Been spending a lot of time recently thinking about how to position during the current oil shock. Markets are down 3-4% since the Iran conflict started and it is not just the obvious names getting hit. Growth stocks, small caps, leveraged companies, pretty much everything is feeling it as people price in inflation staying higher and rates not coming down anytime soon.

The natural hedge is owning energy. But I went down a rabbit hole looking at which energy stocks actually make sense here, because not all of them work the same way in this specific situation. Some of the biggest names have meaningful Middle East exposure, which is a bit of an odd hedge when the disruption is coming from that exact region.

Ended up landing on one Permian Basin producer that I think is the cleanest expression of the trade. Wrote up the full thinking here for anyone interested :)

Curious whether others are thinking about the oil shock as a portfolio hedge at all, or mostly just riding it out.

Financial Analysis Mastery

I'm a finance student with CFA Level 1. I want to have an advanced financial accounting understanding so I can analyse financial statements at a deeper level and make better investment decisions (I also need it for my job).

What resources do you recommend? Do you think CFA L2 offers advanced financial analysis skills or read books such as accounting shenanigans or pursue the CA (I don't want to be an accountant)

Business: The largest retail pool supply distributor in the world.

Financial History: It is a highly profitable firm with a long track record, albeit cyclical in accordance with the summer season and demand for pools or pool supplies.

Market Share: They have a 38% market share in an industry now expected to grow about in line with the overall economy, which is approximately 4-6% annually.

Competition: It is the dominant supplier in a fragmented industry where most competitors are comparatively much smaller or regional, though I have doubts that this advantage should last forever.

Macroeconomy: Considering that the industry itself is cyclical, I think that growth will be low in the short-term (next 5 years), but that it should increase in future periods as new bull markets appear (ultimately averaging out in the long term as previously specified). Due to the cyclicality of the business, I will use normalized earnings. Also, its current return on equity is high compared to competitors, but I believe it will converge on the industry average as competition increases over time. Failure risk is negligible for valuation purposes, due to its size and market position.

Business Story, 'The Bully and Low-Cost Supplier': It is a large company with many resources, ruthless in its ability to deploy capital and out-price regional competition (due to fixed operating charges). This moat is best described as a scale-based cost advantage, or economies of scale.

Valuation Data:

• Normalized EPS: $15.43
• ROE: 44.34% (down to 18.33% after 5 years)
• Augmented Dividends: $13.72
  • These are expected dividends determined by the necessary payout ratio from the fundamental growth rate to maintain a growth of 4.91%:
    • (1-.0491/.4434) * 15.43 = $13.72
• Fundamental Growth Rate: 4.91%
  • The current long-term government bond rate is an approximation of long-term nominal GDP growth.
• COE: 9.805%
  • I'll spare the math, but I derived a bottom-up beta of 1.157 based on its market leverage and cash reserves. This is close to 1, which is appropriate for such a large, stable firm (which should act very much like an economy).

No-Growth Value: $157.4
-15.43/.09805 = 157.4
-This assumes no growth and all earnings are paid out at the current cost of equity. The implication is that the current market price of $202.93 has a growth component of $45.53.

My Estimated Value: $252.8
-High ROE stage: (1-1.0491^5/1.09805^5)/(.09805-.0491) * (13.72*1.0491) = $59.95
-Competitive advantages shrink, and buybacks are assumed to reduce as ROE converges on the industry average.
-New Payout Ratio: (1-.0491/.1833) = 73.21%.
-Earnings at year 5 = $19.61
-Augmented Dividends: $14.36
-Cost of equity does not change; the firm remains in a stable state with weaker competitive advantages.
-(14.36*1.0491)/(.09805-.0491)/1.09805^5 = $192.8.
-Total = 59.95 + 192.8 = $252.8

With a market price of $202.93 per share and an implied growth of about 3%, evidence could point to it being currently undervalued by roughly 20% (due to cyclicality). I did not account for stock options or warrants, which could alter the value.

Do you guys still think that the market will be dominated by US in the near future?

Do you guys actually listen to earnings calls or mostly stick to transcripts?

I’ve started listening to a few more lately and noticed things that don’t really show up in text. Like hesitation or repeated phrasing.

Example. One CEO kept emphasizing “cost control” but avoided anything about growth. Felt like a red flag in hindsight.

Just wondering if people here factor that kind of stuff in or if I’m overthinking it.

