Paul Andre Huet, CEO, Americas Gold and Silver Corp. [ticker: USAS]
80% of it Comes From China.
Most of the rest comes from this one mining company — and it’s incidental to the precious metals this company primarily produces.
Paul Andre Huet is CEO of Americas Gold and Silver Corp.
With over 35 years of experience in senior leadership and mining, Mr. Huet has held a multitude of prominent roles.
Previously, he was Chairman & CEO of Karora Resources Inc. from 2018 to 2024 until its merger with Westgold Resources.
Prior to that he was President, Chief Executive Officer and Director of Klondex Mines from 2012 to 2018, until its acquisition by Hecla Mining Company.
Mr. Huet has a strong command of capital markets and has served in all levels of engineering and operations of Mining.
Mr. Huet graduated with honors from the Mining Engineering Technology program at Haileybury School of Mines in Ontario, and successfully completed the Stanford Executive program at the Stanford School of business.
In 2013 Mr. Huet was nominated for the Premiers Award in Ontario for outstanding college graduates; he is currently a member of OACETT as an applied Science Technologist and an Accredited Director.
“Antimony is part of the critical minerals list.
It’s one of the most important elements we need for missiles, for bullets, for night vision.
It’s very, very critical. In fact, in 1942, when World War II was ongoing, our mine was a significant supplier of antimony to the U.S. war effort.
At the moment, 80% of the world’s antimony processing is done in China.
We need antimony.
We need about 50 million pounds per annum, and we’re not generating it.
Americas is currently the largest domestic producer of antimony.
We’re mining 500 tons of ore a day.
It’s in our tetrahedrite ore so we mine and mill it every day.
What’s extremely important is to understand that the antimony comes to us at no additional cost.
We’re primarily a silver mining company but we also mine copper, lead and antimony.
By the way, all of those elements are on the U.S. critical mineral list.
But the antimony is so important.
In fact, we were able to renegotiate an off-take agreement with Ocean Partners to ship our concentrates up to Canada and start getting paid for our antimony.
However, the reality is that it should stay here in the U.S., given that we produce it here.
In fact, I’ll soon be flying into Washington, D.C., for meetings that include several members of the U.S. government to discuss antimony and how we can help solve this problem, given that we’re already producing it.
We have produced 450,000 pounds of antimony year-to-date at our U.S. operation.
I don’t think anybody can come anywhere near to that anytime soon.”
Mr. Huet manages several different mines through his company.
“There’s no doubt that doubling the silver production and some of the operational successes we’ve had at both our mines were key.
I’ll start with the Galena complex.
We were able to double that production only because we had debottlenecked some very critical parts.
First and foremost, we tested and tried a brand-new mining method — long hole stoping.
That’s a method done by using a long hole drill to drill and blast holes from an upper drift, down to a bottom drift — i.e., 120 feet long, 60 feet deep and 3 feet wide.
Then big chunks of the stope are blasted and the ore from the lower drift is scooped out, at which point the blasted/excavated section is filled with a cemented mix to reinforce the rock.
These are technical things, but they’re so important to the success of the future and getting back to 5 million ounces per year.
Our Galena mine in 2002 produced over 5 million ounces of silver.
Last year, it was maybe 1.2 million.
So, we’re on a path now to get back to that 5 million but we will not stop there.
With the acquisition of Crescent, we have the potential to be significantly higher than 5 million ounces of silver per year.
What are some of the other changes that were very critical?
Well, there were some key projects that were so important to that quarter and achieving those ounces.
To achieve those ounces, both of our operations had to run very smoothly.
And again, I’ll stick to Galena.
We had a 10-day planned shutdown during that quarter to improve the capacity in our main hoisting shaft.
It was phase one of two phases of work we need to do.
Phase one was very successful.
We were scheduled for a 14-day shut down, but we did it in 10 days.
What it allowed us to do is very significant.
It allowed us to take this shaft that has been there for over 60 years and double its capacity.
When we inherited this mine and this shaft, it was able to skip at a rate of about 40 tons per hour.
We went from a 1,750 horsepower to a 2,250 horsepower motor, with an additional motor for redundancy.
In changing the motor, we’re able to skip much faster, going up and down that shaft much quicker.
We’re now at a capacity of 80 tons per hour.
That doubled the capacity.
We can move up to 1,500 tons per day.
It’s the first time in the history of this mine that that’s ever been done.
That was significant, coupled with the fact that we bought over 10 new pieces of equipment underground there, and the new mining method.
So, the new team, the new mining method, the new equipment, and the debottlenecking of the shaft have allowed us to get to that production of 765,000 ounces of silver.
Over at Cosalá, we’ve been targeting toward getting into a brand-new zone, the El Cajón and Zone 120 silver-copper deposits referred to as EC120.
At the end of the quarter, we started achieving tons and ounces from EC120, so we were there a little sooner than expected.
That, coupled with the results from Galena and all the changes at Galena, have made Q3 a strong, strong quarter for us.”
Read the entire interview with Paul Andre Huet, CEO of Americas Gold and Silver Corp., exclusively in the Wall Street Transcript.
John A. McCluskey, President and CEO, Alamos Gold
John A. McCluskey is the President and Chief Executive Officer of Alamos Gold (NYSE: AGI) and has held this position since 2003, when he co-founded the company with mining hall of famer Chester Millar.
He is also a Director of the World Gold Council.
In 2023, Mr. McCluskey received the Viola R. MacMillan Award, given by the Prospectors & Developers Association of Canada for showing leadership and a willingness to take risks in the acquisition and development of the Island Gold mine in Northern Ontario.
In 2018, he received the Murray Pezim Award for Perseverance and Success in Financing Mineral Exploration by the British Columbia Association for Mineral Exploration, in recognition of his role in the acquisition, financing, and encouragement of successive discoveries at Mulatos, as well as his ongoing success as CEO of Alamos.
Mr. McCluskey had only the strength of his convictions to start his current mega gold producer.
“We had been looking at grassroots exploration in Mexico when we realized that making progress in market conditions like that was very tough going, so we more or less shelved the company.
We continued to pay its fees and so forth but were waiting for a turn in the market.
By 2001, I went to my partner at the time and said, “You know, this has to be the bottom. The gold price has been down for five years now. We should see if we can make an acquisition.”
We then pursued the Mulatos project in Mexico, which we bought off of a major mining company.
There were two little junior companies involved in the district at that point, and we signed an options purchase agreement and then merged with the other little junior.
That was in February 2003 and is also when I took over as CEO.
At that point, we had a $15 million market cap.
Since that time, the company has grown from a little exploration and development company to a mid-tier producer that this year will do just under 600,000 ounces of gold production.
We now have a market capitalization of roughly US$15 billion…
All good things start in a bear market, not in a bull market.
Generally, if you jump on the bandwagon, it’s going to be very difficult to create value.
But for these very cyclical commodity-driven markets, you’ll find the cost of entry is very, very low.
There’s very little competition.
It’s very difficult to raise money.
It’s a much tougher thing to do.
But it’s also where the best opportunities lie.
I think about the Chinese character for the word “crisis,” which combines two other characters.
It’s the one for danger and the one for opportunity.
That really applies here.
The market was in a crisis with gold prices.
The day we signed the option agreement, the gold price was about $264 an ounce.
All the major producers were hedging, just trying to stay in business.
