Robert Barrow, Chief Executive Officer and Board Director of Mind Medicine (MindMed) Inc. (NASDAQ:MNMD)
Robert Barrow is the Chief Executive Officer and Board Director of Mind Medicine (MindMed) Inc.
Mr. Barrow is an accomplished pharmaceutical executive and clinical pharmacologist with over a decade of experience leading drug development programs in a variety of disease areas.
After joining MindMed as Chief Development Officer in January 2021, he was named CEO in June 2021.
Mr. Barrow previously served as Director of Drug Development & Discovery at Usona Institute, where he oversaw preclinical, clinical and regulatory development efforts for all of Usona’s development programs.
Prior to joining Usona, Mr. Barrow served as Chief Operating Officer of Olatec Therapeutics, LLC, a private, clinical-stage biopharmaceutical company, where he oversaw the execution of numerous early- and late-stage clinical trials in the fields of analgesics, rheumatology, immunology and cardiovascular disease.
In addition, he has been responsible for the design and execution of preclinical research programs for new molecular entity drugs in brain health disorders.
Mr. Barrow has also served as both a technical and business adviser to numerous pharmaceutical organizations ranging from startups to Fortune 500 companies.
Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) has an ambitious agenda.
“When we look back at historical evidence and look at the mechanism of action, we believe there is an opportunity to impact a wide range of brain health disorders. I believe the opportunity is really vast. There’s such a common thread across many of these indications.
Our lead program, which is MM-120, our proprietary form of LSD, we’re developing for generalized anxiety disorder. And we’re doing so with psychedelics in sort of the traditional sense where we give a perception-altering dose in a clinical setting under observation.
The extraordinary promise of this use case is that we’re seeing after just acute intervention, many weeks or even months of clinical benefit in reducing symptoms of anxiety.
But we’re also exploring innovative treatment paradigms with this drug class. So we’re looking at sub-hallucinogenic doses of MM-120 in ADHD and other alternative approaches that we believe have been overlooked by the field.
Our other lead program, which is MM-402, the R- enantiomer of MDMA. We’re developing it to target core symptoms of autism spectrum disorder. The analogy we like to draw is that the way psychostimulants are used to treat ADHD, is how we envision R(-)-MDMA being used in autism — to enable enhanced social communication for individuals with autism.
We believe that there’s an opportunity that spans beyond just where we’re looking today.
But our furthest along program, one that is coming very quickly up to a clinical readout later this year is our MM-120 or LSD program in generalized anxiety disorder…”
Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) is conducting the largest experiments on humans with LSD since the CIA in the 60’s.
“We announced the completion of enrollment in our Phase IIb trial.
This is the largest modern study of LSD, and maybe perhaps the largest study of LSD ever conducted, certainly in a well-controlled setting.
It’s roughly 200 patients.
We dosed 198 patients in the study and follow them up for 12 weeks.
Our study includes five different arms, so it’s also the most comprehensive assessment of dose response in the entire drug class to date.
We expect to have a really clear indication of the activity of the drug acutely and over the course of four weeks where the primary endpoint is, then out to 12 weeks where our secondaries are in the study.
We believe that this will give us such an important insight into our development program.
And given that long history of research with the drug class, it also gives us a lot of clarity as we think about subsequent phases of development, engagement with FDA for a potential End of Phase II meeting, and really charting a path from the conclusion of the study to ultimately through a pivotal program, and hopefully to a marketing application one day.”
Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) LSD trials are testing a variety of dose delivery systems.
“…With our MM-120 program and going forward to subsequent development, we’ll be using Catalent Zydis orally-dissolving tablet, or Zydis ODT platform. They are ultra-rapidly disintegrating tablets that almost instantaneously disperse when they’re put in the mouth.
Our aim is to generate a differentiated profile of the product that can perform better, that has better pharmaceutical characteristics, that potentially has even more attractive pharmacokinetics.
When we think of some of the unique challenges and opportunities with this drug class and with historical formulations of LSD, we saw a real window to make significant improvements, to have a product that is both differentiated, that can help us protect our market and into the future, but also most importantly to perform as best as possible for patients to make sure that we’re providing a dosage form that really meets modern standards and that can be scalable and delivered out in a normal fashion.”
Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) has a potential addressable universe of 10% of the population with its LSD formulas.
“…Certainly one of the biggest things we’ve seen, there’s a recent study looking at the prevalence of generalized anxiety disorder.
Prior to the study, the belief was the prevalence of GAD was just over 3%.
And the most recent study indicates that the prevalence is actually more like 10%.
So I think the willingness to talk about it for many people, really worldwide, to go through a very challenging period of time both add strain on mental health and mental health care, and also gave people time to reflect and as a society, time to look at the stresses that were imposed both by the pandemic and all that that’s around modern life.
Of course, we aim to alter the trajectory of the mental health epidemic in this country and around the world.
But the reality is that the increase in anxiety and depression levels, the reality of increased screening for anxiety, which is now recommended for all adolescents and adults by the U.S. Preventive Services Task Force, has really shined a light on the severity of the problem.
I think when we look at the magnitude of the kind of impact we could have, it is enormous — which is of course a sad reality both societally and for all of those patients — but we believe it’s the right time for innovative new products and that there is such an urgent need that we can hopefully impact at a massive scale.”
Read the entire interview with the CEO of Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) to get all the details on the LSD application for official pharmaceutical use.
Mathieu Sirois, CFA, Partner, President and Senior Portfolio Manager, U.S. Small Cap Equities at Van Berkom and Associates
Tempur Sealy International (NYSE:TPX) and DoubleVerify (NYSE:DV) are just two of the top picks from US Small Cap Portfolio Manager Mathieu Sirois.
Mathieu Sirois, CFA, is Partner, President and Senior Portfolio Manager, U.S. Small Cap Equities at Van Berkom and Associates Inc., where he is responsible for all the investment decisions related to this product and for the management of the U.S. Equity Team, and for conducting research on a broad spectrum of the U.S. small-cap equity market.
Mr. Sirois is a member of the Executive Management Committee, a member of the board of directors and a significant shareholder of Van Berkom.
He became President of Van Berkom and Associates Inc. in 2021.
In 2007, he was promoted to the position of Senior Portfolio Manager for Van Berkom U.S. Small-Cap Equities, and prior to that, he was part of the U.S. Small-Cap Equity Team since joining the company in 2000.
Mr. Sirois is a CFA Charterholder (2003) and holds a M.Sc., Finance from HEC Montreal (2001).
His portfolio methodology leads directly to top picks like Tempur Sealy International (NYSE:TPX) and DoubleVerify (NYSE:DV).
“There are many, many examples in the past whether it’s small caps or large caps, where if you overpay for a good business, you may not generate above-average and outsized returns for your investors.
So at Van Berkom, it’s always been very, very important that all the companies that make it into our client portfolios, not only do they have all the quality criteria we’re looking at, but they have to be mispriced, significantly undervalued by the market.
And again, the small cap market being so big, being so opaque in many ways with the information flow, not as consistent as large cap equities, it creates these amazing situations where we can take advantage of big inefficiencies in our market to invest in a great business, but only when it is misunderstood and mispriced and undervalued by investors.
