Save More Time with Sentieo’s New Category Search

About Sentieo Document Search

Clients love Sentieo’s industry-leading Document Search for its depth, precision, and workflow integration. Users save hours with the ability to search across all companies, watchlists, individual entities, or by excluding tickers from searches.

Easy document specification with our IN: function covers the most common document types. (For example, search just 10-Ks or just transcripts). Our in-section search lets you search within a specific document section (in:10k MD&A or in:transcript), or by speaker (statements by CFO, by analysts, etc). You can also search PPT presentations, or get very granular document-level controls like “8-K Credit Agreements.” Filter down your search by industry classifications, geographies, market caps, and timeframes. 

Add another layer with our large library of Boolean operators, like “OR” for parallel searches and “BEFORE/NEAR/FAR” for proximity and order control. In the background, we have three levels of synonym control for the thousands of synonym/acronym groups. For example, sales and revenue will “pick up” each other, so you don’t need to know the exact term that the company uses in order to find what you’re looking for.

Machine learning-based Document Search will dynamically suggest synonyms based on your specific query, in addition to autofilling text in your query based on your document set. And if you do not have a query, Sentieo will suggest trending terms based on the searched ticker.

We have extensive Document Search statistics that let you see real trends, and you can drill down quickly with one or two clicks. Imagine seeing all companies that mention China within 25 words of Vietnam, clicking on Consumer Discretionary, and then seeing the top companies that mention your query most frequently. You can also do a “search within a search.” 

On the workflow side, you can save all positive hits as a watchlist for future work (for example, all Industrial companies with a market cap over $1 bn that mention Mexico in their 19-K Risk Factors). You can even automate your workflow with saved searches. All of our searches can be saved and turned into email and/or desktop alerts at the frequencies of your choice.

Highlight and label text as you read, and these annotations will be all stored and automatically ticker-tagged in your Notebook. You can even call out your team members with comments: “are you ready to take a look at this note on [x]?” Take screenshots from presentations and use the web clipper to bookmark webpages. All of your internal documents including uploads, emails, notes, and built-out theses are searchable, too. 

So What’s This New Category Search?

We’ve had in-table search functionality for years, enabling users to find numbers that are broken out in tables. For example, find mentions of EMEA Revenue only in tables, rather than everywhere in the doc. In our latest release, we’ve taken locating numbers to the next level. 

With the newly-released v3.9, users can search for specific types of numbers based on our very extensive categorization system. A Category is a set of keywords which are not synonyms but have similar meanings or constructs.

Category search allows you to search for an entire class using one search term. You can now look specifically for categorized numbers, such as currency, percentages, duration, length, area, temperature, volume, and a lot more. So now finding the “sales growth percentage” or “production volumes” takes a second. 

Moving forward, we will show a few examples of what is now possible in Sentieo’s Document Search.

In this query below, we are searching transcripts for revenue growth within 10 words of a percentage. You can also see how “revenue” picked up “sales” as a part of the synonym search. 

Swapping out the percentage from the query above with the currency categorization, we can look for currency amounts, like dollars or euros. 

Staying on top of KPIs is also easy with our new numbers categories. You can search for specific information like oil/gas production volumes or leasable area in real estate. 

You can search 8-K Credit Agreements for leverage ratios using the Ratio classification:

Need to call up a company? Search all filings (in:CF) for the headquarter phone number listed on the front page. 

The numbers we classified do not even need to be numeric. As a part of this update, we have fractions, time periods and more. 

These are just a few of our new Document Search use cases. Sentieo offers many more categories that help you find exactly what you need, faster.

To find out more about our new Category Search, or any part of Sentieo’s research workflow solution, please get in touch.

YUM! Brands’ Q3 Transcript Smart Summary™ — Extracting the Essentials From a Call With Many Moving Parts

This week, we continue to use Sentieo’s transcript Smart Summary™ to highlight selected reporting companies. We apply machine learning and natural language processing to create a more efficient and a more repeatable process. On Tuesday, we highlighted Beyond Meat (Nasdaq:BYND), and on Wednesday, we looked at Merck. (While Keytruda continues to power through, we picked up pricing pressure warnings for 2020.)