They were selling off assets, like the Mulatos mine, and they were selling them off quite cheaply.
We were able to buy Mulatos for about US$8 million, plus a royalty.
They had spent $50 million developing the project.
But that’s what happens in a bad market.
There was probably about 2 million ounces of gold to find.
When we looked at that resource, we realized there’s probably about a million ounces of it that even at very, very low gold price assumptions, you could still profitably mine.
But it was a completely different project.
If you assumed that the gold price would eventually recover, that would become a very, very valuable project.
And that’s in effect what happened.”
The efficient management of growth in a gold mining company has a lot to do with the generation of future cash flows.
“Back in 2003, our first project had no permitting and no water rights.
Those are essential to developing a mining project.
I mean, there was virtually nothing completed.
We were at a standing start with everything required.
Also, back then I think we had four employees in the company.
But by June of 2005, the project had been fully permitted.
We completed a feasibility study, raised all the capital, hired all the people, built the mine, and poured our first bar in July 2005.
So, we pulled the whole thing together in two years.
I don’t know too many stories that could equal that one.
And as it would happen, the gold price when we started was under $300 an ounce.
But by 2005, the gold price was trading around $500 an ounce, and it continued to rise.
We signed the option when gold looked like it would never recover again but by the time we were in production, it had almost doubled.
By 2011 the gold price was peaking at $1,900 an ounce.
So our timing was really unbelievable, because from the production — we were producing about 150,000 ounces a year from the Mulatos Mine and we had just amazing costs — we were generating incredible cash flows.
By 2015 the market had pulled back again, to $1,100 an ounce, which was an ideal opportunity to start making acquisitions again.
We had nearly $400 million in retained earnings on our balance sheet, capital we used to go out and make acquisitions.
Through the merger with AuRico Gold in 2015, we acquired the Young-Davidson mine.
We completed a multi-year expansion in 2020, and it’s been generating over $100 million a year in free cash flow since then.
It’ll do almost $200 million a year in free cash flow this year.
In 2016, we took over a little junior company called Carlisle Goldfields.
I think we bought them out for about $25 million.
Today, based on the drilling that we’ve done on that deposit called Lynn Lake, it’s sitting with 3 million ounces of gold.
The project now has all of its permits, and we’re in construction.
We acquired it for next to nothing back when that gold price was $1,100.
Then in 2017, we did probably what many would argue is the best transaction that we’ve ever done, we acquired Richmont Mines in Ontario, which had a project that we really liked called Island Gold.
It was quite small when we took it over, but we invested very heavily in exploration and development.
Today, the Island Gold Mine has nearly 7 million ounces in reserves and resources and continues to grow.
We’re producing around 150,000 ounces of gold a year, and our costs are just a little more than $1,000 per ounce.
So we’re making tremendous cash flow from that mine.
Last year, we had the opportunity to acquire the company right next door to Island Gold called Argonaut Gold, which included its Magino open pit deposit.
Island Gold is a high-grade underground deposit and runs 11 grams per tonne.
There are about 5 million ounces of resources at the Magino deposit that grades about one gram per tonne.
It’s quite a contrast to Island Gold.
They are very, very different types of deposits, but we are now operating them basically together.
The open pit mine material is getting crushed and fed into a 10,000 tonne per day mill.
As part of integrating these two projects, we plan to double the mill’s capacity from 10,000 tonnes, to up to 20,000 tonnes a day.
Between now and 2029 through increasing our underground mining and our open pit mining rates, we intend to turn the mine into one that can produce over 500,000 ounces of gold a year.”
Read the entire interview with John A. McCluskey, the President and Chief Executive Officer of Alamos Gold, exclusively in the Wall Street Transcript.
Jonathan Brandt, Senior Equity Research Analyst, HSBC.
Jonathan Brandt, CFA, is a Senior Equity Research Analyst at HSBC. He is head of HSBC’s LatAm cement, construction and real estate equity research team and also covers the LatAm pulp and paper sector.
He joined HSBC in February 2010 as a LatAm metals and mining analyst, before transitioning to the pulp and paper sector in March 2013.
Previously, Mr. Brandt was a buy-side analyst for six years at a major U.S. investment firm, covering commodity companies in LatAm and EMEA.
He holds a bachelor’s degree in economics from Wesleyan University and is a CFA charterholder.
Mr. Brandt has a definitive outlook for copper prices over the next 2 to 3 years.
“Copper has been in focus for a while.
The attention, ebbs and flows over time, but there’s a structural deficit story to be told for copper.
Demand should continue to be strong, led by renewable energy, green investments, EVs, an so forth.
To a large extent, that’s offsetting whatever weakness we’ve seen in the more traditional uses of copper, such as the impact on trade and manufacturing, slower economic growth, higher interest rates…
And then more, if you combine that with supply issues.
So that’s really been the driver over the past several months.
Also, Freeport (NYSE:FCX) had an accident at their Grasberg operations.
And we saw negative revisions to a few mines in Latin America.
Codelco had an accident at one of their mines.
So that has led to a pretty sharp downturn in supply growth expectations for 2025 and into 2026.
And so, we’re looking at a deficit market for at least 2025 and 2026, but then potentially into 2027.
And then we just don’t have the supply growth coming in copper like we have in other commodities.
So, it’s certainly possible that we’re looking at a structural deficit.
Now that’s been discussed at length for the past five to seven years, that we’re entering into a structural deficit.
It hasn’t necessarily materialized, but with some of the issues that we’re seeing on the supply side, as well as the continued demand growth, it’s definitely something that could be materializing here in the next year or two…
Copper is a second derivative of AI.
It’s used in power generation and electrical components of AI.
So, as AI is going to demand more and more energy, there should be a secondary positive impact on copper.
So by that, I mean, AI itself will use a little bit of copper.
But it’s really the power requirements of AI that will help spur demand for copper.”
James Steel, Chief Commodities Analyst, HSBC
James Steel is HSBC’s Chief Commodities Analyst with specific responsibilities for precious metals.
Mr. Steel joined HSBC in May 2006.
Previously he ran the New York research department of a large U.S. commodities brokerage house.
He also worked for The Economist in the Economist Intelligence Unit covering commodity producing nations.
Mr. Steel’s primary duties at HSBC include the production of daily market reports, including long-term outlooks for precious metals.
These include supply/demand and price forecasts, as well as qualitative analyses.
Mr. Steel studied economics in London and New York.
James Steel has a long term view on the price of gold and the mining stocks that will benefit.
“Over the long run, it’s inversely related to the dollar and it’s inversely related to the real yield on the U.S. 10-year.
Now, that relationship has broken down in the last few years.
But generally speaking, gold is inversely related to the real yield, be it negative or positive on medium term bonds and also on the dollar.
But you have to be careful because those relationships have taken a bit of a hit in the past couple of years…
I talk to all sorts of companies that are related to gold.
Without disclosing any clients specifically, HSBC is a massive physical bullion house.
We’re the biggest in the world.
So we have mining clients, we have recycling, fabrication, smelting, mints, central banks, hedge funds, jewelry makers, retailers.
So, we keep abreast and we service this entire range moving from it coming out of the ground to it being invested in and everything in between.
And so, yes, it’s one of the things that make being an analyst at HSBC a little simpler than in other companies because we have a massive huge physical client base that allows me to draw a lot of information.”
