We recently sat down with Richard Sbaschnig, CFA, VP of Financials & Financial Technology Forensic Research from CFRA Research (available to joint clients through the Sentieo Platform) to discuss his forensic accounting analysis of the Wirecard scandal.

Some of the potential manipulations that CFRA detected in the disclosures of Wirecard, its local subsidiaries, as well as local government filings include:

• Sham M&A transactions at grossly inflated prices to generate fake revenue for the acquirer over time through controlled third-party entities
• Overcapitalization of expenses such as buying software or services, with most the expenses flowing back to the purchaser, effectively converting Cash Flow from Investments to Cash Flow from Operations 
• The extensive use of unusual receivables with affiliated entities that results in boosting revenues 
• Straight cash balance fraud: unverifiable cash balances held at purported “trustee” accounts 
• Several other signs pointing to problematic reporting 

We review potential indicators that analysts might be able to use to detect companies that might try to use these techniques to embellish results.

In addition, we also looked at several examples of “traditional” warning signs that might have a weaker signal value than commonly believed, such as discrepancies driven by common income tax strategies or local capital control regulations. 

You can view the webinar at Wirecard Accounting Indicators: Lessons Learned

The post Wirecard AG: Lessons Learned (webinar recap) appeared first on Sentieo.

Quarterly calls by publicly traded companies are usually relatively staid affairs, with corporate executives delivering carefully prepared remarks and answering highly detailed questions by their Wall Street coverage analysts. 

So when we released our white paper on the increase in expletives on conference calls earlier this year, it caused somewhat of a sensation in the media:

• The Wall Street Journal: Sure, Work Makes Us Want to Swear. But Should You?
• Investor Relations Magazine: Oh %&#@!: Record year for swearing on conference calls in 2021
• Business Insider: The most successful teams swear and gossip
• LinkedIn News: white paper highlight and poll with over 39,000 votes
• Axios: Axios Closer 
• Inc. Magazine: Swearing at work was up 60%
• Morning Brew: Daily Newsletter  
• Workiva (NYSE:WK) corporate podcast: @!$% My CEO Says: Conference Call Cursing
• FT journalist discussion on Twitter

Who says that our award-winning AI search has to be used only for serious purposes? You can see how we use our Deal Hunter Dashboard to find free food, free admissions to events, and sweepstakes, and how we used other parts of the platform to track the surge in Plan B contraceptive searches following Valentine’s Day, as well as the never-ending popularity of pumpkin spice lattes.  

You can download the original white paper here (no email required), with all the stats and selected anonymized quotes. 

Finally, we have some good news, or bad news, depending on your perspective: the trend is still up in Q1 2022. There were 50 transcripts in Q1 2022 that contained expletives, versus 42 in Q1 2021. 

The CEO of a US retailer gave this perspective on his career in March: “I just don’t think there’s a lot of people in business today, except for Warren Buffett and Charlie Munger and, I don’t know, George Soros and just a handful. If you had wisdom in 1980, you kind of get into your years of wisdom in your 50s and start to get wise. If I look back and go to my ’30s, I really didn’t do anything. I just like worked really hard. In my 40s, I just got better. I could get (expletive) done and kind of see a bigger picture. In my 50s, I started seeing a much bigger picture. And in my late 50s and 60s, I think I’ve kind of gained a lot of wisdom, and I can see a much bigger playing field than I could.”

The CEO of an industrial company explained the danger of customer concentration in March as well: “You have to have very little customer concentration. We don’t want to deal with 1 or 2 customers that can just beat the (expletive) out of you and control what you do, we want to control what we do.”

More recently, in April, the founder and CEO of a tech company discussed infosec buyer preferences: “They don’t want the suites. They don’t want to bundle because they know that in a bundle might be 7 products, but 2 or 3 of them are (expletive) anyway.”

Want to see how we used the Sentieo Financial Intelligence Platform to conduct this research and try it for yourself? Get in touch.

The post Go Ahead And Say It: Expletives Are On The Rise In Conference Calls appeared first on Sentieo.

