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Valens Research

UAFRS vs As Reported Monthly Highlights - 2020 05 31

This month, Valens identified distortions and the corresponding adjustments to correct for those distortions for KBH, EPAY, OUT, POWI, GKOS and MO.
Underlyings
Altria Group Inc

Altria Group is a holding company. The company's subsidiaries include: Philip Morris USA Inc., which is engaged in the manufacture and sale of cigarettes; John Middleton Co., which is engaged in the manufacture and sale of machine-made cigars and pipe tobacco; Sherman Group Holdings, LLC and its subsidiaries, which are engaged in the manufacture and sale of cigarettes and the sale of cigars; and UST LLC, which through its subsidiaries, including U.S. Smokeless Tobacco Company LLC and Ste. Michelle Wine Estates Ltd., is engaged in the manufacture and sale of smokeless tobacco products and wine. The products of the company's tobacco subsidiaries include smokeable tobacco products and machine-made cigars.

Bottomline Technologies (de) Inc.

Bottomline Technologies operates settlement networks that facilitate electronic payments and transaction settlement between businesses, their vendors and banks. The company provides solutions that banks use to provide payment, cash management and treasury capabilities to their business customers, as well as solutions that financial institutions use to facilitate customer acquisition. Corporate customers rely on the company's solutions to automate payment and accounts payable processes. The company also provides cyber fraud and risk management solutions that are designed to non-invasively monitor and analyze user behavior and payment transactions to flag behavioral and data anomalies and other suspicious activity.

Glaukos Corp

Glaukos is an ophthalmic medical technology and pharmaceutical company focused on surgical devices and sustained pharmaceutical therapies designed to treat glaucoma. The company developed Micro-Invasive Glaucoma Surgery (MIGS) to serve as an alternative to the glaucoma treatment and management paradigm. MIGS procedures involve the insertion of a micro-scale device or drug delivery system from within the eye's anterior chamber through a small corneal incision. The company's MIGS devices are designed to reduce intraocular pressure by restoring the natural outflow pathways for aqueous humor. The company's products include iStent trabecular micro-bypass stent, and iStent Inject trabecular micro-bypass stent.

KB Home

KB Home is a homebuilding company. The company builds a variety of homes designed primarily for first-time and first move-up, as well as second move-up and active adult homebuyers, including attached and detached single-family residential homes, townhomes and condominiums. The company's financial services operations provide various insurance products to its homebuyers in the markets where it builds homes and provide title services in certain of those markets. The company's financial services operations also provide mortgage banking services, including residential consumer mortgage loan originations, to its homebuyers indirectly through KBHS Home Loans, LLC, a joint venture the company formed with Stearns Lending, LLC.

OUTFRONT Media Inc.

OUTFRONT Media is a real estate investment trust that provides advertising space on out-of-home advertising structures and sites in the U.S. and Canada. The company's inventory consists of billboard displays, which are mainly located on the heavily traveled highways and roadways, and transit advertising displays operated under multi-year contracts with municipalities in cities across the U.S. and Canada. The company had displays in markets in the U.S. and Canada. The company's portfolio includes sites such as the Bay Bridge in San Francisco, various locations along Sunset Boulevard in Los Angeles, and sites in and around both Grand Central Station and Times Square in New York.

Power Integrations Inc.

Power Integrations designs, develops and markets analog and mixed-signal integrated circuits and other electronic components and circuitry used in high-voltage power conversion. The company's products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this conversion entails, among other functions, converting alternating current (AC) to direct current (DC) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer's specifications. The company's products are AC-DC power conversion, High-voltage gate drivers, and Motor-driver products.

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Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
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
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • 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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