Volatility in the gold market is the theme for 2026 according to Mr. Steel.
“I think the market is going to be very volatile.
Very volatile.
We’ve had a lot of new entrants into the market and they’re certainly sophisticated investors, but they’re not necessarily experienced in gold.
So, this new money that’s come in — like we’ve seen it in the stock market and I’m sure you’ve seen it in many other areas that you cover — this is going to add to the volatility.
And any change in monetary policy, or any change in the geopolitical risk thermometer.
For example, say a settlement in Ukraine, and we’re not saying there will be one, we’re just using that as an example.
So, if the stock market correction continues to the point where we get a lot of liquidation in the gold market, or if we get a change in the House and the Senate in the midterms or elections abroad, all these things I think are likely to keep the market very volatile.
And that’s why we’re looking for spikes higher consistently in the first half of the year before we finally begin to moderate and settle down.
Because you can’t avoid the fact that the jewelry market and coins and small bars are being hit very, very heavily by this high price.
And most gold is bought in the emerging markets, not in Western markets.
And they’re very price sensitive.
And so, when the market does stop going up for any length of time, that could come to bear.
So, I’m looking for a very wide trading range next year.
It’s going to be a very exciting market.
Very exciting.”
Read the entire interview with Mr. James Steel and Mr. Jonathan Brandt of HSBC exclusively in the Wall Street Transcript.
NVIDIA Co-Founder, Chairman and President Jen-hsun Huang
JEN-HSUN HUANG co-founded NVIDIA Corporation in 1993 and has served as President, Chief Executive Officer and a member of the Board of Directors since its inception.
He spoke with the Wall Street Transcript on the record in July of 2000.
Unlike the current market, by July of 2000 the Dow Jones Index had dropped 10% from January of that year.
Mr. Huang was awarded the Ernst & Young Entrepreneur of the Year honor in June 1999 in recognition of his achievement in building NVIDIA from a start-up to the second largest supplier of desktop 3-D graphics processors in the world.
He was also elected as a member of the RAND Board of Trustees in October 1999.
Prior to founding NVIDIA, he held senior engineering and marketing positions at LSI Logic Corporation and at Advanced Micro Devices.
Mr. Huang holds a BSEE degree from Oregon State University and an MSEE degree from Stanford University.
Mr. Huang laid out his strategy 25 years ago:
“NVIDIA was founded seven years ago. We were founded with the vision that 3-D graphics would transform the PC into a much more important consumer platform than was the case in 1993.
Our longer-term vision is that 3-D graphics will be a pervasive medium and that it will be used for all kinds of applications, whether it’s e-commerce, entertainment such as video games or education, such as helping you with your homework or letting you virtually explore the Museum of Modern Art in 3-D.
That was why we started the company, and NVIDIA today has 500 people.
It’s a large company, growing very rapidly.
We’re one of the fastest growing companies in the world today, and our market share is currently about 25% of the PC desktop.”
JEN-HSUN HUANG pointed out that the computer gaming market was a key driver for the NVIDIA innovations that have led to it’s current success.
“NVIDIA is recognized as a leader in 3-D graphics, and so there are several trends that are going to affect the way that the PC industry utilizes 3-D graphics.
First of all, Sony’s efforts with the PlayStation 2 game console will force the PC industry to significantly raise the bar in 3-D graphics performance.
All of the content that is being developed today and that will be available in the next 12 months encompasses and embodies substantially richer 3-D graphics because of competition created by the capabilities of the PlayStation 2.
Again, this has forced the entire PC industry to raise the bar on its own capabilities in the world of 3-D performance.
The second thing is broadband Internet driving PC multiple media capabilities all over the place.
The more broadband capability we get ‘ the more streaming videos, streaming audios, streaming 3D ‘ the more we are going to be able to utilize these functions on the PC.
This increased broadband capability will drive the multimedia content and capability of the PC-based platform substantially higher.
The third major trend we see is that chip integration, which is enabled by Moore’s Law, will continue to transform the traditional, core logic business into a 3-D graphics business.
In certain segments of the market, it will no longer be cost effective to have a separate computer processing unit (CPU), such as a Pentium
processor, and a separate graphic processing units (GPU).
The integration of these two key components will drive costs down in such cost-sensitive markets as e-machines, without significantly sacrificing performance.
Graphics processing is much more complex than general computer processing, and our expertise is obviously in the graphics end.
So this trend toward integration is going to create new opportunities for us.”
The trend is your friend according to CEO and Chairman Huang:
“The biggest single opportunity is the explosion of digital devices that are connected to the Internet ‘ game consoles, PCs, mobile
devices, hand-held devices, plus a new category of product called Pocket PCs, which are completely sold out.
Whether portable or stationary, these devices will require more and more rich graphics and rich audio.
All of these devices need rich multimedia.
NVIDIA is recognized as a leader in multimedia technology: in your 2-D graphics digital video, HDTV quality video, and 3-D graphics ‘ all of which are capabilities that NVIDIA is known for.
I think NVIDIA is well positioned to take advantage of this explosion in digital devices.”
One compelling insight into the future growth of NVIDIA under JEN-HSUN HUANG is the quality of their customers in the year 2000:
“Today our targets are the PC industry, the workstation industry, the consumer electronics industry ‘ the Who’s Who of each industry.
On the PC front customers include Dell, Compaq, IBM, HP, Gateway, Sony; in Europe, NEC Packard Bell and Siemens/Fujitsu.
In other words, the major PC OEMs of the world are all customers of NVIDIA.
On the workstation side, 100% of the world’s workstation companies buy graphics processors from NVIDIA today: Silicon Graphics, Compaq, Dell, HP and IBM.
On the consumer electronics side we have partnered with Microsoft to develop the key components in Xbox to compete with Sony Playstation 2.”
The supply side was also covered as JEN-HSUN HUANG had already covered semiconductor inputs from TSMC:
“NVIDIA’s business clearly is growing very fast.
We are one of the fastest growing semiconductor companies in the world.
We have grown 100% year-over-year for the last several years.
For the foreseeable future, we are going to continue to grow very quickly.
So I would say that my greatest concern is growth and whether our partners can grow as fast as we can.
And with rapid growth is the challenge of retaining a highly focused culture and vision internally.
So those are my greatest concerns these days.
…Our single most important partner is TSMC.
TSMC is the world’s largest foundry, located in Taiwan.
It is the world’s most respected foundry, and we are one of their largest customers.
It is a terrific partnership.
TSMC is absolutely terrific and world-class.”
From his office in Santa Clara at the time, JEN-HSUN HUANG did not hedge on what he saw in the future for NVIDIA:
“The reasons are actually pretty simple.
The explosion of visual devices has created a huge multimedia market.
We are the best in the business, the most focused in the business and the single best pure-play of multimedia in the world.”
Read the complete year 2000 interview with JEN-HSUN HUANG of NVIDIA in the Wall Street Transcript and get more start up public semiconductor companies in our latest Technology Report and Semiconductors and AI Report.
Vitaly Umansky, Global Gaming Senior Analyst, Seaport Research Partners
Vitally Umansky is the Global Gaming Senior Analyst at Seaport Research Partners and has been based in Hong Kong for the past 18 years.
Prior to Seaport, Mr. Umansky was the Global Gaming Analyst with Bernstein Research (Sanford C. Bernstein) for nine years.
