Kyle Joseph, Analyst, joined Jefferies in June of 2014, following four years as a vice president in equity research covering the specialty finance sector at JMP Securities and Stephens, Inc.
Prior to equity research, Mr. Joseph worked in investment banking for Bank of America Merrill Lynch in the financial institutions group. Mr. Joseph received a B.A. in economics and government studies from Dartmouth College.
In this 2,494 word interview, exclusively in the Wall Street Transcript, Mr. Joseph details the current state of business development companies, or BDCs, in the COVID 19 economic disruption.
“…BDCs are structured essentially the same as REITs, where they’re pass-through vehicles. They’re not taxed as long as they pay out 90% of their net income.
And BDCs are middle-market lenders. So they lend to companies that are not big enough to tap the institutional debt markets and that are not big enough to really attract the attention of the large money center banks.
So they’re really filling the void that’s been left by the banks as a result of capital requirements and some regulatory restrictions in the banking industry.”
Mr. Joseph explains the quirk that excludes BDCs from institutional ownership:
“And so the REIT industry has done a good job and has been exempt from AFFE. But because BDCs are not exempt from AFFE, it’s very difficult for mutual funds to own them because it almost looks like two levels of fees for the investor, but that’s not actually the case.
So essentially, you saw mutual funds lobby to get BDCs kicked out of the major equity indices, particularly the Russell 2000.
And that was in 2014. And so you saw institutional ownership in the space really fall down because they’re not part of the index. In our minds, the removal of AFFE would be a major catalyst for stocks and institutional ownership in the sector.”
The analyst uses his experience in the sector to drill down to his favorites:
“One of our top picks is Ares (NASDAQ:ARCC). They’re one of the biggest and best in the space. We like ARCC right now because of their proven track record in economic downturns. In the 2008 to 2009 downturn, they actually used the market dislocation to acquire a struggling BDC and essentially doubled the size of their balance sheet, and their credit performed a lot better than the industry.
So based on that track record, we’re very favorable on ARCC, and they are one of the biggest and the best.
Another one we like is Oaktree. Oaktree’s bread and butter is distressed credit. And I think we’re getting into an environment where we’re going to be seeing more distressed credit.
And OCSL really entered the COVID environment with some of the lowest leverage in the space and the most debt capacity. They’ve been active in the secondaries and taking advantage of the market dislocations.
“Lastly, we’d highlight Hercules (NYSE:HTGC), which is a fairly unique BDC in the sense that it invests in companies that have raised venture capital.
It sounds like it’s high risk, but these guys actually have a tremendous credit history and actually fared relatively well in the last downturn as well.
They don’t have any energy exposure or exposure to leisure; their portfolio is entirely tech and life science. And so that’s another name that we focus on right now.”
Get all the top picks and more detail on these investment vehicles by reading the entire 2,494 word interview, exclusively in the Wall Street Transcript.
Adrienne Yih is a Managing Director and Research Analyst at Barclays covering U.S. specialty retail, apparel and e-commerce. She joined Barclays in 2019 and has covered the retail sector for more than 18 years.
Prior to joining Barclays, Ms. Yih worked for Wolfe Research, where she was known for developing robust quantitative models used to inform her fundamental industry view and stock picks, and prior to that, also led coverage of the diversified retail sector at Janney and FBR Capital Markets.
Her finance career began at Prudential Investment Group with experience in investment banking, private debt investing, and quantitative asset allocation. Ms. Yih holds an MBA in finance from The Anderson School at the University of California, Los Angeles, and a B.S. in industrial engineering from Stanford University.
In this 3,750 word interview, exclusive to the Wall Street Transcript, Ms. Yih has detailed the analysis behind her recent retail sector stock picks for this COVID-19 economic disruption.
“I do specialty retail; softlines, so that’s apparel, accessories; and hardlines, which is furnishings, like a Williams-Sonoma (NYSE:WSM) or an RH (NYSE:RH). I also do the wholesale and brand manufacturers, both in footwear and apparel, so that would cover Nike (NYSE:NKE), Under Armour (NYSE:UA), and in apparel, Ralph Lauren (NYSE:RL), PVH (NYSE:PVH), G-III (NASDAQ:GIII).