The way we go about this is, for any investment candidate that we strongly consider for our client portfolios, we go through a very deep extensive research process that involves several steps, and we look at all the quality criteria of a business and do research on each of these aspects, and we have to, with a lot of conviction and confidence say, “Yes, this company ticks all the quality boxes that we have.”
However, we also build a full detailed financial model on all of the investment candidates we’re seriously considering for our client portfolios, leveraging our deep knowledge, our superior knowledge, and using such superior deep knowledge for the key assumptions, key inputs of our financial model to project and predict 10 years of estimates, income statement, cash flow statement, balance sheet, through our proprietary research process, coming up with key assumptions on revenue growth, margins, working capital, capital expenditures.
From these estimates, we come to a discounted cash flow valuation methodology where we will estimate with a lot of conviction what the true intrinsic value of a business is.
And recognizing that a DCF — or discounted cash flow — methodology is quite sensitive to the assumptions that we’re using, we will work with various scenarios: a more pessimistic scenario for revenue growth, for margins.
What if the company is not performing quite as well?
A base case scenario which is really what we think is the most likely outcome for the next few years, and then a more optimistic scenario.
And that will give us, these three scenarios, a range of fair values of intrinsic values, and then we compare the current stock price, the current market value with this range of intrinsic values.
And if we see a double or more over the next five years, that’s when we will commit to a new investment in our client portfolio.
So we do a deep dive financial analysis, full discounted cash flow valuation, and then we also work with valuation multiples.
We look at historical valuation multiples in absolute, so relative to itself and also versus peers.
And again, applying historical valuation multiples that range to our five-year-out estimates gives us another measure of where the stock could be five years out.
Again, if we see a double or more over the next five years which is our typical investment horizon, then we will go ahead and commit to the investment.
So yes, we buy the very best businesses, great business model, great track record, fantastic management team, but we also want to buy these great companies in our client portfolios only when they’re undervalued, and that’s why we spend a lot of time assessing the true valuation of any business that we’re considering for our client portfolios.”
This methodology identifies companies like Tempur Sealy International (NYSE:TPX) and DoubleVerify (NYSE:DV).
“…There is no question that developing a better mousetrap, as they say, is one of the key advantages or investment merits of small cap companies.
Oftentimes, they create a better service offering, a better product, and then the smart management teams will build a strong moat around that offering such that it’ll become difficult for new entrants and existing competitors to try to replicate the offering, whether it’s a product or a service.
So innovation can play a role in all kinds of areas.
I’ll give you a few examples.
Tempur Sealy International (NYSE:TPX), the largest manufacturer and marketer of mattresses and bed products in the world — they in many ways develop products through innovation R&D that have become best-in-class and the most preferred sleep options from consumers, and therefore today, slowly but surely over the last two decades-plus, they’ve gradually gained shares to become the largest company.
A lot of it happened organically.
They’ve also acquired some competitors such that today, they have the best brands in the industry, highly sought after by consumers.
They have the best manufacturing, they have the best distribution, they have the best footprint at retailers, and they can outspend everybody else on brand-building, on advertising.
They can outspend everybody else in the industry on R&D.
So they’ll continue to innovate and outpace the industry and come up with products that resonate really well with consumers while also building their brand like nobody else is capable of doing it in the industry.
That’s an example of a company that has, through innovation in terms of marketing, in terms of manufacturing, in terms of R&D, has developed products that have been highly sought after, that have been synonymous with quality.
They’ve been able to gain share, and now it’s very difficult for the competition to catch up.”
“Then we have a company like DoubleVerify (NYSE:DV), they develop very sophisticated algorithms through a huge base database to help companies measure the efficacy and the effectiveness and efficiency of their online advertising.
So they help companies measure the efficacy, the productivity, the ROI on their digital advertising while also helping them prevent fraud on their brands, on their products.
So they’re detecting fraud, they’re helping companies measure the effectiveness of advertising.
They have the best data in the industry that they’ve been able to put together.
And now, through AI and machine learning, they’re coming up with very sophisticated algorithms.
So they work with most big advertisers, most advertising platforms, and they’ve steadily gained market shares within that market.
As the market has shifted more and more toward digital advertising from traditional, they’ve been able to benefit from that as a secular growth trend while continuing to innovate with additional products and functionalities such that this is a company that has maintained a very strong growth profile, very high returns, high margins.
So that’s another example of what innovation can do, especially in the small cap landscape.
I can go on and on.
We’ve got many such portfolio companies that have definitely benefited through innovation.
They’ve been able to build a great business model, and then gain market share as they’ve been able to sell these solutions, product and/or service to customers offering them a better mousetrap, better ROI, better value proposition, and then creating ingredients for a strong moat around this business such that they can sustain that outperformance, that faster growth and these market share gains.”
Get all the top picks beyond Tempur Sealy International (NYSE:TPX) and DoubleVerify (NYSE:DV) by reading the entire interview with Mathieu Sirois, CFA, Partner, President and Senior Portfolio Manager, U.S. Small Cap Equities at Van Berkom and Associates, exclusively in the Wall Street Transcript.
John E. Deysher, President, Bertolet Capital
Unifi (NYSE:UFI), Heartland Express (NASDAQ:HTLD), and Hurco (NASDAQ:HURC) are 3 top picks from John E. Deysher, CFA, President of Bertolet Capital.
John E. Deysher, CFA, is President of Bertolet Capital LLC, adviser to the Pinnacle Value Fund.
He is responsible for the fund’s daily investment activities and has more than 40 years of investment management experience.
From 1990 until 2002, Mr. Deysher was a Portfolio Manager, Senior Analyst with Royce & Associates, an investment firm specializing in the securities of small cap companies and adviser to the Pennsylvania Mutual Fund.
Mr. Deysher began his investment career with Kidder Peabody in 1983, where he managed equity and fixed income portfolios for individuals and small institutions.
He holds a bachelor’s degree from the Pennsylvania State University, and master’s degrees from both Indiana University, Bloomington (Business) and the University of California, Berkeley (Engineering). He is a CFA charterholder, and lives and works in New York City.
His three top picks are Unifi (NYSE:UFI), Heartland Express (NASDAQ:HTLD), and Hurco (NASDAQ:HURC).
“We’ve been buying three stocks recently. One is Unifi (NYSE:UFI), a Greensboro, North Carolina-based maker of texturized polyester and nylon yarns, used to make synthetic fabrics that go into apparel, home furnishings and automotive.
Roughly 30% of their yarns are made from recycled plastic so it’s an environmentally friendly company.
However, sales of apparel and home furnishings have been weak recently and they’ve had trouble passing through raw material cost increases.
Margins are under pressure, but the balance sheet is in good shape.
Once they return to normalized earnings, the stock price should go up.
They also have two activist shareholders, who own greater than 5% each, so perhaps they can make something happen.
Another name that we’ve been buying recently is Heartland Express (NASDAQ:HTLD), a Des Moines, IA based truckload carrier.
Post pandemic, the industry benefited from strong demand but now with demand returning to normal, margins and earnings are under pressure, hitting the share price.