Before research, he was in private equity and advisory in the gaming and leisure industries; was CFO of New Cotai Holdings, a private equity backed casino development investment and company; and earlier in his career was with Merrill Lynch investment banking in M&A and leveraged finance, where he did work in gaming, leisure and hospitality, among other industries.
“I do global gaming.
I’m based in Hong Kong, and I frequently travel to the U.S.
My coverage is largely the gaming stocks that have Asia exposure, both the large caps in the U.S. and Hong Kong-listed Asian gaming stocks.
We’re going to be expanding coverage down the road to include more U.S.-oriented gaming companies, as well.
I’ve been doing equity research since 2014.
I previously was with Sanford Bernstein, and I’ve been with Seaport for about two years.”
“The first company in my coverage reported yesterday afternoon, so it’s good timing.
Las Vegas Sands (NYSE:LVS) had the best performance that they’ve ever had in Singapore, which is their flagship property.
The Marina Bay Sands, which is the largest casino in the world, blew away all expectations, well above consensus estimates and significantly above my bullish estimates for that market.
That’s probably been the biggest surprise so far.
It’s literally just getting underway, so you haven’t had that many companies reporting yet in the gaming space — it’ll be happening over the next two or three weeks.
But I think if you look at the entire market, that Las Vegas Sands’ result in Singapore will probably stand out as one of the biggest surprises of the third quarter results.”
Mr. Umansky focuses in on the online gaming sector.
“In my coverage, MGM is a half-owner of BetMGM, which is the third-largest online operator in the United States.
They pre-reported their Q3.
They’d been having some problems, but the last two quarters they’ve been seeing a nice turnaround.
They’ve engineered some changes within the company.
They’re much more focused on the online casino piece of the business, which is more profitable than sports betting.
You’ve got operators like DraftKings (NASDAQ:DKNG) and Flutter (NYSE:FLUT), which owns FanDuel, which dominate the sports betting market in the United States.
I think the biggest question around the sports betting market coming out of these earnings and management conversations is going to be around prediction markets — a new market that’s been developed by other operators who are unlicensed gaming operators, and they’re trying to implement a sports betting type of business without complying with state law, using a federal loophole in the Commodity Futures Trading Commission rules to try to create what they do not call a gaming market, but is effectively a gaming market.
In the long run, if it’s allowed and if the lawsuits that are currently in process go the way of the prediction markets, they are a new competitive force within the online sports betting industry.
That’s something to keep an eye on. But overall, the online business in the United States is the growth market for gaming in the world right now.”
The international “whale” high-roller in the Las Vegas market looms large in investor’s minds but perhaps it should not.
“The bulk of the business in Las Vegas is U.S.
International business has been a very small piece of Las Vegas, 5%, for some operators maybe a little bit more, a little bit less for others.
That business is softer.
The Canadian business, for example, has seen a significant drop off in visitation into Las Vegas.
As we’ve seen, the overall number of tourists coming into the United States from Canada dropped off dramatically.
This is largely in light of some of the new regulations and laws passed around visitation, in terms of potential risk for tourists coming in and what they have to deal with, and there seems to have been backlash, especially from Canadians, about coming to the United States.
If you look at Florida, for example, not necessarily a gaming market, but visitation to Florida, which was a really big destination for Canadians, especially in the winter months, softened dramatically.
We’re seeing a significant amount of residential real estate being put up for sale by Canadian owners who no longer want to come to the United States.
The same thing is happening in Las Vegas.
They’re just not coming.
We’ve seen a 40% or so drop in the number of airline seats flying into Las Vegas out of Canada.
So, it’s definitely been in decline.
However, recently there have been some new airline routes into Las Vegas. Air France, for example, now has a direct flight from Paris to Las Vegas.
They haven’t had that in a long time.
Overall, international business has been soft, but it doesn’t impact the regional casino market in any way whatsoever.”
More insight into the current gaming market and interesting plays in the new online gaming sector are revealed in our interview with Chad Beynon.
Chad Beynon, Managing Director and Head of U.S. Research at Macquarie Capital (USA) Inc.
Chad Beynon is a Managing Director and Head of U.S. Research at Macquarie Capital.
Since 2007, Mr. Beynon has headed its consumer sector coverage and has been conducting research and publishing reports on gaming, lodging and movie theater companies.
In 2012, Mr. Beynon received recognition as one of Institutional Investor’s Rising Stars of Wall Street in gaming and lodging as voted on by corporate clients.
Prior to joining Macquarie, Mr. Beynon worked at Prudential Equity Group covering the beverage sector, followed by the gaming sector.
Mr. Beynon graduated from the University of Maryland, double majoring in finance and logistics/supply chain management.
“It’s difficult to appreciate the wealth effect from rising equity prices and home prices for higher income earners, but it’s really helped the economy.
In addition, we believe that up to 40% of U.S. homeowners don’t have a mortgage anymore, so their liabilities have come down.
And, as mentioned, they continue to prioritize spending on travel, whether it’s bucket list types of items, taking their families on vacations, or just exploring parts of the world that they’ve only read about in a book.
And then shifting to the digital landscape, we continue to see a healthy shift towards digital versus. retail experiences.
This includes mobile gaming — sports betting or iGaming — media streaming, as well as wellness trends aided by technology.
In addition, improved technology has benefitted the travel experience, from booking to curating the experience.”
“The second one that we like is Churchill Downs (NASDAQ:CHDN).
This is a $10 billion market cap company.
They have a prize-winning asset in the Kentucky Derby, which generates money from sponsorships, media, ticket sales, and wagering around the Kentucky Derby, which is the first week of May every year.
That event continues to grow.
They also have exposure to land-based casinos that benefit from the horse racing industry in states where the local governments are trying to maintain the level of investment in that horse racing industry.
The company also increases their dividend by 7% per year, which is rare in the space.
They have acquired 5% of their own stock this year.
And we think they’re trading at a fairly attractive valuation.
So, that also fits into the higher end spending category.
A second thematic is towards digital, particularly the picks and shovels side of technology.
Within sports betting there are two companies that provide the official data to the leagues, to the teams, and also to the media broadcasters.
And importantly, they are the leader in sports betting integrity, so when we see potential issues from a sports betting integrity standpoint, these companies also serve as the whistleblower.
They are extremely important to the leagues, which continue to see rising valuations.
These companies include Sportradar (NASDAQ:SRAD) and Genius Sports (NYSE:GENI).
They essentially have a duopoly in the space.
They have deep moats around their data collection processes, and they continue to work with advertising companies to increase the value of their business.
Next, we do want to have exposure to the B2C side of this sports betting growth, and that leads us to DraftKings (NASDAQ:DKNG).
This company is a top two player domestically in sports betting and iGaming.
Recently there’s been some competition in the prediction markets, which are a highly contested form of trading.
These trades or contracts may be around potential outcomes of an election, a game show, or even the World Series.
There are legal issues around this, but we think DraftKings will come out of this in great shape, regardless of the decision.
Last week, they even made an acquisition in this space, so they essentially bought an insurance policy to participate in this space if it remains legal, and if it doesn’t remain legal, we think it’s a value stock at these current levels.
Bottom line, they’re growing 20% and currently trading at below average valuation levels.”
Get access to the complete interviews of both of these world class analysts, along with many more, in the current sector report from the Wall Street Transcript.
