Anthony Johnson

Post-Pandemic Stock Analysis II

Did you miss Carrier Global at $14.78 in April 2020? Microsoft at $139.06 on March 13, 2020? Ring Central at $179.81 on March 13, 2020? Illumina at $239.06 on March 20, 2020? If so, you missed tremendous opportunities to build wealth over time! These opportunities were illuminated in my book, “Post-Pandemic Stock Analysis,” the debut from my post-pandemic stock analysis series.

If you would like a tutorial on how to analyze stocks using electronic data science and step-by-step easy to use analytics, this book is for you! “Post-Pandemic Stock Analysis II” is currently being published and will be available by Labor Day 2021! Post-pandemic day traders are not invited!

Pick up a copy of “Post-Pandemic Stock Analysis” by Anthony Johnson on Amazon as a primer so you don’t miss out on tremendous wealth-building opportunities!

Anthony “Dr. J” Johnson is a candidate for a Doctor of Philosophy (Ph.D.) in Christian Education, studied International Business Law at the University of Liverpool (UK), and earned a post-baccalaureate diploma in E-Discovery Project Management and Data Science from Bryan University.

Visit Anthony “Dr. J” Johnson, Ph.D. on LinkedIn.

DECEMBER 2021 – JUST PUBLISHED!

“Post-Pandemic Debt Economics – 2nd EDITION,” is Anthony’s first of a 10-book of what he has coined his “post-pandemic debt economics” series, which examines the cost of the pandemic that go beyond medical debt, metastasizing from shelter-in-place orders, loss of jobs, cost of testing and treatment, due to the pandemic. This how-to book will illuminate how to eliminate pandemic-related debt and restore your FICO score using credit analytics.

Anthony Johnson is a candidate for a Doctor of Philosophy (Ph.D.) in Christian Education, studied International Business Law at the University of Liverpool (UK), earned a Diploma in English Common Law at the University of London (UK), and has a graduate diploma in E-Discovery Project Management and Data Science from Bryan University. He is the founder and CEO of AR/VR Learning, a faith-based virtual learning and education technology company founded as part of his Ph.D. studies as a financial literacy project guided by the religious teaching of Jesus on the corporal works of mercy, which include helping youth obtain a GED, teaching ESL to foreign nationals, mentoring entrepreneurship, and answering the challenges of the yawning wealth-gap for the betterment of the world using education, technology, and financial literacy to reduce poverty.

STOCK PIC OF THE MONTH

The “Stock Pic of the Month” for January 2022, based on my recently published book, “Post-Pandemic Stock Analysis I” is: KYNDRYL (KD): $18.10.

Kyndryl is a spinoff from IBM. It spunoff from IBM in December 2021. Kyndryl was IBM’s information technology services unit. The balance sheet states that it has 4,600 clients in 115 countries. Information technology services is a $500 billion market. With the effectuation of this spinoff, Kyndryl can now partner across all cloud services providers and is no longer limited to IBM which will generate cash and stronger profits.

The numbers don’t lie: Of IBM’s $77.15 billion in total revenue in 2019, Kyndryl had $19 billion in sales in 2019-20. My math indicates that equals 24% of IBM’s revenue. As of September 2021, IBM was trading at $136.43. If Kyndryl is responsible for 24% of that stock price, then, if it were to stand alone, it would have a stock price of $32.64.

Kyndryl is currently trading at $18.00 per share. It has room to grow. Remember, as punctuated in Post-Pandemic Stock Analysis I, the Penn State study concluded that the largest stock gains for spinoff companies took place not in the first year of the spinoff, but in the second year! That means that you should be strategic in your investment approach and watch the movement of the newly spunoff company for the first year, then, when the second year comes around, make your move!

If you have not already done so, pick up a copy of Post-Pandemic Stock Analysis I-THIRD EDITION for more information!

POST-PANDEMIC STOCK ANALYSIS I

Just Published! Post-Pandemic Stock Analysis I is part of a two-book training course designed to help non-professional investors develop confidence and skills that enable them to effectively analyze hidden stock market opportunities. Designed especially for novice investors offering a 7-step checklist and proof-of-concept as a powerful tool!

If you are looking for a tutorial on how to analyze stocks using data science and step-by-step easy to use analytics, this book is for you! Post-Pandemic Day Traders are not invited!

Pick up a copy of “Post-Pandemic Debt Economics-SECOND EDITION” to get your financial house in order so you can begin to master the art of finding hidden stock market opportunities.

Anthony Johnson is a candidate for a Ph.D. in Christian Education, studied International Business Law at the University of Liverpool (UK), English Common Law at the University of London (UK), and earned a post-baccalaureate diploma in E-Discovery Project Management and Data Science from Bryan University, as well as bachelor’s and master’s degree in Theology from Christian Bible College and Seminary. For more information about Anthony, visit his LinkedIn.

STOCK PIC OF THE MONTH

“Stock Pic of the Month” for February 2022, based on my recently published book, “Post-Pandemic Stock Analysis II” is: QUALTRICS (XM): $27.06. The EXTRAORDINARY CORPORATE EVENT: SPINOFF.

The Utah-based company, which provides subscription-based software to businesses looking to evaluate their customers’ experiences, was SPUNOFF from German software giant SAP in January 2021. SAP still remains a majority owner of Qualtrics.

THE BALANCE SHEET: Qualtrics has beaten Wall Street revenue targets every quarter since the spinoff, with the largest coming in the fourth quarter 2021, which revenue jumped 48% year over year to $316 million, growth accelerating from 41% rise reported for the third quarter 2021. The company’s annual revenue just crossed $1 billion for the first time, and projects 31% revenue growth for 2022.