In today’s highlight, we are looking YUM! Brands (NYSE:YUM), the parent of global restaurant chains KFC, Taco Bell, and Pizza Hut. The company reports many metrics about its business: domestic (US) and international unit growth, comparable store (“like for like”) sales growth, and “systemwide” sales growth (reflective of the health of the franchisee system). 

Additionally, the company has a minority investment in order aggregator/delivery company Grubhub, which further complicates the financial reporting, as YUM reports mark-to-market adjustments on top of the operating earnings. 

In this post, we will share our highlights from the Smart Summary™ PDF that we received in our email inbox a few minutes after the original transcript came through. (The Sentieo platform is much larger and more interactive that what you see in this post, so we encourage you to check it out.)

With Smart Summary™, the transcripts are parsed by a ML tool which classifies and scores sentences based on broad classifications, such as Guidance or Legal. (See below). Smart Summary™ runs a layer of NLP processing on top of that, classifying sentiment (positive/negative/neutral), looking for “deflection” statements, and surfacing keywords. 

Looking at the YUM Q3 call Guidance section, we immediately spot the big delta between the GAAP and non-GAAP earnings. We also see the red (negative) outlook for Pizza Hut US, a unit that has been weak for a while. 

As we mentioned earlier, the transcript (as well as the press release) are very KPI-heavy. The convenient sentence extraction and classification helps you get the full picture faster.

We also note a number of negative sentiment questions from the analysts on the call, with the most “negative” analyst question being about system-wide margin pressures. 

The keyword surfacing logically picked up Same Store Sales, Net New Units, and System Sales.  We are highlighting just one of these here; unit growth keeps up, so the sentiment overlay is green. 

Watch our short video walk-through:

To find out more about the Smart Summary™ and all of Sentieo’s other AI-powered features, please get in touch

 

How to Plot Metrics Across An Entire Company Watchlist

With v3.9 of Sentieo, you can now run comparable analysis or obtain sector-level insights (e.g. Sector Gross Margins, a stock’s multiple relative to the sector) by entering a watchlist in any ticker input box in Plotter. 

Using Watchlists In Sentieo Plotter

You can now plot metrics across an entire watchlist, allowing you to (1) run comparable analysis across a peer group or (2) generate aggregate metrics for a sector. When you arrive at the ticker input box, simply start typing in the name of a watchlist to select it:

watchlist tokenization

Peer Group Comparisons

Use the watchlist function on Stock Price to find outperformers in a peer group:

 

Aggregate Metrics Across a Watchlist

Use the watchlist function on P/E and combine it with Weighted Line to generate a sector-level P/E:

 

The watchlist function is among the most powerful tools in Plotter. We also recommend trying out the following use cases:

  • Comparing recent changes in EPS Estimates
  • Generating sector KPI’s
  • Relative P/E vs. a peer group

 

Other Improvements We Made

 

Saved Series

We made it easier to tag series to tickers and topics, and have also made them easier to find. Try using this with Table Explorer or CSV Uploads to manage your own KPIs.

Correlations

We simplified the correlation section so that you can more easily determine what key factors are driving stock prices and valuations.

Templates

We simplified the templates section and added them to the “Add Series” search results to make them easier to use.

 

Join our upcoming webinar to learn more about our financial data updates in Sentieo v3.9!

6 Questions To Uncover Competitive Intelligence Insights: A Sentieo Whitepaper


Why We Wrote This Guide

The amount of data available to researchers today can be overwhelming. In fact, competitive intelligence professionals are often drowning in data.

The tens (or even hundreds) of companies that they track each produce hundreds of data points, documents, and news — any of which could inform a change in corporate strategy or competitive response.

CI professionals can easily miss valuable information as they spend hours searching for relevant and actionable nuggets, or even just a more general understanding of market dynamics.

So how should analysts surface through this data deluge to find missing insights?

We came up with 6 key questions that you should be asking yourself (and your team) as you track your peers’ activities. The answers to these questions will help define your CI strategy.

 

 

 

 

 

 

 

Why It Matters

Staying on top of your competitors’ news, events, and more can help you plan and time your own strategies — whether those be announcements, launches, or promotional activities.

Following a competitor’s activities will help you understand which media outlets they have partnered with, and in turn, how they are positioning their brand and/or product(s) within those publications.

