Thursday, January 28, 2021
Krause comments on Gamestop and Koss stocks which soared as social media traders flood market
Marquette Finance Professor David Krause offers thoughts on the battle being waged between day traders and hedge-fund professionals.
Krause says it's a stock market fiasco, the likes of which have never been seen before. And a longtime Milwaukee staple (Koss) is wrapped up in it. Watch the Milwaukee Fox 6 interview.
Wednesday, January 27, 2021
First Set of Marquette University AIM Equity Presentations for the Class of 2022
Marquette University's AIM Equity Presentations are Back!
First set of AIM pitches this week... follow the link below to access the equity write-ups.
Link to this week's write-ups: https://mcusercontent.com/b996c58f08e8b00aaa936fdb2/files/509828cd-14f7-4160-a59a-cef5a2abdaa5/AIM_Equity_Write_Ups_1_29_21.pdf
Wednesday, December 23, 2020
Marquette AIM Program End-of-the-Year Newsletter (Winter 2020)
Marquette Applied Investment Management (AIM) Program
End-of-the-Year Newsletter (Winter 2020)
The following link contains the most recent AIM Newsletter:
Wednesday, December 2, 2020
An International Equity holding: Medtronic Plc (MDT, $113.70): “Where to next for Medtronic?” by: Ryan Witt, AIM Student at Marquette University
Medtronic Plc (MDT, $113.70): “Where to next for Medtronic?”
By: Ryan Witt, AIM Student at Marquette University
Summary
• Medtronic Plc (NYSE:MDT) is a medical technology company that provides medical devices, solutions, and services. The segments MDT operates through are their Cardiac and Vascular Group (36.2%), Minimally Invasive Technologies Group (28.9%), Restorative Therapies Group (26.7%), and Diabetes Group (8.7%).
• Since MDT was added to the AIM International Equity fund in October of 2017 for $78.24, MDT has increased 45.3% and exceeded its initial price target of $92.27.
• MDT saw 53% of its FY21 Q2 revenues come from the US, while the company also operates in more than 150 countries.
• For FY21 Q2, MDT experienced a -1.5% decrease in revenue from FY20 Q2 due to the impact of COVID, but did rebound to increase 17.5% from FY21 Q1.
• Geoffrey S. Martha was named CEO as of April 27, 2020 following the 9 year run of Omar Ishrak as CEO, who now is the current Executive Chairman of the Board.
Key points:
MDT has started the restructuring to change their organizational structure with a new simplified model which is expected to save them $450 -$475 million by FY23. Martha has said he wants to turn the current operating groups and transition them into very focused operating units. Doing so will allow MDT to give each operating unit more control over their specific segment and allow them to be accountable for their own specified unit.
Martha is hoping to form 20 operating units from the larger overall company. These operating units would be separated under the four different segments. By doing this Martha believes that MDT will be able to obtain organic sales growth of 5%-plus for the long-term by reorganizing the company. There is some skepticism with this as the company has not been able to hit 5%-plus in the past few years.
With MDT being the largest player in the medical technology market and having a constantly expanding product line with numerous products from its pipeline, it has been seen that since the start of 2020 MDT has had over 180 product approvals in key geographic regions. This will continue to grow as MDT expands into new business segments and through their acquisitions. MDT has completed seven acquisitions in 2020 for a combined $1.6 billion furthering their expansion into AI, machine learning, and predicative analytics.
MDT has increased its dividend for every fiscal year going back 43 years. They are on similar path to do so this year coming out to annual dividend per share of $2.32 for FY21. An increase of 7.4% from the FY20 which was $2.16 per share. MDT has no plans of scaling back on dividends and plans to increase them in the future as well.
What has the stock done lately?
MDT took an initial hit from the coronavirus pandemic, but has seen some bounce with a 3 month change of 5.41%. For November the stock has increased 12.6% on the back of the recent vaccine news that saw the market jump. MDT has paid two dividends of $0.58 per share out to shareholders for FY21 Q1 and Q2. The company still plans on paying the same for Q3 and Q4 despite the pandemic.