REMEMBER THE PENN STATE STUDY: The study concluded the largest gains for spinoff companies occurred in the second year after the spinoff. Qualtrics is now in the second year! Pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book training course for more information!

POST-PANDEMIC STOCK ANALYSIS II

Just Published! Post-Pandemic Stock Analysis II is the second part of the two-book training course designed to help non-professional investors develop confidence and skills that enable them to effectively analyze hidden stock market opportunities. Designed especially for novice investors offering a 7-step checklist as proof-of-concept as a powerful tool!

If you are looking for a tutorial on how to analyze stocks using data science and step-by-step easy to use analytics, this book is for you! Post-Pandemic Day Traders are not invited!

Pick up a copy of “Post-Pandemic Debt Economics-SECOND EDITION” to get your financial house in order so you can begin to master the art of finding hidden stock market opportunities!

Anthony Johnson is a candidate for a Doctor of Philosophy (Ph.D.) in Christian Education, studied International Business Law at the University of Liverpool (UK), English Common Law at the University of London (UK), and earned a post-baccalaureate diploma in E-Discovery Project Management and Data Science from Bryan University. For more information about Anthony, visit his LinkedIn.

STOCK PIC OF THE MONTH

“Stock Pic of the Month” for March 2022, based on my recently published two-book training course, “Post-Pandemic Stock Analysis I & II,” is” NUTRIEN (NTR): $27.97 (December 2020). The EXTRAORDINARY CORPORATE EVENT: REGORGANIZATION.

NUTRIEN has reorganized from genetically modified seed manufacturing to include biotechnology, a market projected to grow 7.07% compound annual growth rate between 2019 and 2025, with nearly $90 billion spend in 2018. Nutrien’s biotechnology innovations include seed breeding techniques and tools to modify organisms to affect yield, size, and/or color.

SUPPLY/DEMAND IMBALANCE: Currently, the planet contains 7.6 billion inhabitants, but the population is expected to expand to 9.8 billion by 2050. Farmers are tasked with feeding the world, but increasingly, they need to do so with fewer resources. The good news is that agricultural technology designed to address this growing need is booming. And, the U.S. Department of Agriculture under President Biden, will direct federal conservation payments to farmers who use their fields to capture more carbon, in conjunction with agribusiness firms that have jump-started farm produce carbon-offset credits.

INFLATION: Congress has approved nearly $5.9 trillion in spending in 2020-21. The federal debt rose by $5 trillion between February 2020 and June 2021, to $22.2 trillion. Thus, inflationary pressure is upon us. Even with inflation, stagnation, deflation, war time or peace time, the world will still require one valuable resource: FOOD!

NUTRIEN has nearly tripled in stock price from $27.97 in December 2020 to over $77.00 as of February 2022. I expect continued growth with supply/demand, inflation, and the world continues to need food. Pick up a copy of “Post-Pandemic Stock Analysis I & II” for detailed analysis.

STOCK PIC OF THE MONTH

“Stock Pic of the Month” for April 2022, based on my recently published two-book training course, “Post-Pandemic Stock Analysis I & II,” is: SERIES I SAVINGS BONDS or “I-BONDS.”

EVENT: INFLATION. INTEREST RATE INCREASES. SUPPLY-CHAIN DISRUPTIONS AND BOTTLENECKS. TIGHT LABOR MARKETS. STOCK MARKET UNCERTAINTY. SURGE IN OIL AND COMMODITY PRICES. SOARING HOME PRICES. INCREASE IN DEFENSE SPENDING. INSECURITY IN THE WORLD’S FOOD SUPPLY. WAR IN UKRAINE.

In 1996, President Clinton established I-Bonds, guaranteed, inflation-linked securities issued directly by the Treasury to people and companies. Today, I-Bonds pay a healthy 7.12% annual return, adjusted every six months to reflect changes in consumer price inflation. One would be hard pressed to find a better, safer investment in this uncertain environment.

Currently, individual investors are limited to purchasing only $10,000 in I-Bonds a year. (A loophole in the IRS Code allows taxpayers eligible for a federal tax refund to buy an additional $5,000 of I-Bonds, not a bad deal!). I would suggest my readers to diversify your portfolio with a balance of stocks and I-Bonds. Investor interest has ramped up with the rise of inflation. My research has uncovered that over the past three months alone, I-Bond purchases soared to $7.1 billion, compared with an average of $700 million a year during the decade before.

I-Bonds can be used as a hedge to inflation and are superior to other Treasury securities, including the well regarded Treasury inflation-protected securities, or TIPS, which have experienced a loss of up to 5% since January 1, 2022 as news of more inflation lifted yields and hammered bond prices.

THE KICKER: I-Bonds can be redeemed at any time after 12 months with a modest penalty, amounting to three months of interest. And, after five years there is no redemption penalty whatsoever!

For more information, pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book training course, by Anthony Johnson at Amazon.com.

STOCK PIC OF THE MONTH

“Stock Pic of the Month” for May 2022, based on my recently published two-book post-pandemic stock analysis training course is: CORTEVA AGRISCIENCE, INC. (CTVA)

EXTRAORDINARY CORPORATE EVENT: SPINOFF from DowDupont in 2019.
Corteva AG is a seed and pesticide make formed from the 2017 merger of Dow Chemical Co. and DuPont Co. The subsequent break-up of that merger has resulted in three new companies: 1) Dow, with $48.8 billion in revenue in 2018; 2) DuPont, with $22.6 billion in revenue in 2018; and 3) Corteva Agriscience with $14.3 billion in revenue in 2018. Corteva’s debut follows Bayer AG’s $63 billion purchase in 2018 of Monsanto, the biggest seed company, and Syngenta AG’s $43 billion sale to China National Chemical Corp., commonly known as ChemChina, in 2017.

