I’m sending this week’s update out a day early because I have a window to work now with the kids somewhat entertained with Christmas presents. And it’s always nice not to load up our team with communications the day before a holiday (Cabot is closed Friday).
My family just returned from 10 days in Vermont, where we got to sled, downhill, and cross-country ski with the limited snow that’s fallen so far this season.
There’s been a lot of speculation among skiers about how the season will be with all the COVID-19 rules, etc. Overall, I’d say it felt pretty normal. The lift lines seem a little longer but I think it was mostly an optical illusion due to there being six feet between the lines. And face masks on the ski slopes aren’t a big deal since skiers often cover their faces anyway.
Honestly, the only weird thing is following all the social distancing and masking rules then walking by the lodge and seeing people (albeit at limited capacity) inside eating and drinking without masks on. It doesn’t make any sense at all from a health perspective, but obviously there are economic implications as well. This twilight zone-type juxtaposition isn’t just at the ski resort of course, but for some reason it jumped out at me as being particularly odd there.
In any event, the bigger obstacles to skiing were the usual – getting kids into their clothes and getting to the mountain on time, then finding the best skiing with the fewest people around. This trip, limited snow meant the woods were too sketchy so it was mostly about sticking to the side of the trail and making sure the kids didn’t miss a SINGLE jump.
Beyond all the activities and presents I had a chance to dig into a few new books.
I’m getting near the end of It Was All a Lie: How the Republican Party Became Donald Trump (Stuart Stevens), which is keeping my attention.
Next up is A Promised Land (Barack Obama) to balance things out.
For breaks in the political stuff I’ve been leafing through Is This Anything? (Jerry Seinfeld) which is just classic funny Seinfeld and entertaining for a lot of reasons, one of which is that I can hear him speaking the lines in my head as I read.
We also were gifted copies of Alright, Alright, Alright: The Oral History of Richard Linklater’s Dazed and Confused (Melissa Maerz) and Leave Only Footprints: My Acadia-To-Zion Journey Through Every National Park (Conor Knighton), among a few other names that I can’t recall at the moment.
Based on a quick read of the dust jackets I think I’ll enjoy all of these. Nothing like a pandemic winter to cruise through a lot of books!
On to the market …
This week between Christmas and New Year is always odd because so many market participants are taking time off. My news feeds have basically shut down and there’s little company-specific news of substance.
The main thing on my mind is how all the tech stocks will perform in the January and February given vaccine rollouts and the potential risk of rotation into more cyclical names. This isn’t a hot take – a lot of people are watching for the same thing so it may amount to nothing. In my view I think a period of consolidation for a lot of these ultra-hot stocks would be a good thing.
We’ve also seen some of the megacap tech stocks start to move again. Specifically, I’m talking about Apple (AAPL), which briefly hit a 52-week high yesterday, Microsoft (MSFT), which is just 4% off its all-time high and roughly 20 points above support near 200, and Amazon (AMZN), which jumped off its 50-day line on Monday.
In terms of our portfolio, our stocks are, on average, slightly up over the past two weeks but down around 5% over the last week. There are no ratings changes today.
The biggest detractor has been Accolade (ACCD), which has retreated from a surprise surge that briefly carried the stock over 60 a couple weeks ago. ACCD is still rated HOLD.
Many of our Medtech stocks, including Personalis (PSNL), BioLife Solutions (BLFS) and Karyopharm (KPTI) have also pulled back by around 7% over the past week, and software names Avalara (AVLR) and Fiverr (FVRR) are down about the same.
In terms of specifics, Karyopharm continues to post disappointing performance in the wake of the Xpovio label expansion approval. The stock reacted well initially but is back to 15, which is about where it’s been trading since the end of July. There is a delay between the positive news flow and tangible results (i.e. revenue) so it could just be that investors are being patient. But it’s something I’m watching closely. For now, KPTI remains at BUY.
We also heard that Avalara continues to expand in Europe with the acquisition of INPOSIA, a German-based company providing e-invoicing and integration solutions. The company was founded in 2010, when it was focused on enterprise application integration (EAI), then adapted to focus on electronic data interchange (EDI) soon thereafter. My understanding is that, just as sales tax is a web of confusion so too is e-invoicing, especially in Europe. At a high level it makes sense that Avalara, which offers solutions to simplify complex and annoying digital processes, can help ease the pain for clients. Details of the deal were not disclosed but it doesn’t appear to be immaterial. AVLR remains at HOLD.
Finally, while there is no new news on Arena Pharmaceuticals (ARNA) it’s worth taking a quick look at the chart. The stock, which I’ve kept at buy, has quietly rallied from 63 to 77 over the last three weeks. It’s still a buy.
That’s it for today, and for 2020, assuming nothing major happens before the market closes tomorrow. I hope you’re looking forward to 2021! I’ll be back in touch next week with our January Issue.
