The upcoming 55th edition of the Super Bowl, the championship game for the U.S. National Football League, will be… unprecedented. We do not like using this word (see its rise chronicled in the New York Times using our data) but it is true. The pandemic has brought about serious attendance and activity restrictions to what is normally one of the largest events in the U.S., and we’d expect lower social viewing gatherings. 

Here are some of the themes and stocks we are keeping an eye on. 

First-time advertisers

So far, from the public companies that we monitor, two big pandemic winners have announced their debuts: fast-casual restaurant chain Chipotle (NYSE: CMG) and restaurant delivery giant DoorDash (NYSE: DASH). A diaper brand, Huggies, by Kimberly-Clark (NYSE: KMB), will also make its first appearance. We will also keep an eye out for online car dealer Vroom (Nasdaq: VRM): the ad is already released. Vroom IPO’ed last summer. We share some thoughts on each below.   

Notably, the market capitalization of DoorDash (the company IPOed in early December 2020) is larger than that of most players in the restaurant industry, including several shown here (Chipotle, Yum! Brands, Yum! China, Restaurant Brands International (parent of Burger King, Tim Hortons, and Popeye’s), Domino’s Pizza, and Darden (parent of Olive Garden and other brands) 

Choosing to advertise, Huggies was interesting to us: there have been concerns about birth rates during the pandemic (The Brookings Institution published estimates in December 2020, pointing to hundreds of thousands of “missing” births; for comparison, the latest CDC data shows the U.S. had 3.8 million births in 2018).

But here is another “alternative data” point: in October 2020, Church & Dwight (NYSE: CHD) reported double-digit (!) growth in the sales of its pregnancy kit brand, First Response.

Contrast this to their April 2020 comments that pointed to negative year-over-year change in sales for pregnancy test kids (as well as condoms, dry shampoo, and electric toothbrushes). 

It is entirely possible to view the pregnancy test kit sales spike as a leading indicator, and assume that Kimberly-Clark knows something that maybe the economists at The Brookings Institution do not. 

We decided to take a look at the year-over-year percent change in search interest for both Huggies (in red) and, if we can use this word for diapers, its arch-rival, P&G’s Pampers brand. We see that both had a major spike (100% for Huggies) around the first round of lockdowns in March 2020 but have drifted down steadily since, and are now flat on a year-over-year basis. 

Vroom’s best known direct comparable is Carvana (NYSE: CVNA) but there was a very recent SPAC deal in the space, CarLotz is now public (Nasdaq: LOTZ). CarLotz ceremonially rang the opening bell on the Nasdaq on January 25th, 2021. Given VRM’s recent public market debut, we think the stock could get interesting following its advertising debut.

In terms of revenues, both VRM and CVNA are much smaller than the established leader in used car sales, CarMax (NYSE: KMX).

And in the last two years, both CVNA and VRM have generally had stronger topline growth, versus KMX.

Who is NOT advertising this year?

While USA Today reported that the list prices for 30-second spots have softened somewhat this year, it clearly was not enough for a number of mainstay advertisers and brands at the event. 

Traditional advertising was hit very hard by the pandemic as we can see in both the absolute revenue (in blue) and the year-over-year revenue change (in red), along with the analyst estimates, for Omnicom (NYSE: OMC), one of the largest players in the space. Analysts do not expect pre-pandemic revenue levels through 2022. 

We are also seeing somewhat subdued overall marketing interest: one of our favorite alternative data indicators is the number of press releases referencing “the big game”, a common approach to avoid running afoul of any trademark problems yet a pretty clear reference to the Super Bowl. While the event was 5 days earlier in 2020 vs. 2021 (February 2nd vs February 7th), we are still (as of January 26th), at a fraction of all PRs mentioning “the big game” versus January of last year.

From the companies and brands that have announced that they will skip this year’s event, the ones that stood out to us are Budweiser, Coca-Cola, Pepsi, Ford, Olay (P&G), and Hyundai. To be sure, AB InBev (NYSE:BUD) will be running ads for some of its other brands, while the Budweiser time will be donated to a vaccine awareness campaign. 