Past Year Performance: Over the past 12 months, MDT has seen a change of 2.07% over the year compared to the ACWX-USA(iShares MSCI ACWI ex U.S. ETF) which is up 6.39% for the year. Over the past year MDT has seen a decrease in sales of -5.4%, but increase of net income of 3.4%. Throughout the year MDT has had a range of $72.13 – 122.15. The current price of MDT is $113.70.
Source: FactSet
My Takeaway
Being one of the biggest players in the Medical technology for years now, MDT certainly has an advantage over the competition with its size and plethora of products. However, the pandemic did recently effect MDT in the final quarters of FY20 and beginning quarters of FY21. Although I believe that the company is promising for more growth in the future, the uncertainty around the new CEO and his massive restructuring plan for the coming years have me wary of increasing the weight of MDT within the AIM International Equity Fund. For this reason my recommendation would be a hold as I still think there are opportunities for growth down the line, but the skepticism of the bold restructuring of the organization is prevalent.
Source: FactSet
Tuesday, December 1, 2020
A Small Cap Equity holding: Hamilton Lane, Inc. (HLNE, $75.26): “Continuing Down the Lane for Profits” by: Ben L’Empereur, AIM Student at Marquette University
Hamilton Lane, Inc. (HLNE, $75.26): “Continuing Down the Lane for Profits”
By: Ben L’Empereur, 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
• Hamilton Lane, Inc. (NASDAQ: HLNE) is one of the largest global private market investment managers. They work with their clients to buy, manage, and sell funds and investments. Their clients include investors from the United States, Europe, the Middle East, Asia, Australia, and Latin America.
• EPS is up from $0.02 in Q1 of FY2021 in June to $0.66 to Q2 as reported on November 4th. This increase nearly brings EPS back to HLNE’s pre-COVID number of $0.74
• From Q2 of FY2020 to Q2 of FY 2021, total assets under management grew nearly 11% from year-to-year to $73 billion. Fee-earning assets grew by almost 9% to reach $39 billion in the same period.
• HLNE builds and customizes private market funds to meet each of their customer needs. This segment of revenue accounts for $57 billion of their AUM. Their advisory service segment holds nearly $474 billion assets under advisory for some of the largest private market investors in the world.
• HLNE continues to expand worldwide. The company announced on October 28th, 2020 that they just opened an office in Singapore. This office is the 5th location they now have in the Asia Pacific area.
Key points: Hamilton Lane, Inc has yet to reach its peak when considering their growth potential. With the FOMC projecting interest rates to stay near 0% for the next couple of years, there is a higher demand for investment services. Consumers would rather put their excess income in riskier assets with a higher chance of return than settle for next-to-nothing gains on their investments.
With more investors moving towards the use of FinTech, HLNE already has significant technological developments that sets them apart from their peers. Bundled into their investment solutions offerings is a wide variety of data analytics monitoring their client’s investments and reporting real-time data. For an industry that is important to monitor and report timely information on, Hamilton Lane has already differentiated themselves from the competition.
The company also has a strong management team who have years of experience with the company and within the industry. As the firm continues to navigate the difficulties COVID-19 poses and a transition to a more technology-based investment environment, it is reassuring to be led by a management company that knows the company inside and out.
HLNE provides investment services to institutional investors all over the world. Their revenue has grown double digits year-to-year in countries like Mainland China, Japan, France, and Italy. With their continuous global expansion and effort to open offices in different countries, HLNE will continue to grow their market share in the United States and internationally.
What has the stock done lately?
Following a nearly 20% drop in stock price due to the announcement of a new stock issuance, HLNE has been steadily increasing for the past 3 months. As of November 16th, it had hit a 52-week high at $76.42. As the market continues to recover from the COVID-19 pandemic, and the confidence in a vaccine become stronger, the price will continue to increase.
Past Year Performance: HLNE has increased 32.70% in value over the past year, even with the effect of the selloff in March after news of the nation-wide lockdown was announced. In the past year, HLNE has outperformed the benchmark 22.79%. Since it has been purchased at the end of September, the stock has posted about an 18% gain.
