Ticker Reports for November 29th
The Latest 13F Filings Are In: See Where Big Money Is Flowing
Every quarter, retail investors get the chance to look inside the house of money as the regulatory 13F filings come out for some of Wall Street’s biggest players. Inside these reports, investors can see who has been buying and selling certain stocks, not necessarily to piggyback on these ideas but to potentially connect the dots moving forward for their own market views.
The data as of November 2024 shows that mega investors like Bill Ackman, Howard Marks, and Michael Burry decided to boost their holdings in certain areas of the market during the most recent quarter. These areas may not be the most popular today, but that is part of what comes with taking on a value investment. Hunters need to be willing to take the contrarian route.
By buying a beaten-down consumer discretionary stock like Nike Inc. (NYSE: NKE), Bill Ackman believes today’s price is nothing short of a good deal. The same can also be said of Burry buying even more stock in Alibaba Group (NYSE: BABA), a rare Chinese bet, despite the bearish price action that Howard Marks accompanied in his PDD Holdings Inc. (NASDAQ: PDD) position. Then, an even less common move made by the hedge fund industry into cryptocurrency is to be considered.
What Ackman Hopes to See With His Nike Stock Investment
After recent filings, investors will notice that Bill Ackman has built himself a position of up to 16.2 million shares of Nike stock, a move that not many would have the courage to make considering the stock trades at a dismal 63% of its 52-week high.
It isn’t common to see big buyers when a stock demonstrates such bearish price action, but that’s where most value investors earn their paycheck. This time around, plenty of tailwinds push the envelope for Nike stock to potentially stage a comeback.
One of them is the broader economic landscape, which has investors jumping back and forth between a potential recession or inflation scenario based on the price action between many asset classes. Because most of the market’s attention is now on technology, stocks like Nike fly under the radar today.
Whether there is an inflation or recession scenario, Nike’s scale at $115 billion market capitalization, along with its international exposure and reach, helps the brand cushion whatever impact they may have on the industry. It would seem some on Wall Street also share in Ackman’s enthusiasm for Nike stock.
Analysts at Guggenheim kept their Buy ratings on Nike stock as of October 2024 and have not changed them since. As a vote of confidence already, investors can add the valuation of $110 a share placed on Nike stock for further validation into this potential investment, which calls for a net upside of as much as 42% from where the stock trades today.
Why Michael Burry and Howard Marks Are Betting on China Today
Compared to the United States, China's technology sector offers one of the widest divergences in history today, an opening that these two value investors are willing to uncover for a profit. Michael Burry has added once more to his largest position, Alibaba stock, and it seems he's not alone in this view.
As of November 2024, Sanders Capital decided to boost its stakes in the Chinese giant by 0.3%. While this new allocation may not seem like much percentage-wise, it brought its net investment to a high of $1.9 billion, a direct vote of confidence in Alibaba's future.
With analysts at Barclays assigning a $130 price target, Burry and other investors now face up to 53% upside from where the stock trades today. This is an undeniably attractive deal for those willing to invest in overseas markets. Another willing investor is Howard Marks, who chose PDD as his Chinese commerce pick.
That stock now trades at a low 60% of its 52-week high, making it a similar discount—price action-wise—to where Ackman decided to buy Nike stock. More than that, the consensus price target from Wall Street analysts now sits at $173.4 a share, calling for a 74.6% upside from where it trades today.
These picks cover discounts, double-digit upside, and a way to diversify away from the two potential themes that might take over the United States economy: Burry and Marks.
Hedge Funds Are Turning to Bitcoin ETFs
After reiterating his view on inflation during a recent CNBC interview, Paul Tudor Jones has decided to hedge this possibility by buying heavily into Bitcoin through his hedge fund. Jones bought up to $230 million worth of Bitcoin through spot positions and the iShares Bitcoin Trust (NASDAQ: IBIT).
That ETF didn’t just attract Jones and his hedge fund; other institutional players on Wall Street joined the party as well. As of the second quarter of 2024, Goldman Sachs decided to buy up to $238 million into the same Bitcoin ETF, joining Jones’ timing on this new asset class.
Then, Capula Management, a London-based hedge fund, recently revealed its massive $400 million position in this Bitcoin ETF. It makes sense that this would be the case since the markets are risk-on and face the possibility of inflation themes coming back into the scene.