But it is entirely possible that skipping the Super Bowl this year but creating a conversation around it is just as effective: search interest in Avocados from Mexico, a 5-year advertiser that is also bowing out, was at an all time high in the latest data. 

For AB-InBev, Coca-Cola, and PepsiCo, pulling back this year makes sense. Exposure to food service and on-premise consumption resulted in double-digit revenue declines for BUD and KO (PEP has a large food business so it did not see as large of a dip).

Past Results 

Interestingly, there are studies on stock price performance following advertising during large sporting events. For Super Bowl advertisers specifically, this 2010 study found a significant positive stock price effect in 2-4 days after the ad. A similar study by different authors also found outperformance for the stocks of the advertisers in the 1996-2010 period. The same authors also found a positive effect from Olympics sponsorships between 2000 and 2010. There is further confirmatory evidence from the 2012 London Olympics: UK sponsors experienced statistically significant share price increases. 

We can confirm some of this using our stock price returns seasonality matrices. While Nike (NYSE: NKE) has been one of the biggest “long term winners” in the US equity markets, more than half of their 19% annual returns for the last 15 years has come in calendar Q3: typically the time that both FIFA World Cup and the Summer Olympics take place.

We are seeing an even stronger dynamic with their Japanese competitor Asics (TYO: 7936): almost all of their returns for the past 15 years have been in calendar Q3.

The seasonality with Adidas (Xetra:ADS) is also the strongest in calendar Q3.

And we can see that the then-upcoming Olympic Games in Tokyo were surfaced as the number one trending topic on Nike’s last conference call before COVID (read more about our NLP Trending Topics on our blog here).

Try surfacing some of these insights for yourself, sign up for a free trial today!

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In October we released our inaugural industry benchmarking report focused on discount retailers. In that report we used Sentieo’s extensive data visualization and NLP capabilities to identify key metrics for TJX Companies, Inc. (TJX), Ross Stores, Inc., (ROST), Burlington (BURL), Ollie’s Bargain Outlet (OLLI), Dollar General Corporation (DG), and Dollar Tree, Inc. (DLTR).

What we found was that when it came to revenue growth with forecasts, margins, and revenue share OLLI was gaining share, and DG and OLLI are outperforming in valuation and returns.

In the Winter 2020-2021 edition, we focused on the U.S. Footwear secretor, including analysis of: 

• Crocs, Inc. (CROX)
• Deckers Outdoor Corp (DECK)
• NIKE, Inc. (NKE)
• Steve Madden, Ltd. (SHOO)
• Skechers U.S.A., Inc. (SKX)
• Under Armour, Inc. (UAA)
• Wolverine World Wide, Inc. (WWW)

In the report we take a closer look at:

• Revenue growth with forecasts, margins, and revenue share: standout year for CROX; easy 2021 comps for most
• Inventory turnover and other financial KPIs
• Valuation and returns: major YTD expansion in the valuation metrics for NKE, CROX, DECK

For access to the full report, visit our resources page.

The post Using NLP and Data Visibility to Analyze U.S. Footwear Performance appeared first on Sentieo.

2020 has been unprecedented (so unprecedented, in fact, that the media arm of our legacy terminal competitor used our stats for the surge in the word “unprecedented”). We went into the holiday shopping season knowing that there will be surprises: back in September, we did some work for our friends in the Financial Times, showing the (unprecedented) low inventory levels for 33 retailers. We also pointed to the related trucking capacity issues around that time during the BattleFin Conference Macro Panel (panel video link) where we told viewers point blank to “order now!”

So, besides the widely-reported Christmas tree shortage (NPR Planet Money podcast), what else caught our eye?

Port congestion was a topic on recent conference calls: the supply chain/inventory issues continue.

We also saw a spike in transcripts with mentions of “shipping costs” in August and November (retailer earnings usually lag by a month due to their January fiscal year end).

We did see (physically) lines outside one retailer: Gamestop! We checked the search interest and web traffic, and they seem to confirm our observations.

The surge in “Outdoor” continues (we wrote about the trend a few months ago). American Outdoor Brands gave some numbers in December: this translates to more rods and reels, shells, and camo clothing.