I’m looking for perspectives on evaluating a small-cap defense contractor (market cap ~$60M) with the following characteristics:

• Multi-year government contracts totaling over $200M, with no recompete risk in 2026.
• Historically, the stock has had strong support around $1.00 and has experienced spikes to $1.20–$1.60 on news events.
• Insider buying is ongoing (CEO, CFO, COO).
• Recent price declines appear largely driven by macro factors (market downturn, geopolitical uncertainty) rather than company fundamentals.
• Low institutional ownership and relatively high float make the stock highly volatile.

Question: How should one approach valuing and assessing risk in a micro-cap like this, where fundamentals are relatively secure but price movements are largely driven by news and market sentiment? Are traditional value investing metrics sufficient, or should the strategy lean more toward event-driven considerations?

I want this post to enable discussion for ideas that failed to enter your portfolio, what garnered your initial interest, what dissuaded you from investing, did you create full model prior to concluding that it wasn’t good enough?

My Most recent Addition:

I most recently conducted initial DD for CorMedix $CRMD a bio-tech company that had gained FDA approval for DefenCath a Taurolidine/Heparin central venous catheter (CVC) lock used in end stage renal disease (ESRD) patients that receive hemodialysis. Patients that receive hemodialysis via CVC are prone to catheter related blood stream infections (CRBSIs) which is a leading cause of death. Taurolidine (antimicrobial)/ Heparin (anticoagulant) locks have been tremendously effective in reducing CRBSIs by as much as 70% when compared against heparin or saline alone.

With DefenCath receiving market exclusivity for the next 10 years it seems that it would be adopted as a standard of care, the reality seems to reflect that current healthcare frameworks for ESRD disincentivize developers and financially incentivize outpatient dialysis centers to forego adoption of these new drugs.

Profits > People

Current ESRD billing under the Centers for Medicare & Medicaid Services (CMS) has allocated a budget of $281.71 per dialysis treatment. Outpatient dialysis centers make a profit by capturing the spread between what CMS has allocated per treatment vs what it actually costs them. To encourage adoption of new drugs, Transitional Add-on Payment Adjustments (TDAPA) were introduced. TDAPA allows for 100% reimbursement of per use treatment for a period of 2 years. In this specific case an outpatient center can forego the use of their traditional catheter lock, receive $281 and be reimbursed for the use of DefenCath, effectively increasing their margin by whatever their traditional catheter lock costs them.

After TDAPA expires TDAPA drugs are placed under a Post TDAPA add on adjustment (3 years). This post adjustment is calculated based on 65% of the estimated expenditures for the drug, adjusted for utilization and other case factors. Post TDAPA spreads the cost of TDAPA drugs across ALL OF THEIR TREATMENTS and is no longer on a per use basis. In this specific case, the DefenCath post TDAPA adjustment is $2.37, meaning outpatient centers will receive an additional $2.37 per dialysis treatment regardless of whether DefenCath is used or not.  

Yall Wanna See A Dead TDAPA Drug?

Calcimimetics which include Intravenous etelcalcetide and oral cinacalcet were formerly on TDAPA and were prescribed to ESRD patients to prevent complications of elevated parathyroid hormone levels. Once TDAPA expired they were bundled into the ESRD PPS resulting in an increase of base rate dialysis treatment of $10.09 (increasing dialysis budget, regardless of whether Calcimimetics were used or not). Once bundled into the base rate utilization of Calcimimetics dropped with some providers shifting towards active vitamin D.

As you can see, post TDAPA add on adjustments incentivize treatment centers to just collect the free payments vs use DefenCath and compress margins, regardless of what is more beneficial for patients.

After seeing DefenCath’s prospects, I totally abandoned the idea, never breaking into the rest of CRMD’s product pipeline. Didn’t create full model, and never calculated an intrinsic value. What step do you get to before throwing the towel?

The timing here is unusually favorable for Microsoft shareholders.

On April 1st, internal code and tooling from Claude leaked, offering a rare glimpse into Anthropic‘s web code, including task planning, self critique, and structured workflows.

With the Claude code now public, (not the model) it creates a meaningful opportunity for platforms like Microsoft Copilot.

Microsoft copilot cannot and will not reuse proprietary code, but it can study the architecture, extract the underlying ideas, and implement comparable or improved systems. Aka copilot can be as good as Claude now

Instead of operating in the dark, Microsoft now has greater visibility into what best in class agent style AI looks like, combined with the scale and distribution to iterate quickly.

This is not about copying code, it is about accelerating execution and strengthening competitive positioning.