PRE-RUSSIAN INVASION OF UKRAINE: On February 16, 2022, The Wall Street Journal had reported food-price inflation, in conjunction with increase in seed prices, would constitute a surge in price of crop-seed and pesticide suppliers, like Corteva, which has punctuated that prices it charges farmers for seeds rose 10% in its most recent quarter and its crop-protection products were up 6% compared with the prior year to offset inflation.

POST-RUSSIAN INVASION OF UKRAINE: Farmers around the world will continue to struggle as shortages and rising prices take a toll on crop production, and fertilizer prices will continue to surge as the war limits supplies in the roughly $100 billion global seeds market.

POST-SPIN: On June 4, 2019, Corteva began trading on the New York Stock Exchange at $24.81. As of April 29, 2022, Corteva was trading at $57.82, more than double, and with more room to grow due to food-price inflationary forecasts.

Pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book training course, for detailed analysis, and remember to analyze recent 10Q, the 10K from 2021 to analyze debt-to-income ratio, cash burn, and free cash flow, and FORM 10 for the SPINOFF DISTRIBUTION at www.sec.gov/EDGAR, before investing.

STOCK PIC OF THE MONTH

“Stock Pic of of the Month” for June 2022, based on my two-book post-pandemic stock analysis training course is:
– ARCHER DANIELS MIDLAND (ADM). Stock Price: $42.76 in April 2019.
– EXTRAORDINARY CORPORATE EVENT: RESTRUCTURING in April 2019.

ADM processes crops into fuel and flavorings and has revamped operations after an acquisition spree bulked up its ingredients business. ADM has also invested in flavorings and plant-based proteins. The restructuring has also sought voluntary retirements and layoffs.

ENTER WAR IN UKRAINE: Russia’s invasion of Ukraine has upended two of world’s major grain-producing powers in a region that has become increasingly critical to filling the gap in the shrinking global food supply-chain. ADM has stated it expects the tight supply of crops to continue for the next few years because of drought conditions in South America, a weak Canadian canola crop, and the war in Ukraine.

BALANCE SHEET: ADM posted quarterly earnings of $1.05 billion, or $1.86 per share, compared with $689 million, or $1.22 per share, a year ago. ADM has also reported a 53% profit increase for the 3-month period ending March 31, 2022, outpacing Wall Street’s expectations. Finally, shares of ADM are up more than 30% this year, and have more than doubled in price since the restructuring had begun in 2019.

DIVIDENDS: Dividend-paying stocks have outperformed the S&P 500 this year, in part as investors whipsawed by market volatility have sought out stocks that can offer steady cash returns. In my opinion, ADM fits this profile.

MY TAKE: Higher commodities prices, geopolitical risks, inflated food costs, insecurity in the world’s food supply, in conjunction with strong consumer demand, will continue to boost earnings and profits. In my humble opinion, in light of the current economic downturn, fueled by rising interest rates and accelerating inflation, investors should focus on stocks with dividend yields because dividends are real money-not just figures on a balance sheet. Remember, the balance sheet may have hidden debt, like supply-chain financing, that will not appear as a liability, thus be manipulated! Dividends are real money that is left over after the bills have been paid. As Stacy Abrams, former-gubernatorial candidate of Georgia has stated, “cash is king, but cash flow is queen.” Analyzing the balance sheet for cash flow payable as dividends to investors will save the day in this challenging investment climate.

Pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book training course, to learn how to take advantage of extraordinary investment opportunities in these extraordinary times.

STOCK PIC OF THE MONTH IS “BUFFETT BUYS”

The stock market’s recent spin of topsy-turvyness has investors worried. And they should be. Interest rates will continue to rise to cool inflation. The war in Ukraine rages on with no end in sight. Jobs reports are becoming shaky. Home prices are soaring and that includes rents. So-called “stagflation” (when prices soar and growth slums) is now knocking on the door. There is some good news to report:

Warren Buffett’s Berkshire Hathaway, Inc. has used these turbulent times as an opportunity to increase spending on stocks. All you have to do as an astute investor to follow Berkshire is go to www.sec.Berkshire/E.D.G.A.R. and pull what is known as FORM 13-F at the Securities and Exchange Commission’s website. Once you do, here as some of the companies Mr. Buffett has been buying, and you can too:

1. APPLE (AAPL): $145.54 as of May 2022;
2. OCCIDENTAL PETROLEUM (OXY): $67.72 as of May 2022;
3. CHEVRON CORP. (CVX): $173.01 as of May 2022;
4. ACTIVISION BLIZZARD (ATVI): $78.00 as of May 2022;
5. HP INC. (HP): $37.71 as of May 2022;
6. CITIGROUP (C): $47.46 as of May 2022;
7. ALLY FINANCIAL (ALLY): $38.73.

Investors often use 13-F’s to gauge how large money managers are playing the market, now you can too! For more information, pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book introductory training course, by Anthony Johnson.

STOCK PIC OF THE MONTH

UTILITIES

In these turbulent times, investors should look for investment opportunities in companies that pay dividends. I would suggest non-professional investors to look for stocks largely on the basis of dividend yields. Shares of companies paying big dividends to investors have trounced practically everything else so far this year. And I believe the trend will continue.

Dividends are real money-not just figures on a balance sheet. I like to say, “figures don’t lie, but liars can figure, because figures can be manipulated.”

