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Valens Research

Valens Credit Weekly Insights - 2018 05 23

Valens Credit Research Team highlighted ideas for GME, JCP, and VRX. They have also provided recent analyses for LB and BLDR, while CYH topped the quantitative outlier report for the week.

Underlyings
Advanced Micro Devices Inc.

Advanced Micro Devices is a semiconductor company. The company primarily provides x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit, chipsets, graphics processing units (GPUs), data center and personnel GPUs, and development services; server and embedded processors, semi-custom System-on-Chip products, development services and technology for game consoles. The company also licenses portions of its intellectual property portfolio. The company's segments are: Computing and Graphics, which consists of desktop, notebooks, commercial, and chipsets products; and Enterprise, Embedded and Semi-Custom, which includes server processors, and embedded P\processors products.

AerCap Holdings NV

Aercap Holdings is an integrated global aviation company engaged in aircraft leasing. Co. acquires aviation assets at attractive prices, lease the assets to suitable lessees, and manage the funding and other lease related costs efficiently. Co. also provides aircraft management services. Co. operates its business on a global basis, providing aircraft to customers in every major geographical region. As of Dec 31 2017, Co. owned 980 aircraft and managed 113 aircraft.

AMAG Pharmaceuticals Inc.

AMAG Pharmaceuticals is a pharmaceutical company focused on bringing products to patients in the areas of maternal and women's health, anemia management and cancer supportive care, including Feraheme? (ferumoxytol injection) for intravenous use, Makena? (hydroxyprogesterone caproate injection), Intrarosa? (prasterone) vaginal inserts and MuGard? Mucoadhesive Oral Wound Rinse. The company's portfolio also includes three product candidates, Vyleesi? (bremelanotide), which is for the treatment of hypoactive sexual desire disorder in pre-menopausal women, AMAG-423 (digoxin immune fab (ovine)), which is for the treatment of preeclampsia, and ciraparantag, which serves as an anticoagulant reversal agent.

Avon Products Inc.

Avon Products is a manufacturer and marketer of beauty and related products. The company's product categories are Beauty and Fashion and Home. Beauty consists of skincare, fragrance and color (cosmetics). Fashion and Home consists of fashion jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, children's products and nutritional products. The company's business is conducted primarily in one channel, direct selling. The company's reportable segments are based on geographic operations in four regions: Europe, Middle East & Africa; South Latin America; North Latin America; and Asia Pacific.

Bausch Health Companies

Valeant Pharmaceuticals International is a pharmaceutical and medical device company that develops, manufactures, and markets a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices). Co. has two operating and reportable segments: Developed Markets, which focuses in dermatology, neurology, gastrointestinal disorders, and eye health therapeutic; and Emerging Markets, which focuses primarily on branded generics, OTC products, and medical devices.

Beazer Homes USA Inc.

Beazer Homes USA is engaged as a homebuilder. The company's homebuilding operations consist of the design, sale, and construction of single-family and multi-family homes. The company purchases land or obtains an option to purchase land, which, in either case, requires certain site improvements prior to home construction. When available in certain markets, the company also buys finished lots that are ready for home construction. The company has investments with land developers, other homebuilders and financial partners to acquire land positions, to manage its risk profile and to utilize its capital base. The company also acts as the general contractor for the construction of its new home communities.

Builders FirstSource Inc.

Builders FirstSource, through its subsidiaries is a supplier and manufacturer of building materials, manufactured components and construction services to homebuilders, sub-contractors, remodelers and consumers. The company provides a solution to its customers providing manufacturing, supply and installation of structural and related building products. The company's manufactured products include factory-built roof and floor trusses, and wall panels and stairs. The company also assembles interior and exterior doors into pre-hung units. Additionally, the company supplies its customers with building products not manufactured by the company, such as dimensional lumber and lumber sheet goods and various window, door and millwork lines.

Chesapeake Energy Corporation

Chesapeake Energy is a holding company. Through its subsidiaries, the company is an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce oil, natural gas and natural gas liquid from underground reservoirs. The company owns a portfolio of onshore U.S. liquids and natural gas assets. The company has positions in the resource plays of the Eagle Ford Shale in South Texas, the stacked pay in the Powder River Basin in Wyoming and the Anadarko Basin in northwestern Oklahoma. The company's natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana.

Community Health Systems Inc.

Community Health Systems is a holding company. Through its subsidiaries, the company operates general acute care hospitals and outpatient facilities. The company provides healthcare services through the hospitals that it owns and operates and affiliated businesses in non-urban and selected urban markets. Services provided through the company's hospitals and affiliated businesses include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. The company also provides additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers.

CVR Energy Inc.

CVR Energy is a holding company. The company is engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in CVR Refining, LP (CVR Refining) and CVR Partners, LP (CVR Partners). CVR Refining is an independent petroleum refiner and marketer of transportation fuels. CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. The company's segments include: Petroleum, which includes refineries located in Coffeyville, KS and Wynnewood, OK and supporting logistics assets in the region; and Nitrogen Fertilizer, which includes nitrogen fertilizer manufacturing facilities located in Coffeyville, KS and East Dubuque, IL.

Denbury Resources Inc.

Denbury Resources is an independent oil and natural gas company. The company's operations are focused in two main operating areas: the Gulf Coast and Rocky Mountain regions. The company's properties with proved and producing reserves in the Gulf Coast region are situated in Mississippi, Texas, Louisiana and Alabama, and in the Rocky Mountain region are situated in Montana, North Dakota and Wyoming.

