Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.83 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Bullish Outlook Intact; Mild Concerns Subside

The action we are seeing in broad indexes, Sectors, and in market dynamics continues to support our overall bullish outlook. Additionally, the mild deterioration in market dynamics that we discussed the past two weeks is now much less of a concern. Continue to buy dips.

· S&P 500. The major averages are hitting new all-time highs; and new highs are bullish. Key support levels we are watching on the S&P 500 include short-term support at 3870, with the next important support levels coming in at 3840, 3750, 3694, 3635, 3588, and 3550. A break below the 3694 level would signal a loss of short-term upside momentum, however as long as 3550 holds we want to buy dips... see chart below.

· Sector Relative Strength Rankings & Weighting Recommendations. Cyclical Sectors remain leadership while defensives (Staples, Utilities, Real Estate) remain in RS downtrends -- precisely what we would expect to see in a bull market... see pages 2-3.

· Mild Concerns Subside. Over the past two weeks we highlighted some early signs of deteriorating market dynamics which led us to a slightly less bullish outlook, noting that if deterioration continued, it would likely lead to a deeper pullback for stocks. It turns out that the deterioration in market dynamics was short-lived as (1) the 10-year Treasury yield held above the key 0.97-1.00% support level, (2) the US dollar (DXY) was unable to sustain a breakout above 91, let alone 92, and (3) RS has deteriorated for defensive areas (REITs, pharma, Utilities, and Staples). We mentioned in our 1/26/21 Compass that these deteriorating dynamics could prove to be nothing, and that is exactly the case. Still, these remain important metrics to monitor going forward... see chart below & page 3.

· Small-Caps & EM Equities Remain Leadership; High Yield Spreads At New Lows. Small-caps (Russell 2000) are hitting new price highs and continue to outperform relative to large-caps (S&P 500). We are seeing the same thing happening with EM equities. Additionally, high yield spreads have narrowed to levels last seen in 2018. These are three clear risk-on signals that help us arrive at our overall bullish outlook... see page 4.

In today's report we highlight attractive Groups and stocks within Consumer Discretionary, Energy, and Health Care: CD-15 Apparel, Accessory & Luxury Goods, Small-Cap, EN-10 Oil & Gas E&P, Domestic, Small-Cap, and HC-08 Biotech, Small-Cap... see pages 13-31.
Underlyings
Black Stone Minerals LP

Callon Petroleum

Canada Goose Holdings Inc.

Canada Goose is a holding company. Through its subsidiaries, Co. designs, manufactures, and sells outdoor apparel for men, women, youth, children, and babies in Canada, the United States, and internationally. Co.'s apparel collections include various styles of parkas, jackets, shells, vests, and accessories for fall, winter, and spring seasons. Co. sells its products through online retailers and distributors; and its e-commerce sites and retail stores.

Dicerna Pharmaceuticals

Dicerna Pharmaceuticals is a biopharmaceutical company focused on the discovery and development of subcutaneously delivered ribonucleic acid (RNA) interference (RNAi)-based therapeutics using its GalXC? RNAi platform for the treatment of diseases involving the liver, including rare diseases, viral infectious diseases, chronic liver diseases, and cardiovascular diseases. The company's primary development programs include DCR-PHXC for the treatment of primary hyperoxaluria; DCR-HBVS for the treatment of chronic hepatitis B virus; and an undisclosed product candidate against a rare liver disease, which is in Clinical Trial Application or Investigational New Drug application enabling studies.

Dorchester Minerals L.P.

Dorchester Minerals is engaged in the acquisition, ownership and administration of Royalty Properties and Net Profits Interests (NPIs). The Royalty Properties consist of producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in several counties and parishes in several states. The NPIs represent net profits overriding royalty interests in various properties owned by the operating partnership. The company's general partner is Dorchester Minerals Management LP, which is managed by its general partner, Dorchester Minerals Management GP LLC.

Editas Medicine Inc.

Editas Medicine is a clinical stage genome editing company focused on developing genomic medicines to treat a range of serious diseases. The company has developed a proprietary genome editing platform based on clustered, regularly interspaced, short palindromic repeats (CRISPR) technology. The company is developing both in vivo CRISPR medicines, in which the medicine is injected or infused into the patient to edit the cells inside their body, and engineered cell medicines, in which cells are edited with the company's technology and then administered to the patient. In ocular diseases, the company's program is designed to address a specific genetic form of retinal degeneration called Leber congenital amaurosis 10.