Snow sports enthusiasts are buying season passes from Vail Resorts

And it is pretty fair to say that every (consumer) company is an e-comm company with the store closures and restrictions around the world: Mattel saw 100% growth in their DTC business.

Housing and housing-related purchases are hot, too. Lovesac saw a 40%+ growth (we highlighted the strength in Homebuilders using our NLP in July).

While “most” apparel retail has had a difficult year, online stylist Stitch Fix reported 10% growth in the most recent quarter, and guided even higher for the fiscal year. 

Similarly, Farfetch, a luxury online boutique collection, is seeing great growth.  

And, finally, if you saw an increase in the holiday cards that feature a new pet, you are not alone. We are seeing a sustained, double-digit increase in search interest in pet adoption along with a relentless rise in the stock prices of Chewy (online pet goods), Fresh Pet (fresh pet food), and Trupanion (pet insurance).

P.S. Let us help you with some data in the eternal debate: Die Hard is a Christmas movie!

Stacked Google search trends for Die Hard:

From all of us at Sentieo, happy holidays, and a prosperous new year! 

The post A Most Unusual Holiday Shopping Season appeared first on Sentieo.

With Airbnb boosting the pricing range for its hotly anticipated IPO this week, we decided to take a look at how Wall Street sees the broader travel recovery. For a more in-depth “how to” start your work on the Airbnb IPO, see how we redlined the original S-1 even though some might think that there are no prior versions of the filing. 

Revenue outlook for the cruise lines and theme/destination parks: a 2022 affair 

For the major cruise lines (RCL, CCL, NCLH) and destination-type operators, like Six Flags, SeaWorld, and Cedar Fair, the recovery is a 2022 (and later) affair. You can see how we used our NLP technology to parse through the Six Flags call during the worst of the crisis. 

Equity issuance and government help have taken deeply negative scenarios off the table: the market is over covid

While travel stocks have borne the brunt of covid, on the positive side, we have seen multiple financing transactions, including debt, equity, and asset sales (the airline loyalty programs being among the more interesting deals: see how we collected US airline industry cash burn data in 60 seconds, and our NLP Heatmaps applied on the airlines). But the financings’ success has also led to an interesting phenomenon that we have observed with retail investors: the stock price of “X” is still down Y%… however, in real terms, market capitalization and enterprise value are much closer to the pre-covid highs because of the new equity and debt issuance. We can see this effect very clearly in CCL (below) where the market capitalization (in red) is much closer to a recovery than the price of an individual share. 

Adding the enterprise value for CCL on the chart, we can see that, on EV basis, the market is looking well-beyond covid (note that market capitalization and EV are on different axes). This is partially why the Airbnb IPO is not merely “anticipated” but “hotly anticipated.” 

Airlines: “everything” is uneven 

While the TSA passenger counts have been showing a slow but steady recovery into Thanksgiving, we continue to see a mix of positive and negative metrics coming from the industry. 

Just after the US holiday, American Airlines filed an 8-K that the company expects its Q4 average daily cash burn to come in at the high end of the previously forecasted range. 

We are also seeing a very wide range of reported Load Factors across the industry (the two rightmost columns in the screenshot). While the range for our watchlist was just 80.6%-86.6% for the last fiscal year, in the last quarter, the range is considerably wider, from a low of 25.9% for Hawaiian to a high of 68.1% for Spirit (and both are leisure-heavy airlines: the “lower 48” travel bounce is good for Airbnb). 

Most airline KPIs are “off the lows” but well under pre-covid levels. We can see this very clearly when we use our Machine Learning-based Table Explorer to chain JetBlue’s KPIs from their SEC filings. When viewed on a quarter-over-quarter basis, we see triple-digit percentage increases in metrics like revenue passengers and revenue passenger miles.

Switching the exact same KPI table chain to year-over-year change, the Q3 “bounce” looks underwhelming. 

(To learn more about our table identification, chaining and visualization tool Table Explorer, watch this introductory video). 