Endo International Plc

GameStop Corp. Class A

GameStop is a multichannel video game and licensed consumer products retailer. The company's products and services includes: New Video Game Hardware, which provides video game platforms from manufacturers; New Video Game Software, which provides new video game software for existing and certain prior generation consoles from manufacturers, including Sony, Nintendo and Microsoft; Video Game Accessories, which consist primarily of controllers, gaming headsets, virtual reality products, and memory cards; and Digital, which sells a variety of digital currency and has developed technology to sell downloadable content and full-game downloads in its stores and on its U.S. website.

L Brands Inc.

L Brands is a holding company. Through its subsidiaries, the company is a specialty retailer of women's intimate and other apparel, personal care, beauty and home fragrance products. The company sells its merchandise through company-owned specialty retail stores in the U.S., Canada, the U.K., Ireland and Greater China, and through its websites and other channels. The company's other international operations are primarily through franchise, license and wholesale partners. The company has three reportable segments: Victoria's Secret, Bath & Body Works and Victoria's Secret and Bath & Body Works International. The company operates the following retail brands: Victoria's Secret, PINK and Bath & Body Works.

McClatchy Company Class A

The McClatchy is a provider of independent local journalism as well as selected national news coverage through its Washington D.C. based bureau. The company is engaged in providing content, either editorial or through advertising. The company's media companies and its digital media agency, excelerate?, distribute content, including video products, through its owned and operated websites and mobile applications, third-party search and ad exchanges, social media platforms, electronic editions of its daily newspapers (e-editions) as well as its printed daily newspapers. The company also prints selected niche publications and community newspapers, as well as provides other print and digital direct marketing services.

Navistar International Corporation

Navistar International is a holding company. Through its subsidiaries, the company is a manufacturer of International? brand commercial trucks, proprietary diesel engines, and IC Bus? (IC) brand school and commercial buses. The company's segments include: Truck, which manufactures and distributes trucks and buses along with production of proprietary engines; Parts, which provides proprietary products to support the International commercial truck, IC Bus, proprietary engine lines, and export parts business; and Global Operations, which consists of the operations of its subsidiary, International Industria Automotiva da America do Sul Ltda that manufactures and distributes mid-range diesel engines.

Old COPPER Company. Inc.

J. C. Penney Company is a holding company whose principal operating subsidiary is J. C. Penney Corporation, Inc. The company's business consists of selling merchandise and services to consumers through its department stores and its website at jcpenney.com. The company's department stores and website serve the same type of customers, its website provides the same mix of merchandise as its store assortment along with other extended categories that are not provided in store, and its department stores accept returns from sales made in stores and via its website. The company sells family apparel and footwear, accessories, jewelry, beauty products through Sephora inside JCPenney, and home furnishings.

Parker Drilling Co.

Parker Drilling is a provider of contract drilling and drilling-related services and rental tools and services. The company has two business lines: Drilling Services, which drills oil and natural gas wells for customers in both the U.S. and international markets; and Rental Tools Services, which provides rental equipment and services to exploration and production companies, drilling contractors and service companies on land and offshore in the U.S. and select international markets. Tools provided include drill pipe, tubing, pressure control equipment, and drill collars. The company also provides well construction services such as tubular running services and downhole tools, and well intervention services.

Ryder System Inc.

Ryder System is engaged in transportation and supply chain management solutions. The company's segments include: Fleet Management Solutions, which provides full service leasing and leasing with maintenance options, commercial rental, contract or transactional maintenance services, and fleet support services such as vehicle administration and fuel service; Supply Chain Solutions, which provides logistics management services, including distribution management, transportation management and other services; and Dedicated Transportation Solutions, which combines equipment, maintenance, drivers, administrative services and additional services to provide a dedicated transportation solution.

Unisys Corporation

Unisys is an information technology company. The company's Services segment provides cloud and infrastructure services, application services and business process outsourcing services. In cloud and infrastructure services, the company assists clients to apply cloud and as-a-service delivery models. In application services, the company develops and manages applications for select industries and provides data analytics. In business process outsourcing services, the company assumes management of processes and functions for clients in target industries. The company's Technology segment designs and develops software and provides hardware and other related products including Unisys ClearPath Forward? and Unisys Stealth?.

United States Steel Corporation

United States Steel is a steel producer of flat-rolled and tubular products with production operations in the United States and Europe. The company is also engaged in railroad services and real estate operations. The company's segments are: North American Flat-Rolled, which produces slabs, strip mill plates, sheets and tin mill products; U. S. Steel Europe, which produces and sells slabs, strip mill plate, sheet, tin mill products and spiral welded pipe, as well as heating radiators and refractory ceramic materials; and Tubular Products, which produces and sells electric resistance welded steel casing and tubing (known as oil country tubular goods), and standard and line pipe and mechanical tubing.

Yellow Corporation

YRC Worldwide is a holding company. Through its operating subsidiaries, the company provides its customers a range of transportation services. The company's reporting segments include: YRC Freight, which provides a range of services for the transportation of industrial, commercial and retail goods in national, regional and international markets, primarily through the operation of owned or leased equipment in its North American ground distribution network; and Regional Transportation, in which its service portfolio includes regional delivery, guaranteed and expedited delivery, interregional delivery, cross-border delivery, and hollandregional.com, newpenn.com, and reddawayregional.com.

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  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
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Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
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  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

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