They made two acquisitions that doubled their capacity which they’re in the process of integrating.
So there’s lots of room for improvement once the cycle turns and they’re paying down debt quickly.
We like companies like Heartland that increase capacity near the bottom of the cycle so they’re well positioned for the upturn.
The CEO has been buying shares, and the founding family owns 40%.
A third name we’ve been buying is Hurco (NASDAQ:HURC), an Indianapolis-maker of machine tool systems used to produce various types of capital goods.
The end markets are cyclical and sales and earnings have been trending down recently.
Hurco has been through down cycles before and their conservative balance sheet has always allowed them to emerge intact on the other side.
The yield is almost 3% and there’s no debt.
Hurco is also a net-net, a value investing concept pioneered by Ben Graham many years ago.
It involves selecting stocks having a market capitalization less than net current asset value calculated by subtracting total liabilities from current assets.
Hurco has a net asset value of $28/share — significantly above the current price of $21.
Finding quality firms like HURC trading at less than net asset value is extremely rare in today’s market.”
The process for identifying small cap stock picks like Unifi (NYSE:UFI), Heartland Express (NASDAQ:HTLD), and Hurco (NASDAQ:HURC) begins with an assessment of management.
“We look for a few things in management.
Are they hands on, honest, intelligent, energetic and opportunistic? Do they act as owners not caretakers?
Do they have a good grasp of strategic, operating and financial priorities?
That’s why the proxy is so important; it gives details on compensation, share ownership and prior experience.
We look closely at related party transactions which often indicate whether management is acting in the best interest of shareholders.
Assessing management is tricky.
Sometimes the management teams that we had high hopes for are disappointing and other teams we thought were average turn out to be exceptional.
Assessing management is just one element of our due diligence.
Viable business models, strong balance sheets and other elements are also very important.”
The fund has had difficulty in finding small cap value in recent months.
“…We are holding more cash simply because we’ve taken profits in a lot of names that we bought during the lows of the pandemic.
They’ve worked out well and now trade at or above our estimate of intrinsic value.
We’d like to put the cash to work and are looking diligently for opportunities.
Holding lots of cash is not a market timing move but a consequence of the absence of compelling opportunities.
We’d like to bring it down as soon as possible…
We have a few concerns.
While we can’t predict where the economy or interest rates go, we do think about the consequences for the stock market.
Whether the Fed can engineer a soft land remains to be seen.
Our $33 trillion national debt may have some serious consequences at some point.
We’re also concerned about the amount of financial leverage embedded in the system as a result of low interest rates.
Many firms have variable rate debt that ratchets higher with each uptick in interest rates.
Bankruptcies are at their highest level in a decade and we expect more to come.
We’re also challenged by the proliferation of competitors like private equity, venture capital and hedge funds.
Many have large pools of capital to put to work and are often willing to pay higher valuations for public companies than we are.
Our universe of investable public companies has declined dramatically over the years since many have been acquired by strategic or financial buyers.
It’s also increasingly difficult to get proprietary information that no one else has.
We work hard at this, but the internet has really levelled the playing field so it’s a challenge.
That’s why maintaining a strong relationship with management is so important.
The only silver lining is that with higher interest rates, many potential deals may not generate the returns necessary to justify an investment.
We also think prospective buyers — strategic and financial — are thinking carefully about how a potential slowdown might impact future earnings.
So going forward this might trigger a reset in valuations that allows us to accumulate positions at reasonable prices.
So, we’ll stay conservative and let valuations be our guide.
We have a universe of 100-plus companies we’ve done the work on and want to own at the right price.
At some point there will likely be a disruption of some type that will present opportunities to put our cash to work.
While we think about the economy, we try to focus on events that impact the stocks we own or would like to own.”
Unifi (NYSE:UFI), Heartland Express (NASDAQ:HTLD), and Hurco (NASDAQ:HURC) are three of many stock picks from John E. Deysher, President of Bertolet Capital.
Read about more in the complete interview, exclusively in the Wall Street Transcript.
John E. Deysher, CFA, President, Bertolet Capital LLC
www.pinnaclevaluefund.com
email: deysher@pinnaclevaluefund.com
Peter Ritz, FatBrain AI Co-Founder and CEO: LZG International Inc. (OTCMKTS:LZGI)
Peter B. Ritz is the CEO and Co-Founder of artificial intelligence pioneer FatBrain AI (LZG International Inc.).
Mr. Ritz has also served as an executive advisory board member for Exceda and as a Co-Founder and Managing Director for KeystoneNAP.
Additionally, he has been an Adjunct Lecturer at the University of Pennsylvania Law School and a Managing Director for CloudR Labs LLC.
Furthermore, he has served on the Service Provider Advisory Board for VMware and as President, Managing Director, and Co-Founder of Xtium.
Mr. Ritz received a B.A. in Biochemistry and Molecular Biology and a B.S. in Computer Science from the University of Maryland, and an A1 in Science from Baltimore Polytechnic Institute.
FatBrain AI was an artificial intelligence technology pioneer.
“…We were actually founded as a business in 2015, way, way before the words AI were really interesting or would get people excited about what’s going on in their daily life.
And the way we got started was working for really large companies.
Some of the customers we had early on were people like Goldman Sachs, to help them with trading optimization; folks like Comcast, to help them get the viewership for their clients better, and so on.
And people like Bank of America, to get the financial crime compliance in line and everything else.
But a few years back, we thought what would be really powerful is to take those kinds of AI solutions that we’ve been delivering to really large, well-capitalized businesses and aim them at helping the sector of the economy, what we call the middle of the pyramid, that drives most growth, both in terms of jobs and just overall economic activity.
And that is businesses that are 500 people or less; some are in finance, some are in health, some are in landscaping, plastic surgery, you name it, but it’s really the middle of the pyramid that we think has a tremendous value, both in terms of mission going forward to grow everybody’s fortunes together, but also impact.
And we have technologies that help along with that, and we have a focus to drive that value.”
LZG International (OTCMKTS:LZGI) artificial intelligence is based on “peer intelligence”.
“We’ve all actually used peer intelligence in traffic navigation. Anybody who’s ever used the Waze application usually understands that, because people are driving relatively close to you on the road, they are contributing their speed and some other information into a bigger traffic awareness and insight, and you’re able to navigate better and faster.
So, in this case, each contributes a little bit of their data, their personal data, into this bigger hole. And all of a sudden everybody can see better and avoid traffic better. So that’s how we’ve all experienced an example of that.
We took this simple idea, and we took it into what we call peer intelligence, as you said. And the example there is, the first thing that businesses normally would like to know is, how are they doing in their region? And specifically in their sector? If you have a landscaping business or if you have an insurance business, how am I doing versus my peers and what does that really mean?
And by the way, if you’re a large company, this is what McKinsey would do for you. The first thing that the management consulting firm McKinsey will do for you is just ground you as to where you fit, which quantile you fit in relative to your peers. So this first step in peer intelligence is to get you to understand quantitatively where you fit.
Just coincidentally, it’s a fundamental need we have as human beings because we always want to know, wait a second, where are we relative to the outside world? So, every business in this context wants to know, where do they fit relative to their region, relative to their market, and so on. So, it’s one of the things that the idea of peer intelligence gives you.
