Good morning!
Despite the S&P 500 snapping a five-week winning streak, it was a good week for stocks featured in the 2024 Forgotten Forty.
The momentum continued for Uber, gaining ~11% this week largely due to positive commentary at its Investor Day this week when the company also unveiled a $7 billion dollar share repurchase authorization, supported by its rapidly rising free cash flow. So far, Uber is one of the 2024 Forgotten Forty’s best performers, advancing over 26% since publication. This comes after a strong 2023, when it was the Forgotten Forty’s best performer with a 136% gain.
ANGI was up 21% this week (and has advanced 23% since the 2024 Forgotten Forty was published) after releasing an encouraging earnings report including reporting significantly improved profitability on reduce sales and marketing expenses as well as a de-emphasis on lower-margin services. Investors may also have been reacting to a curious part of IAC/ANGI CEO Joey Levin’s shareholder letter (IAC is the controlling shareholder of ANGI), which read, “Our strategic alternatives (emphasis added) multiply as the execution improves, and the progress we’ve seen at Angi over the last 12 months is tremendous – it’s nice to be growing profits and customer satisfaction together.” In our experience companies do not mention strategic alternatives lightly, so perhaps investors believe ANGI could be sold once they turn it around. Time will tell…
Shares of Forgotten Forty member Allison Transmission (a leading manufacturer of transmission systems used in commercial vehicles) were up 14% on the week (and 24% since publication of the 2024 Forgotten Forty) following better-than-expected Q4 results and a positive 2024 demand outlook. The big surprise, however, was the company’s outlook for future price increases, with CFO Fred Bohley indicating that a large proportion of long-term contracts are up for renewal in 2024 and that Allison is well-positioned to achieve healthy price increases given the value its products provide and the recent price increases by its OEM customers (which makes ALSN’s transmissions even more valuable).
It has not been all roses for Forgotten Forty constituents in recent times though, with Markel declining ~7% after it released earnings at the end of January (its shares are still up ~5% since our Forgotten Forty report). The “baby Berkshire” had another quarter of weak insurance underwriting results, which was especially disappointing considering the stellar results released by other insurance companies. That said, its investment income rose dramatically as it reinvested insurance float at much higher interest rates, and its Markel Ventures arm—where it owns a collection of industrial companies—produced record results on strength from construction-services businesses and moderating inflation.
It’s not too late to order this year’s Forgotten Forty issue (and you get a bonus issue featuring 3 full-blown company reports with your purchase).
From this Week:
Meta's announcement that they will initiate a dividend contributed to a 20% initial surge in its stock price. In this piece, we engage in a broader discussion on how corporate America allocates capital. We explore the strategic choices companies face: reinvestment, share buybacks, or dividends; and propose a nuanced approach to dividend investing.
With the S&P 500 close to all-time highs, we decided to do a little digging. Research indicates that when a significant portion of S&P stocks are below their 50-day moving average, average returns are modest and often negative, and currently the S&P’s growth is being disproportionately driven by a few stocks, which isn't ideal for sustained market health.
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Important Information: Performance Information. Past performance does not guarantee future results. The reports in this sample are for informational purposes only and the performance of the stocks selected is not indicative of the performance of all the stocks profiled in Boyar Research. The performance of the stocks selected and the performance of the stocks in Boyar Research may in fact diverge materially. Additional information regarding the performance of other companies featured in Boyar Research is available from Boyar Research upon request. This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Clients of an affiliate of Boyar Research and employees of Boyar Research own shares in IAC, MKL, ALSN, ANGI, And UBER.