Top Gainers Today @ 10am
Top Gainers Today: $MSFT, $V, $MA, $BABA, $BHP, $BKNG, $JD, $FCX, $PDD, $DDOG, $RIVN, $GFS, $NIO, $CSGP, $ENPH, $LI, $TECK, $ZTO, $BEKE, $TER
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$MSFT - Microsoft Corporation - Software - Infrastructure - $2116.95B - %Chg: 5.67%

$V - Visa Inc. - Credit Services - $441.16B - %Chg: 9.88%

$MA - Mastercard Incorporated - Credit Services - $349.87B - %Chg: 8.21%

$BABA - Alibaba Group Holding Limited - Internet Retail - $234.87B - %Chg: 5.55%

$BHP - BHP Group Limited - Other Industrial Metals & Mining - $180.69B - %Chg: 5.03%

$BKNG - Booking Holdings Inc. - Travel Services - $89.83B - %Chg: 5.30%

$JD - JD.com, Inc. - Internet Retail - $83.80B - %Chg: 8.56%

$FCX - Freeport-McMoRan Inc. - Copper - $69.60B - %Chg: 5.70%

$PDD - Pinduoduo Inc. - Internet Retail - $46.68B - %Chg: 9.67%

$DDOG - Datadog, Inc. - Software - Application - $41.65B - %Chg: 5.30%

$RIVN - Rivian Automotive, Inc. - Auto Manufacturers - $29.78B - %Chg: 5.30%

$GFS - GLOBALFOUNDRIES Inc. - Semiconductors - $27.60B - %Chg: 5.40%

$NIO - NIO Inc. - Auto Manufacturers - $26.55B - %Chg: 6.23%

$CSGP - CoStar Group, Inc. - Real Estate Services - $24.52B - %Chg: 6.95%

$ENPH - Enphase Energy, Inc. - Solar - $24.13B - %Chg: 12.10%

$LI - Li Auto Inc. - Auto Manufacturers - $23.31B - %Chg: 7.00%

$TECK - Teck Resources Limited - Other Industrial Metals & Mining - $21.86B - %Chg: 10.41%

$ZTO - ZTO Express (Cayman) Inc. - Integrated Freight & Logistics - $21.77B - %Chg: 7.80%

$BEKE - KE Holdings Inc. - Real Estate Services - $18.10B - %Chg: 6.25%

$TER - Teradyne, Inc. - Semiconductor Equipment & Materials - $17.99B - %Chg: 5.63%
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LI Auto Updates, Thoughts, and Investment Case
Jeez took much longer than expected to finish this because I definitely did not think I would be writing this much. But here are my thoughts regarding $LI. Would love to hear what other people think and consider opposing/alternative viewpoints given how this is a rather contrarian case compared to what I see amongst most investors.

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Achieved first operating profit, and consecutive quarters of positive operating and free cash flow, whereas profitability of peers like $NIO and $XPEV, who receive more attention, are still in the distant future.

Highest gross margins for FY21 of 21.3% compared to NIO’s 18.9% and XPEV’s 12.5% due to only producing one model so far which gives it strong savings from economies of scale and production facilities being highly optimised. XPEV’s low margins can also be attributed to it having the lowest ASPs.

LI, whose products may not be as flashy as its peers, has established a niche within the mid-market for family SUVs and has been greatly rewarded for its laser-focus. QoQ delivery momentum in 2021 was very strong, which can be expected to continue going into 2022. So far, YoY comps for 2022 are off to a great start with Q122 being up 152% YoY, although down -9.95% from Q421 due to seasonal factors.

LI does not have a pure electric vehicle, with its current model being a plug-in hybrid (thus having much greater total range than pure EVs). This may have played a helping hand during this transition phase in capturing demand from consumers who may be hesitant due to range anxiety typically associated with EVs but do want to hop onto the EV transition. Management has stated that they are confident in demand for the foreseeable future and have been focusing efforts to bring more production capacity online. Guided for annual production capacity of 500-750k units in 2023 (that is ~41700 units per month).