Knowing where competitors hold events can also give insight ?into their target demographics. You’ll also be able to shed light ?on the types of activities where they invest most of their marketing spend.

How It Works

Some tools allow you to set up instantaneous email alerts for specific companies, document types, and keywords. You may also want to create themed watchlists to look at multiple competitors at once.

Why It Matters

How well are your competitors doing, by the numbers? The documents that they’ve filed with the SEC are a gold mine ?of information.

To get insight into a competitor’s next move, search the company’s annual 10-K filing, specifically within the “Outlook” or “Use of Proceeds” sections, which show if the company has used capital to expand or grow, to repay debt, or to support general operations. Can you see specific plans for this capital?

How It Works

Use a tool that allows you to search across all document types, and even within specific document sections.

Get alerted when new competitor documents are released, whether they be a 10-Q covering the company’s quarterly performance, an 8-K for material events (acquisitions, changes
in corporate management, or updated fiscal year end-date), ?or an S-1 for an IPO.

Why It Matters

Annual reports (among many other document types) can also give good insight into product research and development (R&D), which can include everything from initial product design to compliance testing, to new market deployment.

Track exactly how much your competitors are spending on innovation.

How It Works

Get alerted on specific company and keyword searches like “NVDA > R&D > automation,” so you’re always in the know about your competitor’s product roadmap.

 

Want to know the other 3 questions you should be asking? Download the full whitepaper.

You can also check out the webinar we ran last week around the same topic! Watch Webinar.

Is Pumpkin Spice Over?

About a year ago, we wrote a popular blog post on pumpkin spice season. Based on Twitter data and search trends, we could see that pumpkin spice season had started earlier than ever, and was bigger than ever. 

Today, we declare that pumpkin spice is over, using the same data sets. 

Looking at the stacked search trends below, we can see that pumpkin spice was off to an ever-earlier and stronger season in August, running well above prior years (see light blue line). However, the trend peaked below last year’s peak (momentum investors know this sign), and has been tracking below recent years since then. 

We tracked down a couple of notable pumpkin spice season “kick-off” events this year.

Convenience store chain 7-11 announced that their pumpkin spice lattes were back on August 14, 2019.

Dunkin’ Brands (parent of ice cream chain Baskin Robbins) did not highlight the flavor until August 26, 2019.

Things really picked up in early September with releases from Hostess Brands (Nasdaq: TWNK), Restaurant Brands’ Tim Horton’s division (NYSE: QSR), Krispy Kreme, and others.  

Perhaps the biggest success story this pumpkin spice season came from Hormel (NYSE: HRL), which released a limited edition version of their legendary Spam: “[the] limited edition flavor features a blend of seasonal spices including cinnamon, clove, allspice and nutmeg to give it a subtle sweetness.” The September 23rd release was followed by another press release a few hours later mentioning that the $8.98/2-pack item was sold out from both Walmart’s e-commerce site and spam.com in under seven hours. 

Photo source: Hormel PR

For the final word on pumpkin spice, we used our Twitter data integration to see the trends around Starbucks (Nasdaq: SBUX), and their high-profile pumpkin spice beverages. Based on Twitter mentions, we note that, very much like the search trends, YoY mentions are down, and with a shorter “tail” versus prior years. Pumpkin spice just isn’t that big of a deal any more. (Interactive chart link)

To find out how Sentieo’s full workflow solution can help you harness multiple data sets, track promotional intensity, create visualizations, and more, please get in touch

 

Our 8 Favorite Sentieo Use Case Videos

Have you visited our YouTube channel? We have been uploading short videos focused on single functions of our versatile platform. Below, we will highlight a few of these. 

Seasonality of stock price returns

Everyone knows that certain businesses, like retailers and cruise lines, have seasonal characteristics. But did you know that individual stock returns also display seasonality, in some cases? In this example, we look at the seasonality of returns of a cruise line operator (by month and by quarter) in order to inform possible decisions around position management, such as covered call selling. 

 

Interactive consensus-based model

The ability to quickly pre-qualify investment ideas is of paramount importance in active management. To assist with this, we have built an online interactive income statement and valuation model where users can plug in their own assumptions (about sales, margins, and valuation), save scenarios, and compare to the consensus estimates. 