Hotels: also looking past 2021

Looking at lodging- the direct comps of Airbnb- we can also see the market looking past 2021, similar to the cruise lines dynamic, discussed above. Using Hilton as a prominent example, we can see that the 2021 EPS estimates have stayed down over 50% versus the pre-covid levels while the stock price has recovered almost fully. 

This is very similar to what we see going on with the estimates for other hotel names, like Wyndham: 2022 is almost unchanged (screenshot with Revenue estimates from our Equity Data Terminal (recent on-demand webinar open to all)). 

In aggregate, we see Wall Street analysts and investors looking past 2021 for the travel recovery, so we expect a strong showing for Airbnb, a secular growth player where 2020/2021 will not matter much. 

The post Airbnb IPO: How Wall Street Sees the Broader Travel Recovery appeared first on Sentieo.

In next week’s webinar, we will go over building a thesis in Sentieo’s RMS (Research Management System).

We still come across many haphazard systems for research management (from consumer apps to “systems” with no connection to the rest of your workflow). This leads to several problems:

Analyst Inefficiency

The lack of integration with the rest of your workflow is costing you time. Switching from a data terminal to a document reading/search to Excel to a collaboration software all day, every day adds up.

Portfolio Manager Inefficiencies

How much time do PMs spend on catching up/supervision? Now monitoring note-taking, thesis building, and active theses can simply be done via widgets in one of the dashboards that you have in your Sentieo platform.

Internal and External Compliance

How much time does your team spend meeting compliance requirements? Strict access and version control, along with powerful search enable the fulfillment of compliance-related requests in seconds.

Lack of IP Control and Standardization

Disparate tools, even within the same team, and inconsistent formatting/content make it difficult to control and standardize your intellectual property.

Having a purpose-built, integrated, and flexible RMS is essential to improving your investment process. 

In the webinar, we will cover multiple aspects of thesis building and updating, including:

• Collecting information from everywhere in the Sentieo platform
• Contributing information from outside sources
• Versioning
• Collaboration
• Dashboard monitoring

We will also discuss specific elements like structured fields, sections, attachments, updates, and version control, as well as the broader research management from a PM’s viewpoint.

Register now for this December 10th webinar.

The post Webinar Preview: Building a Winning Thesis appeared first on Sentieo.

Over the past few weeks we’ve been covering investable themes for both the Biden and Trump campaigns. So far, we’ve discussed higher education, police funding and cannabis decriminalization. Today, we’ll look at private prisons.

While President Trump does not directly address the use of private prisons by various federal, state, and local agencies, his opponent, former VP Biden, does address the issue quite explicitly: “Biden will end the federal government’s use of private prisons.”

And there is substantial historical precedent for this: the Obama administration did, in fact, outline a plan to end private prison use at the federal level in 2016. 

The two “pure play” REIT stocks, CoreCivic (NYSE: CXW) and The GEO Group (NYSE: GEO) got cut in half almost immediately. Then, these two stocks almost tripled following President Trump’s election. The Trump administration rescinded the Obama administration orders in early 2017.

CXW AND GEO TO BENEFIT

The 2016 volatility in CXW and GEO is clearly visible in the price chart below.

Going into this election cycle, people and groups associated with CXW and GEO have been active in terms of contributions, mostly to Republicans, and have been signing long-term contracts with federal agencies. 

You can read more in our reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term. You can also subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Trump: Private Prisons appeared first on Sentieo.

In the weeks since launching our U.S. Election 2020 dashboard and reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term, we’ve been covering the investable themes for both campaigns. So far, we’ve discussed Higher Education and Police Funding. Today, we’re going to look at the second theme in the Biden/Harris portfolio: Cannabis Decriminalization.

The decriminalization of cannabis at the federal level is a part of the broader Biden-Harris criminal justice reform initiative. Like the other ideas here, we look for situations where there are already established state or local developments that resemble the presidential candidate’s ideas. The individual US states are currently at very different levels regarding the legality of cannabis: from felony for possession to legal sales for recreational purposes. The federal situation has also made it difficult for operators to obtain services such as banking and insurance.