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3 Stocks to Ride the Manufacturing Sector's Big Comeback
The financial markets have provided investors with their sentiment for the United States economy moving forward through price action in different asset classes like stocks, bonds, and commodities. From the way gold is making new all-time highs while bond yields are on the rise, investors could assume that one single theme is taking over the behavior coming out of the different markets.
Despite being a new asset class, this price action adds to the inflation theme, especially in other inflation-linked assets like Bitcoin, which is considered out of the rest of the markets. Why inflation? Because the Federal Reserve (the Fed) started cutting interest rates and has also stated that they want to start supporting the labor market in the country.
The problem is that the services sector is already filled with high employment. In contrast, the manufacturing sector (as judged by the manufacturing PMI index) needs to catch up in this metric. For this reason, new inflation is likely to come from the manufacturing names in the market, and why stocks like Prologis Inc. (NYSE: PLD), Broadstone Net Lease Inc. (NYSE: BNL), and even Old Dominion Freight Line Inc. (NASDAQ: ODFL) could come into play in the coming months.
Warehousing and Logistics Rally: Markets Trace the Comeback Momentum
The transportation sector, with trucking stocks in particular, has led the way in terms of price action since the presidential election results for the United States were released. This means the markets see new policies as accretive to business activity and the need to transport and warehouse raw materials.
This is where Prologis stock becomes attractive. It offers a robust network of warehouses and logistics centers to support the increased activity in the trucking and transport sector. The stock trades at 84% of its 52-week high, giving markets enough room for a decent pushback to its previous highs.
Knowing Prologis's role in this setup, Wall Street analysts now see the stock going to a consensus price target of up to $131.25 a share, calling for a net upside of 13.3% from where the stock trades today. However, some were willing to stand out from the pack, particularly those at Scotiabank, after reiterating their Sector Outperform rating for Prologis stock.
This time, the rating came alongside a higher price target of $136 a share, for a bit extra upside than the consensus at 17.5% from today’s level. To back this sort of upside, Wall Street projected up to $1.5 in earnings per share (EPS) in Prologis for the next 12 months, a growth rate of just under 50% from today’s $1.08 profit level.
Broadstone Net Lease: Why Both Short Sellers and Institutional Buyers See It as a Buy
Operating in similar verticals to Prologis, as a real estate investment trust (REIT) holding mostly industrial property, there is one difference maker to make Broadstone Net Lease stock a buy with much more potential upside than where it trades today.
Because this company trades at a market capitalization of $3.4 billion, compared to Prologis’ $100 billion and over, investors can see more aggressive price moves in percentage terms, and that is where the money is made. Short sellers understand that smaller companies will rally the most in this trend, so they start to run from the stock.
Broadstone Net Lease stock’s short interest declined by over 8.9% in the past month, a direct sign of bearish capitulation in the face of all the bullish tailwinds that could be headed to the stock in the coming quarters. Some institutional buyers caught onto this trend and decided to take action before it was too late.
Allocators from Geode Capital Management decided to boost their Broadstone Net Lease holdings by 1.3% as of November 2024, bringing their net position up to $156.8 million today. Investors can take this move as a complementary bullish signal, given that the short sellers also closed down their positions last month.
Why Old Dominion Freight Line Stock Justifies Its Premium Valuation Today
Compared to the rest of the transportation sector, Old Dominion Freight Line stock’s 38.5x price-to-earnings (P/E) ratio today calls for a significant premium above the sector’s average 18.9x valuation multiple today. Some might call this expensive and full of downside, but the opposite is true.
Markets will typically overpay for a stock believed to be in a position to outperform the rest of the pack. In the case of Old Dominion Freight Line stock, a few factors could make this the case. Starting with Wall Street analyst sentiment, there is room for another rally in the stock coming up.
That’s what those at Citigroup believe after they raised their price targets in Old Dominion Freight Line stock to $241 a share from a previous $201 target. To prove this new view right, the stock would need to rally by as much as 10% from where it trades today.
However, that valuation may not reflect the potential growth and upside the company could achieve in the coming months. The reason for the valuation premium will only become clear in hindsight, and by then, it is already too late.
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2 Generic Drug Stocks Ready to Surge in 2025
Generic and biosimilar drugs are often preferred over the brand name version due to their cheaper prices. Generics are exact duplicates of the branded counterparts, while biosimilars are "similar" and often require clinical trials. Health insurance companies, Congress, and patients love generics. It’s a growth industry in the medical sector as drug patents generally expire after 20 years after they are filed. The Trump administration is expected to streamline the U.S. Food and Drug Administration (FDA), which could result in faster approvals. Here are two generic drug stocks that will continue to grow in 2025.