 

Twitter data integration to assess buzz around movie titles

The ability to benchmark discrete events (such as movie releases, game releases, or calls for boycott) is easy to do with our Twitter data integration. In this example, we plot the Top 5 movies year-to-date (all from Disney) to see the real winner. 

 

Creating a custom sub-industry index and visualizing valuation against the broader market

Broad industry groups, like Consumer Staples, might hide valuation dynamics within that group. So we create our own “Household and Personal Care” group, calculate its market-cap weighted valuation, and compare it to the S&P 500 in just a few clicks, using our visualization tool Plotter. 

 

Adding screenshots to your write-ups 

Company investor presentations offer a wealth of information in their powerpoint decks. Sentieo’s screen capture tool enables fast and efficient screenshots (with annotations, ticker tagging, labeling, teammate tagging, and more). 

 

Combining alternative data with financial data

We look at visualizing search trends versus revenue for a leading online real estate brokerage. It took us a few simple clicks to see both seasonality and YoY direction for the topline growth of the company.

 

Table data extraction from PDFs and PowerPoint decks

A lot of data lives in ppt/pdf deck tables. Sentieo’s “Export Table” button enables fast, easy, and error-free export of data from pdf/ppt tables to Excel. (We also have this functionality for filings; not shown here). 

 

Scatterplot visualizations and trendlines of comparable company metrics

Comparable company tables are widely used for benchmarking of business and valuation metrics, such as sales growth and EV/EBITDA multiples. But your work does not have to stop there. Using our Comps scatter plot visualization, you can answer questions in seconds such as, “do companies in this industry with faster 3-year EBITDA growth trade at a higher EV/EBITDA multiple, or is it EBITDA margin that is more predictive?” Simply add a trendline in one click.

 

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Alternative Data + “Back to School Season”: A Retrospective

About two weeks ago, we posted an extensive blog post going through the various alternative data indicators for retailers with “Back to School” season exposure. We specifically looked at where our alternative data composite is vs. the most optimal (or predictive) metric. In some cases, the index works better for overall revenue growth and, in other cases, the index works better for KPIs (comparable store sales, in the case of retailers, but we do have others, like Bookings for tech companies). To find out more about how we use alternative data across our platform, including screening, visualizations, and alerts, please watch our recorded webinar

The retailers on our list have by now reported their results, and some have provided “color” on the current quarter (August sales trends). In this post, we will review how we did. 

We wrote “We see the potential for strong overall YoY revenue growth in FIVE, PVH, DBI, AEO, CAL, ZUMZ, and VRA. We see the best potential for comparable store sales growth for BBY, BURL, SCVL, and DLTR.”

For the overall revenue growth names:

FIVE: Five Below saw an extremely robust 20% revenue growth (comps were +1.4%). This is an exceedingly rare double-digit growth number for a physical retailers. (FIVE was also one of our H1 long ideas) (Interactive chart link)

 

PVH: PVH total revenue grew 3% on a constant-currency basis, above Street estimates, though the company did bring down its H2 revenue guidance. (interactive chart link

 

DBI: Designer Brands (formerly known as DSW or Designer Shoe Warehouse) total revenue growth of +8% disappointed vs. consensus. (interactive chart link)

 

AEO: American Eagle (parent of the eponymous brand and aerie) saw total revenue growing at 7.9% for the quarter (vs. consensus of 4.2%), with very strong comps at aerie. The stock did sell-off only to fully recover the very next day. (interactive chart link

 

CAL: Caleres (parent of brands such as Famous Footwear and Allen Edmunds) total revenues increased 6.5%, also above consensus. (interactive chart link)

 

ZUMZ: Zumiez reported really strong numbers, and guided up for the year. Revenue increased 4.3% while the August comp was up 7.1%. The stock is trading up about 8% on the day after the earnings. (interactive chart link)

 

VRA: Vera Bradley total revenue increased 5.4% (at the high end of their guidance). However, there were a lot of puts and takes. There was a partial recognition of an acquisition-related revenue in the quarter, combined with reduced clearance sales. (interactive chart link)

 

We are able to summarize these results very quickly by using our industry-leading document search: we simply brought up all 8-Ks and all press releases for these tickers at once. 

