Summary
Highlights
Boyer Research releases its annual "Forgotten 40" list, comprising 40 stocks expected to outperform in the coming year. Jonathan Boyer explains that while they are typically long-term investors, this list focuses on catalyst-driven ideas expected to perform well within a one-year horizon, rather than just the cheapest names.
Boyer Research generally tries to ignore macro trends due to their unpredictability, but they do consider potential catalysts like tax law changes. A key pick, Atlanta Braves Holdings, has been a disappointing stock previously. However, a new tax law taking effect in 2027, which prevents the deduction of top five employee salaries (including highly paid athletes), could prompt media mogul John Malone to sell the team, thereby unlocking value.
Markel Group, described as a "baby Berkshire Hathaway" run by Tom Gayner, is another pick. It has a strong long-term record and has attracted activist investor Janna Partners, who are pushing for actions to unlock value. These actions include strengthening the insurance business and significant share buybacks, with the stock estimated to be worth $3,100 compared to its current $2,000.
Cooper Companies, a healthcare supplier of contact lenses and women's health products, is on the list due to activist involvement. Boyer suggests splitting the business into two separate entities, as the dominant contact lens franchise (25% market share) has little synergy with the women's health division. This split, along with better capital allocation, is seen as a key catalyst.
Uber, a repeat pick from last year's list that saw a 40% rise, recently experienced a 15% drawdown due to fears of robo-taxis and autonomous driving. Boyer Research believes Uber will be a beneficiary, not a victim, of these technologies. The company is actively buying back shares, growing rapidly, and is considered a strong long-term hold.
While Boyer Research's "Forgotten 40" outperformed most value indexes last year, it lagged the S&P 500. Jonathan Boyer explains that the S&P 500 is heavily concentrated in technology stocks, making it a concentrated bet. He views value investing not as a hedge but as a crucial diversifier, especially if the "MAG7" tech stocks falter. Value investing, historically, offers strong returns over long periods and helps balance portfolios against technology-heavy indices.