Garik Shmois, Managing Director, Senior Equity Analyst, Loop Capital Markets.
Kathryn Thompson, Partner, CEO, Thompson Research Group (TRG).
Construction stocks are hot in certain sectors according to these two award winning equity analysts.
Garik Shmois is Managing Director and Senior Equity Analyst at Loop Capital Markets.
He covers stocks within the construction materials and building products sector.
These include cement, aggregates, wallboard, roofing, cabinets, and plumbing manufacturers and distributors.
He was ranked as the No. 1 earnings estimator in coverage by StarMine/Financial Times (2014, 2017) and the No. 1 stockpicker (2012, 2014, 2017).
He has been interviewed by CNBC, The New York Times, The Wall Street Journal, and Bloomberg. Earlier, he worked at Longbow Securities and National City Bank.
He is a graduate of Binghamton University and received an MBA from Case Western Reserve University.
His stock picks lie at the intersection of the Trump and Biden Administrations:
“…the Infrastructure Investment and Jobs Act, IIJA, that was passed into law late in 2021.
It is funding that supports highway and street construction amongst other areas of infrastructure.
And it is dedicated through the program’s expiration at the end of September of 2026.
The Trump administration has stood behind IIJA.
And there’ve been other parts of the Biden administration’s agenda that have been supportive of construction spending that have been more at risk.
But for IIJA, there’s been no indication that the funding will be pulled.
And conversely, when IIJA funding runs out later next year, there’s actually been early signs of optimism amongst our contacts in D.C. that there will be a successor bill to IIJA that will be passed in relatively short order.
So that would support funding levels at or above actually current direct spending levels…
Within our coverage, we are positively disposed to the more infrastructure-focused companies.
And a lot of that comes back to the IIJA discussion that we’re having.
We have visibility to highway funding, which is the largest source of demand for our heavy materials coverage.
And because of that, and because most of our heavy materials coverage sees at least half of their demand coming through infrastructure, that provides a lot of volume visibility.
In addition, a lot of these companies are in very consolidated geographic markets, and this provides very strong pricing power.
And then lastly, a lot of these companies are not exposed to tariffs.
So, they’ve been able to see very strong margin expansion because inflation has not been as material as in other areas we follow.”
The specific stocks deal in heavy construction materials.
“I’ll give you one heavy materials and one building products name that we like.
On the heavy material side, it’s CRH (NYSE:CRH).
They are the largest aggregates company in the U.S. and they are vertically integrated, which provides them with leading positions in cement, ready-mix concrete, asphalt and paving.
Their vertical integration allows them stronger margins across their businesses.
We like them because as the largest aggregates producer, they are overexposed to infrastructure, which we’re bullish on right now.
They’re also very active in M&A, and on an annual basis, they make significant acquisitions that help with external growth.
The shares are also trading at a discount to peers.
And there could be an external catalyst on the horizon as we expect them, at some point, tough to predict when, but at some point we expect them to be included in the S&P 500, which often leads to a re-rating.
On the building product side, Owens Corning (NYSE:OC), a roofing insulation manufacturer, has housing exposure.
But it’s a cheap stock, and there’s some concern about the housing cycle.
However, the company is well positioned because they’re gaining share in roofing, their largest segment, and that is offsetting new-construction weakness.
And when the housing cycle does come back, they’re very well positioned within doors and insulation.
So, we think the shares should trade at a higher valuation because their execution over the last several years has been very strong.
Their margin performance is very similar to high multiple peers.
And we think the valuation should expand.
Many of their peers trade at a 3- to 5-turn valuation premium to Owens Corning with very similar if not worse performance.”
Kathryn Thompson is a founding Partner and Chief Executive Officer of Thompson Research Group (TRG).
TRG is an equity research and advisory firm focused on the industrial and construction sectors.
In addition to managing and setting the strategic direction of the firm, she also serves as Director of Research.
Ms. Thompson brings over 20 years’ experience analyzing, modeling and advising mutual funds, hedge funds, pension funds, private equity funds and family offices on investment and portfolio management.
She also works closely with key public and private companies, acting as a trusted advisor for strategic planning and growth initiatives.
Ms. Thompson has been recognized by The Financial Times/Starmine as a top Stock Picker in Construction Materials.
A graduate of the University of the South in Sewanee and Vanderbilt University’s Owen Graduate School of Management, Ms. Thompson is a regular guest speaker at industry trade conferences and corporate meetings.
She has been a guest on CNBC and Bloomberg, and is quoted regularly by The Wall Street Journal, Barron’s, Forbes, Fortune, and Bloomberg.
Kathryn Thompson believes that the AI boom will support the equity valuations of key construction pre-cursors to data center builds.
“You’ve got to pick your spots. APi certainly has done quite well.
But perhaps a different company that’s also in inspection services, that is a newer publicly traded company and that has a reasonable valuation now, is a company called Acuren (NYSE: TIC).
Acuren just completed its acquisition of another public company, NV5.
Combined, Acuren and NV5’s services support key AI/data center complexes and value chain — energy and water infrastructure — continuity.
NV5 brings exposure to building solutions, geospatial and infrastructure customers, with significant increased exposure to IIJA funding and data centers.
For example, NV5 recently announced a $5 million data center substation design service contract in Georgia and Nevada.
The Street is just now getting to know Acuren, and there’s still much to learn about the company…
Our research efforts are looking at the value chain for AI for maintaining and sustaining the actual data centers and the AI network on a go-forward basis.
So my bet on a go-forward basis is you’ll see more companies that are services for energy infrastructure or water infrastructure.
So we already cover a couple of names that benefit, including Core & Main (NYSE:CNM) and CRH.
But my bet is you’re going to see more in the coming months.”
Get all the details on construction stocks and other infrastructure equities by reading these interviews from top tier equity analysts in the new Construction, Building Materials, Basic Materials and Specialty Chemicals Report, exclusively from the Wall Street Transcript.
Taylor Lauber is the Chief Executive Officer of Shift4 Payments (NYSE:FOUR) and a member of the company’s board of directors.
Taylor Lauber, CEO, Shift4 Payments (NYSE: FOUR)
He has been with Shift4 since 2018 and his prior roles include President and Chief Strategy Officer.
He has been a corporate officer since the company’s IPO in June 2020, but his roots extend far beyond this as one of the company’s first interns 25 years ago.
Before joining Shift4, Mr. Lauber worked at Blackstone in a variety of strategy roles, most recently as the COO and lead portfolio manager for Blackstone Total Alternatives Solutions funds.
Before joining Blackstone in 2010, Taylor worked as a Private Banker at Merrill Lynch. Mr. Lauber received an Economics and Finance degree from Bentley College.
In this exclusive interview in the Wall Street Transcript, Taylor Lauber explains his primary case study for Shift4 Payments (NYSE:FOUR).
“To provide an example of our business, we like to have people visualize a visit to Yankee Stadium.
You’re buying your ticket to the game online.
You’re using a digital ticket to enter.
It might come with a free voucher that you need to also present digitally.
You may spend money in a dozen different ways in an ecosystem like that, and they’re all very unique commerce experiences, whether you’re buying a hat, or ordering a round of drinks in a suite versus a table service restaurant inside of just one venue.
We try to specialize in that level of complexity.
We try to pick areas of commerce that are a lot more complicated than we think they necessarily have to be, and then pursue those very vigorously.”