The current Biden position is (1) decriminalize use and expunge prior convictions, (2) legalize medical use, and (3) leave recreational use up to the states. Biden would also reclassify cannabis as a Schedule II drug, enabling medical studies (currently a Schedule I drug, along with heroin, MDMA, and others).

We believe that the federal decriminalization under a Biden-Harris administration will go further than currently listed: Senator Harris has been actively trying to “atone” for her aggressive anti-cannabis record as a prosecutor in California, something that came to prominence during the Democratic Primary Debates in this widely-circulated exchange between Congresswoman Tulsi Gabbard and Senator Harris.

MARKET CAP DROPPING FOR LEADING PLAYERS

The current state of the public equity markets in the cannabis space is somewhere between disgust and revulsion. We can see it in the 75% drop in aggregate market capitalization of four of the top players in the space: Canopy Growth, Aurora Cannabis, Tilray, and Cronos.

(interactive chart viewer)

ETF MJ TO BENEFIT

Given the vastly different state-by-state dynamics, here we feel making an “industry bet” is more appropriate: the largest AUM ETF’s ticker is MJ (others include TOKE, YOLO and THCX). We can see that the 90-day moving verage ETF price has stabilized and is inflecting upwards.

(interactive chart viewer)

Subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Biden: Cannabis Decriminalization appeared first on Sentieo.

In the last couple of weeks we gave an overview of how we identified the core themes and stock ideas for each campaign and provided more color on the first investable theme for a Biden-Harris win: Higher Education. Today we will focus on the first in the Trump-Pence portfolio: Police Funding.

Perhaps the biggest social flashpoint in the last few months has been policing: Pew Research Center covered several separate issues this summer.

As President Trump has adopted an explicit “law and order” messaging (including tweets containing just “LAW & ORDER!”, all caps) during the recent months of protests, riots and looting across the country, we looked at his policing position.

Additionally, President Trump picked up endorsements from the main NYPD union and the Chicago PD union, both deeply Democratic cities.

In President Trump’s agenda, we see a call to “fully fund and hire more police and law enforcement officers” as well as to “end cashless bail and keep dangerous criminals locked up until trial,” an emerging problem in some cities that ended cash bail, like NYC. 

We like two “police funding” stocks: Axon, the company formerly known as Taser (Nasdaq: AAXN) and Shotspotter (Nasdaq: SSTI).

AAXN TO BENEFIT

In addition to the famous “less lethal” Tasers, Axon has seen strong growth in its body and police vehicle cameras, and evidence management solutions (effectively, cloud services), in addition to recently released innovations, like transcriptions. Pew reports that only 31% of the smaller police departments use body cams. Axon’s stock has done well in the last two years, powered, in part by substantial NTM EV/EBITDA multiple expansion.

Interactive chart viewer

SSTI TO BENEFIT

Shotspotter is a microcap SaaS service that contracts with local police departments to monitor gunshots through multiple locally installed sensors. A part of the technological solution is the recognition of firearm sounds based on its proprietary identification library, which is then combined with location triangulation from multiple sensors. While revenue has grown consistently since its IPO, the stock has been range-bound: we think that a Trump win will change the sentiment around the stock.

Interactive chart viewer

Subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Trump: Police Funding appeared first on Sentieo.

Last week, we launched our U.S. Election 2020 dashboard. Our analysis of the platforms of both campaigns resulted in four investable themes for each candidate, outside of the obvious. We’ve detailed each of these in our two reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term. Our dashboard however, offers a live look at these stock ideas, the data influencing them, as well as some insight into current events around the election and each campaign. (Spoiler alert: there is a lot!)

In this post we’ll cover each of the widgets and tools available in the Dashboard.

Price monitor

The Price Monitor displays positions from multiple watchlists, along with financial, alternative and internal data for these positions. Positions can be added to this view directly without a need for a watchlist. Users can add many fields and save separate views: for example, for certain watchlists users might want to see P/AFFO and data from their internal theses.

Total Returns Plotter Widget 

Here we loaded a data viz from our Plotter that shows the Total Returns for the different baskets as well as the SPY. Users can change the timeframe and show/hide the individual data sets. 

