The Shares Researcher

Nearly three years ago, a note on Kyndryl was published. Since then, the company has made notable progress in reshaping its business following the spin-off from IBM. In November 2024, Kyndryl announced a new growth strategy along with the launch of a share repurchase program, signaling confidence in its future prospects. Recent developments have brought encouraging news. While there may still be some upside potential, the stock now appears closer to fair value, and the market currently offers a range of other compelling opportunities. Let others enjoy the rest of the ride;)  Notably, the stock price has risen approximately 115% compared to its level in January 2022. Current Price $38.90

In June 2021, this blog mentioned the possibility to sell put options – for example the Jan23 2P @$0.18 per option (or 18$ per option contract) – on Gamestop as underlying. After a bit less than one year, the prices of the options above have come down significantly. Though the position could still be kept open, it seems prudent to close the trade early and buy back the options sold @$0.18 per option for only @$0.06 per option. This results in a profit of $0.12 per option for only delivering margin! Current Price Jan23 2P @$0.06 per option (or $6 per option contract)

Intro Kyndryl is a leading technology services company and the largest infrastructure services provider in the world, serving as a partner to more than 4,000 blue-chip customers in over 100 countries. Prior to November 2021, Kyndryl was wholly owned by IBM, which retained 19.9% of the shares. IBM intends to dispose of any retained common stock in the year 2022. Kyndryl is a world leader in designing, building, managing and modernizing mission-critical information systems spanning the digital transformation journey. Due to the separation, Kyndryl enjoys new freedom to invest for growth while expanding its ecosystem of strategic partners as well as service capabilities and enhancing customers' access to a wider range of technology solutions. As a standalone company, Kyndryl is expected to generate around $19bn in annuity-like annual revenues with EBITDA margins of approx. 15%. Valuation In 2020, Kyndryl indicated its free cash flow to be around $0.7bn, which is a bit difficult to rep...

Intro Altice USA is one of the largest broadband communications and video services providers in the US, delivering broadband, video, mobile, proprietary content and advertising services to more than 5 million residential and business customers across 21 states. While the video segment has lost some ground in the last years, broadband was able to more than compensate for it. Altice USA went public at $30 per share in 2017. After trading as high as ~$37 per share, the price has recently gone back to its low in 2018 at approx. $15 and shows attractive valuation metrics. Valuation From 2018 to 2020, the company has increased revenues from $9.6bn to $9.9bn, while adj. EBITDA has grown from $4.2bn to $4.4bn. This translated into free cash below between $1.2bn and $1.9bn. The first nine months of 2021 depict an adj. EBITDA of $3.3bn and a free cash flow of $1.3bn, making one assume that 2021 will likely show similar numbers as last year. With a market cap of $6.9bn and net debt of $24.6bn, EV...

Intro Today we’ll look at two companies at the same time. Why two you might ask? Because they have very similar characteristics in many ways. Both companies have been spun off recently by a large pharmaceutical company – Viatris from Pfizer and Organon from Merck. Furthermore, they show the following similarities: -High debt load due to one-time payment to parent company -Stagnating revenues and hence a lack of growth -Significant cash flow generation from existing products -Small market capitalisation compared to the parent company -Tiny or no dividend pay-out yet in order to reduce debt burden -Limited analyst coverage The above points might have led investors – that got the shares from the parent company – to sell them in the open market. As can be seen below, the valuation looks rather undemanding and might show good upside potential in the next two to five years. Valuation The two firms show a very undemanding valuation based on historical and short-term future numbers: Viatris gu...

Intro There is probably no intro needed for Gamestop, the ultimate meme stock that ran from less than $20 to around $235 per share in no time this year. Disclaimer: At current trading levels, it is very unlikely that Gamestop will be able to show future results that will justify the very lofty valuation and buying the stock now is pure speculation. With the significant increase in its share price, volatility rose substantially as well – and this is where it may get interesting. One, or probably the most, important parameter to calculate an option price is volatility. Volatility is measured in percentage and “boring”, mature stock usually show a volatility in the range of 15-20% and levels of above 50% are considered elevated volatility. Gamestop’s volatility is above 170% and therefore all Gamestop options outstanding are expensively priced by looking at the volatility. As will be further described below, a possible strategy might be to sell deep out of the money put options and profit...

Intro Cigarettes? Who and why would anybody invest in cigarettes nowadays since everybody is aware of its possible health issues it can cause and hence the declining client base? Well, the tobacco industry has done an excellent job to more than compensate the declining customer base with price increases or substitutes. Altria, probably best known for its Marlboro cigarettes, has a very long history and is seeking to invest its high cash flows from the tobacco portfolio into other related trends such as the stakes in IQOS or JUUL. Besides, the company owns shares in ABInbev, the drink and brewing company, as well as a wine producer and cannabis firm. Valuation Altria’s share price dropped around 50% from almost $80 just three years ago. Does this make the company a bargain? Of course not, but let’s look at the earnings and balance sheet: The company has been generating consistent revenues of around $25 billion in the last years and, what’s more impressive, has been able to raise its ope...