Emergent BioSolutions Inc.

Emergent BioSolutions is a life sciences company. The company is focused on preparedness and response products and solutions that address the following categories: Chemical, Biological, Radiological, Nuclear and Explosives; emerging infectious diseases; travel health; emerging health crises; acute/emergency care; and contract development and manufacturing. The company also has a development pipeline consisting of a mix of both pre-clinical and clinical-stage product candidates, including Trobigard? a combination drug-device auto injector product candidate. In addition, the company has a fully integrated molecule-to-market biologics CDMO business offerings (development services, drug substance and drug product).

Halozyme Therapeutics Inc.

Halozyme Therapeutics is a biopharma technology platform company that provides solutions to improve patient experience and outcomes. The company's approved product and its collaborators' approved products and product candidates are based on rHuPH20, its patented recombinant human hyaluronidase enzyme. The company refers to the application of rHuPH20 to facilitate the delivery of other drugs or fluids as its ENHANZE? Drug Delivery Technology (ENHANZE). The company licenses the ENHANZE technology to form collaborations with biopharmaceutical companies that develop or market drugs requiring or benefiting from injection via the subcutaneous route of administration.

Insmed Incorporated

Insmed is a biopharmaceutical company focused on improving the lives of patients with rare diseases. The company's proprietary Pulmovance? technology uses charge-neutral liposomes to deliver amikacin directly to the lungs where liposomal amikacin is taken up by the lung macrophages where the MAC infection resides. The company's product pipeline: INS1007, an oral, reversible inhibitor of dipeptidyl peptidase 1, an enzyme responsible for activating neutrophil serine proteases in neutrophils when they are formed in the bone marrow; INS1009, an investigational inhaled treprostinil prodrug formulation that has the potential to manage certain of the limitations of existing prostanoid therapies.

Intellia Therapeutics Inc.

Intellia Therapeutics is a genome editing company focused on developing therapeutics utilizing a biological tool known as Clustered, Regularly Interspaced Short Palindromic Repeats (CRISPR)/CRISPR associated 9 (Cas9). This is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid. The company utilizes its CRISPR/Cas9 platform across two areas: in vivo applications, in which CRISPR/Cas9 is therapy, delivered to target cells within the body; and ex vivo applications, in which CRISPR/Cas9 creates therapy of engineered human cells.

Intra-Cellular Therapies Inc.

Intra-Cellular Therapies is a biopharmaceutical company focused on the discovery and clinical development of small molecule drugs that address medical needs in neuropsychiatric and neurological disorders by targeting intracellular signaling mechanisms within the central nervous system. The company's primary product candidate, Lumateperone is for the treatment of acute and residual schizophrenia, and for the treatment of bipolar disorder, including bipolar depression. The company's pipeline also includes preclinical programs that are focused on developing drugs for the treatment of schizophrenia, Parkinson's disease, Alzheimer's disease and other neuropsychiatric and neurodegenerative disorders.

Iovance Biotherapeutics Inc

Iovance Biotherapeutics is a clinical-stage biopharmaceutical company focused on the development and commercialization of cancer immunotherapy products. The company's main product candidate, LN-144 for metastatic melanoma, is an autologous adoptive cell therapy utilizing tumor-infiltrating lymphocytes, which are T cells derived from patients' tumors. The ongoing studies include LN-145 for metastatic or persistent cervical carcinoma and LN-145 for recurrent and/or metastatic squamous cell carcinoma of the head and neck.

Lands' End Inc.

Lands' End is a retailer of casual clothing, accessories and footwear, as well as home products. The company provides products through catalogs, online at www.landsend.com, on international websites, third-party online marketplaces, and through retail locations. The company's segments consist of U.S eCommerce, Retail, Outfitters (Outfitters), Europe eCommerce and Japan eCommerce. The company's product channels are eCommerce, Retail and Outfitters. eCommerce provides products through its eCommerce websites, third party online marketplaces and direct mail catalogs. Retail sells products and services through Company Operated stores and through Lands' End Shops at Sears. Outfitters sells products to end consumers.

Laredo Petroleum Inc.

Ligand Pharmaceuticals Incorporated

Ligand Pharmaceuticals is a biopharmaceutical company focused on developing and acquiring technologies that help pharmaceutical companies discover and develop medicines. The company employs research technologies such as antibody discovery technologies, structure-based drug design, formulation science and liver targeted pro-drug technologies to assist companies in their work toward securing prescription drug and biologic approvals. The company's collaboration partners and licensees have programs in clinical development targeting cancer, seizure, diabetes, cardiovascular disease, muscle wasting, liver disease, and kidney disease, among others.