Strong top-line performance and margin improvements have allowed LI to achieve profitability despite continued heavy increases in R&D (more than tripling in 2021), which management stated they will continue to prioritise. LI’s smart tech features like ADAS are often dwarfed by that of its peers NIO and XPEV; but management is well aware of this and investing to brush up, with promising results so far — recent OTA (over-the-air) 3.0 software update that included their full-stack self-developed NOA (navigation on ADAS) and AEB (Automatic Emergency Braking) function that has been awarded Champion of the Year 2021. Personally, I’ve never thought much about LI’s technological offerings so this is an interesting development that I would want to monitor, especially as they endeavour to develop the full-stack of capabilities in-house (as opposed to relying on other third-parties).

LI is chock-full of cash, like seriously loaded. 47.52B CNY of cash and short-term investments against ~6B CNY of debt, giving it a net cash position of 41.5B CNY, ~6.52B USD, against a market capitalization of ~28B USD. Its net cash position accounts for ~23.3% of its MC already. Given how LI is very likely to exit 2022 profitability and no longer cash-burning, this net cash is certainly a huge plus.

Regarding its positive cash flow at a ~16% free cash flow margin exiting FY21, I would definitely want to look at its annual report (to be released) to determine the sustainability of such a high margin for an automaker (for comparison, $TSLA, though many years more mature, exited FY21 with a 9.29% FCF margin). From what I can see so far, it seems that the bulk of the free cash flow comes from delaying accounts payable, which isn’t sustainable. At least for now, taking LI’s FCF at face value, it gives us a TTM EV/FCF ratio of 31x, on the back of 186% revenue growth. How often do you find a hyper-growth company that is profitable and trading at 30x trailing EV/FCF?

I believe that LI is often overlooked in favour of its peers by investors (for valid reasons) due to it currently only producing plug-in hybrids, while the long-term future is definitely pure electric vehicles. In addition, its battery tech and smart features (which are the important selling points of an EV) are inferior to its competitors. Personally, I didn’t think much about LI’s long-term future before this ER and my investment has been based on its relative valuation attractiveness to its peers amidst current strong fundamentals thus far.

Moving forward, however, management does have a plan to continue expanding far into the future with more models and transitioning to pure-electric makes while heavily investing into R&D efforts to catch up. They have stated that they believe the addressable market for their current targeted family SUV one is still very large and that alone can sustain their growth for a good few years.

In addition, management also has a customer-centric philosophy of understanding their customers’ needs and exceeding them: “There are things that users do not even realise that they want, but the moment that they see their products, they'll realise this is what they actually wanted.” This mindset, though alone is not sufficient, is what helped propel Amazon to meteoric success.

The upcoming release of its premium flagship L9 SUV has generated much hype and is priced much higher than its current Li ONE model, which would put it in direct competition with NIO’s SUVs (though once again, not entirely because one is a PHEV, the other is a BEV). It would be interesting to see how their L9 is received over the next few months.

Management has also stated that unlike competitors like NIO who are aggressively expanding overseas and exploring ancillary products and services (smartphone, AR/VR), LI is very much focused on its home market and continuously enhancing its core product and technologies. I believe these disparate approaches can both be good; just because they are opposites doesn’t mean one is better than the other. In LI’s case, its strategic focus is very much welcomed given how it will be navigating the very large challenge of releasing new models (after relying on just one for a while) and transitioning to pure-electric models.

As an investor, given management’s vision with laser-focus, mindset, and proven execution thus far, I like what I see and am becoming more cautiously optimistic about LI’s long-term runway, and will slowly adjust and adapt my thesis and expectations as I monitor developments and their results along the way. There is also much upside via multiple re-rating if LI continues to execute as planned and proves its long-term sustainability to investors. Lastly, with rock-solid fundamentals (high margins, operating and cash-flow positive, top-line growth) whilst trading at objectively (as a growth stock, not a mature automaker so please don't bring it comparisons to Ford or GM lol) and relatively (to its peers) attractive valuation, I believe that LI is a compelling case worthy of consideration by any investor looking at EV companies.
Upcoming Earnings Calendar (Feb 21th - 25th)
Hey guys! Here's the upcoming earnings calendar! Several very interesting reports coming up. Here's what I'll be looking forward to.

