLine by proactively engaging them earlier in the transformation process. As a result, BL can expect to experience increased adoption and platform expansion as clients realize the full benefits of the service.

While the effects of the pandemic are subsiding, BL has seen an increasing trend in large companies prioritizing digital transformation. As a result, executives are being asked to perform more with the same or even fewer resources in today's organizations, which are experiencing a severe skills crisis. BL can capitalize on this by automating time-consuming and laborious activities, thus freeing critical finance and accounting resources.  

BlackLine’s SolEx deals were vast and strategic in scope, covering APAC, EMEA, and North America. SolEx was especially strong in the APAC region, creating significant orders and building its small growing business in Japan. BL expects to continue capturing new SolEx accounts through partnerships.

What has the stock done lately?

BL’s share price has consolidated within the $110s/$120s over the past month and hasn’t shown any signs of a break-out. From year to date, BL shares have fallen 7.5%, compared to a gain of 20.8% for the S&P 500. The stock's 50-day moving average is $116, and its 200-day moving average is $117. The Q1 2021 consensus EPS forecast is $0.13 on revenues of $107.5 million and $0.48 for the current fiscal year on revenues of $420 million.

Past Year Performance:

Shares of BlackLine, Inc. have been trading within a range of $154.61 and $88.62 over the last 52-week period. BL has experienced a YTD loss of -7.52%, with a 52-week beta of 1.25. BL was closely shadowing the Russell 2000 (Figure 1), although BL fell sharply in March and continued to lag while the Russell 2000 continued sideways. BL has underperformed the benchmark from year-to-date, producing a 52-week gain of 22.13%, compared to the benchmark at 39.52%.

Source: FactSet

My Takeaway

BL was added to the small-cap portfolio in March 2017 at around $27.50 per share, with a price target of $32.99. Since being added to the fund, the stock has gained over 348%. BL was pitched under the notion that expanding through international- and middle-market penetration would drive top and bottom-line growth. Management has demonstrated strong performance, quadrupling the firm’s size over four years, reducing the WACC by 44%, and generating positive ROIC, ROA, and ROE since added. Because the investment thesis continues to support long-term growth and profitability, I believe that BL represents a hold in the AIM small-cap equity fund.

Source: FactSet

Rishi Kumar-IonQ (IONQ) AIM Equity Presentation

The Seventh Set of Fall 2021 Marquette AIM Program Student Equity Pitches/Q&A for Friday, October 29th

 

AIM Class of 2022 Student Equity Presentations on Friday, October 29^th

Join us live in person in the AIM Room or via Teams for this week’s AIM presentations beginning at 1:00 pm.

This is the link for the AIM equity write-ups (each week’s write-ups will be available on Thursday mornings): AIM Write-ups 10/29/21

This is the link for the YouTube videos of the 8-minute student presentations (each week these will be posted on Thursday afternoons)

If you would like to participate in the live Q&A session with the student presenters on Friday at 1:00 pm CST on Teams, please email Jessica Hoerres at: jessica.hoerres@marquette.edu

Please feel free to submit questions to be asked of the students by emailing them to david.krause@marquette.edu

 

 

 

 

A Small Cap Equity holding: Beam Global (BEEM 28.75): “Running Low on Battery” By: Jacob Kello, AIM Student at Marquette University

 Beam Global (BEEM 28.75): “Running Low on Battery”

By: Jacob Kello, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• Beam Global (BEEM, 28.75) offers plug-and-play solution for modern energy problems. The company currently has two product offerings: the EV Arc, which is the only 100% renewable, transportable, and off-grid EV charging station on the market, and the Solar Tree, which offers charging solutions for medium and heavy-duty electric vehicles.
• The company receives 100% of its revenues from the United States, ad relies heavily on government contracts to sell its products. BEEM operates out of San Diego, CA.
• Since being added to the portfolio, the stock has dropped from $48.44 to $28.75. The target price for the stock was $104.59. The 52-week beta for this stock is 2.8, representing an extremely high volatility that has yet to provide any upside.
• The AIM Small Cap Domestic fund should sell its position in Beam Global as it continues to decrease in value.

