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Valens Research

Valens Equity Insights and Inflections - 2022 05 17

Silvergate Capital (SI) has built a robust banking network for the cryptocurrency industry, driving massive growth and network effects in the process. Uniform Accounting highlights that the market is missing Silvergate's value proposition and profitability and growth potential, indicating equity upside.

Silvergate Capital was an early partner to the cryptocurrency industry, building its network as early as 2013. Over the last decade, the business has created massive network effects within the industry, driving sustainable growth and opportunities for ROE expansion. The market is currently pricing in decelerating growth and historically low Uniform ROE going forward, signaling the potential for equity upside as the business continues executing.

Silvergate's management is closely aligned with shareholders for long-term value creation.

Management confidence in the Q1 earnings call about their lack of exposure to crypto
prices, their new lending products, and their risk management suggest they are executing in the right areas to meet their strategic goals.

CHDN Q4 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to reach new peaks, but management may have concerns about online betting, growth opportunities, and off-track betting

CNC Q1 2022 Embedded Expectations Analysis – Market expectations are for Uniform ROA to fade, but management is confident about their value enhancement, new offerings, and guidance

UTHR Q4 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to fade, but management is positive about their manufacturing pipeline and DPI approval

SI, CHDN, CNC, UTHR, ACC, JBL, LEN, MIDD, SHOP
Underlyings
American Campus Communities Inc.

American Campus Communities is a real estate investment trust focusing on the acquisition, design, financing, development, construction management, leasing, and management of student housing properties. The company has four reportable segments: Owned Properties, which includes off-campus properties that are located in close proximity to the school campus; On-Campus Participating Properties, which includes on-campus properties that are operated under long-term ground/facility leases; Development Services, which consists of development and construction management services; and Property Management Services, which includes third-party management contracts in which the company is responsible for operations.

Centene Corporation

Centene is an insurance holding company. The company's Managed Care segment provides health plan coverage to individuals through government subsidized programs. The company also provides a variety of individual, small group, and large group commercial healthcare products, both to employers and directly to members in the Managed Care segment. The company's Specialty Services segment consists of the company's specialty companies prviding healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups and other commercial organizations, as well as to its own subsidiaries. The Specialty Service segment also includes the Government Contracts business.

Churchill Downs Incorporated

Churchill Downs is a racing, online wagering and gaming entertainment company. The company manages its operations through three reportable segments: Churchill Downs, Online Wagering, and Gaming. Churchill Downs includes live and historical pari-mutuel racing at Churchill Downs Racetrack and Derby City Gaming. Online Wagering includes the company's TwinSpires business and its online sports betting and iGaming business. Gaming includes casino properties and associated racetrack or jai alai facilities which support the casino license as applicable.

Jabil Inc.

Jabil is a provider of manufacturing services and solutions. The company provides electronics design, production and product management services to companies in various industries and end markets. The company's manufacturing and supply chain management services and solutions include design, planning, fabrication and assembly, delivery and managing the flow of resources and products. The company's segments include: Electronics Manufacturing Services, which utilizes information technology, supply chain design and engineering, technologies centered on primary electronics; and Diversified Manufacturing Services, which provides engineering solutions, with a focus on material sciences, technologies and healthcare.

Lennar Corporation Class A

Lennar is a homebuilder in the United States, an originator of residential and commercial mortgage loans, a provider of title insurance and closing services and a developer of multifamily rental properties. The company's homebuilding operations include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which it has investments. The company operates under the Lennar brand name. The company creates and participates in joint ventures that acquire and develop land for its homebuilding operations, for sale to third parties or for use in the ventures' own homebuilding operations.

Middleby Corporation

Middleby is engaged in the design, manufacture, marketing, distribution, and service of a line of foodservice equipment, food preparation, cooking, baking, chilling and packaging equipment, and kitchen equipment. The company's segments are: the Commercial Foodservice Equipment Group, which provides foodservice equipment to serve cooking, warming, refrigeration, freezing and beverage application within a commercial kitchen or foodservice operation; the Food Processing Equipment Group, which provides processing solutions for customers producing pre-cooked meat products; and the Residential Kitchen Equipment Group, which manufactures, sells and distributes kitchen equipment for the residential market.

SHOPIFY INC.

Shopify provides a cloud-based commerce platform designed for small and medium-sized businesses. Merchants use its software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops. Co. provides a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand and grow its business. Co.'s platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting.

Silvergate Capital

Silvergate Capital is a bank holding company. Through its subsidiary Silvergate Bank, the company provides a banking platform for innovators, especially in the digital currency industry, and developing product and service solutions addressing the needs of entrepreneurs. The company serves clients in the United States.

United Therapeutics Corporation

United Therapeutics is a biotechnology company. The company markets and sells four commercial therapies to treat pulmonary arterial hypertension (PAH): Remodulin? (treprostinil) Injection; Tyvaso? (treprostinil) Inhalation Solution; Orenitram? (treprostinil) Extended-Release Tablets; and Adcirca? (tadalafil) Tablets. The company also markets and sells an oncology product, Unituxin? (dinutuximab) Injection for treatment of high-risk neuroblastoma. The company also engages in research and development of new indications and formulations and delivery devices for its existing products, as well as new products to treat PAH and other conditions. The company also engages in organ transplantation-related technologies.

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Valens Research
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