Sentieo values diversity and believes that diverse teams make innovation possible. (We are hiring!). One of the exercises that we are doing for Pride Month is taking a look at how Corporate America is celebrating, by using our industry-leading Document Search technology. Check out our findings below.
Pride Month Is Growing!
Mentions of “Pride Month” in US corporate press releases for public companies were practically non-existent in 2012, but in 2018 and 2019, we see about 20 press releases. (Interactive chart)
Who Were The “Early Adopters?”
Our search results show that Hyatt, Marriott, PNC Bank, Comcast, Macy’s, Southwest Airlines, The Knot, and CBS were talking about pride in 2012-2013.
This month at Sentieo’s New York office, our Head of Research, Nick Mazing, hosted a two-hour “Ask Us Anything” live webinar. Nick answered questions from Sentieo’s current and prospective users, covering the many functionalities of the platform. In this post, we will share a few FAQ’s about Sentieo’s Table Explorer and Plotter features.
Table Explorer FAQs
How do I save time when handling 6, 9, and 12-month cumulative reported numbers (such as Cash Flow Statements) using Table Explorer’s “Quarterize” function?
Unsurprisingly, this was the first question that came in. Table Explorer is a very popular feature that we released earlier this year. It identifies and chains similar tables for fast collection of “as reported” financials in an easily auditable and workable format. One of the challenges with using reported financials is adjusting cumulative cash flow line items; it is not hard, but it takes time. Here, we show how to do this in literally two clicks. Add a Q4 column and Quarterize.
How do I analyze reported KPIs?
Table Explorer will chain all “similar” tables in the filings going back years. So as long as the company has been reporting KPIs in a somewhat consistent format, Sentieo Table Explorer will chain them going back 10+ years. You can then export the tables to Plotter and add other data series (ie. rolling valuation, or alternative data such as search trends, or macro indicators).
How do I explore an idea from macro to micro?
To answer this question, we started with a transcript search searching for wage inflation, identified the restaurant industry as an industry that talks a lot about wage inflation, showed the search statistics in Plotter, overlaid with a macro indicator. We then used the search statistics to identify The Cheesecake Factory as a company that talks about the topic a lot. So we located the labor expense line with one query that saved us time digging through filings and tables. Once there, we used Sentieo’s Table Explorer to chain that table going back for a few years. We quickly visualized the trends in labor expenses and in operating income, as a percentage of revenue, to get an idea of what is going on.
How do I use Table Explorer to chain and visualize line items and KPIs from reported financials?
We dig into Royal Caribbean (RCL) and visualize many reported expenses to get insights on what has been going on with the business. We utilize our easy switch to Common Size and YoY% growth for all line items to see the full picture.
Can you show financials in Plotter?
Sentieo’s Plotter is our versatile data visualization tool. In addition to choosing from a wide menu of available data sets, users can also do a variety of calculations using these data sets. In this example, we pulled the past and estimated quarterly revenues for Home Depot and Lowe’s, and ran a correlation between these two data sets in three clicks.
Does Plotter integrate FRED macro data?
Our clients welcomed the recently expanded FRED macro data integration in Sentieo Plotter. We went over a quick example how to combine macro data with price data for a sector ETF.
How do I chart multiple datasets in Plotter?
Sentieo’s Plotter offers many data sets, from financials to macro series, to alternative data, to your own uploaded data sets. We show how to bring up KPIs in the tool for three casual dining stocks, and how to calculate a “mini-index” KPI average.
The most important aspect of a financial research process is how quickly and confidentially an analyst can get to an investment thesis, market analysis, or corporate strategy recommendation that comes out of the process. Unfortunately, legacy financial document search vendors are failing to recognize this. Instead, they simply push the idea that they are improving how you search for documents.
In this post, we’ll outline 3 key questions to ask your legacy document search vendor before you commit to another year of using their platform. To find out the other 2, download the full visual whitepaper.
1. Why do they make it so hard to get to actionable data?
The data that analysts need to build an investment model or competitor/market analysis model is typically buried in a variety of places across filings, transcripts, and presentations. Data such as product-specific growth data, wage inflation estimates, or C-suite compensation packages are all in separate tables or in text format within these documents. With legacy search vendors this means your high-value analysts spend hours copying and pasting or doing data entry work, instead of building their models.