KEY POINTS

In the year 2020, the global electric vehicle (EV) market size was valued at $246.74 Billion, which was down 9.7% from 2019 due to the global COVID-19 pandemic. However, Fortune Business Insights, a company which specializes in the research of sectors, projects that by 2027, the EV market will grow to 985.72 billion USD which represents a CAGR of 17.4%. In unit terms, the global EV market demand was estimated at 8.5 million vehicles in 2020 and is projected to reach 116 million units by 2030 according to Bloomberg New Energy Finance. Demand for EV’s clearly exists and is being met by newer EV companies and some traditionally internal-combustion engine auto companies which are now producing more EV lines. While the demand for Electric vehicles clearly exists, the demand for public charging stations has stalled due to slow-moving infrastructure bills, and the Biden Administration’s climate agenda no longer being a part of the bill. This unfortunately has some not-so-great implications for a stock in the AIM Small Cap Domestic Fund—Beam Global.

The most important driver of earnings for BEEM was its GSA MAS contract with the federal government that allows federal institutions to purchase EV Charging products specifically from BEEM Global. At the beginning of the new presidency, the Biden administration also had committed to deploying over 500,000 EV charging stations by 2030. This commitment was clearly contingent on a climate-centric infrastructure bill, and it was very recently announced that the administration’s climate agenda will be completely removed from the bill due to opposition within the democratic party coming mainly from West Virginia Democratic Senator Joe Manchin.

The company has yet to turn a profit, and it doesn’t look like it will by 2025 which is when it was projected to turn a profit when it was bought by the fund. Even with the levelized cost of energy for photovoltaic solar being the lowest it has ever been and continuing to decrease, materials costs to produce solar panels and batteries have continually increased which obviously hurts a company that relies on solar power storage to charge electric vehicles.

What has the stock done lately?

Recently, the stock has been fairly stagnant. Since May of 2021, the stock has continuously above and below $30, and since adding the stock to the Small Cap Domestic Fund, it has gone down by 40.65%. On October 7^th, the company released news that they had received an order from the United States Marine Corps to purchase EV Arc and energy resiliency systems for 14 of their bases, and the per share price only rose 2.4% by the end of the week. This stock is stagnant, and will continue to be stagnant unless the infrastructure bill includes climate provisions which is looking unlikely.

Past Year Performance

BEEM has fallen 61.03% YTD and over a 52-week period has increased by 85.01%. The 52-week high-low for AMRC is 14.15 – 75.90. The 52 week beta for Beam Global is 2.8, representing very high volatility in comparison to the market.

Source: FactSet

My Takeaway

The investment thesis for BEEM global has yet to pan out and does not look like it will anytime soon. The upside for BEEM was heavily dependent on their GSA MAS contract with the federal government, and that contract was also dependent on the infrastructure bill that congress was expected to have passed long ago. Also, with Senator Joe Manchin stalling any action in regards to a climate bill, it is not expected that the most important driver for this stock will pan out anytime soon. With that being said, it is recommended that BEEM should be sold and taken out of the AIM Small Cap Domestic Fund.

 

 

George Wong -Callaway Golf Company (ELY) AIM Equity Presentation

A Small Cap Equity holding: Insight Enterprises, Inc. (NSIT, $93.56): “Continued Growth Insight” By: Will Steinhafel, AIM Student at Marquette University

 Insight Enterprises, Inc. (NSIT, $93.56): “Continued Growth Insight”

By: Will Steinhafel, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• Insight Enterprises, Inc. (NASDAQ: NSIT) provides information technology, services, and cloud solutions to enterprises, governments, schools, and healthcare companies primarily in the United States, Europe, and Asia Pacific.
• NSIT beat Q2 2021 consensus earnings and revenue projections
• Although supply chain constraints remain, management expects materials sourcing and product backlogs to normalize in Q3 FY 2022
• Management is targeting SaaS and Infrastructure-as-a-service offerings to continue revenue growth and margin improvement
• Since being added to the AIM Small Cap fund, NSIT’s share price has increased 47%

Key points: On August 6, 2021, Insight Enterprises reported Q2 EPS of $1.91/share, beating consensus estimates of $1.87. Revenue also surpassed expectations at $2.23 billion, representing a 13.26% YoY increase. This impressive quarter was driven by strong hardware demand, as well as SaaS and Infrastructure-as-a-Service (IaaS) sales growing at high double digits during the quarter.

Despite ongoing supply constraints due to Covid-19 disruptions, management is confinement in Insight’s ability to continue to work with customers to forecast demand moving forward. In NSIT’s Q2 earnings call, management shared that they project over 50% of the company’s backlog will be shipped during Q3 FY21. NSIT’s supply chain and product pipeline is expected to normalize and return to healthy growth during the second half of FY 2022.