Usually, investors believed that dividend-paying stocks don’t do well in an interest-rate-rising environment, like we are experiencing today. However, I would suggest a different dynamic is at play, with interest rates rising to try to cool inflation. Many dividend-paying stocks are in industries like utilities, telecommunications and consumer staples, which consumers tend to rely on year round, regardless of the economic environment.

WATER

The one utility I love is WATER. Water is a vital source for life and a significant risk facing investors in thirsty industries such as food production, mining, apparel manufacturing, and semiconductors. It is also a scant resource: Just 3% of the Earth’s water is fresh. About 2.5%, however, is locked up in polar ice caps, glaciers, the atmosphere, and soil, or is highly polluted or lies too far below the earth’s surface to be extracted at an affordable cost. That leaves just 0.5% of the Earth’s water available as fresh water.

My top three water companies are:

1. AMERICAN WATER WORKS (AWK): $130.88 as of June 14, 2022;
2. ROPER TECHNOLOGIES (ROP)(which makes smart water meters for utilities): $372.29 as of June 14, 2022;
3. XYLEM (XYL)(which provides technology for water companies): $73.07 as of June 14, 2022.

For more information, pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book introductory training course for non-professional investors, by Anthony Johnson. Available at Amazon.com.

SVERIGES RIKSBANK NOBEL PRIZE IN
ECONOMIC SCIENCES
RECOMMENDATION FOR NOMINATION (2022)
Recommendation to Nominate: Anthony Johnson

I would like to take a moment to celebrate a wonderful achievement! I have been recommended for nomination for the Sveriges Riksbank Nobel Prize in Economic Sciences, also known as the “Nobel Prize in Economics!” When Alfred Nobel, the Swedish millionaire died in 1896, he left his fortune to finance awards for “those who, during the preceding year, shall have conferred the greatest benefit on mankind.” His will called for recognition of those who made extraordinary contributions to physics, chemistry, medicine, economics, and literature. I am proud and humble to have been considered for nomination to such an honorable award for writing my 9-book “post-pandemic economics” series, while incarcerated, on lockdown in a federal prison, during the eye of the COVID-19 pandemic in 2020. Although I will not know whether I have actually won the prize until October 2023, it sure feels good to be recommended for consideration. Here is a brief description of the process involved in choosing th economic sciences laureates:

1. SEPTEMBER: Nomination invitations sent out.
2. FEBRUARY: January 31, deadline for submissions of nominations.
3. MARCH-MAY: Consultation with experts.
4. JUNE-AUGUST: Writing report with recommendations.
5. SEPTEMBER: Academy gets report on final candidates.
6. OCTOBER: After a majority vote the prize is announced and economic sciences laureates are chosen.
7. DECEMBER: Nobel Prize Award Ceremony in Stockholm Sweden.

I will keep my readers up to date on the process and upload a posting in October-November 2023, confirming any award!

STOCK PIC OF THE MONTH

The “Stock Pic of the Month” for September 2002, is KELLOGG CO. (K) – $75.22 July 2022. EXTRAORDINARY CORPORATE EVENT: SPINOFF.

In June of 2022, The Wall Street Journal reported a proposed spinoff opportunity for KELLOGG CO. (K). The company said it plans to break up its business into three companies: 1) Global Snacking Co.; 2) North American Cereal Co.; and 3) Plant-Based Foods Co. In doing so, Kellogg is looking to jump-start its larger, faster-growing snacks business which had revenue of $1.98 billion in 2021.

Kellogg’s plant-based foods business had an estimated $340 million in net sales in 2021, and as a stand-alone enterprise will first aim to expand in North America and grow globally organically.

The North America cereal business had about $2.4 billion in sales in 2021, while undergoing efforts to reverse sales declines and boost profit margins.

MY TAKE: The largest of the three planned newly spun out companies would be the global snacks business, which includes brands like Pringles Potato Chips, Cheez-Its snack cheese bites, and long-time breakfast favorites like Eggo waffles. The global snacks business would also include Kellogg’s fast-growing noodle business in developing countries like Africa, as well as cereal sales overseas.

POST-PANDEMIC ANALYSIS: Remember to check Kellogg’s most recently filed FORM 10 for information regarding the proposed spinoff distribution. Visit www.sec.gov/EDGAR, put in the company symbol for Kellogg which is (K), and begin your credit analytics of the balance sheet and all the other metrics, including dividend yields, as outlined in “Post-Pandemic Stock Analysis I & II,” my two-book training course for non-professional investors.

You have time. Kellogg announced it expects to complete the spinoff by the end of 2023, with the North America cereal business potentially separating first, followed by the plant-based foods business as the third company due to its contemplating the sale of the plant-based foods unit, which is predominantly composed of the MorningStar Farms brand.

STOCK PIC OF THE MONTH

BLOCK (SQ)
$51.51 – 10/15/2022
EXTRAORDINARY CORPORATE EVENT: REORGANIZATION

My “Stock Pic of the Month” for October 2022 is BLOCK (SQ). Cash Apps are becoming ubiquitous these days. Everyone in prison uses them. Folks use them in the world to send money on a peer-to-peer basis. Block, the provider of Cash App and Square merchant payments, has reorganized itself to provide an important cash inflow to the company by linking a bank account, mobile depositing a check, bringing paper money to a place such a Walmart that partners with Cash App, or direct-deposit from a paycheck!

Cash App’s inflow was a record $52 billion in the third quarter of 2022, up 19% from the third quarter 2021. In fact, Cash App’s gross profit has shown a steady and consistent increase each quarter since late 2019 from about $100 million to almost $900 third quarter 2022.

