Company Reports

With a network of nearly 8 million monthly active customers and over 600,000 drivers, Instacart’s grocery delivery platform boasts a strong presence across the United States. The firm benefited from a pandemic-induced surge in online grocery ordering in 2020, with its gross transaction value eclipsing $20 billion (versus $5 billion in 2019) as retailers hastily joined forces with Instacart to meet consumers’ evolving purchasing preferences that favored home delivery. In the years that followed, Instacart has managed to maintain a resounding position in the grocery delivery industry, as the platform’s more than $30 billion in gross transaction value gives it about 70% share of grocery sales placed on third-party intermediary platforms and about 30% of total grocery delivery sales (per eMarketer).

Helmerich & Payne has maintained the dominant market share in US horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation. It was an early adopter of super-spec rigs (AC drive, minimum 1,500-horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one third of total super-spec rigs available in the United States.

LyondellBasell is one of the largest petrochemical producers in the world, manufacturing ethylene and propylene and a myriad of chemical derivatives, including propylene oxide, or PO. These products form the building blocks for downstream chemicals and plastics that are used in industrial and consumer markets alike. About 70% of LyondellBasell’s ethylene and polyethylene production capacity sits in North America. Its total ethylene and propylene capacity is fairly evenly split between North American and international markets.

Kinetik Holdings is a midstream operator providing pipeline and gathering and processing services to E&P companies in the Permian Basin. In 2024, the volumes handled by its pipeline activities will evenly split between gas and natural gas liquids (NGLs) with less than 10% from crude oil. Its gathering and processing services collect and process natural gas and NGLs in order to feed them into its own pipelines for sale at the local Waha hub. Alternatively, the molecules will be transferred to larger transit pipelines to access the larger and more lucrative international export demand for liquefied natural gas (LNG) and from China for natural gas liquids.

Honda's products and strong financial position should keep it on solid ground, but the competition is fierce and the US market's increased move to light trucks—where Honda's lineup is not as complete as competitors'—may be permanent. Ongoing risks include foreign-exchange volatility, a highly competitive US market, and rising input costs for Honda and suppliers.

AMC Networks is deploying an “all of the above” strategy, and we think that gives the firm its best chance in a difficult environment. AMC is a small player that we expect will be challenged to independently find its place with consumers who are overwhelmed with numerous different streaming services, most of which have broader and deeper content than what AMC can provide. It also must continue to find and create attractive programming, which should be increasingly difficult in an industry that now has more and much larger competitors.

Since taking the helm at Mondelez more than six years ago, CEO Dirk Van de Put has orchestrated a plan to drive balanced sales and profit growth by extending the distribution of its fare, fueling investments behind its local and global brands, empowering its local leaders, and increasing the agility with which it brings innovation to market (aims that are hitting the mark). Against this backdrop, Mondelez targets 3%-5% sales growth long term as it works to sell its wares in more channels and reinvests in new products aligned with consumer trends at home and abroad. Further, it has prudently made acquisitions of niche brands to build out its category and geographic exposure, and we anticipate it will continue to pursue inorganic targets when the opportunity arises.

AirTAC is the second-largest pneumatic components maker in China, with 27% market share in 2023. We think the firm’s leadership position is underpinned by its reputable brand, established track record, comprehensive sales and service network, and strong operating efficiency.

Pembina offers a fully integrated "store" to its customers, allowing it to retain full economics over the midstream value chain. Its major earlier growth opportunities across liquefied natural gas (a CAD 4 billion-CAD 5 billion net investment in Jordan Cove LNG and the related Ruby pipeline repositioning) and petrochemicals (a CAD 4.5 billion venture with Canada Kuwait Petrochemical) were essentially canceled in early 2021, leading to significant write-offs.

No-moat Takeda Pharmaceutical is Japan’s leading pharmaceutical company by revenue. While the firm historically focused on the Japan market, management is undertaking an ambitious overhaul to diversify away from its stagnant local market and overcome patent expiries with acquisitions. In January 2019, it closed its purchase of Shire Plc for approximately $57 billion. The mega-deal not only gave Takeda access to Shire’s rare-disease and plasma-derived therapies, it also granted Takeda much greater penetration into United States' markets and diversification away from Japan’s cost-cutting policies.