2020 has been unprecedented (so unprecedented, in fact, that the media arm of our legacy terminal competitor used our stats for the surge in the word “unprecedented”). We went into the holiday shopping season knowing that there will be surprises: back in September, we did some work for our friends in the Financial Times, showing the (unprecedented) low inventory levels for 33 retailers. We also pointed to the related trucking capacity issues around that time during the BattleFin Conference Macro Panel (panel video link) where we told viewers point blank to “order now!”

So, besides the widely-reported Christmas tree shortage (NPR Planet Money podcast), what else caught our eye?

Port congestion was a topic on recent conference calls: the supply chain/inventory issues continue.

We also saw a spike in transcripts with mentions of “shipping costs” in August and November (retailer earnings usually lag by a month due to their January fiscal year end).

We did see (physically) lines outside one retailer: Gamestop! We checked the search interest and web traffic, and they seem to confirm our observations.

The surge in “Outdoor” continues (we wrote about the trend a few months ago). American Outdoor Brands gave some numbers in December: this translates to more rods and reels, shells, and camo clothing.

Snow sports enthusiasts are buying season passes from Vail Resorts

And it is pretty fair to say that every (consumer) company is an e-comm company with the store closures and restrictions around the world: Mattel saw 100% growth in their DTC business.

Housing and housing-related purchases are hot, too. Lovesac saw a 40%+ growth (we highlighted the strength in Homebuilders using our NLP in July).

While “most” apparel retail has had a difficult year, online stylist Stitch Fix reported 10% growth in the most recent quarter, and guided even higher for the fiscal year. 

Similarly, Farfetch, a luxury online boutique collection, is seeing great growth.  

And, finally, if you saw an increase in the holiday cards that feature a new pet, you are not alone. We are seeing a sustained, double-digit increase in search interest in pet adoption along with a relentless rise in the stock prices of Chewy (online pet goods), Fresh Pet (fresh pet food), and Trupanion (pet insurance).

P.S. Let us help you with some data in the eternal debate: Die Hard is a Christmas movie!

Stacked Google search trends for Die Hard:

From all of us at Sentieo, happy holidays, and a prosperous new year! 

The post A Most Unusual Holiday Shopping Season appeared first on Sentieo.

With Airbnb boosting the pricing range for its hotly anticipated IPO this week, we decided to take a look at how Wall Street sees the broader travel recovery. For a more in-depth “how to” start your work on the Airbnb IPO, see how we redlined the original S-1 even though some might think that there are no prior versions of the filing. 

Revenue outlook for the cruise lines and theme/destination parks: a 2022 affair 

For the major cruise lines (RCL, CCL, NCLH) and destination-type operators, like Six Flags, SeaWorld, and Cedar Fair, the recovery is a 2022 (and later) affair. You can see how we used our NLP technology to parse through the Six Flags call during the worst of the crisis. 

Equity issuance and government help have taken deeply negative scenarios off the table: the market is over covid

While travel stocks have borne the brunt of covid, on the positive side, we have seen multiple financing transactions, including debt, equity, and asset sales (the airline loyalty programs being among the more interesting deals: see how we collected US airline industry cash burn data in 60 seconds, and our NLP Heatmaps applied on the airlines). But the financings’ success has also led to an interesting phenomenon that we have observed with retail investors: the stock price of “X” is still down Y%… however, in real terms, market capitalization and enterprise value are much closer to the pre-covid highs because of the new equity and debt issuance. We can see this effect very clearly in CCL (below) where the market capitalization (in red) is much closer to a recovery than the price of an individual share. 

Adding the enterprise value for CCL on the chart, we can see that, on EV basis, the market is looking well-beyond covid (note that market capitalization and EV are on different axes). This is partially why the Airbnb IPO is not merely “anticipated” but “hotly anticipated.” 

Airlines: “everything” is uneven 

While the TSA passenger counts have been showing a slow but steady recovery into Thanksgiving, we continue to see a mix of positive and negative metrics coming from the industry. 

