Trump’s Market Impact, Independent Power Producers Debate, $SWIM Potential, Top Insider Trades, and More
Welcome back to the BBAE Blog, your trusted source for the latest investment insights and analyses from the BBAE team. This week, we’ve packed the blog with actionable insights that will keep you informed and ahead of the market. Don’t forget, some of our most valuable insights are available exclusively in the BBAE Pro app—download it now to unlock full access!
- A Second Trump Presidency and the Stock Market
- BBAE Debate: Independent Power Producer (IPP) Stocks like Talen Energy (NYSE: $TLN): Hot or Not?
- Optimist Fund’s Bet on Latham Group ($SWIM): Capitalizing on the Fiberglass Pool Boom
- InsiderEdge™️ Highlights: October 2024’s Top Insider Trades
- Weekly Roundup: Fed Rate Cut, Trump Returns, Bad Buffett ETF, Next Decade of Stock Returns
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A Second Trump Presidency and the Stock Market
James Early, BBAE’s CIO, examines the potential market impact of a second Trump presidency, analyzing key trends such as the strengthened US dollar, the mixed performance of “Trump trades” like private prisons, steel, and healthcare stocks, and the challenges of predicting government-driven market moves. He highlights winners like small-cap stocks and private prison operators, while also noting underperformers in clean energy and steel. James emphasizes the unpredictability of politically driven investment strategies and advocates for long-term investing across presidential administrations. Read the full article here.
BBAE Debate: IPP Stocks like Talen Energy (NYSE: $TLN): Hot or Not?
James hosts a spirited discussion on the future of independent power producer (IPP) stocks, focusing on Talen Energy (NYSE: $TLN), Constellation Energy (NYSE: $CEG), and Vistra (NYSE: $VST). Enrique Abeyta of HX Research defends a bullish outlook, arguing that FERC’s recent rejection of Talen’s power delivery request to Amazon’s data center is more about procedural delay than a long-term precedent, and he predicts Talen could be bought out within 18 months. On the other hand, Travis Miller of Morningstar remains bearish, viewing the FERC ruling as overly performative and questioning the longer-term viability of IPPs. Despite their differing views on the short-term, both express skepticism about the sector’s prospects in the distant future. Watch the full debate here.
Optimist Fund’s Bet on Latham Group ($SWIM): Capitalizing on the Fiberglass Pool Boom
Optimist Fund highlights Latham Group ($SWIM), the leading U.S. manufacturer of fiberglass pools, as a high-potential long-term investment. Fiberglass pools, which offer lower maintenance costs, faster installation, and better design, have grown from 4% of new pool starts in 2000 to 22% today, with expectations to exceed 30% over the next decade. Despite industry challenges, including a 50% drop in new pool starts and Latham’s adjusted EBITDA over the past few years due to rising interest rates, Optimist Fund views this as a temporary downturn. They believe Latham’s market leadership, growth in fiberglass penetration, and expansion into ancillary products will drive a 4x increase in EBITDA within five years. Having acquired shares at an average cost of $3.25, Optimist Fund projects a $50 price target (>600% upside from current price), representing a 25x multiple on estimated 2029 EPS. Read the full article here.
InsiderEdge™️ Highlights: October 2024’s Top Insider Trades
- Wave Life Sciences Ltd. ($WVE): Reported on October 2, a 10% Owner purchased 2,791,930 shares at $8.00/share for $22.34M. Following the InsiderEdge signal, the stock price increased by +78.67% to $14.83.
- NerdWallet, Inc. ($NRDS): Reported on October 24, a 10% Owner acquired 461,777 shares at $11.43/share for $5.28M. After the InsiderEdge signal, the stock price rose by +43.69% to $15.82.
- Septerna, Inc. ($SEPN): Reported on October 29, a 10% Owner bought 650,000 shares at $18.00/share for $11.70M. Since the InsiderEdge signal, the stock price gained +25.30%, reaching $26.00.
Click here for the full InsiderEdge post, available daily in BBAE Discover.
Weekly Roundup: Fed Rate Cut, Trump Returns, Bad Buffett ETF, Next Decade of Stock Returns
This week’s financial news highlights several key developments:
- Trump Returns as U.S. President: The biggest headline of the week, with potential implications for markets and inflationary pressures.
- Federal Reserve Rate Cut: A quarter-point rate cut was largely overshadowed by political news. The cut benefits small-cap stocks and emerging markets, but inflation risks from Trump’s policies could challenge future cuts.
- Questionable ETF Innovation: The newly launched “Kick BRK 2X Daily Long Target ETF” ($BRKX) promises 200% of daily returns on Berkshire Hathaway. Critics argue it contradicts the long-term ethos of Berkshire’s strategy, making it an odd choice for leveraged day traders.
- Presidents and Market Influence: Historical analysis suggests that U.S. presidents have limited direct impact on long-term market trends, emphasizing the importance of staying invested.
- A Decade of Large-Cap Growth: Data from Charlie Bilello highlights the dominance of U.S. large-cap growth stocks over the past decade, vastly outperforming emerging markets. Vanguard forecasts a reversal in trends, favoring underperforming sectors in the next decade.
Read the full roundup post here.
Wishing you a great week ahead~
Barry Freeman
CEO @ BBAE
This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.