Insight is aiming to grow its cloud solutions business through the development and sales of SaaS and Infrastructure-as-a-service offerings. As previously mentioned, NSIT saw strong growth of these product lines during Q2, resulting in cloud gross profit increasing over 300 bps YoY to 22%. Management is dedicated to growing Insight’s cloud offerings moving forward to continue revenue growth and margin improvement.

What has the stock done lately?

Insight’s share price has remained relatively flat over the last month, with a -0.65% decrease during the period. NSIT beat Q2 FY21 consensus earnings by $0.04, reporting EPS of $1.91 representing a 9.14% YoY increase.

Past Year Performance:

Over the last year, NSIT’s share price has increased 47%. The 52-week high-low for NSIT has ranged from $107.27 to $52.63. As of Q2 FY21, Insight posted all time high LTM revenues of $8.65 billion. Since being added to the AIM Small Cap fund in September 2020, NSIT’s share price has increased 56%.     

Source: FactSet

My Takeaway

Since being added to the AIM Small Cap fund in September 2020, Insight Enterprises has well surpassed its price target of $87.86, however, the initial investment thesis remains intact. NSIT is poised to continue to benefit from increased demand as businesses look to shift to cloud-based solutions and modern technology infrastructure. As management focuses on SaaS and IaaS offerings, continued margin expansion can be expected due to decreased cost of goods sold. It is recommended that the AIM Small Cap fund continue to hold Insight Enterprises.

Source: FactSet

 

Marc Minani-Boston Beer (SAM) AIM Equity Presentation

Matt Schembari-SoftBank Group (SFTBY) AIM Equity Presentation

A Small Cap Equity holding: TechTarget, Inc. (TTGT, $82.74): “On Target to Exceed Expectations” By: Natalie Frey, AIM Student at Marquette University

 TechTarget, Inc. (TTGT, $82.74): “On Target to Exceed Expectations”

By: Natalie Frey, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• TechTarget, Inc. (NASDAQ:TTGT) provides informational content for the buyers of corporate IT products. The Company collects data and provides analytics on content consumption in order to connect sellers to buyers and maximize sales execution for IT providers.
• Product announcements made during summer of 2021 provide greater access, focus, and visibility into content consumption for use in analytics.
• New product features suggest a likely price increase for TTGT products in the near-term, offering a revenue boost to base revenue estimates for FY22 and on.
• In August of 2021, TTGT acquired Xtelligent Healthcare Media, a B2B media content company offering similar services to those provided by TTGT, with a focus on the healthcare IT vertical
• Q2 earnings exceeded estimates for top-line and earnings growth (~6% favorable earnings surprise). The Q3 earnings release is scheduled for November 3, 2021.

Key points: TechTarget, Inc. remains 'in-play'. While the price saw little movement during Q2 and most of Q3, toward the later months of the third quarter the stock began to gain traction. Currently, TTGT stands at $82.74 per share, which is up approximately 8% from its addition to the fund. While this growth in share price demonstrates positive movement, the stock has not yet lived out the thesis which states a target price of $92.70.

Given the positive earnings surprises seen in Q2, the original thesis appears to hold true at this time in its argument that TTGT still has room to grow. During 2020, TechTarget acquired BrightTALK, a webinar hosting platform primarily to expand the firm’s reach into the corporate IT market. During 2021, BrightTALK registered users have been integrated into the Priority Engine product offered by TTGT and this has provided revenue synergies above previous expectations for Q2 of 2021. With synergies resulting from the acquisition hitting TTGT’s P&L faster and at a greater level than originally expected, the markets are favorably surprised by the firm’s agility in creating value from strategic acquisitions. This provides good reason to be optimistic about the likely benefits to come from the recent acquisition of Xtelligent.

In addition to the favorable impacts of prior year acquisitions, TechTarget announced a new product during the summer of 2021. The product that was announced in June was the new and improved version of the legacy product, Priority Engine. The new version adds significant enhancements to the legacy platform with account visibility that is 2x that of the legacy system and enhanced access to content consumption information. While these additions may seem like minor refinements of existing features, the impact for sales reps utilizing TTGT has been significant.

With the successful integration of BrightTALK users into TechTarget’s core platform, the impactful new product launch, and continued focus on growth and improvement of existing product lines, TTGT is on a steady path to achieving a higher value. The consensus analyst recommendation supports this argument, with the average price target having risen to ~$100.

What has the stock done lately?

Since the release of Q2 earnings, the stock has risen approximately 12%. The positive earnings surprise has the market taking a second look at their expectations for TechTarget’s growth potential. The recent momentum demonstrates the likely start of a gradual climb for TTGT’s share price in the coming months.