Just after the US holiday, American Airlines filed an 8-K that the company expects its Q4 average daily cash burn to come in at the high end of the previously forecasted range. 

We are also seeing a very wide range of reported Load Factors across the industry (the two rightmost columns in the screenshot). While the range for our watchlist was just 80.6%-86.6% for the last fiscal year, in the last quarter, the range is considerably wider, from a low of 25.9% for Hawaiian to a high of 68.1% for Spirit (and both are leisure-heavy airlines: the “lower 48” travel bounce is good for Airbnb). 

Most airline KPIs are “off the lows” but well under pre-covid levels. We can see this very clearly when we use our Machine Learning-based Table Explorer to chain JetBlue’s KPIs from their SEC filings. When viewed on a quarter-over-quarter basis, we see triple-digit percentage increases in metrics like revenue passengers and revenue passenger miles.

Switching the exact same KPI table chain to year-over-year change, the Q3 “bounce” looks underwhelming. 

(To learn more about our table identification, chaining and visualization tool Table Explorer, watch this introductory video). 

Hotels: also looking past 2021

Looking at lodging- the direct comps of Airbnb- we can also see the market looking past 2021, similar to the cruise lines dynamic, discussed above. Using Hilton as a prominent example, we can see that the 2021 EPS estimates have stayed down over 50% versus the pre-covid levels while the stock price has recovered almost fully. 

This is very similar to what we see going on with the estimates for other hotel names, like Wyndham: 2022 is almost unchanged (screenshot with Revenue estimates from our Equity Data Terminal (recent on-demand webinar open to all)). 

In aggregate, we see Wall Street analysts and investors looking past 2021 for the travel recovery, so we expect a strong showing for Airbnb, a secular growth player where 2020/2021 will not matter much. 

The post Airbnb IPO: How Wall Street Sees the Broader Travel Recovery appeared first on Sentieo.

Investors have always looked for an edge — usually in the form of more and faster information — in order to make better investment decisions. And the industry has responded, creating the $27 billion financial information market we know today. The industry has delivered a complete firehose in the forms of financial data terminals, data feeds, and APIs tied into the global markets.

But, for most people performing fundamental company research, the day-to-day work is still essentially disconnected. While a modern sales executive works in a cloud-based CRM that’s custom-designed to their workflow, the modern analyst performs their day-to-day work using a hodgepodge of generic tools, such as Excel and Word, and using similarly generic collaboration tools, such as Outlook and shared drives. 

Alap and Naman Shah understood this when they founded Sentieo. It was their vision of creating an integrated workflow system specific to the financial and company research domain. Sentieo starts by bringing together the core tools into one platform: a financial search engine, a collaboration suite for investors and analysts, productivity tools designed with the analyst in mind, an integrated research management system (RMS), and of course, real-time financial data.

Most of today’s leading financial information products were built in a previous era — before the cloud, the mobile revolution, social platforms, or real-time collaboration tools. Sentieo’s strategic advantage stems from its platform designed from the start to support an analyst’s workflow, while leveraging today’s leading technologies from the ground up. The Sentieo platform simply couldn’t have been built even a few years ago.

And we’re committed to continuously make it more powerful, more user friendly, and more aligned with our users’ daily workflows. We have built and applied the industry’s most advanced natural language processing engine to the financial domain, and leveraged advances in artificial intelligence to make our users more productive than they could be with any other research platform. 

This is an exciting time for Sentieo and our clients. I am bullish on the future of Sentieo and our ability to improve the lives of the analysts and researchers that depend on us. 

You can read the press release announcing David’s appointment here.

The post Why I Joined Sentieo appeared first on Sentieo.

Over the past few weeks we’ve been covering investable themes for both the Biden and Trump campaigns. So far, we’ve discussed higher education, police funding and cannabis decriminalization. Today, we’ll look at private prisons.

While President Trump does not directly address the use of private prisons by various federal, state, and local agencies, his opponent, former VP Biden, does address the issue quite explicitly: “Biden will end the federal government’s use of private prisons.”

And there is substantial historical precedent for this: the Obama administration did, in fact, outline a plan to end private prison use at the federal level in 2016. 