And then, I do cover some emerging e-commerce, so for example, we cover Wayfair (NYSE:W). So basically, broadly retail in its traditional format, from department stores to specialty, and then as we emerge and change the world of consumer, we gravitate toward the e-commerce backdrop.”
From this coverage universe, Ms. Yih picks her favorites:
“So the simple fact is, if you had a significant portion of your sales coming through stores, they went to literally zero for a good six to eight weeks. You can make the argument that in the COVID/post-COVID period, those that were best positioned were companies like Wayfair. ”
Other names draw a more critical viewpoint:
“I’m not going to differentiate which department stores are going to fare better or live on. The fact is that every 20 years or so, there’s a consumer behavioral shift that is dominated by the generation that is in its spending peak, and today we are in the spending peak of the Millennial.
The next two decades will be all about Millennial consumption, who want everything conveniently, efficiently and at their doorstep.
If you look at the department store segment, the department store model was predicated on everything conveniently in a 100,000-foot box, and 40 years ago was the sort of heyday of the department store, the mid-1980s.
That model just doesn’t work today.”
Get more detail on what works and what won’t work in today’s retail sector by reading the entire 3,750 word interview, only in the Wall Street Transcript.
Jen Redding is an Equity Analyst at Wedbush Securities Inc. covering consumer sector stocks, with experience covering consumer and tech stocks spanning 10-plus years, including coverage of companies in softlines, broadlines, e-commerce, leisure and restaurants.
Ms. Redding spent the most recent two-year period as Director of Consumer and Tech Data Research at an off-Street startup, where she spearheaded correlating and packaging raw data into actionable product for institutional investors. At BMO Capital Markets, LLC, Ms. Redding envisioned and led the BMO Big Data initiative.
In this 1,650 word interview, exclusively to the Wall Street Transcript, Ms. Redding picks her current retail sector favorites after the COVID 19 disruption.
“We have “outperform” ratings on American Eagle (NYSE:AEO) and Abercrombie & Fitch (NYSE:ANF). We see a strong response as stores reopen, at a time when teens are eager to venture outside of home, into malls in specialty retail.
We think both American Eagle and Abercrombie & Fitch have the right product and are best positioned to take advantage of fallout from COVID. In a worst-case scenario, we think both names show relative outperformance in the back half, because of proven lessons learned internally over the course of the recent shutdown, and improvement in potential future pandemic-environment execution.”
These two picks are not the only stocks Ms. Redding likes in the sector:
“We think the Mirror acquisition is a great opportunity for Lululemon (NASDAQ:LULU). In our opinion, the company made a smart bet on the future of fitness in an environment that really tips odds in Lululemon’s favor.
Lululemon potentially establishes Mirror into homes faster, and it’s also a great opportunity for Lululemon to become even deeper embedded into the community. Bottom line: We see potentially strong synergies between Lululemon and Mirror, likely making the deal more accretive to earnings sooner than expected.”
Companies without strong e-commerce capabilities are in trouble:
“We’re generally cautious on off-price retail as a whole into the back half, owing to low visibility into the potential store closures in the back half, coupled with the lack of e-commerce business in the off-price industry.
If stores face a forced shutdown and/or consumers change course and stop trafficking physical locations, off-price doesn’t have a fallback plan, given the channel doesn’t play in e-commerce. Valuations are relatively rich in the off-price space, and we see this coupled with lower visibility on the off-price channel’s ability to compete, assuming a second round of forced closures as a real wild card for the industry.”
Get all the top picks and details behind them by reading the entire 1,650 word interview, only in the Wall Street Transcript.
Janet Kloppenburg is President of JJK Research. Ms. Kloppenburg is a well-known specialty retail analyst who served 18 years on Wall Street’s sell side. There, she developed extensive knowledge and expertise of the retailing industry.
Ms. Kloppenburg has a proven track record on delivering timely and pertinent research and analysis, which has been instrumental to the investment decisions of her clients. Ms. Kloppenburg became a stock analyst after being trained as a buyer for a major New York City department store where she gained invaluable insights into the inner workings of a major retail operation.