Past Year Performance: The YTD returns stand at 37.5% for TTGT, with the 1Y return rising to 64.4%. The YTD returns demonstrate impressive growth, but TechTarget remains undervalued according to the original thesis the stock was pitched on and much of the street’s valuation estimates. With the price beginning to climb after a multi-month stretch of low movement, TTGT’s share price is likely to continue climbing in the near-term.

Source: FactSet

My Takeaway

TechTarget’s success in integrating BrightTALK’s registered users into the core product platform has driven synergies that exceed expectations, both in magnitude and time of realization. The release of a positively received new version of Priority Engine has expanded the value offered by TechTarget’s products and services for both clients, and end-buyers. With high quality content, the buyers of corporate IT are able to access high-quality information and be efficiently connected to sellers based on consumption data. The sellers of IT have even more to gain from TTGT’s enhanced offerings and increased user base, making top choice in sales development tools.

Source: FactSet

An International Equity holding: Vestas Wind Systems ADR(VWDRY, $82.39): “Is there still wind at its back?”

 

Vestas Wind Systems ADR(VWDRY, $82.39): “Is there still wind at its back?”

By: Bob Thelen, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• Vestas Wind Systems ADR (OTC:VWDRY) engages in the development, manufacture, sale, and maintenance of wind turbines. It operates through two segments of Power Solutions and Services.
• Vestas recently signed an agreement with a Brazilian power company for a 189 MW wind project and has also won a contract in Sicily, Italy.
• Vestas secured 297 MW order for an undisclosed wind turbine project in Canada.
• They will end production at 3 European factories to meet manufacturing requirements of a new product portfolio and ESG standards.
• Vestas also reported revenues of 3.5 billion euros in Q2 of 2021.

Key points:

Vestas Wind Systems remains a stable company as they continue to expand production of various wind turbine systems. The firm has consistently grown sales figures from $9.3 billion in 2015 to $16.8 billion in 2020 although net income has been stagnant from a 2015 figure of $760 million to a 2020 figure of $872 million.

Vestas maintained a current ratio of at least 1.1 since 2014 as they utilize the majority of their assets for leverage in expanding production and development of new systems. The firm also has a Debt/Equity ratio of 29.1% which puts them at very low risk of encountering debt issues in the near future. While Vestas has encountered slow growth in the past, their capital structure shows that they are prepared to take advantage of the increasing international demand for wind power systems.

As Vestas continues to accept new contracts for various international clientele, they stand to benefit from global trends towards wind and solar power generation and are steadily increasing capital expenditures to a high of $901 million in 2021 (LTM), up significantly from $408 million in 2015.

What has the stock done lately?

Vestas has been up since March of 2020 with a current share price of $11.55 and has been in a range of $11 to $15 for the majority of 2021 as no major news has affected its share price since January of 2021 when it received regulatory approval on a joint venture with Mitsubishi Heavy Industries.

Past Year Performance: Vestas share price has not increased in value over the past year as a result of a sharp increase in January of 2021 due to approval for a joint venture with Mitsubishi Industries, but fell due to a market correction.: Vestas’ valuation implies a steep discount with a broker price target of $75.25. While unlikely to hit this target in the near term, it has the potential to achieve this by taking advantage of the rapidly expanding wind power segment.

Source: FactSet

My Takeaway

Vestas is proving to be a major player in the development and production of the wind power industry and will stand to benefit from global trends toward renewable energy sources. While they have experienced slow growth and a stagnant share price over the past few years, they are ramping up to provide an increasing customer base with wind power solutions. If Vestas can take advantage of this growing market, then they will be able to achieve the lofty price target set by various brokers.

Source: FactSet

A Small Cap Equity holding: SoFi Technologies (SOFI, $18.39): “SoFlying into the future of banking” By: Rishi Kumar, AIM Student at Marquette University

 SoFi Technologies (SOFI, $18.39): “SoFlying into the future of banking”

By: Rishi Kumar, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• SoFi Technologies (NYSE:SoFi) is a digital bank which engages in offering student loans, mortgages, refinancing, credit card, and investing products through their digital platforms. They also engage in providing insurance and banking products such as checking accounts.
• SOFI had disappointing earnings in August but shares have rebounded nicely and are up 24.9% since their last call. Much of the disappointment in the company was from misunderstanding.
• SoFi’s shares shot up on October 11^th, 2021, due to Morgan Stanley stating initiating a buy rating at $25 PT. Sell side analysts have stated that SOFI has a powerful revenue growth story and they expect SoFi’s users to double in the next year to 5.2 million.
• The company recently announced a proposal to issue $1.1 billion in convertible notes. The notes are due 2026 and are unsecured and have a conversion price of $22.41.