With more than two decades since its inception, Spin Master has developed and acquired a plethora of well-known brands like Paw Patrol and Hatchimals, amassing 2% share in a fragmented, more than $100 billion global toy industry (Circana). Utilizing a multifaceted plan for growth focusing on innovation in toys and digital games, higher penetration of overseas markets (which composed more than 40% of 2023 sales), the pursuit of strategic acquisitions, and the development of evergreen global entertainment properties, we believe Spin Master has the ability to grow into nascent product and geographies. This, in turn, should help the firm outpace the traditional global toys and games industry, which is forecast to rise globally at 4% between 2024 and 2027, per Euromonitor, including acquisitions and venture projects. Further, we posit prior supply chain optimization, with warehouses consolidated and sourcing better diversified, should support solid operating metrics (we forecast above 15% average adjusted operating margin over the next decade). Spin Master is set to generate average free cash flow to the firm of around $265 million over the next decade, facilitating investment in its operations while maintaining the flexibility to strategically add assets to its mix.

A renewables developer, Acciona Energia was spun off from Spain industrial conglomerate Acciona in July 2021. The floating share is 17.3%. The rationale of the IPO was to revive capacity growth that had been subdued since a 2013 regulatory change in Spain drove a sharp cut in renewables' returns.

NiSource's focus on electric and gas infrastructure, including renewable energy, creates growth opportunities that could last for a decade or longer.

We expect LG Uplus to continue to grow its core business through the expansion of its wireless/wireline network, specifically its 5G broadband network, and expansion into targeted noncore businesses such as its smart home and enterprise infrastructure business segments. As LG Uplus expands its wireless network, it attracts premium 5G subscribers directly but also mobile virtual network operator subscribers. In addition, LG Uplus is investing in physical storefronts to drive its MVNO business. Revenue from roaming data usage is now back to prepandemic levels, due to the easing of covid-19 restrictions in Korea.

Escalating global security concerns, intensified by the Ukraine conflict, are driving structurally higher growth in the defense market. We anticipate this growth will be uninterrupted for at least several years, considering that many countries, particularly in Europe, have underspent since the end of the Cold War. BAE Systems is strategically positioned to benefit, given its significant stakes in a broad array of major international defense projects.

Long-established Oversea-Chinese Banking Corp. is one of the three largest banks in Singapore. It has expanded in the past two decades through acquisitions and we think it could do further mergers and acquisitions in Asia in banking, insurance, or wealth management. OCBC’s private bank division, Bank of Singapore, was established by the acquisition of ING’s private bank when ING exited the Asia region following the global financial crisis. The operation's scale was increased by bolting on Barclays' wealth-management arm in Singapore and Hong Kong and, later, National Australia Bank's wealth-management business. OCBC's bancassurance business was built on the gradual acquisition of Singapore-based insurer Great Eastern. In Indonesia, the bank raised its stake in PT Bank NISP to 85% from 23%, and it bought Wing Hang Bank in Hong Kong in 2014 as a platform to expand its presence in Greater China, on top of its 20% stake in affiliate Bank of Ningbo purchased in 2006.

Halliburton is one of the three largest oilfield service firms in the world, and it’s the largest pressure pumper in North America. The firm is renowned for its exceptional record of innovation, consistently developing novel ways to maximize value for its customers.

We expect Life360 to primarily focus on continued investment in the improvement of user retention within its core Life360 product.

Alstom offers a comprehensive portfolio, including rolling stock (53% of revenue), services (23%), and signaling and systems (24%), setting it apart from competitors.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 38.9% owned by Renault, while Nissan owns 15% of Renault. Under the new alliance agreement reached in July 2023, Nissan's 15% ownership in Renault will gain voting rights and both Renault's and Nissan's ownership voting rights will be capped at 15% each. Renault holds the rest of the stake in Nissan through a French trust, which will vote the shares neutrally for “most decisions” but retain the economic benefit of the dividends and any proceeds if shares are sold. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance had been dismal but is now improving.