In this 3,470 word interview, exclusive to the Wall Street Transcript, Ms. Kloppenburg determines which retail stocks will prosper in the post-COVID 19 world.
“The second group of winners would be those that had wisely and astutely built strong digital platforms and were positioned to take advantage of services that extend into the omni world, which include ship from store and BOPUS — buy online pick up in store.
So the winners are the well-positioned digital players. For instance, Urban Outfitters (NASDAQ:URBN) having over 40% of their business in the digital channel prior to the pandemic gave them a great opportunity to capitalize on the consumer’s need for products, and with a well-equipped digital platform, they were able to take market share.”
The retail expert has a very firm list, some additional names:
“But I think that on a relative basis, the off-price retailers — all three of them, Burlington, TJX and Ross (NASDAQ:ROST) — will perform better than most. So the active sector, Nike and LULU; the off-price sector, again on a relative basis.”
The analyst also has a warning for other retailers:
“Department stores are in real jeopardy right now. They don’t really have an infrastructure to bring in that value customer. They all have tried to be too much to too many, and they are going to have to each figure out their own strategies.
I will give Nordstrom (NYSE:JWN) credit for developing digital in a very big way, unlike their competitors, and also for the development of their off-price business. Their investments are shifting toward digital and off-price, but it’s still going to be very hard for Nordstrom to operate in this environment, and they are really, really cutting costs in a way that I never imagined.”
Further insight into sub-sectors is detailed and actionable:
“The wholesalers should say, “Maybe we should clean house here and not be in so many weak, underperforming doors. Let’s cut some of that out, and let’s spend more money on opening a few flagship stores,” like VF, which has opened a couple of beautiful stores in Manhattan right by Grand Central, in terms of The North Face and Timberland.
“Let’s open a few flagship stores around this country and the world, and then, we’ll drive everybody to our digital channel, and we really need to develop that.” I just think that’s something that may make operating margins not bounce as much as we thought but could really help those companies have sustained outperformance in the industry as we look into 2022 and beyond.”
Get further detailed retail analysis in this 3,470 word interview, exclusive to the Wall Street Transcript.
Kevin Conley is the President and CEO of Everspin Technologies, Inc. Mr. Conley has served as the President and CEO of Everspin since Sept 2017 and as a member of the board of directors since March 2017.
Prior to joining Everspin, Mr. Conley spent over 20 years at SanDisk where he was most recently Senior Vice President and CTO of SanDisk until June 2016, focused on fostering strategic innovation at the company. Previously, he served as Senior Vice President and General Manager of SanDisk’s Client Storage Solutions after holding several key system engineering leadership positions over his career at SanDisk.
In 2009 to 2010, he was Vice President of Engineering at Corsair, where he transformed and expanded the product portfolio to grow the company to a leader in PC gaming components, including high-performance SSDs. Mr. Conley is listed as the inventor or co-inventor on over 90 patents in the area of non-volatile memory architecture and management.
In this 2,813 word interview, exclusively in the Wall Street Transcript, Mr. Conley details the strategy that will capitalize on the growth in demand for computer memory storage.
“Everspin Technologies is the world’s leading provider of magnetoresistive RAM, or MRAM. MRAM is a type of non-volatile, or persistent, memory that retains data even without power, unlike other types of memory technologies, such as SRAM or DRAM. MRAM is the company’s sole focus, as its stock ticker MRAM suggests.
Our company name, Everspin, is actually a reference to the magnetic phenomenon of electronic spin that is the basis of operation at spintronic devices, such as MRAM, and that allows our technology to provide unprecedented performance and endurance for non-volatile memory.
While there are other companies starting to provide MRAM solutions, Everspin is the only company in mass production of MRAM discrete memories that deliver the industry’s most robust, high-performance non-volatile memory for industrial IoT, data center and other mission-critical applications where data persistence is paramount.”
The company has several paths to a greater growth trajectory:
“One of our key growth drivers that we see over the next few years is continuing our efforts to increase customer adoption and new design wins. It should be noted that we have been in production with our Toggle technology for over a decade.
It has won the loyalty of many very demanding customers across a broad variety of applications; these are some of the most demanding customers in the industry. So it has a long life ahead of it.