  • $MELI - How much did inflation impact their logistics margins?
  • $SQ - Cash App Users and Revenue Growth
  • $COIN - I think they will deliver a monster quarter. Crypto volatility should incentivize trading, driving commissions revenue above forecast.

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

TUE:


WED:


THU:


FRI:
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Upcoming Earnings Calendar (Nov. 29 - Dec. 3)
Happy Thanksgiving everyone!

This week was light on earnings reports, but next week is shaping up to be very interesting in the stock market. None of my holdings report, but I'm still interested in listening to the $CRM, $CRWD, $SNOW and $DOCU earnings calls.

I'm also hoping we get post-earnings commentary on $CRM from @gkotak, $DOCU from @invesquotes and $OKTA from @tolvkin so that I can learn more about these companies.

Remember, if you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

Monday:

Tuesday:

Wednesday:

Thursday:

Friday:
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SEC Filings and what you really need to know
SEC FILINGS

Form 8-k

This form is used to report newsworthy events to the SEC, thereby making them available to the public. Included are items such as change in management, change In the company’s name, mergers or acquisitions, bankruptcy filings, and major new product introductions or sale of a product line. A Form 8-K HAS to be filed when a member of the board of directors resign over a disagreement. The 8-K is filed within four business days of the occurrence. This form is used only by domestic issuers, foreign issuers are exempt. Although ADR’s are registered with the SEC, they too are exempt because of the underlying security of foreign issue.

Form 10-K
Most domestic public issuers must file an annual report to the SEC on FORM 10-K. This report is a comprehensive overview of the company’s business and financial condition and includes financial statements that have been audited by an independent accountant. Do not confute this with the annual report to shareholders, which also contains and audited financial information than the annual report, while the annual report will have much more detail about the company itself and its future plans.
The Filing Deadlines depend upon the company’s public float. For Companies with a float of $700million or more, the Form 10-K deadline is 60-days after the close of the fiscal year; $75 million, but not $700 million, it is 75 days; and less than $75 million is due at 90 days.

Form 10-Q
Because one year between filings is a long time and a lot can happen quickly, we also have this form, and it is filed quarterly (Q for quarterly). It contains unaudited financial statements and for all but the companies with a public float of less than $75 million, it must be filed within 40 days of each of the first three fiscal quarters of the year (no 10-Q is filed at the end of the fourth quarter—that information is taken care of by the filing of the 10-K). Those smaller firms file theirs within 45 days of the end of the quarter.

Annual Reports
When it comes to publicly traded companies, in general, all shareholders must receive a copy of the issuer’s annual report. For those too lazy to access EDGAR, this is the most detailed information they can get on the company’s financial position. Unlike the Form 10-K, this is usually a professionally prepared piece with just as much used for marketing purposes as it is for providing information. There is usually a welcoming letter from the CEO/Chairman of the board, and it is generally loaded with beautiful pictures of smiling people (employees and customers) and the company’s facilities. New plans for products and programs are discussed and voting proxies are included.

Form S-1
SEC Form S-1 is the initial registration form for new securities required by the SEC for public companies that are based in the U.S. Any security that meets the criteria must have an S-1 filing before shares can be listed on a national exchange, such as the New York Stock Exchange. Companies usually file SEC Form S-1 in anticipation of their initial public offering (IPO). Form S-1 requires companies to provide information on the planned use of capital proceeds, detail the current business model and competition and provide a brief prospectus of the planned security itself, offering price methodology and any dilution that will occur to other listed securities.
SEC Form S-1 is also known as the registration statement under the Securities Act of 1933. Additionally, the SEC requires the disclosure of any material business dealings between the company and its directors and outside counsel. Investors can view S-1 filings online to perform due diligence on new offerings prior to their issue.
Foreign issuers of securities in the U.S. don’t use SEC Form S-1 but instead must submit an SEC Form F-1.