Shift4 Payments has been growing its business through acquisitions of adjacent competitors.
“Revel is a great example.
It was restaurant software.
We know that very well.
We invest a ton of time in it.
We own our own software.
We’ve acquired others.
And yet, to make that software work well, they were working with like three different payments companies, a bunch of different hardware companies, and different security layers.
If we own that business, we can deliver all those pieces and a Revel customer should be a heck of a lot happier because they get one hand to shake — or one throat to choke when it’s not working well — and it’s not this grand series of finger pointing.
And as you can imagine, the connectivity of all of that information under one roof helps solve problems much more quickly.
We have found that acquiring pieces of the value chain can really differentiate us.
From a growth perspective, it’s great, because you can actually instantly inherit a lot of customers that are sending their payment volume to dozens of other places and don’t love that experience.
And it’s an easy conversation: “We’ll consolidate everything for you.
We can help you save money.
You can get updates much more easily because we own the whole value chain.
And when it doesn’t work, you know who to call and that entity is 100% responsible and is empowered and has the tools to manage the entire ecosystem.”
Taylor Lauber explains the acquisition strategy for Shift4 Payments (NYSE:FOUR):
“So needless to say, acquisitions have been a healthy area for us to build out capabilities where we don’t have them, in a good way, and Givex, I think, is an example of that.
We also inherited a bunch of customers.
Obviously, Givex is its own 30-year-old business, with a bunch of customers, and then cross-sell those customers and make their lives easier.”
The expansion into adjacent verticals explains the company’s recent growth trajectory.
“In terms of how it brings us to categories, it’s that philosophy.
We don’t start with the idea that restaurants are the right vertical to go after and therefore, let’s go.
We actually start with where are the problems in commerce and where do we think our skill set could be applied?
So, lo and behold, restaurants pop up in hotels, and we start to become educated on how to solve more problems. And again, we weren’t in any hotels eight years ago. We’re now in 40% of the hotels in the country with that kind of philosophy.
And sometimes you need to acquire a technology capability to service hotels on top of what you already do for that hotel and other times it’s that you need to build something, or maybe just partner with 10 different companies in order to solve their problems.
As you start to think through that, it becomes very easy to spot the next thing to solve. We started touring a stadium as customers in Las Vegas. They wanted us to buy a suite because we had a business there. They said, “Come visit the stadium.” And we’re walking through and we said, this is just like a hotel: There’s an online sale. Then the guest shows up. Then they navigate this experience and buy food and buy merchandise. And hopefully they all stay overnight.
I think as you double-click on the verticals we serve with that mindset, you’ll see that they all actually have a lot more in common than you’d think.”
“…We have a founder who is Chairman, who owns the largest single share of stock in the company and votes and controls the company.
Oh, and by the way, he’s done it for 26 years before me, and we’ve been friends since we were 16 years old.
All this to say that there’s not a lot of ambiguity around the mission.
From that standpoint, I hope as little changes as possible.
I will say we are different as a company.
We started last year with 3,000 employees.
We’re going to end this year with 6,000.
And I mentioned that 75-plus country growth that we’re experiencing.
You can’t be the same company.
Maybe we balance the idea that we’ve been on a successful march for 26 years and deviating from that would be, quite frankly, dangerous, with the idea that every two to three years of those 26, we had to change the way we were operating to help manage scale.
So, how do I think about this through the lens of what the business is today?
Really, really predictable, what I call battle rhythms.
I don’t want anyone in the company to guess what a Monday morning is going to look like versus a Thursday afternoon versus a Friday evening.
Helping the 6,001st employee to join the company as quickly as possible, and understand what we’re focused on, and when and how to, quite frankly, just navigate the complexity of a growing organization.
Our priorities are always clear, and I think we try to keep as few of them as possible, but inevitably, you can’t say you want to be in over 75 countries and not deal with nuance there.”
Get the complete interview, exclusively in the Wall Street Transcript, and develop further insight into Shift4Payments (NYSE: FOUR).
Bank CEOs sometime have a reputation for leading boring lives. These two bank CEOs survived life threatening situations that resulted in a new business focus that has led both their banks to greater success.
Brent Beardall, President, CEO and Vice Chairman of WaFd Bank
Brent Beardall is the President, Chief Executive Officer and Vice Chairman of WaFd Inc., NASDAQ:WAFD.
Mr. Beardall joined WaFd in 2001 as Vice President & Controller. In 2003, he was promoted to Chief Financial Officer, a position he served in for 11 years prior to being assigned to his current role with responsibility for all client-facing activities of the bank.
He was awarded the title of President in 2016. On April 1, 2017, he became only the sixth CEO in the bank’s 100 year history.
In January 2022, Mr. Beardall was appointed Vice Chairman of the Board.
I want employees that have heart, that care about others.
And I want to be a bank with heart. I want to help out, and that’s really what a bank is about — to be able to help.
What we found is, if you give someone a chance, 90%-plus of the time they will pay you back and they will be customers for life.
It’s really easy to make a loan to someone that’s absolutely qualified.
Everybody will make a loan to them.
It’s making loans to people that are right on that edge of if they’re qualified or not.
But that’s the loan that’s really going to make the difference.
And you look at what we’ve done in this country from a financial institution standpoint, we’ve really closed our doors to the most needy, and so, OK, go ahead and do your banking outside of the regulatory financial institutions.
So that they’re going to the payday lenders.
Think about how hard it is to get ahead when you’re paying 20% interest.
It’s impossible.
And so, what I want to do is be that bank with heart and open up to people that wouldn’t normally bank with us.”
Brent Beardall recognizes that a bank must be more than a simple mortgage lender.
“…A mortgage loan, a 30-year fixed rate mortgage loan is a unique instrument.
It has what’s known as negative convexity, meaning it is never worth more than the day you book it.
And you’re like, why is it that rates go up, it goes down in value; rates go down, it goes down.
It’s never worth more.
It will stay the same.
That’s because if rates go up, the value goes down because you are now earning a below market interest rate.
So, all of a sudden, they’re going to extend, just like it’s happened today — everybody with their 4% mortgages.
So, it’s less valuable to the bank when rates go up because you’re now underwater in terms of what you could earn on that.
And then what happens on the downside is, historically, if rates went down, nobody really paid attention to it.
I’m happy with my mortgage, I can pay it.
But now with technology, oh, my goodness, your rate is now a quarter of a percent higher than what the market is.
I can let you click on this one button and I can refinance you with very little paperwork, and it’s going to save you, you name it, $200 a month.
And so now all of a sudden, the bank that made the mortgage — that mortgage is gone because it’s paid off and gone somewhere else.
So that’s what I meant about technology, and primarily cell phones, because it’s so easy.
And it is really artificial intelligence; once artificial intelligence really kicks in, they’re going to say, OK, hey, Brent, here’s one button, you can choose which of the five mortgages you want.
So why would you want to be in that business where if rates go up, you’re stuck with something you don’t want, and if rates go down, it just converts to cash.”
John Hairston, President and CEO, Hancock Whitney
John M. Hairston is President and Chief Executive Officer of Hancock Whitney, NASDAQ: HWC.
Mr. Hairston has served as CEO of the company and the bank since 2008, and President of the company since 2014.
Prior to becoming President, he served as its Chief Operating Officer from 2008 to 2014.