The next thing that’s very interesting that we’re able to provide is, wait a second, if I am in the middle quintile, right in the middle of the pack, or maybe I’m below the middle, how do I actually advance? What’s a practical way for me to podium up and become top quantile or better and do this on a continuous basis, so I can always improve?
And that’s a little bit of the two sleeves of what peer intelligence usually provides. One is, where am I today? And then two, how do I get to improve and what are the simple practical things I can do to get there? So those are the two things that we think are a big deal for every business to try to improve what we call their business wellness.
We have so much data coming to us now from our general ledger, from our portals and everything else. So the data is there, but how you make sense of it so it can help you improve in really simple ways is what peer intelligence is all about.”
The applications from LZG International (OTCMKTS:LZGI) artificial intelligence technologies are increasing rapidly.
“…We have a solution in a foreign exchange market.
There is a study that we use to underpin our solution and this study was by the International Monetary Fund, which found that small business that imports into United States or exports from United States pays 25 times more in foreign exchange fees, if you will, than some of the larger businesses that have treasury departments and manage these things.
And in very simple terms, small business always gets hit pretty hard. If they have a $50,000 or $100,000 invoice and they have to convert it from, let’s say, Norwegian kroner or they have to convert it from some South Asian currency into dollars and vice versa, they pay 25 times more — not 25%, 25 times more — for this kind of transaction.
And we’re able to do all sorts of things to help them and really save a lot of money.
What’s interesting in this context is in a clothing industry and it’s called the wholesale industry, there is a strange dynamic happening.
Because of COVID, government has subsidized a lot of grants and loans and other things to help businesses during the pandemic.
All those subsidies are going away.
In other spaces as well, but just keeping with the clothing wholesale business — and by the way, it’s a $60 billion business, so it’s a meaningful business just in the U.S.
Well, the problem is, they used to have factoring on their invoices that were 2% to 3% in terms of the interest rate on the factoring for that invoice.
Today, with inflation and all the interest rates going up, it’s ballooned probably closer to a double-digit number.
So the big issue everybody’s figuring out is like, oh my god, what can we do?
Well, we have a solution that, through a subscription, is going to substantially decrease the cost of that ballooning factoring interest rate and improve something on the foreign exchange front.
So as a bundle, it provides a tremendous saving.
So we see it from a customer perspective of what’s the customer facing, and how we can help.
And what we’re very excited about is that not only can we help, but there’s great solutions to almost unlock them from their existing relationship that’s going to charge them a double-digit rate in addition to the foreign exchange situation and really help them along through a subscription.
So we think that’s going to be helpful to them and it’s going to be super accretive to us.”
Get all the detail on the development of artificial intelligence applications from FatBrain AI by reading the entire interview with Peter B. Ritz, the CEO and Co-Founder of FatBrain AI (LZG International OTCMKTS:LZGI), exclusively in the Wall Street Transcript.
Larry Jasinski, CEO, ReWalk Robotics Ltd.(NASDAQ:RWLK)
ReWalk Robotics Ltd. (NASDAQ:RWLK) and its new acquisition Alter G are technologies that permit stroke, accident and warfare victims new hope for regaining mobility.
Larry Jasinski has served as Chief Executive Officer and as a member of the ReWalk Robotics Ltd. board since February 2012.
From 2005 until 2012, Mr. Jasinski served as the President and Chief Executive Officer of Soteira, Inc., a company engaged in development and commercialization of products used to treat individuals with vertebral compression fractures, which was acquired by Globus Medical in 2012.
From 2001 to 2005, Mr. Jasinski was President and Chief Executive Officer of Cortek, Inc., a company that developed next-generation treatments for degenerative disc disease, which was acquired by Alphatec in 2005.
From 1985 until 2001, Mr. Jasinski served in multiple sales, research and development, and general management roles at Boston Scientific Corporation.
Mr. Jasinski holds a B.Sc. in marketing from Providence College and an MBA from the University of Bridgeport.
“ReWalk has been primarily focused on exoskeletons that allow paralyzed individuals an ability to walk once again. And most of our strategic focus has been built around gaining CMS reimbursement, because 56% of that population relies on Medicare. So our mission has been really driven around that one product.
Part of our longer-term growth goals was to use some of the cash we had and the structure in which we worked to add additional product lines, to help us on the pathway to profitability. And so the combination of where our focus has been from a technology point of view, expanding to adding more product lines, to have the company profitable on its current cash balance.”
ReWalk Robotics Ltd. (NASDAQ:RWLK) CEO explains the acquisition of Alter G.
“First, for the reason that we are focused initially on the clinics where our patients get trained and AlterG is highly active in the U.S. marketplace with products in over 4,000 clinics worldwide. But importantly, almost all the clinics where we would sell the ReWalk have AlterG.
So there’s an immediate synergy of the companies where they have relationships in places where we want to be able to expand the exoskeleton presence once we have CMS payment.
So that’s the excellent part of the fit at a high level because we need those doctors to write prescriptions once they believe this can be paid for.
But parallel and equally important to us is that they brought a very innovative nominal technology that’s heavily used in the clinics.”
ReWalk Robotics Ltd. (NASDAQ:RWLK) has recently gained new US government reimbursement support.
“It is probably the most significant thing that’s happened, will ever happen to this industry other than the creation of the product.
The whole challenge with this market has been lack of access.
So, we had plenty of people or doctors that would like to prescribe for someone to be able to walk once again.
But it’s a population that generally didn’t have the means to get the equipment and use it on a day-to-day basis.
Specifically with CMS, we spent many years building up our database.
When we first gained our FDA clearance, we had less than about 10 papers.
In the citations that have developed from all those smaller studies and two randomized studies over the years, we have 117 citations in a lot of what was provided to CMS.
The steps at CMS are important.
We went through a public hearing process and did have a code created for the category of exoskeletons for the industry.
Once that code is created, it then needs a benefit category in which to be paid, and pricing.
The major development on that occurred in June of this year when a proposed rule was published by CMS.
It is currently in a 60-day comment period, which is just coming to its conclusion — August 29 is day 60.
Then they will issue a final rule based on the comments they gained in that period.
That will issue approximately in November.
In parallel, the pricing will begin moving along as a part of the process with a pricing proposal at the next HCPCS meeting, which we think will also be in November or so — pricing that may go through a public comment period — and then we can finalize pricing early next year.
So the rule will take effect in January, the pricing will be very close to that.
In parallel, we have already started submitting patients’ claims.
So we put 11 in in June; we’re going to put in about 35 this year.
And so, we are at the beginning stage of all these patients who lacked access having the ability to stand and walk once again.
So the progress in CMS has been our number one focus and we’ve hit a major milestone so far.
The next one is this rule, pricing, and the first units being paid for…
Germany is still our strongest market.
That will be eclipsed rather quickly by the United States just by virtue of the size of the two markets.
And our primary focus today has been the United States and Germany. They’re sizable markets.
They will have a method to pay in the United States hopefully soon and the Germans are now covering it.
The other element in the United States is the VA does pay for it.
So we do have one vehicle here.