Form S-3
SEC Form S-3 is a regulatory filing that provides simplified reporting for issuers of registered securities.
An S-3 filing is utilized when a company wishes to raise capital, usually as a secondary offering after an initial public offering has already occurred.
In order to utilize the simplified process, firms must first meet a certain set of eligibility criteria.The SEC form S-3 is sometimes filed after an initial public offering (IPO) and is generally filed concurrently with common stock or preferred stock offerings.
There are a variety of other requirements that must be met for a business to file the S-3 form. In the 12 months prior to filling out the form, a company must have met all debt and dividend requirements. The SEC Act of 1933 also requires that these forms be filed to ensure that essential facts about the business are disclosed upon the company’s registration of securities. Doing so allows the SEC to provide investors with specifics about the securities being offered and works to eliminate fraudulent sales of such securities.

Form 4
SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Insiders consist of directors and officers of the company, as well as any shareholders, owning 10% or more of the company's outstanding stock. The forms ask about the reporting person's relationship to the company and about purchases and sales of such equity shares.Form 4 must be filed with the Securities and Exchange Commission whenever there is a material change in the holdings of company insiders .If a party fails to disclose required information on a Form 4, civil or criminal actions could result. It must be filed within two business days starting from the end of the day the material transaction occurred.

Schedule 13D
The Schedule 13D is also known as the "beneficial ownership report" and is required when any owner acquires 5% or more of the voting shares in a company. The report must be filed within 10 days of reaching the 5% threshold. It provides the following information: The acquirer's name, address and other background information, Type of relationship this owner has with the company, Whether the person has been convicted of a crime in the past five years. An explanation of why the transaction is taking place, The type and class of the security, and The origin of funds used for purchases.

Form 144
Form 144 is required when corporate insiders want to dispose of company stock. The Form 144 is a notice of the intent to sell restricted stock, typically acquired by insiders or affiliates in a transaction not involving a public offering. The stock is restricted because it must meet certain conditions before becoming transferable. The transaction, or at least part of it, is made within 90 days of filing. Form 144 is required when the amount sold during any three-month period exceeds 5,000 shares or $50,000.

Initial Public Offering (IPO)
A corporation’s first sale of common stock to the public.

Secondary Offering
A Sale of Securities in which one or more major stockholders in a company sell all or a large portion of their holdings; the underwriting proceeds ae paid to the stockholders rather than to the corporation. Typically, such an offering occurs when the founder of a business (and perhaps some of the original financial backers) determine that there is more to be gained by going public than by staying private. The offering does not increase the number of shares of stock outstanding.

Regulation D (Private placements continued.)
The provision of the Securities Act of 1933 that exempts from registration offerings sold in private placements. Rule 506(b) limits the Sale to a maximum of 35 NON-accredited investors during a 12-month period with no advertising permitted, while Rule 506(c) permits advertising but requires that all purchasers be accredited investors.

Accredited Investor - As defined by Rule 501 of Regulation D, any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the regulation d registration exemption. An individual accredited investor is generally accepted to be one who, individually or with spouse, has a net wort, excluding the net equity in the primary residence, of $1 million or more, or has had an annual income of $200,000 or more in each of the two most recent years (or $300,000 jointly with a spouse), and who has a reasonable expectation of reaching the same income level in the current year.

SEC Rule Change Effective 12/08/2020 -- Individuals who hold the Series 7, Series 65, or Series 82 Licenses, are now considered accredited investors by qualification.

There are more but these are some of the essentials to know for any active trader.

This week's featured earnings!
Surprisingly strong list of interesting companies announcing earnings at the tail-end of earnings seasons -

Which ones are you most interested in?

P.S. If you want an easy way to NEVER forget an earnings call, you can use the Fincredible service to automatically sync earning events to your personal calendar for the companies you follow here
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Interested in cyber so seeing Okta and Crowd will be a good indicator
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