We see the next wave of growth coming from our current STT-MRAM products in data center applications. As I mentioned earlier, it’s a very large opportunity. The design wins that we have had there have provided pretty significant growth.
We do expect that as we add more design wins to the pipeline for our STT-MRAM products in those data center applications that this will continue to add to the accelerated growth that we’ve achieved so far.
Then, longer term, we have taken the cost basis of our high-density gigabit STT-MRAM device and have brought the benefits of that density in terms of the cost per bit back to the opportunity that we see in the industrial and IoT space. ”
Get the complete detail from reading the entire 2,813 word interview, exclusively in the Wall Street Transcript.
Jason Wilson is ETF Managers Group, LLC’s Cannabis Banking and Research Expert and Partner of ETFMG Alternative Harvest ETF (NYSEARCA:MJ).
Jason Wilson has held leadership and senior positions at several leading financial institutions. Most recently, Mr. Wilson was Senior Vice President at INFOR Financial Inc. INFOR is a leading boutique investment bank based in Toronto, Canada, that has worked in connection with a number of companies in the legal cannabis industry, including acting as adviser to Canopy Growth Corporation in connection with entering into its strategic relationship with Constellation Brands.
In this 3,736 word interview, exclusively in the Wall Street Transcript, Mr. Wilson explains and details the components of his marijuana based ETF:
“…The ETFMG Alternative Harvest ETF trades under the ticker MJ on the New York Stock Exchange and has been focused primarily on the cannabis industry since December of 2017.
As you mentioned, it is an index fund, which means it tracks an index of companies that are engaged in the cannabis industry. Currently, there are 35 companies in the index, and these are the holdings of MJ.
As of today, there are approximately $600 million in assets in the ETF. We have a daily trading volume of over 850,000 shares, which means approximately, at current price, around $12 million a day of volume. It has a 12-month trailing yield right now, at just over 6%.
The fund is a very interesting way to gain exposure to the cannabis industry and to wait for the inevitable growth or tailwinds behind the industry and actually receive a decent yield while we wait for further opportunities to unfold.”
The fund is geared towards investors looking to find an easy way to participate in this sector:
“When you look at the universe of companies that would be eligible for inclusion, we break them down as to whether or not they’re primarily engaged in the industry or have ancillary exposure, so that’s our initial driver. Any company that is primarily engaged, where they’re all in on the cannabis industry, are automatically eligible for a higher weight.
Companies that are good examples are Canopy Growth (NYSE:CGC), Aphria (NASDAQ:APHA), Aurora (NYSE:ACB), Tilray (NASDAQ:TLRY) and GW Pharma, as all of their revenues are related to the growing of cannabis or the manufacturing and sale of cannabis-related products. They are eligible for the highest weightings.
Ancillary companies, no matter how big they are, tend to have a lower weighting than those primary companies.”
Get the full detail by reading the entire 3,736 word interview, only in the Wall Street Transcript.
Sam Rubin is the President and Chief Executive Officer of LightPath Technologies.
Before LightPath, Mr. Rubin had a senior executive role at Thorlabs, where he was responsible for Thorlabs’ Imaging Systems Division, a standalone organization with its own sales and marketing, as well as global responsibility for all of Thorlabs’ life science activities.
Among the roles he upheld at Thorlabs, Mr. Rubin founded and grew Thorlabs’ operations in China, and spearheaded its entry and significant growth in the life sciences market. Mr. Rubin also led new strategic initiatives for Thorlabs, including new product lines, acquisitions and growth into new markets.
Prior to that, Mr. Rubin co-founded XLight Photonics, an optical communication startup, which was later sold to a telecommunications private equity firm.
Mr. Rubin holds a Bachelor of Science degree in electronic engineering from Ben Gurion University, a Master of Business Administration degree from New York University, Stern School of Business, and is a graduate of the Executive Education, Program for Leadership Development at Harvard Business School.
In this 3,857 word interview, exclusively in the Wall Street Transcript, Mr. Rubin details the strategic plans for his company.
“In the last few years, LightPath has taken that technology and extended it into an area called infrared, which means a completely different type of glass than the standard glass being used in regular lenses. We have been able to not only make the glass but also mold it into final shapes.
