Singular Research’s April 2021 Director’s Letter

Summary

• While it appears we are underway to a return to normalcy, there are still many questions of what normalcy look's like in the future.
• Inflation has come to question as the March CPI registered 2.6%, the fastest year-over-year increase since August 2018.
• Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 7,137 and 4,309 basis points, respectively.
• For the month of April, Singular coverage list underperformed the S&P 500 and Russell 2000 by 575 and 275 basis points, respectively.

In April, stocks hit record highs from strong economic data, robust earnings reports, a strong vaccination campaign, and further support from the Federal Reserve. Total vaccinations in the U.S. surpassed 100 million which is providing hope for a return to normalcy sooner rather than later. As a result of this pandemic-ending view, large cap growth stocks led the month as the Russell 1000 Growth index returned 6.8%. The Federal Reserve indicated that they would keep rates near zero to support economic recovery; however, inflation has come to question as the March CPI registered 2.6%, the fastest year-over-year increase since August 2018. With just over 60% of the companies in the S&P 500 that have reported, 87% of those companies had an earnings surprise with an average beat of 23%. It appears we are well underway to a return to normalcy, but there are still many questions of what normalcy will look like in the future.

The April Purchasing Managers Index® (PMI) registered 60.7 percent, a decrease of 4.0 percentage points from the March reading of 64.7 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 1.3 percent in March to 111.6 (2016 = 100), following a 0.1 percent decrease in February and a 0.5 percent increase in January. The April PMI reading indicates economic expansion for the 11^th consecutive month. The unemployment rate remained at 6.0% in April (6.0% in March) as businesses have started the rehiring process.

For the month of April, the Singular coverage list underperformed the S&P 500 and Russell 2000 by 575 and 275 basis points, respectively. Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 7,137 and 4,309 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 540 and 474 basis points, respectively.

For April, DMYD (GENI) had a great month as the company reported quarterly revenue that increased 27.6% year-over-year. BBKCF also had a stellar month as the firm continued to post record monthly growth metrics. Similarly, ACU posted a strong quarter with a 22 and 44% increase in sales and EPS, respectively.

SALM was our worst performer for the month as the firm filed an offering to sell $15 million of its common stock. VIVO was not far behind as investors sold off on worries of pending lawsuit news. GMBL and RSI were mainly affected by an overall downtrend in online sports gaming. GEOS had a decline because of negative sentiment from the Biden administration.

For the month, we initiated coverage on SCR. SCR operates sports media, online sports betting, and iGaming in the U.S. and Canada under the Score brand. SCR is a unique player in the North American online gaming market where its ability to directly integrate sports media consumption with sports betting is a unique opportunity in the industry.