The two “pure play” REIT stocks, CoreCivic (NYSE: CXW) and The GEO Group (NYSE: GEO) got cut in half almost immediately. Then, these two stocks almost tripled following President Trump’s election. The Trump administration rescinded the Obama administration orders in early 2017.

CXW AND GEO TO BENEFIT

The 2016 volatility in CXW and GEO is clearly visible in the price chart below.

Going into this election cycle, people and groups associated with CXW and GEO have been active in terms of contributions, mostly to Republicans, and have been signing long-term contracts with federal agencies. 

You can read more in our reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term. You can also subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Trump: Private Prisons appeared first on Sentieo.

In the last couple of weeks we gave an overview of how we identified the core themes and stock ideas for each campaign and provided more color on the first investable theme for a Biden-Harris win: Higher Education. Today we will focus on the first in the Trump-Pence portfolio: Police Funding.

Perhaps the biggest social flashpoint in the last few months has been policing: Pew Research Center covered several separate issues this summer.

As President Trump has adopted an explicit “law and order” messaging (including tweets containing just “LAW & ORDER!”, all caps) during the recent months of protests, riots and looting across the country, we looked at his policing position.

Additionally, President Trump picked up endorsements from the main NYPD union and the Chicago PD union, both deeply Democratic cities.

In President Trump’s agenda, we see a call to “fully fund and hire more police and law enforcement officers” as well as to “end cashless bail and keep dangerous criminals locked up until trial,” an emerging problem in some cities that ended cash bail, like NYC. 

We like two “police funding” stocks: Axon, the company formerly known as Taser (Nasdaq: AAXN) and Shotspotter (Nasdaq: SSTI).

AAXN TO BENEFIT

In addition to the famous “less lethal” Tasers, Axon has seen strong growth in its body and police vehicle cameras, and evidence management solutions (effectively, cloud services), in addition to recently released innovations, like transcriptions. Pew reports that only 31% of the smaller police departments use body cams. Axon’s stock has done well in the last two years, powered, in part by substantial NTM EV/EBITDA multiple expansion.

Interactive chart viewer

SSTI TO BENEFIT

Shotspotter is a microcap SaaS service that contracts with local police departments to monitor gunshots through multiple locally installed sensors. A part of the technological solution is the recognition of firearm sounds based on its proprietary identification library, which is then combined with location triangulation from multiple sensors. While revenue has grown consistently since its IPO, the stock has been range-bound: we think that a Trump win will change the sentiment around the stock.

Interactive chart viewer

Subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

The post U.S. Election 2020 Investable Theme for Trump: Police Funding appeared first on Sentieo.

Two weeks ago in Forbes Magazine, we made the supposition that the current “femcession” will worsen in September due to the combination of “return to the office” pressure, and the lack of normal schools (and after-schools) in many districts, including the five largest nationally, will worsen what is already a difficult recession for women, the primary caretaker population. 

Based on the employment data released last Friday, we are seeing this playing out: women are dropping out of the labor force (that is, neither working formally nor looking for work). 

(interactive chart viewer)

We can see that the participation rate was at 57.9% at the start of the year, dropped to 54.7% at the bottom, but the recovery is completely stalled: the participation rate dropped from 56.1% in August to 55.6% in the September release. 

Contrast this to the dynamic with the male labor force participation. It was 69.4% at the start of the year, bottomed at 66.1% (similar to the 3.2% drop that women saw but from a much higher starting point), and with a much sharper bounce. The participation rate was 67.7% in August and 67.6% in September, 1.8% below the peak at the start of the year with a higher base, versus 2.3% for women. 

(interactive chart viewer) 

And, moving beyond the percentages, we took a look at the just released BLS data. There are 5.1 million fewer women in the payrolls than there were a year ago.

Making things worse for the primary caretakers, we already know that women take a major hit in earnings following the first childbirth/time off.(chart source)

And we already know the multiple negative effects of long-term unemployment: much lower wages at re-entry, declining social capital, lower health, and more (Urban Institute study).

