February 2022 Mid-Month Update: Thinking in Themes

The big Consumer Price Index (CPI) number reported last week appears to have put to rest the idea that the increase in inflation we were seeing was transitory. A 7.5% increase in the CPI compared to the same period last year was higher than most market participants were expecting and contributed to further volatility in the markets. Volatility was one of the themes we were expecting for 2022 and we picked the market making firm Virtu Financial (VIRT) for our December 2021 Special Situations Newsletter. The stock is up nearly 24% since then after reporting strong fourth quarter results that were up both year-over-year and on a sequential quarter basis. We discuss Virtu’s results in more detail in the Model Portfolio Updates section below. Given that a number of our Model Portfolio companies reported results in the last two weeks, we decided to focus this update on their earnings. Another theme we have been focused on recently is opportunities among “broken growth” stocks that have finally entered Growth At a Reasonable Price (GARP) territory and potential short opportunities in SPACs that merge with an operating business. We discussed these themes in our SPAC Attack mid-month update last month and explored...

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