Outside of that, we have spotty coverage.
We see some other countries starting to follow the German lead in Northern Europe.
But generally, the sales outside the two major direct markets for us are either by individuals that self-pay or that find other means to pay.
So in the future, hopefully some of these other countries will adopt the policies that the German and American governments are heading towards…
The device has a list price of $186,000.”
ReWalk Robotics Ltd. (NASDAQ:RWLK) CEO Larry Jasinski emphasizes that patient outcome drives his business forward.
:…The changes in patients’ lives are as dramatic as ever.
When a person could stand up and stand with their spouse or children for the first time and walk with them again, it’s life changing.
And that hasn’t changed in any manner or measurement with what we’ve gotten.
And it’s something to really pay attention to why we believe we’re getting coverage for this product, it’s because it is life changing and of great benefit.
It’s just taking the time to work through these systems that we’re pretty much on track — it just seems like it’s been a long time.”
Get the complete picture by reading the entire interview with ReWalk Robotics Ltd. (NASDAQ:RWLK) CEO Larry Jasinski, exclusively in the Wall Street Transcript.
Larry Jasinski, CEO, ReWalk Robotics Ltd.
Marlborough, MA 01752
www.rewalk.com
Keyvan Mahajer, CEO, SoundHound AI, Inc. (NASDAQ:SOUN)
Artificial Intelligence (AI) covers alot of different target markets and SoundHound AI, Inc. (NASDAQ:SOUN) is the platform that supports artificial intelligence (AI) voice interface technology.
Keyvan Mohajer is Co-Founder and Chief Executive Officer of SoundHound AI, Inc. (NASDAQ:SOUN).
Inspired by science fiction and the promise of speaking naturally with the devices around us, Mr. Keyvan launched SoundHound.
As Co-Founder and CEO, he envisions a world where custom voice assistants transform how we interact with machines — making lives more convenient and productive.
Mr. Keyvan earned his Ph.D. in Electrical Engineering from Stanford University.
“I was a Ph.D. student at Stanford, specializing in speech recognition and machine learning and AI, and our vision with my co-founders was that what we now call voice AI would happen in our lifetime.
So, within our lifetime, we would talk to computers and robots and devices in natural language and they would speak back to us, and we can ask them to do things and ask for information. It’s a vision we came up with nearly 20 years ago and it was ahead of its time.
We started the company to be a part of that transformation, and we knew that it was a long-term vision. In fact, I always said from the start that this transformation will happen in about 20 years. This is SoundHound’s passion and our vision and our mission.
We spent the first 10 years building all the voice AI technologies that we needed. It’s very rare for companies to have all the ingredients for voice AI. We didn’t want to be a system integrator or to use other people’s technologies. We thought we needed to invent and own the technology so that we could disrupt and leapfrog the voice AI space, by making it ahead of the state of the art.
And in 2015, we unveiled our voice AI platform. In 2016, when we launched it, we raised several hundred million dollars from strategic and financial investors, companies like Nvidia, Samsung, Hyundai, Oracle invested in us, and then we went public in 2022.”
SoundHound AI (NASDAQ:SOUN) CEO Keyvan Mohajer predicts a bright future both for AI and his company.
“We have three pillars of revenue.
In the first pillar, we provide a branded digital assistant to physical products like cars, TVs, IoT devices and the revenue is a form of royalty.
The device manufacturers pay us a royalty for our technology.
We believe every device should have an AI assistant.
It’s the future of human-computer interfaces and 75 billion IoT devices that are projected by 2025, I believe.
A lot of these devices can’t have a touch screen, they don’t have a keyboard or a mouse, but they can afford a small inexpensive microphone and that’s all it takes to voice-enable products.
So, our pillar one is royalty revenue from devices where we provide digital assistants.
In the second pillar, we provide AI customer service for businesses.
Let’s say you call a restaurant to place an order for food, instead of a person picking up the phone, or not picking up the phone and missing out on the orders, our AI will pick up the phone, take the order, and put it on the restaurant’s point-of-sale system.
Other examples include appointment booking, reservations and so on.
The revenue model of the second pillar is subscription.
Businesses will pay us a monthly fee for our AI customer service.
If you think about pillars one and two, they can succeed on their own without one depending on the other one.
We can provide that to devices and services with well-proven business models.
Now that brings us to the third pillar, which is when we bring these together — we can bring the services that we voice-enable to the products that we voice-enable. Let me explain.
Imagine you’re driving your car and you’re talking to your car to control the radio, to play music, to control the air conditioning, to control your navigation.
And then you can also talk to your car to find restaurants and order food.
And you can have the food be ready for pick-up when you get to the restaurant or have it delivered to your house.
So you don’t even have to go to the drive-thru.
You don’t have to call the restaurant.
You don’t have to use a mobile app.
You just continue to talk to your car, and you can order food, you can book appointments, you can make reservations, and so on.
This is our third pillar.
The revenue of this pillar is monetization revenue because the leads we generate for the businesses, like restaurants and other merchants, are new leads for them.
It’s not their existing users that are calling them directly.
If you’re generating new users and transaction opportunities from the users of these devices — like drivers of cars and viewers of TV devices — the businesses will pay us for that lead generation, and we will share that revenue with the device maker.
This means the car maker makes money, the TV maker makes money from providing a service, and most importantly the end user is happy because they have the convenience of a voice-enabled transaction.
We expect our third pillar will create a flywheel effect, because more services will want to be on our platform so they can get new leads. More products will adopt our platform because they can generate revenue while making their users happy.
And the end users, the most important part of this equation, will be happy because of the convenience of a voice-enabled transaction.”
The SoundHound AI (NASDAQ:SOUN) product is constantly being improved.
“…The current state of voice and conversational AI is that it has become really good. And in just the last six to nine months, we’ve seen an inflection point where they became so good that the technology can be better than humans. The path to mass adoption is very clear.
So they’re very good today, but they will always get better. And that’s what makes our job really exciting, because even though our technology and solutions are incredible today, our job will never end. We can make it better and better every day.”
To get the complete picture of the future for SoundHound AI, Inc. (NASDAQ:SOUN), read the complete interview with CEO Keyvan Mohajer, exclusively in the Wall Street Transcript.
Jack Abuhoff, CEO and President, Innodata (NASDAQ:INOD)
Innodata Inc. (NASDAQ:INOD) has been developing artificial intelligence software for 7 years and this R&D investment has been winning major contracts.
Jack S. Abuhoff has served as President and Chief Executive Officer of Innodata Inc. since September 15, 1997, and a director of the company since its founding in 1988.
Mr. Abuhoff served as Chairman of the company’s board of directors from May 2001 to June 2020.
Since joining the company, Mr. Abuhoff has focused Innodata on helping information and media companies create and maintain leading information products.
From 1995 to 1997 he was Chief Operating Officer of Charles River Corporation, an international systems integration and outsourcing firm. From 1992 to 1994,
Mr. Abuhoff was employed by Chadbourne & Parke, LLP in connection with its joint venture with Goldman Sachs to develop capital projects in China.
He practiced international corporate law at White & Case LLP from 1986 to 1992. Mr. Abuhoff holds a B.A degree in English from Columbia College (1983) and a J.D. degree from Harvard Law School (1986).