Direct deposit will prove to be a significant method of gross profit moving forward representing regular cash inflow comparable to how workers would use a traditional bank account, without interest payments (Cash App does not pay interest on deposits!).

Cash App now offers a Cash App Card for purchases, paying for things at merchants via Cash App, trading stocks, or buying cryptocurrency. Block now provides the basics such as account and routing numbers instantly to users who order a Cash App Card to make it easier to start using direct deposit. About half of cash inflows in the third quarter of 2022 were from Cash App Card users.

Remember to follow your checklist before investing in Block. Check the P/E Ratio, book value, and free cash flow, as well as dividend distributions. Conclude your research by opening a Cash App Card and account to test the ease of use, which is what lures people to regularly put their paychecks into the Cash App experience, which includes peer-to-peer money transfers, direct deposit, a debit card with bank account and routing number, and stock market investing capability, which should be your deciding factor as to its durability in the post-pandemic investment climate.

STOCK PIC OF THE MONTH

ILLUMINA (ILMN)
$242.74
EXTRAORDINARY CORPORATE EVENT: (POTENTIAL SPINOFF OF GRAIL, INC.)

My Stock Pic of the Month for November 2022 is ILLUMINA (ILMN). Illumina makes the gene-sequencing machines that its Grail unit and its rivals including Exact Sciences Corp., Freenome Holdings, Inc., and Guardant Health, Inc., use to process blood tests, known as “liquid biopsies,” and can also be used to augment the few established screening tools, such as mammograms for breast cancer and colonoscopies for colorectal cancer. The machines can also become sentinels for other tumor types that lack validated screens, and is estimated to eventually generate $50 in annual sales.

I. LIMITED BACKGROUND

Illumina founded Grail in 2015 and spun it off in 2016 so that it could raise more money for studies. Grail ultimately raised $1.9 billion in capital from investors including Jeff Bezos and Bill Gates. Illumina maintained a 12% stake. With a commercially viable product nearly in hand in September of 2020, Grail was exploring an IPO. Seeking opportunity, Illumina made an $8 billion offer to reacquire Grail.

II. LEGAL PROCEEDINGS

Not so fast. The proposed acquisition attracted regulatory scrutiny and the FTC (Federal Trade Commission) sued Illumina and Grail to block the acquisition, arguing that it would “lessen competition in the U.S. multi-cancer early detection (“MCED”) test market by diminishing innovation and potentially increasing prices.

Illumina promised the FTC it wouldn’t thwart Grail’s potential competitors and would give its clinical oncology customers contractual guarantees of “equal and fair access.” The FTC wasn’t satisfied and has asked a federal judge overseeing the case to dismiss its complaint in June 2021, but it is still alive as an administrative proceeding.

The FTC is also planning to let European regulators run out the clock on the deal, which had to be completed by December 20, 2021, under the terms agreed to by Illumina and Grail. Illumina is challenging the EU’s Article 22, an obscure provision in its competitive rules on the grounds that the EU has no jurisdiction because Grail has no business in Europe and the deal is between two American companies.

Frustrated by the entanglements, Illumina and Grail closed the deal in August 2021 notwithstanding the risk it could be undone if it loses in U.S. or European courts. In September 2021, the FTC held its own administrative trial, which Illumina is likely to lose. No word on the results to date, but unsurprisingly, the FTC has a nearly perfect record before its own administrative judges.

III. APPEALS

Illumina plans to appeal any adverse FTC ruling in federal court where it seems likely to prevail because the U.S. government hasn’t successfully challenged in court a vertical merger, that is, a combination of noncompeting businesses that operate in different parts of the supply-chain, since 1972. And, because of the legal snags, Illumina has stated that it does not plan to fully integrate Grail into its business until it clears legal hurdles in Europe, thereby saving time and money, but adversely costing lives.

As for appeals to the U.S. Supreme Court, the high court likely wouldn’t hear this case until 2025, so Illumina faces the risk that the deal could be blocked for years, thus, its exploration of options for Grail that include a divestiture, like a spinoff.

IV. CONCLUSION

Nonprofessional investors should keep their eye on Illumina and any news on its Grail unit divestiture as a stand-alone company. Genetic testing does more than find disease: It will tell you what you’re susceptible to. Even for infectious disease, genomics will help you identify the pathogen that’s causing the disease. It will also help you understand the impact that that pathogen is likely to have on you. For example, two people can get COVID-19. For one it will be fatal. For the other it will not. A lot has to do with your genome!

I had picked Illumina in March of 2020 due it being one of the only biotechnology companies to detect COVID-19 in late 2019, before it was declared a national emergency by the WHO. On March 13, 2020, Illumina was trading at $239.06. It quickly more than doubled in price in less than a year to $504.76 on February 13-14, 2021. Since then, it has done a stock split, 2-for-1, and is now trading at $242.74 as of November 12-13, 2022. With a planned divestiture of Grail to eliminate any further legal wrangling, I believe Grail, as a spinoff, and Illumina, its parent, will both perform extremely well in the coming months!

STOCK PIC OF THE MONTH

Iridium Communications, Inc. (IRDM)
Stock Price: $52.40 – 11/26/2022

Event: Bankruptcy, Merger, Reorganization

My “stock pic of the month” for December 2022 is Iridium. Iridium is a low-earth satellite telecommunications provider orbiting in what is called “low earth orbit,” which is up to 1,200 miles high. Low earth orbit satellites circle the planet in about 100 minutes, so any one satellite might be visible to ground observers for as few as seven minutes.

I. HISTORY

In 1990, Motorola introduced Iridium, their satellite communications company with worldwide coverage for their satellite phone service.