Mr. Hairston served on the board of directors and was a faculty member of the Graduate School of Banking at Louisiana State University in Baton Rouge, Louisiana, and at the Georgia Banking School in Athens, Georgia.
He also currently serves on the boards of directors of the Gulf Coast Business Council, New Orleans Business Council, Mississippi Economic Council, and The National WWII Museum.
“…The real catalyst for somewhat of a hockey stick growth curve really occurred following Hurricane Katrina. Our organization — and I have to give credit immensely to each of our team members during that time — really exhibited heroic efforts to reopen the organization very quickly, faster than most of our competitors.
In many cases, we had facilities that had been leveled — where there was nothing left but a slab.
And our associates stood up trailers, folding tables, motor homes that had missing windows and windshields, whatever we could get to serve the community in the absence of a lot of banks.
In doing so, that created a fairly massive trajectory of growth.
In fact, the first 105 years took us to $3 billion; then over the next 20 years, to $35 billion.
The catalyst for that really was the aftermath of Hurricane Katrina, which was as difficult a time as our region had seen.
It presented a great deal of economic growth, and we were very fortunate to participate in that rather heavily.
From there, very rapid organic and inorganic growth took us to the $35 billion in assets we have today.
Along the way — and this is somewhat cultural because of our focus on strength and stability — the organization has been remarkably stable.
We haven’t had a dividend decrease since 1967 — nearly 60 years — and have been rated by BauerFinancial, Inc. as one of America’s strongest and safest banks for 143 consecutive quarters, which is almost 36 years in a row.
Despite all the growth and the interesting periods in our economy from the 1970s through today, the company has been remarkably stable and successful.”
The FDIC has recently been dramatically downsized but John Hairston has handled this regulatory change in stride.
“I presume that you recognize that we’re an FDIC chartered bank.
We have a State of Mississippi charter, because that’s the state in which we’re headquartered.
Then, we have an FDIC obligation.
We also have a holding company that owns our bank which is regulated by the Federal Reserve.
With the FDIC, I’ve been impressed so far with the ability of the organization to roll with the downsizing of the organization.
Every organization from time to time goes through a belt-tightening or a downsizing.
We’ve been through it several times in our existence.
We always come out the other side in better shape than when we enter it.
I expect the FDIC is going to do the same.
So far, we’ve seen no degradation whatsoever in the quality of exams.
We, as a midsize bank, are under what’s called a continuous exam process; we have exams going on all the time.
There were the days of having the FDIC show up for two or three months a year and leave.
When we crossed $10 billion, that all went away.
We have a couple of dozen exams throughout the year.
There’s always an exam going on, on some area of the company.
We’ve seen zero degradation in the quality of the examination staff, in the thoroughness of the exams, the quality of the questions, and the timeliness of the exam results.
If anything, we’ve been getting results back faster.
We’ve really seen no apparent degradation in the quality of the work that they’re doing.”
Vlad Vitoc, Chairman, CEO, and President of of MAIA Biotechnology
Vlad Vitoc, M.D., is Chairman of Board, Chief Executive Officer, and President of MAIA Biotechnology Inc.
Dr. Vitoc has a broad array of experience across commercial strategic analysis and planning and medical affairs, with over 25 years of experience in Oncology Pharma/Biotech.
Dr. Vitoc held leadership roles at Bayer, Astellas, Cephalon, Novartis and Incyte and has managed and supported over 20 early, launch, and mature stage compounds, which have included targeted therapies and immune therapies across more than 25 tumor types, including colorectal cancer, hepatocellular carcinoma, lung cancer, breast cancer, prostate cancer, and renal cell carcinoma.
“MAIA is an oncology company at which we develop new therapies for cancer that have a novel mechanism of action: telomere targeting and immunogenic effect, teaching the immune system to respond to cancer.
Our lead molecule is ateganosine, our new nonproprietary name for THIO, and is now beginning pivotal trials for commercialization in non-small cell lung cancer — NSCLC — after having shown extraordinary efficacy in a Phase II trial in the course of the last couple of years.
We have several follow-on molecules — three that are in preclinical development as we speak and several more in reserve, ready to proceed as well.
We look forward to bringing them to the clinic in the course of the next year or so.”
The cancer cure that MAIA is testing is a telomerase based approach:
“Cancer is a group of diseases that occur in the aging population.
There are many mechanisms by which cancer can appear, but one very important mechanism is the shortening of the telomeres.
With aging, telomeres, the protective end caps at the end of the chromosome arms, become shorter and shorter.
When they become critically short, then diseases of old age start to appear, including cancer.
Now, in cancer cells, something extraordinary happens: They turn their enzyme telomerase back on.
And so, they regain the ability to lengthen their telomeres.
Now, we have a scenario in which the cancer cells have long telomeres and reach a state of replicative immortality, continuing to divide, and the tumor grows, whereas the normal cells continue to suffer with short telomeres.
This happens in the process of aging.
The farther we advance in age, the shorter our telomeres become, and the more important this mechanism becomes in cancer genesis.
The enzyme telomerase is key for the THIO mechanism of action.
It picks up THIO instead of a guanine base and places it in the structure of the telomere, creates an unstable telomeric structure.
The telomere collapses, the DNA unwinds and the cancer cell dies.
What we observed in the preclinical setting is that this process is very fast and efficient.
It happens in 24 to 72 hours. And THIO directly kills 70% to 90% of the cancer cells.”
Erez Aminov, Chairman, CEO, MIRA Pharmaceuticals
Erez Aminov is the Chairman and Chief Executive Officer of MIRA Pharmaceuticals, Inc., a biopharmaceutical company developing treatments for neuropsychiatric disorders.
In addition, Mr. Aminov serves as the Chairman and Chief Executive Officer of Telomir Pharmaceuticals, Inc., a biotechnology company dedicated to treating age-related inflammatory and degenerative conditions.
Mr. Aminov also founded Locate Venture Corp, where he supported early-stage biotech enterprises and fostered growth through strategic partnerships.
He has also served as a trusted consultant for multiple biotech firms and successfully guided two companies through IPOs on the Nasdaq.
“Telomir-1 is our lead oral therapeutic designed to target key drivers of aging — including telomere shortening, oxidative stress, and metal imbalance. In a recent prostate cancer animal model using highly aggressive human cancer cells, Telomir-1 reduced tumor size by approximately 50% at both low and high doses.
It actively suppressed tumor growth while selectively protecting healthy cells, addressing long-standing concerns around telomere-elongating drugs and cancer risk.
When combined with Paclitaxel — a commonly used chemotherapy agent known for its efficacy but also its toxicity — Telomir-1 eliminated mortality and significantly reduced side effects.
We believe this protective effect is linked to Telomir-1’s ability to regulate metal ion activity and reverse oxidative stress, a major driver of chemotherapy-induced toxicity.
We’re also exploring Wilson’s Disease as a potential lead indication.
It’s a rare disorder caused by copper accumulation, and because our drug works through metal regulation, it’s a strong mechanistic fit.
As an orphan disease, it may also offer a faster clinical development path.”
Alan Auerbach, Chairman, CEO, President, Puma Biotechnology
A cancer cure for metastatic breast cancer is the goal of Puma Biotechnology.
Alan H. Auerbach has served as Chairman of the Board and as CEO and President of Puma Biotechnology since its inception.