They are very cost-effective infrared lenses. The importance there is, when you look at consumer goods and almost any level of product that optics is significantly in, obviously the cost of the lens of the glass becomes more and more important.
As a recent example, one can take thermometers. We now see contactless thermometers being used such that they can be pointed at someone’s head or at a person to take a measurement without the person being touched. All of that is done with infrared optics.”
This creates an industry demand that is difficult to duplicate:
“…More of the world of optics and electronics and semiconductors needs a very small form of lens, such as the types we make, to be used in such devices.
The trend is now called integrated photonics. Basically, instead of the optics being completely separated from the electronics, they are being done together, so a chip is both a semiconductor and an optical device. Still, there is a need for a lens like ours to shape the light.”
This led to a recent demonstration of this competitive advantage:
“In China, its closure came right after the Chinese New Year, when we were contacted by the government during the Chinese New Year and asked to reopen the facility because of the growing need for our lenses in the devices that are used to measure temperature.
We were probably one of the first foreign companies in China to resume operation in the full…”
This competitive advantage is the basis for the future growth of LightPath:
“LightPath is really in a unique position from that point of view. We not only make the material ourselves, but we can also mold it into shape, which means we can mass produce it far more effectively…”
Get the complete 3,857 word interview with the CEO of LightPath, exclusively in the Wall Street Transcript.
Michel Letellier is the President and CEO of Innergex Renewable Energy Inc. Since 1997, Mr. Letellier has been a driving force at Innergex, first as Vice President – Finance, then as Chief Executive Officer before being appointed President and Chief Executive Officer in 2007.
His leadership of the corporation’s business activities has led to sound financial management and long-term sustainability, growing Innergex into a global energy producer respected by industry peers. Under Mr. Letellier’s strategic direction, the corporation has become a leader in the renewable energy industry, with activities on three continents.
In this 3,627 word interview, exclusively in the Wall Street Transcript, Mr. Letellier describes what it takes to put renewable energy projects into place, both economically and operationally.
“If we look at the historical cost to produce hydro, yes, it has been a success in bringing cheap and reliable energy. One of the nice aspects of hydro is that once you build the initial facility, the life expectancy of the assets is long; you have good hydro assets that last 16 to 17 years, and with a little bit of caring for the mechanics and civil works, you can even extend that life closer to 100 years.
For solar, in the future, we are looking at Chile as an example, and even in some places in the South of the United States, you could produce solar at a very competitive price.
You take into consideration the Production Tax Credits and Investment Tax Credits in the U.S., then the total cost to produce wind in many places is now below $40 per megawatt-hour. In some cases, you can challenge that to be closer to $30 per megawatt-hour, and solar will soon be in that range as well.
We were getting very close to producing solar at around $30 per megawatt-hour. Renewable energy is definitely going to be more and more competitive down the road.
The challenge is to make sure that the grid will be able to integrate this new intermittent renewable power coming onto it. Batteries will play a big role, and the price to produce batteries in my mind is going to follow the same path of cost reduction that solar experienced in the last 10 years.
So I am very optimistic of the fact that renewable energy, coupled with battery technology, will play a big, big role in the future of electricity in the United States and around the world and also be very competitive compared to coal or even natural gas.”
Get the complete 3,627 word interview with Mr. Letellier, only in the Wall Street Transcript.
Thomas Curran, CFA, is Senior Vice President of B. Riley FBR, Inc. With over a decade of experience as a senior sellside equity analyst, Mr. Curran has covered every segment of the energy equipment and services value chain as well as select other industries, e.g., desalination equipment, calcium chloride, power transmission, etc., and conducted due diligence and/or provided support for diverse array of equity offerings totaling over $775 million, including 144a, IPO, private placement and ATM — at the market — transactions.
He has been ranked number three out of 40 for stock picking in the energy equipment and services category in the 2018 Thomson Reuters Analyst Awards and has appeared in myriad media outlets, such as The Wall Street Journal, Bloomberg and Forbes.
In this 3,406 word interview, Mr. Curran details the current state of the small cap oil and gas sector, and how investors can position their portfolios.