In 1998, after spending more than $5 billion, Iridium launches with 66 satellites circling earth, not only in low earth orbit, but also in “polar orbit” (in line with the north-south longitude of the planet). (I do not believe Iridium has any satellites in geostationary orbit, which is up to 22,000 miles above the earth)

In 1999, Iridium declared Chapter 11 Bankruptcy, one of the largest in the U.S. at that time.

2000: The U.S. Government extends Iridium’s satellite service a lifeline by offering a $72 million contract for two years of service, which saved Iridium from being decommissioned by a matter of days.

2001: A group of private investors buy Iridium out of bankruptcy for $25 million.

2008: Iridium was acquired and went public via S.P.A.C merger.

II. IRIDIUM’S APPEAL

Iridium has undergone three extraordinary corporate events over the past 20 years, with the most recent event constituting a restructuring / reorganization. At the time of its initial launch, Iridium was expensive and slow, with service mostly for the U.S. military, airplanes, freight, cruise ships, and oil rigs in the north Atlantic.

Now, Iridium has reorganized its network of satellites for use in the so-called “Internet of Things,” connecting access to autonomous cars, homes, business, and the all-important and ubiquitous smartphone. Iridium has amassed licenses in many countries to transmit data over frequencies that are considered better suited for reaching smartphones, tablets, computers, and cars. But sending and receiving text messages still poses a challenge due to technical limitations.

Enter the reorganization, Iridium announced early this year that it had an agreement to develop its technology for us in smartphones for transmission of data. It has partnerships with mobile carriers around the world. (Check out the prospectus at www.sec.gov/edgar -IRDM) And, several industry executives say future satellite service could be offered as an add-on subscription that smartphone makers or cellphone carriers charge. (Note: Appel’s iPhone 14 offers satellite connection that lets users send emergency text messages as a free service)

Finally, industry executives at New Street Research estimate that a “seamless” satellite-to-phone service with voice and data would be worth as much as $20 billion in the U.S., and many times that around the world. With Apple, a $2 trillion company in the game, the opportunity could be massive!

III. MY TAKE

Do your own research! Value Iridium based on cash flows and expected future cash flows, check book valve, pie ratio, and follow the checklist. Remember, in this very volatile investing climate, be sure to check out Iridium’s dividend distribution history. I have had my eye on Iridium since December of 2018 when the stock price was at $18.45, ten years after it went public via SPAC in 2008. In August 2019, Iridium had risen to $22.58. In December 2020: $39.33. December 2021: $41.29. As of November 26th, 2022: $52.40.

Iridium has almost tripled in stock price over the past 4 years! I believe there is a tremendous growth opportunity, but you must value the company correctly. If you do, 90% of the time, the market will concur with your decision-making. Have patience! Give yourself 2-3 years time for the market to properly value Iridium. It may take a few more years for technology to fully embrace the importance and support the transition to seamless coverage via satellite communication in smartphones. Have patience and the market will shine kindly on you.

Pick up a copy of “Post-Pandemic Stock Analysis I & II,” the two-book training course for more information!

MISSED PICS 2020-2022

HAPPY NEW YEAR! The 2020-2022 investment climate was a whirlwind-topsyturvy-to say the least! Inflation fears; a bull-to-bear market in stocks; recession knocking at the door; war in Ukraine; interest rate hikes; the collapse of FTX, and the crypto winter. What else could go wrong?

Notwithstanding all of the above, there were some bright spots in the market… I missed them! My goal is to indefatigably research companies to find value in the businesses based on cash flows and expected cash flows, and then, buy them at a discount to what the cash flows are worth. Only then could I, in good conscience, recommend a company as my “Stock Pic of the Month.” Buying the cheapest stocks still works, even in a bear market or challenging investment climate.

I could not properly analyze the balance sheet of the following companies; therefore, they were not chosen as a “Stock Pic of the Month,” even though I had my radar on them. I like to remain discipline and follow my checklist before making a recommendation. Because I could not properly vet these companies, I missed these opportunities in 2020-2022. Let’s take a look at what I missed:

1. IBM: SPINOFF of services unit; 09/17/2021. Stock price $136.43. December 2022 @ $148.67

2. American Homes 4 Rent (AMH): REORGANIZED from purchasing foreclosed homes to flip & sell-to-rent homes. Stock price $27.46 on 06/08/2020. $42.27 on 08/06/2021.

3. Invitation Homes (INVH). REORGANIZED. Same investment thesis. Stock price $29.20 on 06/08/2020. $40.43 on 08/06/2021.

4. Marathon Petroleum (MPC). SPINOFF of gas station operation Speedway. Stock price $43.16 on 01/30/2021 (post-spin). $125.20 on 11/26/2022.

5. Merck & Co. (MRK). SPINOFF of $6.5 billion in products in first half of 2021. Stock price $78.60 on 07/3/2021 (post-spin). $107.50 on 11/26/2022.

6. Dell Technologies, Inc. (DELL). SPINOFF of $50 billion VMWare stake. Stock price $57.80 on 06/24/2020. $112.98 on 10/22/2021.

7. CVS Health Corp. (CVS). Judge approved CVS-Aetna MERGER. $60.28 on 09/05/2019. $102.58 on 12/03/201.

8. Centene Corp. (CNC). MERGER deal with Magellan Health. Stock price $61.51 on 01/24/2021. $85.79 on 12/03/2022.

9. Sempra Energy (SRE). REORGANIZATION to include green energy. Stock price $127.45 on 05/20/2019. $165.93 on 12/03/2022.

10. On Semi (ON). REORGANIZED into using older manufacturing techniques to make microchips. Stock price $59.13 on 11/06/2021. $73.04 on 12/03/2022.

