Investment Q&A

Both HMM. A and DRX are small-cap names that are currently experiencing a tailwind from the industry’s upcycle. DRX is trading at 11.3x Forward P/E, while revenue growth in the last 5-year is around 20% (not a straight line, some cyclicality over the years). On the other hand, HMM. A is trading at 7.1x trailing P/E, 5-year revenue growth is around 10%, less cyclical relative to DRX. That said, HMM. A is much more capital-intensive than DRX. As a result, HMM.A's operating results would be very volatile due to the high fixed cost. Overall, we think both could do well from here, we are comfortable holding both for now but would tend to trim as the cycle turns south. HMM is up 44% this year and 101% in 52 weeks. DRX is 113%/588% for the same timeframes.