With Sentieo we make it easy to get to actionable data:
Table Explorer delivers the ability to extract data points from all of the documents searched, but also helps analysts build multi-year tracking models by bringing together data from historical documents. This dramatically reduces the time spent on manual, low-value work.
Analysts can visualize trends and plot their new dataset with a couple of clicks, further cutting the time from search to insights.
2. Are they really delivering on AI that helps your analysts get the information they need?
Financial research platforms and search tool vendors have made a significant number of claims to be using AI to drive innovation in their platforms. However, as you make a long term commitment to a contract, it is worth asking whether they have delivered on these claims:
How many engineers are working on features that actually reduce the time spent by your analysts finding what they need? This is a proxy for understanding whether they are delivering on their AI promise or just “AI washing” their product.
What specific features have come online in the past year, and what is planned for the next year that uses AI to improve the productivity of your team?
Sentieo has made use of AI to directly solve financial research problems:
Over 75 engineers work on our platform, the majority of whom are working on features to support the analyst research process. One legacy vendor, Alphasense, has just 30 engineers (Source: LinkedIn May 21st 2019)
In just the past 6 months, Sentieo has delivered:
Table Explorer to automate the process of extracting and chaining data together directly from filing documents
NLP-driven synonym system, with thousands of synonym groups and the ability for users to request more
Contextual search, allowing users to search content in specific sections of filings or on attributes. For example: whether a CEO mentions a specific topic in a transcript
Search autocomplete, search within a search, and ever more Boolean operators.
3. What is more important: the number of documents a search returns, or the specific data or insights an analyst is looking for?
More search results do not mean more alpha: better search results mean more alpha.
Many search vendors will cite the number of documents that they will return from the platform as a competitive comparison, without acknowledging that they are comparing standard settings instead of platform capabilities.
However, what is most important is how quickly an analyst can get to the specific information they are looking for. Traditional search providers will tell you how many times a search term appears and how that has changed over time, or provide filters that are more suited to an online shopping experience, but will not make it easy to get the actual data or document you are interested in.
Sentieo accelerates the process of getting to relevance with:
Search analytics that allow analysts to rapidly hone in on the most relevant set of documents or data based on attributes like ticker, industry sector, geographic region, or market capitalization. This dramatically reduces the time they spend searching through documents, and allows them to focus on building their investment or strategy thesis.
With a high-profile IPO like Chewy coming up, an analyst faces two challenges: since the company is a unique, fast-growing asset, the analyst has to triangulate possible valuation ranges for the offering as there are no direct comparable. Contrast this, for example, to a quick-serve restaurant chain seeking an IPO: there are tens of comparables to choose from. The second challenge is that the pre-IPO valuation work has to be done quickly so that the team can decide whether to pursue the idea further: the opportunity costs on time spent in dead ends in investment management can be extraordinarily large. Using Sentieo, we were able to pull trading data on active and delisted tickers, as well as transaction multiples from fairness opinions, in minutes, ready to be compared against the proposed IPO price range, and to be presented to the team.
After Chewy’s first IPO filing in late April (latest S-1/A here), we are looking at what we can learn about pet industry valuations — both from trading data and from what is buried deep in SEC filings — in the form of fairness opinions filed around M&A activity in the sector.
Chewy (CHWY) does not have direct US comparables. There are no other dominant online pet food or pet medicine specialists. There used to be two publicly traded “pure play” pet food companies: Blue Buffalo (old ticker: BUFF) and FreshPet (FRPT). FRPT still trades, while BUFF was taken over by General Mills.
FRPT pioneered fresh, refrigerated pet food that is delivered to stores and sold in branded coolers, in contrast to Chewy’s online model of shelf-stable food combined with a large subscription business. After a rocky post-IPO start, FRPT is in the middle of a successful turnaround, and the company is currently trading at around 6.5x EV/NTM Sales and at around 48x EV/NTM EBITDA. Interactive chart
BUFF, on the other hand, offers traditional, shelf-stable food. BUFF was acquired by General Mills last year, and was trading at 5.7x EV/NTM Sales and 23.1x EV/NTM EBITDA at takeover time. Interactive chart
Since the General Mills-Blue Buffalo transaction was likely cited in fairness opinions, we searched all Consumer Staples company filings for tables that contain “Blue Buffalo.” We found one right away, literally the first result: Pinnacle Foods’ filings around its takeout by ConAgra Brands (CAG) (Full document here). We see that there are three recent pet food transactions that are of relevance to our work on CHWY: BUFF taken out at 25.5x EV/LTM EBITDA, Ainsworth Pet Nutrition at 20.0x, and Big Heart Pet Brands at 15.1x.