So while the “headline” unemployment rate did improve in the latest release, we continue to monitor the gender dynamics, and think through the implications. 

The post “Femcession” confirmed? appeared first on Sentieo.

The 2020 election is heating up and the outcome of the presidential race will likely have an impact on public equities. In the lead up to the first presidential debate this week, we spent a lot of time reading through the platforms of the candidates, both the extensive Biden-Harris platform and the far less extensive Trump-Pence platform (one Bloomberg Opinion writer said “Donald Trump’s Platform Doesn’t Bother with the Details” as the second term agenda consists of bullet points, without any elaboration.)

We used this analysis to identify four investable themes for each candidate, outside of the obvious things like a democratic win would be good for renewables.

For Biden/Harris our research focused on a combination of lesser known, “under the radar” policy positions, the established track record of the Obama-Biden administration on these issues, and state or local programs already in place that can serve as blueprints for changes at the federal level, in contrast to “moonshot” proposals. 

For Trump we relied more heavily on prior market action around President Trump’s election, along with the bare-bones policy intents, past legislative efforts, contrasts to Biden’s platform, and simply just “betting on the jockey.” 

What is common between the two reports is, of course, the expression of our views through the public markets.

Today we are excited to release the results of this research in our two reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term.

Our U.S. Election 2020 Dashboard which includes a price monitor for the watch lists, data visualization on total returns for the different baskets as well as the SPY, a news feed and visualization of search trends and visits to each candidates campaign site, NLP heatmaps, betting odds for the election, and even a live news widget, will be accessible to customers as a dashboard template right after this week’s debate. If you’re not a customer, but want to check out the full dashboard, you can sign up for a free trial.

You’ll find a synopsis of each theme on the Election 2020 home page or subscribe to the Sentieo blog for snapshots over the coming weeks.

The post U.S. Election 2020: Stock Ideas for a Biden or Trump Result appeared first on Sentieo.

There is no doubt that the pandemic and its impact on the economy, business performance, and society has created new reporting challenges for companies in the Software sector. In the runup to Q2 2020 earnings, our team tracked signals to identify trends. What they came away with were  four critical topics Software analysts should be tracking in the second half of the year. We detail each of these topics in our new market report: Top 4 Critical Themes for H2 2020 Software Analysts.

Today we’re coving the first: Pipeline Status

The COVID recession has resulted in widespread conference cancellations and budget cuts, while disruptions to daily life have made attracting the attention of buyers harder than ever.

At the same time, and perhaps surprisingly, we have observed a serious EV-to-Sales valuation expansion in the software space. In our SaaS sample below, the unweighted average EV to NTM Sales (in fuchsia) for about 20 names has expanded dramatically, from 13.5x at the start of the year to over 20x.

Given the lofty expectations going into the second half of the year, we expect a heavy emphasis by analysts on the state of the pipeline. Companies should be prepared to answer:

• What is taking place instead of industry and user conferences?
• What has been happening with the sales cycle?
• What percentage of large deals are getting pushed back because of budget cuts or general uncertainty?
• Have the travel restrictions affected the ability to sell beyond just the effect of the cancelled in-person events?

To read more of our findings for H2 2020, download the full report for Software analysts here. To read our take for investor relations check back here on Friday. Can’t wait that long? Download the full report “Market Report: Top 4 Critical Themes for H2 2020 Software IR”

The post Spotlight on Software: 4 Critical Themes for H2 2020 appeared first on Sentieo.

For the next few days, we will review Q1 calls across a variety of industries using our machine learning and natural language call transcript application, Smart Summary^TM. Today we will focus on UPS.

We released the first version of Smart Summary last July to rave reviews. This was followed up by an in-depth expansion of many of the machine learning classifications and improved visuals (word clouds, heat maps, and keyword extraction) in our March 2020 Sentieo 4.1 product release. 

Smart Summary fundamentally changes the way our clients read transcripts. While it’s important to listen to high priority calls live, Smart Summary ensures that you do not miss anything in your high priority list, whether you listen live, or not. Further, with Smart Summary you no longer need to read transcripts from your broader coverage universe chronologically. 