 

For the strong comparable stores growth names:

BBY: Best Buy was perhaps our biggest “miss”. Comps of only +1.6% domestically and well below Street estimates. Additionally, the company narrowed its full-year comparable store sales growth forecast unfavorably. (interactive chart link)

 

BURL: Burlington Stores, on the other hand, was our biggest “win.” Comps there exceeded the company’s own guidance and accelerated QoQ (+3.8% vs. +0.1% in prior quarter). The company also raised its comparable store sales growth guidance. (interactive chart link)

 

SCVL: Shoe Carnival beat the Street comparable store sales growth estimates very slightly (+1.4% vs 1.3%). More interestingly, the company said that its August SSS are coming in strong, at +3.5%. (interactive chart link)

 

DLTR: Dollar Tree (also parent of Family Dollar) reported a 2.4% growth in their comps, well above the 1.9% consensus, mostly driven by Family Dollar. The company re-iterated its low single digit guidance. (interactive chart link)

 

How did we do overall? 

An equal-weighted portfolio consisting of these 11 stocks returned over 13% in the last month, versus roughly flat returns for the broader retail ETF XRT. (interactive chart link)

 

To find out more about the alternative data integrations in our platform, please get in touch with us

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Which Retailers Are Winning This “Back to School” Season? Combining Document Search and Alternative Data to Find Out

Our first step to analyzing how retailers are doing during this “Back to School” season is to use our industry-leading Document Search to find out which retailers are talking about “Back to School” in the first place. If keyword mentions appear in filings or in transcripts, then we know that we should be taking a closer look at that company. 

We start in our Document Search without tickers (since we want keep the search broad to firstly see who mentions “back to school”). We combine our in:CF (in-filings) and in:TR (in-transcript) search for exact match “back to school.” We can also see our machine learning-suggested synonyms as well, though here we are not going to use them. 

We add two filters: one is an industry filter (Consumer Discretionary and Consumer Staples), and the other is a geographic filter (US). 

In our next step, we create our “Back to School” retailers watchlist by simply saving all companies that have positive hits in our search. We started with a fairly broad theme that is now confined to a watchlist with specific companies on it. 

In our next step, we name our Back to School watchlist, configuring any alerts that we would like to receive, and saving the watchlist with alerts preferences. 

In our next step, we brought in our just-created Back to School list in our customizable Dashboard, where we are looking at a few things related to our composite alternative data index. (Watch this recorded webinar to find out how our alternative data index takes several sets, calendarizes them properly to the reporting periods, and then compares the “index” to the consensus estimates).

First, we see which is the optimal metric against which the index works best, based on past performance. Since these are retailers, we can see that comparable store sales, a standard KPI for the industry, works better than revenue for some. Second, we see the R-squared that our index has against that optimal metrics: a higher number here indicates a higher predictability. 

We dig deeper by checking the individual dataset metrics on a monthly basis for YoY changes (in this case, we are showing monthly YoY percentage change in search trends and page views) along with the earnings dates.

We see that there 18 retailers reporting in the next few days (the week of August 26, 2019, and the week of September 02, 2019). They are: CAL, BNED, TIF, EXPR, FIVE, TLYS, SCVL, AEO, GCO, BBY, BURL, DBI, ANF, DLTR, PVH, ZUMZ, FRAN, and VRA. Since these retailers’ fiscal year typically ends at the end of January (vs. the standard December for the majority of publicly traded companies), the Q2 numbers are for the quarter ending in July. So the “back to school” period is somewhat split. But investors do expect QTD color for Q3, as well as guidance updates. Since the Sentieo team has decades of buyside experience (all product managers are former buyside and/or sellside analysts), we know that we can eliminate TIF, BNED, and FRAN from the list. TIF, a high-end jewelry retailer, is not really driven by BTS, while BNED and FRAN are “special situations” currently. 

With our slimmed-down, “actionable” list of 15 stocks, we took a look at what our composite index looks like YoY (used for the more predictive metric, revenue or comparable store sales growth).  

We see the potential for strong overall YoY revenue growth in FIVE, PVH, DBI, AEO, CAL, ZUMZ, and VRA. We see the best potential for comparable store sales growth for BBY, BURL, SCVL, and DLTR. 

Taking this a step further, we can look at past performance by adding the R-squareds to our list (higher = more predictive). Our confidence is highest in the YoY revenue growth performance from FIVE and AEO, and for comps, in BURL. 