Source: FactSet
My Takeaway
Hamilton Lane, Inc. still has a very bright future ahead of them with a lot of growth potential. As reflected in the consistent rise in the price of the stock for the past three months, investors are confident in this firm’s ability to grow its bottom line and market share. With the hopes of a vaccine and an economic recovery, the firm has more potential as investors have more excess income. I recommend that we hold the stock for the foreseeable future to benefit from HLNE’s future growth.
Source: FactSet
A Small Cap Equity holding: Nexstar Media Group Inc. (NXST, $109.35): “And our Nexstar in the industry is…” by: Holden Patterson, AIM Student at Marquette University
Nexstar Media Group Inc. (NXST, $109.35): “And our Nexstar in the industry is…”
By: Holden Patterson, 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
• Nexstar Media Group Inc. (NASDAQ: NXST) is a television broadcasting and digital media company that operates all across the United States. In addition to operating local television stations, they also develop many local interactive community websites and provide digital media services.
• NXST will be brining NEXTGEN TV, a new IP broadcasting system that lets internet content be transmitted through over-the-air broadcast signals, to their local station in Raleigh, NC.
• NXST recorded record net revenue of $1,118.2 million in Q3 of 2020 which was 68.5% higher than Q3 of 2019.
• NXST capitalized on the United States electins in 2020, bringing in 132.4 million of political revenue during Q3.
• In September, NXST launched WGN America’s primetime national newscast, News Nation, in addition to the mobile app, NewsNationNow, helping them reach millions of users.
• NXST repurchased1,300,000 shares of its Class A common stock at an average price of around $96.14 per share.
Key points: Nexstar is one of the major broadcasters that will be brining NEXTGEN Tv to their local television station in Raleigh, NC. NEXTGEN TV is an Internet Protocol (IP) based system that can transmit internet content and services over the traditional over-the-air broadcast signal. This technology will improve signal, give greater sound and higher quality picture, expand transmitting distance, and provide additional features such as video-on-demand.
NXST recorded record net revenue of $1,118.2 million in Q3 of 2020. This was 68.5% higher than Q3 of 2019. Of the third quarter television advertising revenue of $514.3 million, 132.4 million is political revenue and $381.9 million is core advertising revenue. Although it is unlikely that they will maintain this high level of political revenue after the presidential election coverage comes to an end, they were able to capitalize on this huge event.
NXST launched WGN America’s primetime national newscast on September 1st, News Nation, which is viewed by around 75 million television households across the country. This launch also came with an accompanying mobile app, NewsNationNow which gives their audience the ability to follow their stories and coverage with the simplicity of their smartphone.
NXST recently repurchased a total of 1,300,000 shares of its Class A common stock at an average price of $96.14 per share for a total cost of $125 million. This was funded from cash flow from operations. NXST CEO, Perry Sook, says quarterly cash dividends and share repurchases will continue to be a priority of their capital allocation.
What has the stock done lately? After taking a huge hit at the start of the pandemic in March, NXST has started to move back towards where it was at in the beginning of 2020. YTD the stock has decreased by 5.19%, but since they hit a low of $43.37 at the end of march the stock has increased by 152.13% to $109.35 today.
Past Year Performance: NXST has not yet retuned to the level they were trading at in January and February of 2020 but has recovered nicely from the pandemic. Sitting around $109.35, NXST has seen a steady growth of around 2% for the past 52 weeks. This is promising to consider the massive hit they suffered at the start of the pandemic. They have followed a very similar pattern as the Russel 2000 index but have consistently seen lower levels of return over this past year.
Source: FactSet
My Takeaway
NXST is right where they need to be. They have done a great job reacting to the pandemic which is seen by their record net revenue growth in Q3 and are effectively moving in the direction their industry is going. I believe this is a stock that we will see do quite well in the next couple years as they continue to rollout technology such as NEXTGEN TV into more and more cities to combat against the internet of things movement. This stock should be held in the AIM portfolio until their business becomes unable to keep up with where the television/media industry is moving.
Source: FactSet