Teva Pharmaceuticals: The King of the Generics Mountain
With a portfolio of over 500 generic drugs, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is the world’s largest generic drug maker. Its generic drugs revenue surged 17% YoY, crushing the industry compound annual growth rate (CAGR) of 5.4%, as estimated by KPMG. Teva also develops its own branded drugs, including AUSTEDO for movement disorders, AJOVY for migraines, and UZEDY for treating schizophrenia, which are their growth engines. Teva produces a generic version of metformin, the world's most widely used drug for type-2 diabetes, as a first-line treatment to lower blood sugar levels.
Third Quarter Results Were Robust
In its third quarter of 2024 earnings report, Teva reported 66 cents per share, beating consensus estimates by 3 cents. Revenues grew 13% YoY to $4.33 billion, handily beating consensus analyst estimates of $4.14 billion. The company generated $693 million from operating activities and $922 million in free cash flow.
Teva’s Generic and Branded Drug Business Is Growing by Double-Digits
The generics business surged 30% YoY in the United States, 8% in Europe, and 13% in international markets. Its branded AUSTEDO revenues rose 28% YoY to $435 million. Teva reaffirms its 2024 revenue outlook of $1.6 billion. AJOVY revenue rose 21% YoY to $137 million. UZEDY's revenue continues to gain momentum, generating $30 million in the quarter as the company raises its 2024 revenue forecast to $80 million to $100 million. Teva submitted its generic version of Amgen Inc.’s (NASDAQ: AMGN) osteoporosis drug Prolia to the FDA and European Medicines Agency (EMA) for review.
Market Expected More Than In-Line Guidance
Teva issued in-line guidance for the full year 2024: EPS between $2.40 and $2.45 versus $2.30 to $2.50 consensus estimates. Full-year revenue is expected between $16.10 and $16.50 billion versus $16.27 billion analyst estimates. Adjusted EBITDA is expected between $4.7 billion and $5.0 billion. The company expects COPAXONE revenues of $500 million in 2024.
Teva Pharmaceuticals CEO Richard Francis commented, "I am confident that with our newly accelerated innovative pipeline, both early- and late-stage, we are well-positioned to provide meaningful access to medicines for patients who need them while also delivering continued growth for our shareholders.” He concluded, “With these strong results, we are raising our 2024 financial outlook, including revenues, Adjusted EBITDA, and Non-GAAP EPS.” Incidentally, Teva's stock fell 12% following the news.
Viatris: Merged Origins to Form a Leading Generics and Branded Pharma
Spawned from the merger of generic drug maker Mylan and Pfizer Inc.’s (NYSE: PFE) legacy business Upjohn in 2020, Viatris Inc. (NASDAQ: VTRS) is a leading generic, biosimilars and branded pharmaceuticals company with over 1,400 drugs in its portfolio. Its branded drugs include former blockbuster drugs from Pfizer that have since gone off patent, including cholesterol drug Lipitor, Viagra, antidepressant Zoloft, Lyrica, Influvac, and Norvasc for hypertension and chest pain. The company entered into an exclusive licensing agreement with Lexicon Pharmaceuticals Inc. (NASDAQ: LXRX) for INPEFA (sotagliflozin) in October 2024 to expand its cardiovascular diseases portfolio.
Falling Revenue Offset by Debt Reduction and New Revenue Growth
Viatris reported Q3 2024 EPS of 75 cents, beating analyst estimates by 7 cents. Revenues dropped 4.8% YoY to $3.75 billion, handily beating consensus estimates for $3.72 billion. Its portfolio of legacy blockbuster drugs continues to decline in revenue as expected, but its new drugs are growing in Emerging Markets, Europe, and China. Generics saw divestiture-adjusted growth of 4% versus 2% YoY growth in Branded drugs.
Viatris has been paying down its debt from $17 billion at the start of 2024 to a projected $14 billion by the end of the year. The company plans to return 50% of the free cash flow to shareholders and apply 50% for stock buyback upon achieving a 2.8x to 3.2x EBITDA range.
The company will be releasing EFFEXOR for anxiety and INPEFA for heart failure, which are highly anticipated growth drivers. The new products revenue forecast was raised from $500 million to $600 million by year's end. Shares surged 13% the following day after its earnings release.
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