The Innodata Inc. (NASDAQ:INOD) CEO explains the target markets for his artificial intelligence software.
“The way that we use computers today for mundane tasks — booking airline fares, renting an apartment, shopping online, getting tech support — it’s all going to change.
The new interface is going to be conversational.
And the work that people do — that is going to fundamentally change as well.
Just as an example, we are working with one of the largest banks in the world right now, looking at the way they perform certain work and we are building new generative AI-enabled platforms that will help you do this work in a fundamentally different way.
They recently told us that what used to take them three hours is now taking them 45 minutes using our AI-enabled platform.
And we are just at phase one in what will likely be three phases of this project.
I think, eventually, where that gets them is the thing that used to take three hours will take them about ten minutes…
We’re developing a platform to help banks comply with global regulation.
So if you’re a regulated entity, one of the problems you have is knowing when the expectations of the regulator have changed.
They issue new guidance.
They issue new directives.
They issue new law.
You need to know what’s changed and then you have to know how it impacts your business.
The platform that we are developing helps do all of that.
It helps you track the regulators, helps you identify changes in law, helps you even identify prospective changes in law.
And then it automatically connects that change or potential change to the areas of your business that are or could be impacted.
What we’re building is a $2.4 million-a-year subscription product that they’re already paying for.
We own the IP and will be showing it to other potential customers next year.”
Innodata (NASDAQ:INOD) artificial intelligence software is winning major new contracts.
“…We’re under strict NDAs, so I cannot refer to any customer by name.
But when people talk about the Big Five, they are referring to Amazon, Apple, Microsoft, Google and Meta, and we are able to say without violating NDAs that of those five, we are now working with four out of the five.
Large language models are a class of generative AI that is widely associated with OpenAI’s GPT-4 and ChatGPT.
The Big Five technology companies are super-focused on this technology, which has been widely reported and which they each have talked about publicly.
They’re in a veritable arms race to build competencies and leadership in these technologies and we are privileged to be a part of their journey.”
The Innodata Inc. (NASDAQ:INOD) CEO details some of these successful contracts.
“That is a program we recently announced with a large cloud provider — one of the recognized hyperscalers — under which we will be providing AI data engineering to its customers.
The primary business of the hyperscaler is selling compute and storage.
That’s their primary business.
They’re very well positioned to benefit from generative AI, because it is compute and storage intensive.
Therefore, to capture this market opportunity, they’re very committed to having a full ecosystem of capabilities that a developer needs in order to build and deploy and manage large generative AI models and applications.
One of the things that’s needed is data engineering.
In our deal with the hyperscaler, it stands up a data engineering offering and we fulfill it.
So the exciting thing about that for us is —well, there are several but I’ll name two. The first is that it’s an opportunity for us to scale, standing behind the brand and the distribution that one of the largest technology companies in the world has.
Our constraint is always our own sales and marketing, which is just eight people presently in our AI solutions and services area.
How do you really make a dent in the world with eight people, once you get beyond the areas of concentrated spend in this area?
The white label program enables us to potentially overcome that limitation.
We don’t need to do the selling — they do the selling, they do the marketing, we do the execution.
So that’s the first thing.
The second thing that’s really super-cool is virtually every company in the world right now is thinking,
“What will our AI strategy be? What will our large language model strategy be? Where do we integrate? Where do we build our own? Where do we fine-tune? How do we fine-tune? How do we use our proprietary data assets with these technologies without compromising our data?”
They’re all thinking about these things, but the earliest adopters are doing something about it.
By virtue of this white label program, we will be again in a privileged position to work with those earliest adopters, learn a lot, experience a lot, see what the use cases are and grow with it such that when the early majority heads our way, when the majority comes calling, we are going to be progressively in a better and better position to help them achieve their goals.”
Get the complete strategy picture for Innodata (NASDAQ:INOD) and the development of its artificial intelligence software by reading the complete interview with CEO Jack S. Abuhoff, exclusively in the Wall Street Transcript.
Mike Knowles, President and CEO, One Stop Systems (NASDAQ:OSS)
One Stop Systems (NASDAQ:OSS) is creating an industrial platform for edge related artificial intelligence.
Mike Knowles is the President and CEO of One Stop Systems (NASDAQ:OSS).
Mr. Knowles has more than 30 years of leadership experience in global aerospace and defense markets, including Cubic Corporation, Rockwell Collins, Lockheed Martin, and Curtiss Wright Defense Solutions.
Over his career he has effectively developed and launched market-changing technologies and products in both defense and commercial markets.
As President and GM of Cubic Corporation’s Mission and Performance Solutions business, Mr. Knowles led a $700 million global business unit with 2,000 employees.
Mr. Knowles is a retired Navy Officer, AEDO, and graduate of the U.S. Naval Test Pilot school.
He has a bachelor’s degree in aerospace engineering from the U.S. Naval Academy, a master’s degree in aerospace engineering from the U.S. Naval Postgraduate School and an MBA from George Mason University.
The One Stop Systems (NASDAQ:OSS) explains the appeal of artificial intelligence software deployed to US troops.
“…If you look at the defense posture of the U.S. and its allies versus our adversaries, you will see that our adversaries tend to have a more centralized command and control system.
They will bring back sensor and other intelligence information to a centralized location where a limited number of commanders can make a decision, determine actions and then issue orders to execute.
They’re counting on a centralized leadership group and massive volume of assets to be able to execute their strategies.
The United States and its allies have taken a more distributed approach because they may not have such an overall volume of assets.
Their strategy is based on being able to move command decisions out to the edge where commanders and sensors operate.
Commanders can make decisions and act locally based on the information that they can utilize there and not have to rely upon a centralized location, which can take longer to make those decisions.
Artificial intelligence and machine learning processing at the edge allows you to make decisions faster with fewer people and allows you to act faster than your adversaries.
So this is the driving force behind the big pull for artificial intelligence, machine learning and edge processing in the defense market.
Very similarly, inside the commercial aspect, time is money, and action and business are local. So if you’re thinking about elements like autonomous trucking, the truck has a sensor suite of systems with forward-looking infrared, radar and visual systems that all must be processed and managed by AI.
This enables the truck to operate autonomously in real-time.
The capability opens up the opportunity, for example, to do long haul routes from the West Coast to the East Coast in significantly less time than driver-controlled vehicles do today.
Another example is agriculture or organic farming, using lasers to manage weed infestations.
The sensors used to differentiate weeds from crops require significant amounts of processing to run the associated AI application.
And you can’t do that through the cloud given latency and connectivity constraints.
You need to do that on the tractor, in the field. In doing so, you can tender and process fields faster, which means you can turn crops quicker and efficiently.
So there is opportunity to apply artificial intelligence for defense or commercial applications at the point of action, and this has been driving the increased demand for AI in these markets.”
One Stop Systems (NASDAQ:OSS) is partnering with all the right companies.
“On the hardware side, we have an especially strong partnership with Nvidia (NASDAQ: NVDA). We are one of a few companies to become a Nvidia certified provider. This certifies that any software that has been developed on Nvidia products will run in any of our systems.”
we have successfully completed the CEO transition as a key element of the company and board growth strategy.
