We all know that on its own earnings season is as busy a time as it gets. This time around, however, things have been complicated by a wave of merger and acquisition announcements, one of which involved our position in Connected Societycompany AT&T (T). We’ll speak to why we like the transaction and see it as very positive for our AT&T shares below. Outside those merger headlines and commentary, you’ve likely read or seen that as we get further and further into the current earnings season, we are seeing a growing number of disappointments. We’d like to say we’re surprised, but as we’ve shared with you over the last several weeks we’ve been expecting something like this.

We’ve caught some cover fire ourselves, which led to our Special Alert yesterday in which we shed Sherwin Williams (SHW) and Whirlpool Corp. (WHR) — more on that move on page 5. We’ll continue to look for thematic opportunities at better prices in the days and weeks ahead. Now let’s tackle all of what’s already transpired this week…
This week’s issue of Tematica Investing includes:

• Earnings season for the September quarter is heating up, and it’s as we expected with more than a few disappointments.
• Over the weekend, Connected Society AT&T (T) announced it would acquire Content is King contender Time Warner (TWX). Despite what appears to be headline resistance to the deal, we like the strategic positioning and rationale that is bringing these two companies together.
• Following disappointing results for the September quarter with more of the same signaled for the current quarter, we’ve cut both Sherwin Williams (SHW) and Whirlpool Corp. (WHR) from the Tematica Investing Select List.
• With operating profit expectations reset at Under Armour (UA), we’ve reduced our price target on the shares to $40 from $55. After the sharp drop in the shares due to that expectation reset, our revised target offers 22 percent upside, which has us keeping it on the Tematica Investing Select List with a Buy rating.

You can click below to download the full report.


Chris Versace
Chief Investment Officer
Tematica Research, LLC