Today we will look at the most recent UPS transcript (Q1 2020 was reported on April 28, 2020). We can see that the Smart Summary email came in shortly after the “old way” transcript (don’t worry, we have the full transcript in the Smart Summary too, with our NLP sentiment scoring applied).

The Smart Summary PDF starts off with the word cloud through NLP keyword surfacing on top of the new tearsheet. 

We can see that Covid-related terms are prominently featured, as is Asia (recovering!), recession, and healthcare (big increase in mentions there due to a number of corporate initiatives). We can also see Headwinds and B2C: this immediately alerts us to the product mix headwinds that the company is experiencing (shift to the less profitable B2C). 

The overall sentiment of the call was decidedly negative versus prior quarters. 

We can also see this reflected in the darker color in the ML-based Categories Heatmap. Notice the particularly negative change in the Economic category, as well as the Deflection category, indicating considerable uncertainty. 

The top keywords in the transcript (along with the top keywords in the prior two years) are next: these mirror the word cloud. We can see the mix mentioned above (SMB and B2C), we can see Healthcare, Asia, and of course, Covid.

In the next section, we highlight several categories from the ML output, along with their sentiment scoring. The top category is Covid. In the top five Covid comments, we can immediately see the guidance withdrawal and the unfavorable mix shift language.

In the next category, Business, we see a mix of positive and negative in the top five. While ROIC and the initiatives are positive, we see the decline in U.S. operating income and mix shift (again!) as negatives. 

In the video below, we do a more detailed walkthrough of the emailed Smart Summary along with the full version inside our product.

Stay tuned for more highlights over the next week, and register below for our Q1 2020 Earnings Season Recap webinar on Thursday, May 7.

If you would like to learn more about Sentieo’s ML and NLP capabilities, please get in touch. 

The post UPS: Negative NLP Sentiment, ML Highlights Unfavorable Mix Amid the Covid Crisis; China Growing in March appeared first on Sentieo.

Whether you are looking to save time by consolidating all of your important content in one place or trying to identify unique insights by searching more specialized sources, RSS Feeds are a great way to customize and round out your Sentieo content.

Use Sentieo’s Search on the sources that drive your decisions

Even as we expand our Sources with each new release we know there is a lot of important content we still don’t cover.  While our recent focus has been around self-service incorporation of internal documents via upload and Evernote/OneNote/Box/Dropbox syncs, we have added RSS feeds to give users the ability to incorporate external sources used in your everyday workflow into the Sentieo platform.

When you add a feed to Sentieo we capture and index the entire publicly available article–not just the content present in the feed–so the full content is searchable.  You can also set up Saved Searches and Alerts for RSS feeds.

It’s easy to get started

RSS Feeds are easy to add to Sentieo.  Go to the Sources filter in Document Search, click Add, give the feed a name, and paste in the url.  Most feeds will be processed and available within one business day. 

For Sentieo users, we’ve created an FAQ that can be accessed in the Support Center here.

Example RSS Feeds from our staff

While finding and adding new feeds is up to our users (after all, you want a unique combination to maintain your edge), our staff has several recommendations to get you started.

General Financial News

WSJ Markets https://feeds.a.dj.com/rss/RSSMarketsMain.xml

CNBC Top News https://www.cnbc.com/id/100003114/device/rss/rss.html

Zero Hedge http://feeds.feedburner.com/zerohedge/feed

Industry Publications

Restaurant Business https://www.restaurantbusinessonline.com/feed/rb

Corporates

Workiva IR https://investor.workiva.com/rss/pressrelease.aspx

Regulatory

SEC Public Statements https://www.sec.gov/news/statements.rss

Educational

CBS Ideas at Work https://www8.gsb.columbia.edu/articles/ideas-work/rss

Independent Research

Nathan Tankus/Fed https://nathantankus.substack.com/feed

The post Gain an Informational Edge Through Adding RSS Feeds in Sentieo appeared first on Sentieo.