This will help to more effectively drive the company’s growth with an eye toward accelerating its position in the defense market.
In support of this strategy, we were also happy to announce the recent addition of a new VP of sales, Robert Kalebaugh, to the team.
Robert and I worked together for the past decade at our previous firm, and he brings to OSS 35 years of sales and marketing experience in the defense market.
Another big takeaway was that I found the core strategy around bringing data center level performance to the edge was sound and that we had room and ample opportunity organically to grow in both the defense and commercial markets.
Lastly, I have been impressed with the scale of available products that we have in terms of their capability, as well as the various cost points where we can competitively solve solutions at different levels of need in compute capability and cost point.
I think all of these factors reinforce that OSS is in a good position with strong differentiating products in a growth market and has a strategy that makes sense. It is now all about accelerating the capture of this great market opportunity…
We’re in a very promising market that’s showing no indication of slowing down, both in commercial and defense, and we have a sound strategy and differentiated products and capabilities. We’re helping organizations capture the advantage that artificial intelligence and machine learning is bringing to their capabilities, and the related demand for greater processing power has been growing every year.
I think one of the other interesting dynamics of our market is that you can take many existing platforms — such as trucks, aircraft and military vehicles — and apply artificial intelligence and computing to make them more capable without having to redesign and rebuild a whole new platform.
This is an interesting economic aspect which I believe will continue to substantiate this market for quite some time.
I also believe that we’re in this strong market space with a differentiated offering. We bring leading-edge compute and storage and switching fabric capability that is better than our competitors.
The industry relationships I mentioned, like with Nvidia and others, bring with them the opportunity to do things in the market that others are unable to do.
And so, we can offer some differentiated capability and leverage this to capture new opportunities and grow the business.”
Read the entire interview with One Stop Systems (NASDAQ:OSS) CEO, exclusively in the Wall Street Transcript.
P. Ross Taylor III, a Partner with ARS Investment Partners
Perma-Fix (NASDAQ:PESI) has a strong advocate in P. Ross Taylor III , a Partner with ARS Investment Partners.
“We figure all good things come eventually out of cash flow.
The skill set I use in our small-cap area — and also in our all-cap area — is very similar to that which people I know in private capital managements use.
We’re trying to see what a business can produce in the way of free cash flow, what catalysts are out there, what things we see.
For example, in our small-cap area, we own shares in a company called Perma-Fix (NASDAQ:PESI).
It’s basically a nuclear cleanup company.
They actually have a business with Hanford nuclear reservation, probably the most polluted place in the western world. The government’s been looking at cleaning up for decades, but Perma-Fix (NASDAQ:PESI) has a unique capability to pull low level nuclear waste out of water.
Hanford has to separate the waste into high- and low-level waste.
Perma-Fix (NASDAQ:PESI) can literally just pipe the water that comes out in a process called vitrification.
They can pull the low-level radioactivity out of the water, make the water good, and recycle the water back into Hanford and get rid of the low-level wastes.
That’s a unique player in that space. There’s really no one else who does that. That’s a real control choke point.
We look at that as a company that’s trading now around $12. We think from that one project the company will earn a run rate or $3 a share a year, and it will grow from just that one project.
If I’m a private capital, I would love to own all of that business. And that’s the other thing.
We’re always saying, “Would I want to own the whole business?” Would I own a business at $12 a share right now that’s like that? All day.
If I can buy it on 50% to 75% levered, that means I can turn around and as a private capital guy, I can buy from that one project $3 a share in earnings, and that’s just that project. Other projects that make them higher.
What’s that going to be worth?
Well, I don’t think they’ll ever run out of nuclear waste at Hanford, honestly.
But let’s just say they talk about it being 40 to 60 years’ worth of work that needs to be done. That’s well beyond most investors’ horizons, but I would love to own that.
If I’m a private capital guy, I’m interested in owning that entire stream of business, because if I paid $20 or $30 for that stock, I’m going to make a really nice cash-on-cash return over the life of that investment.
So that’s kind of how we’re looking at it.”
The well regarded professional looks at the Perma-Fix (NASDAQ:PESI) stock financially.
“If I pay $20 and I put up 40% of that in cash, put up $8, that $8 is going to generate me $3 a share in earnings power, which should be free cash flow.
You think about, that’s 37%, 38% annualized return at a 70% premium to the current stock price.
And they do have other business that I think could earn another $1 to $5 a share.
So that’s why the inefficiencies are so great. And it’s also why we work with management.
Frequently, these companies aren’t as sophisticated.
Oftentimes, a major corporation will have more people on IR than these people have in the entire administration of a company.
And they don’t always get the best advice frequently.
I have a friend who used to head investment banking at a place, and he used to say, “I can tell you three things about investment bankers. They know nothing about investing. They know nothing about banking. They know everything about their comp package.”
They go to an investment banker and think, “Wow, these guys are smart. These guys are interested in a transaction.”
They’re not interested in maximizing the value of the company.
So we’re trying to find places where we can work with management.
We have at times helped lead to management changes. Through my career, I’ve done a lot of that.
But we’re not an activist.
What we’re looking at is how we get this story realized.
How we get it put out there.
So we talk to companies, and we will say, this is how you need to message.
We just say this is what from our perspective on our side of the street, the buy side, this is what we think the issues are…Something like a Perma-Fix (NASDAQ:PESI) — what we’d be saying is, “OK, our work says you can earn $3 a share out of this one particular business.”
Last quarter, they were trading at nine.
That’s inefficient.
How are we going to close the inefficiency gap?”
The ARS Investment Partner sees value in various small cap stocks besides Perma-Fix (NASDAQ:PESI).
“We have a micro-cap name in the defense space, TechPrecision (NASDAQ:TPCS).
They make key components for attack and ballistic submarines, as well as for certain aircraft programs.
We know the United States has a bunch of nuclear submarines of both varieties.
The attack submarines are the ones that go into war.
They do what you think submarines do.
They hunt other subs and ships and attack land targets.
And then, the ballistic missile subs are basically sitting quietly underwater waiting for Armageddon.
And both of our fleets are well past age.
The cool thing about a nuclear reactor is that it runs forever.
But the bad thing is when the fuel goes bad, then you have to take it into the harbor and fill it up with uranium.
That generally means you have to cut the hull open and pull the reactor, all sorts of things — which, by the way, benefits Perma-Fix (NASDAQ:PESI) because there’s the chance to clean that waste up.
There’s a circle here. But we’re watching here.
There was an editorial in The Wall Street Journal where a senator said, “We need to be able to build more than two attack submarines a year.”
The House Republicans in their version of the Defense Appropriations Act put a rider that says we need to build more than two attack submarines a year.
There’s a group of senators who have said the same thing.
Right now, we’re building 1.2 a year, where the Navy has said we need 66 total, I think it is. They see us in seven, eight years being down to like 46.
That’s a lot of subs but you can only usually get about a third of your subs at sea at any time.
About a third are being fixed, a third have just come off patrol, and a third are on patrol.
So, 66 means you effectively have 22 boats at any time.