“What happened is the global oil complex has been dealt two seismic shocks. One hit first on the supply side, and that was the breakdown of the original OPEC Plus agreement, or what was also called the Vienna Alliance, led by two of the three main competing oil export powers, and that is the Saudi-led GCC OPEC and then Russia.
What you had was a breakdown in the willingness to continue to constrain output, at least in part because you had the third major player — U.S. light tight oil — essentially being subsidized and rapidly growing share.
As a result of that breakdown, a brief production war erupted between Saudi Arabia and Russia that ran headlong into a nuclear strike that hit on the demand side, which was the evolution of the COVID-19 outbreak in China into a global pandemic.
That led to a historically unprecedented blow to global oil consumption. The IEA predicts global demand will contract by 9% this year, which is more than twice the size of the largest annual percentage drop on record: 4% in 1980. World annual oil demand only contracted by 1% in 2009 during the Great Recession and by more than 1% just five times between 1955 and 2019.”
This market disruption has led inexorably to an investment decision situation:
“Then, there are investors, and that client group is a mixture of energy-dedicated, value-oriented and opportunistic bottom fishers.
For them, we think even at these current levels, the stocks of the best-quality companies are offering a generational investment opportunity on a multiyear basis. As an investor, the longer your time horizon, the more attractive the risk/reward of the best-in-class names are here.
Our top pick overall is Aspen Aerogels (NYSE:ASPN). We have three names we like that we expect to emerge as secular winners in onshore North America.
All three of which are offensive completions players, and those are Liberty Oilfield (NYSE:LBRT), Select Energy Services (NYSE:WTTR) and then Solaris Oilfield Infrastructure (NYSE:SOI), and then finally, our favorite defensive idea is Archrock (NYSE:AROC).”
Get the full reasoning detail behind this stock picks in the complete 3,406 word interview, only in the Wall Street Transcript.
Travis Miller is an Energy and Utilities Strategist for Morningstar, Inc. Prior to joining Morningstar in 2007, Mr. Miller worked as a reporter at several Chicago-area newspapers, including the Daily Herald, Arlington Heights, Illinois. He holds a bachelor’s degree in journalism from Northwestern University’s Medill School of Journalism and an MBA from the University of Chicago Booth School of Business, with concentrations in accounting and finance.
In this 2,326 word interview, exclusively in the Wall Street Transcript, Mr. Miller sees some investment upside to US energy generation:
“There are two ways that investors can play the battery trend development. The first way is through upstream investment. That would be investing directly in the material stocks that produce the lithium, process the lithium and refine it into a battery-level type of material.
Morningstar has a top pick here called Albemarle (NYSE:ALB). It is one of the largest lithium producers. Our analyst has a 5-star, strong “buy” rating on them right now. It is the world’s largest lithium producer. Lithium represents about half of its total profits.
It has mines in primarily Chile and Australia. In Chile, it has the world’s lowest-cost lithium mine source. If lithium-ion becomes the technology that goes into the utility scale batteries, then certainly it would be a leader in that upstream area of electric vehicle battery demand.
The other way is to play the downstream investments in batteries, and that would be with utilities. Utilities are going to invest billions of dollars in battery storage over the next few years and multiples of that over the next 10 and 20 years.
All of that investment, if it receives regulatory support, will be a source of earnings growth for utilities. AES, in particular, has a joint venture with Siemens (OTCMKTS:SIEGY) to develop battery storage, and I would expect they’re going to be the leader out of the blocks on battery investment in the U.S.”
The country as a whole has a chance to make energy independence based on renewable sources:
“Solar alone will never supply 100%. But when you combine solar with wind, with batteries and with some other noncarbon or renewable energy sources, then I do think you can get to 100%.
Solar already is at the top of the investment list for nearly all investors, from utilities to corporates, who want to expand their renewable energy profiles. Most of the market agrees that solar is the accepted choice for incremental renewable energy. It will only grow over the next decade as utilities and energy companies try to meet the demands from policymakers and corporates.”
Get the full 2,326 word interview, along with more stock picks from this Morningstar equity analyst, only in the Wall Street Transcript.