To find out more on how you can compare the alternative data composites against the analyst consensus numbers, please see our white paper and webinar from a few weeks ago, or request a trial with a product specialist

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Just How Unusual Are the Related Party Transactions Disclosed in The We Company’s S-1 Filing?

To find out, the Sentieo team took a look at other recent high profile IPOs to compare against what we saw in The We Company’s expansive 800+ page S-1 filing. The document also contains 198 separate tables. Inside the filing, the Company (proposed ticker: WE) spends ten pages on discussing various transactions with “related parties.” Contrary to widespread understanding, related parties are not limited to just insiders and large owners. In this case, the underwriters of the equity IPO are also considered related parties, since there are multiple non-IPO business transactions that have occurred prior to the filing. If you are interested in finding out more about the regulations, there are extensive SEC publications regarding these disclosures (for example, there is a 436-page PDF published by the Commission on the topic).

Part of what we see is attributed to the fact that as a real estate company, WE uses bank financing. Another aspect is that as a remarkably fast growing company in the physical world, the company has needed trusted JV partners in different geographies.

WE has disclosed various transactions with four “levels” of insiders: the founder, Adam Neumann and his family, its executives, its pre-IPO investors, and its banks. In fact, “related party” or “related parties” is mentioned 110 times in the document.

In the first group, WE has business relationships with the founder across several dimensions: it leases a small number of buildings from him, there are unusual supervoting stock, succession, charitable giving, real estate, and compensation arrangements. There are several family members employed or doing business with the firm. The founder was paid almost $6 million for the renaming of the company (since he personally had a company called We Holdings), and he has borrowed several times from the company, and separately from its offering underwriters.

WE also disclosed related party transactions with several executives, including loans and bonuses that were used to repay these loans.

SoftBank and Hony are investors in WE but are also partners for WE in its various Asian joint ventures.

The IPO underwriters (a collection of bulge bracket banks) also have several “related party” disclosures: ownership of preferred stock, loans to the company, as well as personal loans to the founder: almost $500 million secured either by WE stock or by personal properties.

So how unusual is this level of related party transactions in recent high profile IPOs? We took at look at Slack, Uber, Lyft, Chewy, Pinterest, Levi Strauss, and Zoom Video to get an idea. 

In Slack’s filing, we see a few mentions. There have been several rounds of convertible preferred financings and executives selling shares. There have been transactions with Square (since the Square CFO is on the Board of Slack, she’s a related party), some content partnerships with the wife of the CTO and the former domestic partner of the CEO, and the son of a BOD member works at the company. The VC investors are also partners with Slack in an “in house” VC fund. (We dug deep into Slack’s business model back in May).

Uber, like Slack, has had several rounds of convertible preferred financing. Its executives, like Slack’s, have had pre-IPO liquidity events with company involvement. It has a co-investment with Softbank (and Toyota) in an AV venture. Uber has a relationship with Google Maps, Google’s ad business and Google Pay, all owned by Alphabet, an investor. The daughter of an executive is employed at the company. There are a few other bits and pieces, like their relationship with DiDi.

Lyft’s related party transactions are almost a carbon copy of these at Uber: investors with convertible preferreds, and business relationships with several related parties, such as Google, General Motors and Rakuten. (Our five big AV takeaways from Uber’s and Lyft’s filings are written up here).

Chewy, the fast-growing online pet product retailer, was mostly owned by pet product physical retailer PetSmart. Its related parties disclosure is relatively plain, and almost entirely focused on its operational relationship with PetSmart: purchasing, product, tax and governance matters, not unusual in the case of subsidiary IPOs. (Our read of Chewy’s full IPO filing is here).

Pinterest, similar to the tech companies described above, has disclosures around its relationships with its VC investors, and there is one family member of an executive employed in a non-executive function. (We wrote a very long post analyzing Pinterest after the IPO).

Beyond Meat disclosed a consulting agreement with its Chairman and an advisory contract with a Board of Directors member. There was a one-time consulting agreement with another BOD member (the former CEO of McDonald’s), and loans to BOD members that were repaid in 2018. (We recently dug around Beyond Meat’s secondary offering documents).

