Weekend Update #059

Jan 29

Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.

Markets managed to pull out a strong gain on Friday to close out the volatile week positively. However, January has been a rough start to 2022 as the S&P 500 and NASDAQ are down 7% and 12%, respectively, while the crypto market has lost 23% in value as market and macroeconomic pressures gain more influence on the digital tokens. Investors were primarily focused on the Fed’s decision to keep interest rates unchanged, with the expectation that rate hikes will likely begin in March. Additionally, both Consumer Confidence and Consumer Sentiment readings have fallen since June 2021, with Consumer Sentiment reaching its lowest level since November 2011. Blue Room’s Jared Fenley analyzes the present situation of these economic indicators in his report below.

Thank you Blue Room Analyst NICK PEART.

It finally feels like winter here in Denver, Colorado, but wishing these January snows could have come just a few days sooner. Here in the office, we have been busy with daily research activities.

On January 13th, 2022, Colin Angle, CEO, and Julie Zeiler, CFO, participated in Needham’s 24th Annual Virtual Growth Conference. Some highlights, followed by a transcript of the event:

Their entry into air purification through their acquisition of Aeris was a logical extension of their brand and they seek to continue making organic and inorganic adds to their portfolio to take advantage of this positioning
They seek to leverage their investments in their direct-to-consumer capacity, executing on a targeted marketing engine that they are “just turning on”
- Expect to grow connected consumers from 12.5 million to 30 million by 2024
Retail continues to be important for new customers, but the connected customer base will enable efficiencies that will allow them to reach their 12%-13% operating profit margins by 2024
They intend on using the differentiated intelligence of their AI and cloud-based knowledge platform—Genius—to continue learning about customers’ needs and simultaneously provide customers with precise control over their products in the iRobot ecosystem

CLARK
RICHERT

with Adam Lipsius
Uptown 6 Productions

Tuesday
December 8, 2020
2:30 PM

Clark's home
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Time and Space are Perpendicular

Discussion Topics

Outlook for Best Buy vs. other Retailers & eCommerce players - is Best Buy in a better or worse position vs competitors than it was 12 months ago? Are they making the right moves to drive traffic growth?
Sentiment perspectives on Best Buy’s fundamental positioning & outlook over the next 12 months - on a scale of 1-10 (1-very cautious, 10=very optimistic), how would you characterize your level of optimism on their business?
Progress of Best Buy’s Omnichannel retail strategy? How will it impact their retail store footprint? Will they continue to focus on in-home services?
Thoughts on the new Best Buy Beta Program?
Key wildcards to monitor for Best Buy/CE retailers in 2022?

SUMMARY:

Q4 performance met expectations despite facing both Omicron and pulling sales forward into Q3 with holiday sales beginning earlier due to COVID, generally. Participants considered the reorganization of Best Buy to be an inconvenience and less of a fundamental change in the way that they do business as a company. Part of this reorganization, though, is the retraining of Blue Shirt associates, which many of the callers agreed were the difference between Best Buy and competitors. The concern will be whether or not the in-store experience will decline with a more diversified workforce.

From a larger market perspective, callers noted that they were feeling confident that prices have risen high-single to low-double digits. Consensus was that these costs would be passed down to the customer. General sentiment on inflation was that it will be well tolerated due to rising wages.

Demand wasn’t spoken about much, but it did not seem like call participants were worried about the demand side of things. If anything, the underlying tone of most participants was one that suggested, “Best Buy just needs to get people in-store and in front of my products and my sales will go up”. OEMs are still seeing a demand over supply imalanace.

Ticker: VRTX

Market Capitalization: $58.6 billion

Shares Outstanding: 254,500,000

Share Price History

January 18, 2021 $231.07

January 19, 2021 $230.84

January 20, 2021 $228.61

January 21, 2021 $228.08

January 24, 2021 $229.68

January 25, 2021 $227.11

January 26, 2021 $226.58

January 27, 2021 $228.22 ← +0.7% following Q4 ‘21 Financial Results released

January 28, 2021 $243.02 ← +6.5%

Corporate Profile:

Vertex is a biotechnology company that invests in scientific innovation to create transformative medicines for people with serious diseases. The company has multiple approved medicines that treat the underlying cause of cystic fibrosis (CF) — a rare, life-threatening genetic disease — and has several ongoing clinical and research programs in CF. Beyond CF, Vertex has a robust pipeline of investigational small molecule medicines in other serious diseases where it has deep insight into causal human biology, including pain, alpha-1 antitrypsin deficiency and APOL1-mediated kidney diseases. In addition, Vertex has a rapidly expanding pipeline of genetic and cell therapies for diseases such as sickle cell disease, beta thalassemia, Duchenne muscular dystrophy and type 1 diabetes mellitus.

On Tuesday, January 25th, The Conference Board released their Consumer Confidence survey data for the month of January.

The index reading came in at 113.8, higher than the expected 111.2, but still a slight decrease from 115.8 in December.

Both Consumer Confidence and Consumer Sentiment readings have fallen since June 2021, and the readings remain volatile as consumers digest changes in the macroeconomic environment and adjust their future expectations.

Looking at the longer-term trends, recessions have historically been preceded by at least a 10-point drop in consumer confidence. The question of what this means for our current economic situation depends on how Americans’ expectations for the future will evolve and if the economy is strong enough to bear some important factors: persistent inflation, a rising federal funds rate, and a historically tight labor market.

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Thursday
January 27, 2022
12 PM

BLUE ROOM

MEETING NUMBER 75

Business Updates

I am happy and grateful for the 6 investor commitments we have received so far. Our goal is to complete paperwork and collect funds for the first day of trading on February 14, 2022.

Agenda

Blue Room Investing

I. Blue Room Investing Updates from Emily and Jim

II. Blue Room Research Team: 2-Minute Drill

Blue Room Impact

III. Blue Room Housing: Liminal Space from Sharon

IV. Madelon
V. Blue Room Art

VI. Blue Room Grain (Twin Peaks)

VII. Dry Storage and Id Est Hospitality

Icebreaker Question:

How was your January?

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We love making

stock charts.

Please do not interpret this as investment advice.
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A
R
T

Dyani White Hawk: Speaking to Relatives

-and-

Eamon Ore-Giron: Competing With Lightning/Rivalizando con el Relámpago

Join MCA Denver on Wednesday, February 16 to celebrate the opening of two new exhibitions: Dyani White Hawk: Speaking to Relatives and Eamon Ore-Giron: Competing With Lightning/Rivalizando con el Relámpago. The exhibitions feature new and recent works by the artists that recontextualize abstraction within a more expansive legacy of artistic creativity in the Americas.

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