Key points: SoFi had a disappointing earning in August which caused share prices to plummet to $13.75. However interestingly enough SoFi’s CEO Anthony Noto was thoroughly impressed with the performance of the company as they recorded their fourth straight quarter of positive adjusted EBITDA and grew every key performance measure.

Revenues for SoFi grew 101% to $231M in Q2 beating street estimates by 6% while total members rose 117% to 2.6 million. The financial services segment grew 608% to $17M while the financial technologies segment represented by the Galileo platform acquired last year grew accounts 119% to 78.9 million accounts while growing revenues 138% to $45.3 million.

However, despite the growth EPS came to -0.48 vs the expected -0.06 EPS causing the street as well as investors to become weary. However, the EPS was slightly misleading as much of it can be tied to non cash one time non-cash items. Most prominently was a one-time non-cash cost related to deferred tax liabilities of 99.8M which were tied the Galileo acquisition and 89M could be tied to stock based compensation. Also, the company’s positive adjusted EBITDA and user metrics were not considered by the street which are more relevant for an aggressively growing financial technology company rather than an EPS figure.

Since then, SoFi’s shares have rebounded quite nicely, going up nearly 25% since the earnings call. Much of that outperformance can actually be tied to a sell side initiation report published by Morgan Stanley on October 11^th, 2021, which caused share prices to climb 13.45%. According to Betsy Graseck, the analyst at Morgan Stanley who initiated coverage, SoFi is a disruptive company that has a “powerful growth story” and according to Graseck SoFi has two major growth catalysts: student loan refinancing and the bank charter SoFi is actively pursuing.

Student loan refinancing was SoFi’s first initial claim to fame as they became famous for having some of the lowest student loan refinancing rates among legacy players and challengers. The student loan space is ripe for this kind of mass refinancing, according to a study done by Andrew Latham at Supermoney[1], student loans have been the fastest growing debt in US households since 2007 with 32x faster growth than mortgages and 3x faster growth than auto loans. This would give SoFi a huge tailwind as student loan deferments end at the end of January 2022 especially with a large base of potential customers in the United States who have student loans.

SoFi will also benefit from a second major driver according to Morgan Stanley which is the procurement of a bank charter. A bank charter allows SoFi to underwrite their own loans instead of using bank partners which in turn leads to margin expansion and increased profitability. According to SoFi’s last investor presentation a bank charter would result in adjusted EBITDA rising from $254M to $447M and growing at a CAGR of 143% as opposed to 130% from 2021 to 2025. The lower cost of capital and the ability to capitalize on their own deposits while also cross selling loan products to other digital banks via the Galileo platform will drive incremental growth in revenue and margins.

In recent news, SoFi announced a proposal to issue $1.1 billion in unsecured convertible notes that are due in 2026 with an interest rate of 0% and a conversion price of $22.41. The increased liquidity will be used to build out SoFi’s platform without the company having to incur heavy interest expenses. The initial notes proposed were for $750M but management appended the figure to $1.1 billion to capitalize on the low cost of debt.

What has the stock done lately?

The stock has had quite the pop recently as mentioned earlier due to the sell side report and due to the gross misunderstanding of earnings by the street and investors who grew wary by the higher than expected negative EPS. The stock went up 13.45% on October 11^th and since their last earning call shares have risen considerably. . The next earnings call is set to take place on November 10^th, 2021.

Past Year Performance:  SoFi’s SPAC merger was less than a year ago so share prices are up ~84% since the merger was announced however the stock is still down from its 52-Week high of $25.78. Overall negative sentiment towards SPAC’s and less than stellar EPS in recent quarters has brought down share prices.

Source: FactSet

My Takeaway

With strong user and revenue growth metrics and a business model that is sticky due to the one stop shop nature of the business, SoFi is still in optimal position to keep growing revenues aggressively and expand margins through the procurement of a bank charter. The street is starting to account for the strong growth in users and consistent positive EBITDA as evidenced by Morgan Stanley’s initiation report. SoFi’s lower rates, rounded product lineup, and completely digitized platform gives them a significant advantage over their big bank peers and the thesis on which SoFi was pitched remains strong as the technology segment is still seeing 100+% growth and consumers are flocking to SoFi’s robust platform. Due to these reasons I believe SoFi’s stock is still undervalued and it is recommended that the AIM small cap fund continue to hold SoFi shares in the portfolio.

Source: FactSet