11. IPG Photonics (IPGP). REORGANIZED use of lasers in industrial applications, such as welding, 3-D printing, for spacecrafts, homes, airplanes, race cars, bridges. Stock price $113.29 on 12/2018. $172.14 on 12/2021.

12. Amgen (AMGN). MERGER of pharmaceuticals with biotechs to promote growth in healthcare sector. Stock price $182.24 on 01/13/2020. $285.51 on 12/03/2022.

13. Wabtec (WAB). REORGANIZED from digital electronics to autonomous train manufacturing. Stock price $53.52 on 03/13/2020. $103.38 on 12/03/2022.

14. Cintas (CTAS). REORGANIZED from uniform rental services company to cleaning, first aid, fire extinguishers, and safety training. Stock price $225.49 on 03/13/2020. $462.53 on 12/03/2022.

PANDEMIC PICS 2020-2022

HAPPY NEW YEAR! Let’s take a moment to recapitulate my so-called “pandemic pics” I had suggested in my two-book training course, “Post-Pandemic Stock Analysis I & II,” in 2020 during the nadir of the COVID-19 pandemic. Traditionally, I like to focus my stock analysis on “extraordinary corporate events,” to wit: SPINOFFS, RESTRUCTURINGS, REORGANIZATIONS, MERGERS, and BANKRUPTCY CHAPTER 11 FILINGS.

However, the COVID-19 pandemic presented a unique opportunity, a once-in-a-lifetime event, which I had coined “an extraordinary event that will affect corporations.” Based on that rare opportunity, my focus was on companies that were pandemic-related, with strong balance sheets, free cash flow, solid earnings potential, and could experience growth due to the pandemic as a catalyst.

Most, if not all, of the below-listed companies were recommended in my books. These stocks should have performed quite well. Remember to give the market 2-5 years to conduct a proper analysis using the “STATEMENT OF CASH FLOWS” found in the company’s 10K and 10Q financial filings. It may take the market some time to drill down the numbers to become aware of a company’s cash-generating ability, thus, patience is prudent. It has been two years, so let’s take a look at how my pandemic pics have panned out:

1. AUTOZONE (AZO): Coronavirus economy; do-it-yourself customers. $1.166.71 on 09/23/2020 – $2,571.59 as of 12/2022.

2. TJ MAXX (TJX): Eschews e-commerce during pandemic. $37.37 on 03/21/2020 – $80.19 as of 12/2022.

3. ROSS STORES (ROST): Same investment thesis as TJX. $63.90 on 03/21/2020 – $119.00 as of 12/2022.

4. BURLINGTON STORES (BURL): Same investment thesis as TJX and ROST. $138.01 on 03/21/2020 – $200.21 as of 12/2022.

5. LAB CORPORATION OF AMERICA (LH): Reorganized from diagnostics and drug development to PCR COVID-19 testing; involved in the development of nearly all of the top-selling pharmaceuticals and biotechnology products, including 85% of all drugs approved by the FDA in 2020; administered 500 million diagnostic tests per year before pandemic. $136.99 on 03/13/2020 – $241.57 as of 12/2022.

6. *MODERNA (MRNA): Biotech subsidiary of British American Tobacco (BAT) and had begun to work on transition to developing a vaccine for COVID-19 in April of 2020. At that time, Moderna had not developed any drugs; had no drugs on the market; had no revenue or sales. But had a $30 billion valuation. $31.66 on 04/10/2020 – $379.63 as of 11/27/2021.

7. BIONTECH (BNTX): Merger with Pfizer to develop mRNA technology to provide twofold immunity against coronavirus. $28.55 on 03/13/2020 – $281.96 on 07/26/2021 with a stock split to $154.85 in November 2022.

8. ABBOTT LABS (ABT): Transmitted from traditional blood testing for disease prevention to rapid at-home antigen test for COVID-19. $74.74 on 03/13/2020 – $108.09 as of 12/2022.

9. REGENERON PHARMACEUTICALS (REGN): Sought FDA emergency use authorization for antibody drug REGEN-COV, on top of steroid DEXAMETHASONE, to cut risk of death for sickest COVID-19 patients. $431.89 on 03/13/2020 – $766.39 as of 12/2022.

10. GILEAD SCIENCES (GILD): Developed REMDESIVIR to treat COVID-19 patients, as an antiviral; had been working with U.S. Government since 2014 to investigate remdesivir’s effectiveness against coronaviruses. $68.58 on 03/13/2020 – $89.03 as of 12/2022.

11. CRISPr THERAPEUTICS (CRSPR): Developed CRISPr CAS-9 gene-editing technology to manipulate genes to prevent heart disease and illnesses. $28.57 on 12/208 – $75.78 as of 12/2021.

*I WOULD NOT HAVE PURCHASED SHARES OF MODERNA BECAUSE PRIOR TO THE COVID-19 PANDEMIC, THE COMPANY HAD NO DRUGS ON THE MARKET, NO REVENUE, NO SALES, NO “STATEMENT OF CASH FLOWS” TO REPORT, AND NO GUARANTEE IT WOULD HAVE BEEN SUCCESSFUL IN DEVELOPING A VACCINE FOR COVID-19 WITH FDA APPROVAL.

STOCK PIC OF THE MONTH

HAPPY NEW YEAR! My “Stock Pic of the Month” for January 2023 is:

NU HOLDINGS (NU): $3.89 as of 12/2022
EVENT: “BUFFET BUY” (Form 13-F)

Warren Buffett’s Berkshire Hathaway has invested $1.5 billion in NU Holdings, an attractive fintech company, since the fourth quarter of 2021, on the heels of NU’s IPO. I believe this “Buffett Buy” is significant because Berkshire rarely buys IPO stocks.