Going beyond food, we also took a look at the pet health players. There are three segments that we looked at: pet/animal pharmaceuticals, pet hospitals, and pet health insurance. There are US publicly traded companies in the pharmaceutical and the insurance space.
On the pharma side, we took a look at Idexx Laboratories (IDXX), Zoetis (ZTS), Elanco Animal Health (ELAN), and Phibro Animal Health (PAHC). We can see that the median animal pharma name is trading at 20.4x NTM EV/EBITDA.
There is one US/Canadian pet health insurer trading publicly: Trupanion (TRUP). While pet insurance belongs in the property insurance category, TRUP has been trading more in line with software names, and less so with P&C insurers, which has resulted in a lot of short-seller activity, including published reports and an increased short position as a percent of float. Interactive chart
On the veterinary side, we searched through corporate filings for tables containing VCA (old ticker “WOOF”), a marquee $10 bn transaction. We found a detailed fairness opinion in the filings of Abaxis (ABAX), acquired by Zoetis (ZTS, mentioned above). We see that precedent transactions in the veterinary distribution and the veterinary hospital sectors have been done at 14.5x-15.0x LTM EBITDA multiples. See full filing.
Finally, we also know that Chewy is currently owned by physical pet retailer PetSmart (old ticker “PETM”). PetSmart itself was public, and was taken private in early 2015. We see that the comparables on file from that time look at physical retailer comparables to arrive at a median 9.7x LTM EBITDA. Full filing here.
If you are interested in how Sentieo’s integrated research platform can make you and your team more productive, please get in touch with us.
Last week at Sentieo’s New York office, our Head of Research, Nick Mazing, hosted a two-hour “Ask Us Anything” live webinar.
Nick answered questions from Sentieo’s current and prospective users, covering the many functionalities of the platform. In this blog post, we will share a few Q&As about Sentieo’s Document Search feature.
How can you start with a macro topic (“China”) and quickly drill down to specifics (“Consumer Discretionary companies moving production to Vietnam”)?
Using Sentieo’s industry-leading document search, we showed how to run searches for specific documents, and how to be more efficient combining synonyms with proximity searches. We also showed the usefulness of Sentieo’s search analytics screen, where users can filter search results by industry or geography.
How do I find information about a specific irregular event (i.e., the government shutdown in 2013) in broker research reports?
We showed how to search for research reports specifically within a certain timeframe. We also looked at which industry had the most coverage around the event based on the top 10 companies that were listed in our search analytics summary.
How do I increase my productivity by saving my searches?
With saved searches, you can receive alerts when new search results hit. With Sentieo, you can save any type of search and choose exactly how you want to be notified. Nick reviewed one of the saved searches that he uses to stay on top of a topic he finds interesting.
How do I find valuable information hidden in the footnotes of tables in corporate filings?
We showed how to use the “IN:table+footnote” search functionality to uncover how a declining sales trend was actually worse due to the extra week in that fiscal year.
How about non-US filers?
Sentieo’s powerful Document Search works just as well with non-US filers. We took a quick look at the documents we have for LVMH, the French fashion conglomerate, and showed how our search functions work there, including our popular saved search alerts.
How do I create a watchlist to track my favorite tickers?
Building custom watchlists in Sentieo is one of the first steps that our users complete. We showed several ways to build watchlists, including a watchlist from Document Search results, for example, “all companies mentioning a certain term in the Risk Factors section of their 10-K’s.” The extensive level of customization for the alerts/notifications related to each watchlist can help you save hours of time.
How do I get free food? Free admission to events?
We used Sentieo’s Document Search to find free food! Our attendees now know about the free donuts coming up for National Donut Day on Friday, June 7th, 2019, at Dunkin’ Donuts, as well as many other current offers. These searches aren’t just for fun, though. We show you how to track retailer promotional intensity over the years using this type of search.
Sentieo is a research platform built by former hedge fund analysts to speed up the research workflow.
Nothing on this website should be considered investment advice. We do not make recommendations (long or short) in any securities. We do not express opinions as to whether any company's accounting practices are in violation of SEC, GAAP, IFRS or other rules/regulations.
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