Before joining Puma, Mr. Auerbach served as Founder, CEO, President and a member of the board of directors of Cougar Biotechnology from the company’s inception in 2003 until its acquisition by Johnson & Johnson in July 2009.
From July 2009 until January 2010, Mr. Auerbach served as Co-Chairman of the Integration Steering Committee at Cougar (as part of Johnson & Johnson) for Cougar’s lead product candidate, abiraterone acetate, which was approved for the treatment of metastatic prostate cancer in the U.S. in April 2011 and in the European Union in September 2011.
Prior to founding Cougar, from June 1998 to April 2003 Mr. Auerbach was Vice President, Senior Research Analyst at Wells Fargo Securities, where he was responsible for research coverage of small- and middle-capitalization biotechnology companies, with a focus on companies in the field of oncology.
“Puma is a biotech company that is dedicated to the development and commercialization of drugs for the treatment of cancer.
The company was founded in 2011 upon the licensing of the drug Neratinib from Pfizer.
Neratinib is an orally available, irreversible, pan-HER inhibitor that inhibits HER1, HER2, and HER4.
The drug is currently FDA approved and is commercialized under the trade name NERLYNX.
The approval in the U.S. is for both the extended adjuvant treatment of HER2 positive breast cancer and for HER2 positive metastatic breast cancer.
It is also approved in many other geographies outside the U.S., including Europe, China, Canada, Latin America, and the Middle East.
And then in 2022, we added another product to the portfolio.
We in-licensed the investigational drug alisertib, which is a selective, small molecule, orally administered aurora kinase A inhibitor.
We’re currently developing the drug in multiple tumor types, including small cell lung cancer and hormone receptor positive HER2 negative breast cancer.”
A positive development for this cancer cure innovator is the positive income statement, rare among microcap biotechnology companies.
“As we mentioned in our most recent conference call for our fourth quarter earnings, Puma saw positive net income in fiscal year 2023 and 2024.
A lot of that was obviously driven by NERLYNX, because that’s our commercial product.
But it also was due to the financial discipline that we have instituted across the company in the last few years.
We’ve been very, very focused on expense reductions, which we have performed and which we continue to perform as a major contributor to our positive net income.
So, it is very nice for us to be able to have the revenue from NERLYNX, be able to clinically develop alisertib, and also achieve positive net income, not only for 2024, but also which we’re guiding to for the full year in 2025.
And we remain very, very committed to continuing to achieve that positive net income.
And we’ll continue to reduce expenses if we need to, to achieve that.”
Private equity investing is all the rage with pension funds and college endowments ramping up returns with their estimates of the value of their limited partnership shares.
There are value investment portfolio managers who see incredible discounts to these estimates of value in their publicly traded portfolios.
Private equity investments at a big discount to public valuations: is this a current sweet spot for investors?
Scott Hood and Evan Fox detail their logic in two exclusive interviews in the Wall Street Transcript.
Scott Hood, Chairman and Portfolio Manager, First Wilshire Securities Management
Scott Hood, CFA, CFP, serves as Chairman and Portfolio Manager at First Wilshire Securities Management Inc. He joined First Wilshire as an analyst in 1993, was promoted to Chief Executive Officer in 2001, and became Chairman in 2019.
“…On the institutional side, we’ve noticed there’s been less and less interest in active management, and a lot more interest in private startups, private equity, and maybe real estate.
We have studies going back over 90 years on the market and value and small cap and mid and large and international, and we’ve been in this remarkable time of a very few large tech stocks in the U.S. dominating the world’s returns.
So, I spend a lot of time on the more technical aspect of that, and also trying to give examples of these hundreds of small companies that trade almost like private equity.
They’re like private equity without the high valuations; there are all these great companies that are a bit forgotten, because there’s not as much interest in those inactive and small companies.
On the individual side, say high-net-worth individuals, I spend a lot of time explaining First Wilshire and our research process and what’s different.
You asked, what are people worried about?
They were worried about politics, so we had to explain that there really hasn’t been a correlation between who got elected and performance in the stock market.
Every time there’s an election, there’s a big group of people who say, “I’m getting out of here if so-and-so wins,” so we’ve tried to put this into broader, historical context, to explain that it’s probably not a good idea to take all your money and make extreme decisions based on a single election.
And then we’ll spend time explaining that, well, when the market’s gone up a lot, people tend to feel more excited, and then they have too much money in the market, and then when things get a little scarier, they tend to take money out — and usually it should be the opposite.
I guess I’ve learned in decades in the business that psychology can be more important than earnings, growth and valuations, so we spend a lot of time with the clients on that.
I explain a lot about our history and our firepower.
We’re all, I’d say, academic, investing business nerds.
We don’t have a marketing department, so we’re not out there banging the drum about First Wilshire.
And the problem is, most companies are all about marketing and not much on the meat and potatoes, and they bring in massive amounts of assets to be put willy-nilly into the same junk that everybody else has.
Somebody like us, who does so much work with such a long track record, we have to explain to clients the difference between us and these other companies that they may have a more favorable impression of them than they should, in our opinion of course, just because the marketing dollars are hitting them in the right way.
Obviously, I’m a little sour about that.”
One small cap company that is wildly undervalue according to the First Wilshire portfolio manager is Aviat Networks (NASDAQ:AVNW).
“There’s a company called Aviat Networks (NASDAQ:AVNW).
They’re based in Austin, Texas.
Aviat does private networks, and in this case “private network” refers to a private cellular and internet network in an area where it works better to do microwave and radio technology rather than wiring an entire area.
Say, a large industrial park, or stadiums use these and are a growing area.
Multiple dwelling unit projects are a growth area.
The company provides the equipment, software, design and installation for these systems.
They had three years of really strong revenue growth and earnings.
Then they had — and this was the time we got interested — an internal control accounting issue.
It was the first quarter last year, and the stock really got hit.
It wasn’t material and it wasn’t intentional, but it really hurt the stock.
Then they came back with strong quarters again, just the stock hasn’t caught up with the performance.
It’s a low p/e company.
It’s trading about 8 times next year’s earnings estimates.
Balance sheet is in good shape.
A lot of growth opportunity ahead.
You look for turnarounds, in a sense.
When they have a problem, you take a look.
A lot of times they’re down for a reason, and it’s going to be hard to turn it around.
We didn’t feel that was the case here.
We felt that the business was in great shape, and the discount that came from the accounting interruption was just too much.
And it’s recovered a little bit, but has a lot further to go.”
Evan D. Fox, Co-Portfolio Manager for Pzena Investment Management
Mr. Fox became a member of the firm in 2007.
“For small caps especially, I think those first couple of questions — why does it exist and is this a good business — make it important to understand that many of the companies that we’re investing in are leaders in some sort of niche market, and that’s what creates the fantastic opportunities.
They’re not going after markets with tens of billions of dollars of revenue.
Instead, we have companies like Shyft Group (NASDAQ:SHYF), that is a leader and one of two companies making step-in vans, which are the ones UPS and FedEx use.
We also own MasterBrand (NYSE:MBC) and American Woodmark (NASDAQ:AMWD), which are leaders in making kitchen cabinets throughout the United States.
And Steelcase (NYSE:SCS), which is one of the two largest office furniture manufacturers in the world.
We have a whole range of other companies that are leaders in specific areas, and that’s what makes it exciting — that we can have fantastic businesses that many people have never heard of.”
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