This is what the dataviz looks like in Plotter (public viewer chart) 

Saved Search widget

This saved search widget displays snippets from transcripts globally (not linked to any watchlists or stocks in the Price Monitor but could be). We saved a search in our Document Search for terms like election or Biden, across all transcripts, and then we simply loaded it into the widget. 

This is what the saved search looks like in the Saved Searches folder in our Document Search. Saved Searches can also be set up for email or desktop or mobile alerts at user-defined frequency. 

LexisNexis Articles Widget

This widget displays article titles from our extensive LexisNexis news/journal/magazine source integration. We have linked the articles to the securities in the current Price Monitor (note the chain icon in the upper right). 

Press Releases Widget

This widget displays specifically Press Releases from, or related to, the securities in the Price Monitor. 

Search Trends Plotter Widget 

Here we have loaded a saved Plotter that has US search data for the two presidential candidates on the same volume scale. 

The full chart in Plotter looks like this (public chart viewer)

 Tip: to have the two sets on the same scale, enter them at the same time when using Plotter, separated by a comma. Make sure you select the broader “topic” category for each (otherwise, you’d get only the specific keyword).

Web Traffic Plotter Widget 

Here we are showing the 10-day moving average (for smoothing) of Alexa page views to each candidate’s website. 

This is what these data sets look like in Plotter (public viewer link)

Tip: users can display multiple moving averages at the same time, along with mean, median, standard deviation bands, and YoY % change. 

RSS Feeds Widget

This widget enables users to display one or more of their existing RSS subscriptions. The widget can be linked to display articles related only to the securities that are loaded in the Price Monitor. In this example, we are showing the general feeds coming from FiveThirtyEight and RealClearPolitics. 

Managing the active feeds can be done right from the widget where users can select which active RSS subscriptions to display. 

Adding entirely new RSS sources happens from the Document Search homepage. 

NLP Heatmaps Widget

The NLP Heatmaps widget brings in one of our Natural Language Processing applications on the Dashboard. Here we are looking at transcript sentence classifications across the loaded tickers, along with Sentiment. Users can click on the broad categories on the left to expand, and inside the boxes to read the extracted text. 

We’ve created this short video walkthrough as well. If you have any questions or would like to set up a free trial to try the Dashboard out for yourself, contact us.

The post U.S. Election 2020 Dashboard Explained appeared first on Sentieo.

Today we are focusing on retailers (late Q2 reporting sector as their FY typical ends at the end of January). Many retailers reported strong sales (ie Home Depot with a 20%+ comp). We decided to look at what is happening with sales and inventory levels in the sector. 

In our data visualization tool Plotter, we combined with quarterly sales for eight major retailers: Walmart, Target, Home Depot, Lowe’s, TJX, Best Buy, Dollar General, and Gap. We see the regular seasonality but look at the most recent quarter: there was a major drawdown in inventory (gray) as sales (red) spiked. A version of this chart but with 33 retailers was used by our friends at the Financial Times last week (“US retailers short of goods ahead of winter holiday shopping season”). 

We see the distinctive seasonality: inventory (gray color) builds ahead of Q4 sales. We also see that most of the time, inventory levels are higher vs. the year-ago quarter as these retailers open more units. Sales show a similar pattern: sales peak in the quarter after the inventory build-up. This year is a very visible departure from the usual pattern. 

(interactive chart viewer) 

To get a better idea of this unusual move, we divided this aggregate inventory level over the years by the aggregate quarterly sales. We then added mean and one standard deviation lines above/below. We can see how highly unusual last quarter was. 

(interactive chart viewer)

(A note for our accounting enthusiasts friends: we do have days inventory as well, however here we were trying to capture the overall inventory value to the overall sales for the industry. You can view the days inventory for the individual names and the unweighted average here. It paints a similar picture.) 

We surmise that the unusual move in the last quarter has been propelling the transportation stocks to new highs. Here we are looking at the IYT, the transportation ETF powering to new highs recently: an impressive feat given the weight of the airlines in the ETF.

(interactive chart viewer) 

Looking more closely at some of the trucking names, we see a pretty sizable valuation expansion (rolling NTM EV to EBITDA). The three stocks are ODFL, CHRW and LSTR. 