If you’ve got 45, 46, you only effectively have 15.
So, you’re actually operating well under capacity.
And then, if we’re worried about China doing anything with Taiwan, the first line of defense, the one that the Chinese cannot knock out, is attack submarines.
And so, you’re seeing that pressure build up.
We’re looking at TechPrecision.
It’s a $7, $7.50 stock. In our math, we go, “OK, it’s a micro-cap.”
But we see where they can earn $1.50 to $1.80 a share run rate in free cash flow, when the DoD gets these submarine programs up.
We’re not even counting on them winning new business.
And we know that will have to happen.
We need to invest in the industrial base, but we’re seeing all that pressure now to do that.”
Get all the small cap and micro cap picks from P. Ross Taylor III , a Partner with ARS Investment Partners, only in this exclusive interview in the Wall Street Transcript.
Kathryn Thompson, founding Partner and CEO, Thompson Research Group (TRG)
Core & Main (NYSE:CNM) is just one of many infrastructure stocks highlighted by this expert portfolio manager.
Kathryn Thompson is a founding Partner and Chief Executive Officer of Thompson Research Group (TRG).
TRG is an equity research and advisory firm focused on the industrial and construction sectors.
In addition to managing and setting the strategic direction of the firm, she also serves as Director of Research.
Ms. Thompson brings over 20 years’ experience analyzing, modeling and advising mutual funds, hedge funds, pension funds, private equity funds and family offices on investment and portfolio management.
She also works closely with key public and private companies, acting as a trusted advisor for strategic planning and growth initiatives.
Ms. Thompson has been recognized by The Financial Times/Starmine as a top Stock Picker in Construction Materials.
A graduate of the University of the South in Sewanee and Vanderbilt University’s Owen Graduate School of Management, Ms. Thompson is a regular guest speaker at industry trade conferences and corporate meetings.
She has been a guest on CNBC and Bloomberg, and is quoted regularly by The Wall Street Journal, Barron’s, Forbes, Fortune, and Bloomberg.
In this 2,072 word interview, exclusively in the Wall Street Transcript, Ms. Thompson details the reasoning behind picking Core & Main (NYSE:CNM) as well as many other infrastructure stocks for her portfolio.
“I am the co-founder and CEO of Thompson Research Group. We started in spring of 2009. And we were one of the early movers in the independent equity research platform.
Today, our business model has evolved, and we are an equity research and advisory firm focused on the construction and industrial value chain.
So that’s anything that touches the residential, non-res, or public construction and markets, whether it’s product or service.
Our equity research clients include large institutional investors — hedge funds, mutual funds and pension funds in the U.S. and Europe. Our consulting and advisory clients are both public and private companies, in addition to private equity and family offices.”
Core & Main (NYSE:CNM) is a good representative of a company that benefits from both government initiatives and the results of increased storm activity in the United States.
“…There are companies such as Core & Main (NYSE:CNM) which fit squarely into water infrastructure and address that issue.
On the other end, you have companies in the heavy materials space that are providing some of the very basic infrastructure to support wind energy buildout.
There’s a lot of rock and a lot of concrete that goes into wind farms.
So those are just two examples.
But overall, the significant driver for demand is either building the infrastructure or being key factors in the value chain that help with environmental matters and that are important for dealing with global warming…
I’ve already touched on, is Core & Main.
This company went public a couple of years ago, and CNM fits squarely into the water infrastructure network.
And it’s a big winner.
The other ones, which is a little bit of a twist, are cement producers, which are the largest producers of CO2 globally.
Cement producers that are very proactively taking measures to reduce their carbon footprint will be net winners, because ultimately, cutting cement production emissions is critical to global carbon footprint reduction.
And there are three names that we view as leaders there — Summit Materials (NYSE:SUM), Martin Marietta Materials (NYSE:MLM) and CRH (NYSE:CRH).
CRH was traded on the London Stock Exchange, but the company just made an announcement earlier this year about the shift to primary listing on the NYSE.
TRG picked up coverage of CRH in June. In fact, we were the first U.S. analysts to pick up coverage.
Dublin-based CRH operations are both in the U.S. and Europe, with ~75% EBITDA in the U.S.
CRH is emerging as one of the world’s thought leaders in how to be responsible for pushing ESG initiatives in the construction industry.”
There may be a competitive innovation to challenge the main products from Core & Main (NYSE:CNM).
“The industry is looking for all sorts of replacement for cement, which is the number two emitter of CO2 globally.
And there is some technology that is being developed to replace the need for so much cement consumption overall.
So that is one area.
The other really basic one is increased use of vehicles using alternative fuels and/or electric vehicles — think about uses for those big heavy concrete trucks that you see rumbling through the city, or big hauling trucks you see in rock quarries.
It’s those type of vehicles that could be moved to non-diesel or non-gas-consuming vehicles.”
Cement is the dominant revenue source for more companies than just Core & Main (NYSE:CNM).
“Martin Marietta Materials (NYSE:MLM) reported earnings last week. And they, along with Vulcan (NYSE:VMC), are the top two heavy materials producers in the U.S.
Last week, what MLM reported was a beat for Q2, which was largely driven by upside in its cement and ready-mix concrete earnings contributions. MLM also raised its FY’23 guidance on better pricing momentum.
This is the theme we expect to continue throughout 2023.
Pricing actions that were made last year and that are continuing into this year, even with pretty OK volumes — and when I say pretty OK volumes, organic or aggregate crushed rock volumes forecast report from Martin are supposed to be down 5% to down 1%.
So it’s not like you’re having double-digit volume increases in gaining pricing momentum.
Against that backdrop, their organic aggregate pricing is forecasted to be up 17% to 18%.
So that’s the real story of the names that you’re seeing.
And when you ask, why in the world would you have such strong pricing with such tepid volumes, even if you’re facing just tough comps?
It all goes back to visibility, which goes back to our original golden era themes driving fundamental growth in the construction industry.”
General interest in companies like Core & Main (NYSE:CNM) is increasing as construction becomes an ever increasingly important component in the US economy.
“We publish six different industry surveys that we publish on a quarterly basis. It’s from building products — so it could be wallboard, roofing, flooring, and lighting — to bonding and surety survey, which is looking very heavily at the non-res end market, and everything in between.
It focuses on capturing a large relative market share of the space.
And because the construction industry is largely still private, we’re able to do that by connecting with key private contacts.
This is done through building relationships over 20 years.
And many times, we’re talking to C-suites of these large companies.
So with that, we get a view of not just what’s going on with volume and pricing, but really the outlook and the flavor of fundamental drivers of demand.
And it is these types of surveys that help us to identify secular trends and inflection points and bigger themes that drive key investment and stock picks.
Who’s interested in these surveys?
When we first started that, it was very much our core institutional investor base.
So if you’re a hedge fund, and you’re a large holder of let’s just say Vulcan or Martin, you really want to focus on what’s going on with our heavy materials or state revenue and DOT survey.
Then, more recently, within the past five to six years, we’ve had strong interest from the industry.
And so that’s public companies, private companies, and private equity that also have had an interest, because looking at and reviewing our reports helps them to forecast and think about managing their own business.”
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