Although shares have fallen about half since NU’s 2021 IPO, investors, like you and I, should pay particular attention. Here’s why:

NU lets users in Brazil, Mexico, and Columbia handle digital money transfers with their phones and sells investment products and life insurance. Keep in mind that Buffett likes to focus on well-managed companies that have a strong franchise, brand name, or market niche. In addition, he likes businesses that are easy to understand, generates lots of cash, and have an attractive discount to current value. You may do your own research to vet Buffett, or pull Form 13-F at www.sec.gov to confirm Berkshire’s thesis on NU and check out NU’s “STATEMENT OF CASH FLOWS” found in its 10K and 10Q financial filings. You would want to be sure of NU’s cash generating ability, because cash, as opposed to reported earnings, can be used to pay dividends, buy back stock, pay down debt, finance new opportunities, or make acquisitions into other Latin American countries.

With 186 million people in Brazil, 108 million in Mexico, and 46 million in Columbia, the growth potential is outstanding! Think of NU Holdings as equivalent to Block’s $CASH APP growth trajectory in North America, with the same investment thesis and characteristics as punctuated in my “Stock Pic of the Month” for “Block” posted for 10/2022.

For more information on post-pandemic stock analysis, pick up a copy of “Post-Pandemic Stock Analysis I & II.”

STOCK PIC OF THE MONTH

GE HEALTHCARE TECHNOLOGIES, INC. (GEHC)
EVENT: SPINOFF: $60.49 per share post-spin – January 3, 2023

My “Stock Pic of the Month” for February 2023 is “GE HEALTHCARE TECHNOLOGIES, INC.” I have been monitoring GE since its massive restructuring had metastasized in 2017-18 under new CEO Larry Culp. I was familiar with Larry Culp from days as CEO of Danaher, Corp., and knew he was a turnaround expert hired to right GE’s ship. His efforts are not bearing fruit five years later with the break up of GE into three divisions: GE HealthCare; GE Vernova (a portfolio of energy businesses which will include natural gas-powered turbines and wind turbines, and will split in early 2014); and GE Aerospace.

My research has uncovered that an analysis of recent healthcare breakups by Houlihan Lokey found that from 2019 to 2022, the sector tied for first place with information technology. Another study conducted by Morgan Stanley of medical technology spinoffs since 2000 showed they outperformed the S&P 500 by about 20% in their first year as independent listed companies. The Edge Group’s 20 year study of large-cap spinoffs concluded that newly spinoff stocks dropped on average of 7% in their first 30 days, but returned 22% over a 2-year period post-spin.

Finally, remember the Penn State study covering a 20-year period ending in 1998 that punctuated that stocks of spinoff companies outperformed their industry peers and the S&P 500 by about 10% per year in the first three years of independence.

The case for continued growth for GE HealthCare as a stand-alone company is great due to rising healthcare demand which should result in expansion of its ultrasound business, while its imaging and patient-care solutions division, with low margins, could also be expanded with management focused on just healthcare. Check out the management team’s bona fides at www.sec.gov/EDGAR, pull the prospectus.

For more information about how to properly analyze a spinoff opportunity, pick up a copy of “Post-Pandemic Stock Analysis I & II,” by Anthony Johnson.

STOCK PIC OF THE MONTH

CONSTELLATION CORP. (CEG)
CORPORATE EVENT: SPINOFF
$59.21- May 1, 2022 (post-spin)

My “Stock Pic of the Month” for March 2023 is CONSTELLATION CORP. In February of 2022, Exelon Corp. completed its spinoff of its power-generation business as a stand-alone company. The stand alone company, Constellation, operates the nation’s largest fleet of nuclear-power plants and has plans for further growth by acquisition and novel ways to use nuclear power to produce green hydrogen, which is made using carbon-free energy to strip hydrogen atoms from water molecules through a process called electrolysis. This will be a significant break-through for the energy sector because hydrogen doesn’t emit carbon when burned, and it has long been touted as a fuel with the potential to help eliminate emissions from vehicles, power plants and heavy industry.

State and federal policy makers increasing view nuclear energy as a way to help move the needle to achieving ambitious goals of decarbonization of the power grid in the coming decades. The Biden administration has targeted a carbon-free grid by 2023. We cannot have a carbon-free grid without the use of alternative energy sources to power an already oversaturated grid with the increase of the electrification of everything and no power sources to supply demand.

Unlike wind and solar farms, whose output depends on weather and time of day, nuclear plants produce carbon-free electricity around the clock and could help bolster power supplies as more intermittent resources come online. There has to be a way to transition and match consumption of energy with power, and if nuclear energy is missing from the equation, it becomes very difficult to achieve the goal of a carbon-free grid.

The bipartisan infrastructure bill passed by Congress in 2021 included $6 billion to support existing nuclear plants, and on the heels of the legislation Constellation outlined a plan to manage costs and boost output from its nuclear operations, which span IL, PA, MD, NJ, and NY and expand its retail electricity business serving commercial and industrial power users, while investing in emerging technologies, like green hydrogen, as cited above.

Be sure to pull FORM 4 for spinoffs at www.sec.gov/EDGAR, and read the prospectus, 10Q and 10k. Also, drill down into the numbers by reading the “Statement of Cash Flows” and check dividend distributions. Finally, remember spinoffs outperform the overall market by 10% per year in the first three years of independence.

For more information on how to properly evaluate spinoffs and other extraordinary corporate events, pick up a copy of “Post-Pandemic Stock Analysis I & II.”

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