(interactive chart viewer)

The trucking valuation expansion indicates that the retailer inventory restocking could be a boost in the “real” economy for Q4. Stay tuned. 

The post The Mother of All Retail Restocks? appeared first on Sentieo.

Two weeks ago in Forbes Magazine, we made the supposition that the current “femcession” will worsen in September due to the combination of “return to the office” pressure, and the lack of normal schools (and after-schools) in many districts, including the five largest nationally, will worsen what is already a difficult recession for women, the primary caretaker population. 

Based on the employment data released last Friday, we are seeing this playing out: women are dropping out of the labor force (that is, neither working formally nor looking for work). 

(interactive chart viewer)

We can see that the participation rate was at 57.9% at the start of the year, dropped to 54.7% at the bottom, but the recovery is completely stalled: the participation rate dropped from 56.1% in August to 55.6% in the September release. 

Contrast this to the dynamic with the male labor force participation. It was 69.4% at the start of the year, bottomed at 66.1% (similar to the 3.2% drop that women saw but from a much higher starting point), and with a much sharper bounce. The participation rate was 67.7% in August and 67.6% in September, 1.8% below the peak at the start of the year with a higher base, versus 2.3% for women. 

(interactive chart viewer) 

And, moving beyond the percentages, we took a look at the just released BLS data. There are 5.1 million fewer women in the payrolls than there were a year ago.

Making things worse for the primary caretakers, we already know that women take a major hit in earnings following the first childbirth/time off.(chart source)

And we already know the multiple negative effects of long-term unemployment: much lower wages at re-entry, declining social capital, lower health, and more (Urban Institute study).

So while the “headline” unemployment rate did improve in the latest release, we continue to monitor the gender dynamics, and think through the implications. 

The post “Femcession” confirmed? appeared first on Sentieo.

This week, we launched our U.S. Election 2020 dashboard and reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term. 

In Monday’s blog we gave an overview of how we identified the core themes and stock ideas for each campaign. Today, we will focus on the first investable theme for a Biden-Harris win: Higher Education.

We combed carefully through the Biden-Harris higher ed positions for ideas on what is likely to happen in the sector. There are two big reasons why we focused so heavily there.

First, the student loan crisis in the US is an unmitigated disaster. There is almost $1.7 trillion in student debt outstanding (FRED data), more than motor vehicle loans ($1.2 trillion, based on the latest FRED data) and credit card debt ($992 billion, based on the latest FRED data).

Second, the Obama-Biden administration implemented a large number of initiatives around higher education. The passage of the Student Aid and Fiscal Responsibility Act dramatically increased the government’s role in student loans, increased Pell Grants and the Federal Direct Perkins loans, and more. The Obama-Biden administration also introduced student loan forgiveness under certain circumstances, as well as the “Gainful Employment” rule targeting the for-profit universities.

In addition, we also looked at state-level precedents for the “big” parts of the proposal, and we found them. For example, New York State’s Excelsior program provides free in-state tuition for families with incomes under $125,000, with some other conditions. We have seen similar initiatives in Texas (with a lower income cutoff), and in Connecticut (with an even lower income cutoff).

The Biden-Harris platform targets making colleges and universities tuition-free for families with incomes under $125,000 (just like the NY State program), in addition to numerous other initiatives for two-year colleges, grants, income-based repayments, and loan forgiveness for individuals pursuing a public sector career. There are three higher ed “plays” that we like:

• Aramark (NYSE: ARMK), a provider of dining and facilities services to colleges, stadiums, and offices
• Barnes and Noble Education (NYSE: BNED) campus bookstores
• Chegg (NYSE: CHGG), an online learning platform

We can see ARMK’s severe drop in quarterly revenues year-over-year during the shutdowns, combined with the decline in stock price.

Interactive chart viewer

In aggregate, we can see college enrollment under a Biden-Harris administration not just recovering post-COVID but increasing despite the demographic cohort declines after ‘Peak Millenials’.

Subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Biden: Higher Education appeared first on Sentieo.