Levi Strauss & Co. has a fairly straight-forward 2-page disclosure: the descendents of the founder have certain rights as shareholders, some executives have sold stock back to the company, and there is some overlap between the executive team of the company and that of the Levi Strauss Foundation, to which the company also donates. There is one former BOD relative employed at the company.

Similar to LEVI, Zoom has a short disclosure doc: relationships with the VC investors, its founder had sold some stock to a fund and had a loan in 2015-2016, and a BOD member is from Veeva, which is also a small client.

It is fair to say that WE’s relationships with its related parties go well above and beyond what we have seen in the other recent high profile initial public offerings. The most common are: governance arrangements with pre-IPO VC investors, followed by ordinary course of business relationships with investors such as Google (it is hard for a consumer-facing business to avoid working with Alphabet properties), and finally, cases of founders and executives getting some liquidity for their equity stakes over the years.

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What We Learned From Redlining Beyond Meat’s (Nasdaq: BYND) Secondary Offering Documents

Meat alternative marketer and recent IPO Beyond Meat (Nasdaq: BYND) reported quarterly earnings a few days ago, and, concurrently, the company surprised the market with a secondary offering well ahead of the indicated 180-day IPO period (a rare occurrence in the last 10 years). The stock’s performance since its IPO has been stunning: the IPO priced at $25 on May 01, 2019, and the stock went up over 8 times leading up to the earnings announcement.

The secondary offering priced at $160, well below the closing price of $222.13, the last price before the Q2 results and secondary announcement on July 29, 2019.

The offering was mostly pre-IPO investors and insiders selling (3,000,000 shares), along with the company selling 250,000 shares itself to fund its operations:

The secondary came just as BYND’s market capitalization surpassed that of a number of consumer staples companies in the S&P 500:

(interactive chart link)

We were curious to read the secondary offering document using redlining, to see what has changed since the IPO documents. Keep in mind that there will be changes solely due to the fact that BYND is now publicly traded, versus the pre-IPO language. We redlined the secondary S-1/A filed on July 31, 2019, against the final IPO S-1/A from April 29, 2019.

 

Here are our notes:

1) Stunning distribution and sales growth, along with successful partnerships and major increases in media impressions:

 

2) Expanding distribution in Europe and growing product lines:

 

 

3) Since the company is now publicly traded, there is a new warning around stock price volatility and potential losses:

 

4) Certain US states have introduced legislature regarding what products can be called “meat.” We saw this reflected in the added “state regulators” to this risk factor:

 

5) The rapid distribution growth noted above has resulted in some shifts in the major distribution partners:

 

6) There are no written contracts with the US co-manufacturers (note the EU deal mentioned above):

 

7) Big drop in local unemployment in the area around their Columbia, MO, facility warranted an update in this risk factor:

 

8) Entirely new risk factors: the growth will not last forever, and there might be serious fluctuations in the results:

 

9) Negative development for BYND in a lawsuit brought against them by a former co-manufacturer:

 

 

10) A relatively new development in IPO filings is the disclosure of use of Professional Employer Organizations for a number of HR/payroll tasks:

 

11) Surprisingly, the number of pending patent applications have dropped:

 

12) Added language around compliance and internal controls:

 

 

13) As we saw in the price action after the secondary offering was announced, the share price can fall. There is added language around secondary offerings’ effects:

 

14) Since the stock is now publicly traded, there is a whole new paragraph on the effect of research analyst coverage:

 

15) We can see the company balance sheet pro-forma of the offering. Note the increase in Cash and Cash equivalents, along with the increase in Additional paid-in capital:

 

16) New language on revenue seasonality (“summer grilling season”):

 

17) The IPO also lead to a simplification of the capital structure of the business (also note the Warrant crossed off in the table above):

 

18) The company has a small balance on its revolving line of credit:

 

19) New obligations: a 5-year office lease and minimum purchase commitments:

 

20) There is a lot of detail on Sales and Marketing activity (of course, all numbers are up: sales team, promotional events, samples, followers):

 

21) Notably, no changes in the serious celebrity endorser line-up:

 

22) New executive hire and one anticipated Board of Directors departure:

 

23) There is quite a bit of detail around the lock-up agreement (which was waived for this offering)

 

24) The underwriters have the standard “greenshoe” option to sell additional shares: 

Get in touch with Sentieo to try your own redlining!

 

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