Matador Resources Company

Matador Resources is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with a focus on oil and natural gas shale and other unconventional plays. The company's operations are focused on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Also, the company conducts midstream operations, through its midstream joint venture, San Mateo Midstream, LLC together with San Mateo Midstream II, LLC.

Myriad Genetics Inc.

Myriad Genetics is a precision medicine company acting as a trusted advisor to transform patient lives through molecular diagnostics. The company's molecular diagnostic tests include: myRisk? Hereditary Cancer for assessing the risks for hereditary cancers; BRACAnalysis? for assessing the risk of developing breast and ovarian cancer; riskScore? that improves the company's myRisk Hereditary Cancer test; GeneSight? to support psychotropic drug selection for depressed patients; Vectra?DA for assessing the disease activity of rheumatoid arthritis; and Prolaris? for assessing the aggressiveness of prostate cancer. The company also provides pharmaceutical and clinical services.

Oxford Industries Inc.

Oxford Industries is an apparel company that designs, sources, markets and distributes products bearing the trademarks of its Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands, other owned brands and licensed brands as well as private label apparel products. The company's business is primarily operated through its Tommy Bahama, Lilly Pulitzer, Lanier Apparel and Southern Tide operating groups. The company distributes its products through its direct to consumer channels, consisting of its Tommy Bahama and Lilly Pulitzer retail stores and its e-commerce sites for Tommy Bahama, Lilly Pulitzer and Southern Tide, and through its wholesale distribution channels.

Pacira Biosciences Inc.

Pacira BioSciences is a holding company. Through its subsidiaries, the company is a pharmaceutical company focused on delivering non-opioid pain management and regenerative health solutions to surgeons and anesthesiologist. The company's marketed product, EXPAREL (bupivacaine liposome injectable suspension) is indicated for single-dose infiltration in adults to produce postsurgical local analgesia and as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia. EXPAREL consists of bupivacaine, an amide-type local anesthetic, encapsulated in DepoFoam, the company's extended release drug delivery technology, that delivers bupivacaine over time for extended analgesia.

Prime US REIT

Prime US REIT is a Singapore-based real estate investment trust. The Trust is investing in stabilized income-producing office assets, and real estate related assets, in the United States of America. The Trust's objective is to provide unitholders with regular and stable distributions and to achieve long-term growth in distribution per unit and net asset value per Unit. The Trust offers a portfolio of 11 prime office properties located in nine primary markets across the United States of America. The Trust's portfolio properties include Tower I at Emeryville, 222 Main, Village Center Station I, Village Center Station II, 101 South Hanley, Tower 909, Promenade I & II, CrossPoint, One Washingtonian Center, Reston Square and 171 17th Street.

Range Resources Corporation

Range Resources is a holding company. Through its subsidiaries, the company is an independent natural gas, natural gas liquids and oil company, engaged in the exploration, development and acquisition of natural gas and oil properties, located in the Appalachian and North Louisiana regions of the United States, primarily in the Marcellus Shale in Pennsylvania and the Lower Cotton Valley formation in Louisiana.

SM Energy Company

SM Energy is an independent energy company engaged in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. The company's operations are concentrated in the Midland Basin and South Texas.

SPDR S&P Global Infrastructure

Travere Therapeutics Inc

Viper Energy Partners LP

W&T Offshore Inc.

W&T Offshore is an independent oil and natural gas producer with substantially all of its operations in the Gulf of Mexico. The company is active in the exploration, development and acquisition of oil and natural gas properties. The company's interest in fields, leases, structures and equipment are primarily owned by the parent company, W&T Offshore, Inc. and its subsidiary, W & T Energy VI, LLC and through its proportionately consolidated interest in Monza Energy, LLC.

Xencor Inc.

Xencor is a clinical-stage biopharmaceutical company focused on discovering and developing engineered monoclonal antibody and other protein therapeutics to treat diseases with unmet medical needs. The company is developing a suite of clinical-stage drug candidates from its proprietary XmAb? technology platforms that are designed to treat cancer and autoimmune diseases. The company's protein engineering knowledge and the XmAb technologies are focused on the parts of the antibody that interacts with various segments of the immune system and controls antibody structure. This segment, referred to as the Fc domain, is constant and interchangeable among antibodies.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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