Liberty Global Lowers Growth Guidance

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Liberty Global (LBTYK) remains a troubled stock after reporting mixed 1Q17 results and lowering full year guidance for growth in operating cash flow.  The shares performed poorly last year but bounced back strongly to start this year.  Unfortunately, the sharp down move post the 1Q17 earnings report last week lost all of the year to date gain.

Northlake has a long history with LBTYK and I have followed it back to predecessor companies in the 1990s.  Historically, management has executed well and consistently hit or exceeded its targets.  Over the last 18 months, however, results have been sloppy even if management could claim to have met its guidance.  The first quarter saw a setback in the buildout of the company’s cable plant in the UK.  This is a key driver for the company as the UK is the company’s largest market, followed by Germany.  The UK also suffered from poorly implemented price increases that led to discounting via a bad mix of new subscribers.

There really is not much to hang your hat on at LBTYK at the moment. However, the stock is down over 10% and near logical support at $28-29.  In addition, after an embarrassing stretch of news, management is chastened and has lowered guidance to what should be an achievable level.  Furthermore, LBTYK has been subject to periodic merger rumors with Vodafone, a deal which makes strategic and financial sense.  This should provide support for the shares.

We had been concerned that LBTYK made too many large acquisitions too quickly as competition from incumbent wireless and wireline telcos in Europe was picking up.  We remained patient with LBTYK given our long and successful experience with management and the stock.  With expectations lowered, investor skepticism high, and the stock having reacted sharply lower, we think patience is still the best play.  It may take a while for the shares to rebound, almost certainly until another quarter or two is reported showing that the new guidance is accurate.  The upside is considerable though, so we are going to sit tight, looking for stronger second half 2017 performance to stabilize and then lead to a rally in the shares back to the mid $30s.

LBTYK is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  LBTYK is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

Liberty Media: On Track at F1 and Sirius

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Formula One (FWONA/K) and Liberty Sirius (LSXMA/K) are tracking stocks of Liberty Media.  FWON owns the Formula One racing circuit and LSXM owns a controlling interest in SiriusXM Satellite Radio (SIRI) representing approximately 70% of the shares outstanding.  Consequently, when Liberty reports earnings and hosts a conference call the discussion is on these separate businesses.

It is early days at FWON but Liberty’s strategy for enhancing the racing and interest in F1 appears on track.  The new racing season is only four races old but attendance and TV ratings are up at each race and the competitive situation on the track is improved with three different drivers winning races and Ferrari challenging Mercedes multiyear dominance.  More exciting races are important to Liberty’s plans to drive higher sponsorship and TV rights, add new races, and develop alternative income streams from digital media.  FWONA and FWONK are small holdings for Northlake clients but we think the potential for meaningful share price increases exists albeit likely over a multiyear time frame.  Hanging onto the small holdings gives us a foot in the water while the company navigates the risks of transitioning the sport to a more modern platform.  The transition may not be easy given the need to get the teams and drivers to buy in but we are confident in Liberty’s management expertise, particularly the hiring of long-time media executive Chase Carey to lead FWON.

LSXM’s sole asset is its stake in Sirius so LSXM analysis is focused on how well SIRI is performing and the discount at which LSXM trades to the value of the SIRI shares its owns.  SIRI reported 1Q17 earnings in line with estimates although net subscriber ads fell slightly short.  Management maintained all guidance.  It is unusual for SIRI to report a shortfall in any metric and the shares gave back a material portion of their big gains over the past year following the report.  Investor concern was exacerbated by several months of slowing new car sales, leading to a sell off recently in most auto related stocks.  We think SIRI is in good shape as long as car sales do not plunge.  Recent data suggest a plateau rather than a sharp pullback.  With SIRI preinstalled on about 80% of new cars sold and tens of millions more cars on the road sold as used vehicles with SIRI installed, the funnel to drive subscribers remains large.  In fact, it is still growing even with new car sales off a few percent from their peak.  SIRI’s high free cash flow is used primarily to buy back shares, enhancing shareholder value and increasing Liberty’s ownership at the same time.  This brings us to the stubbornly high 18% discount at which LSXM trades compared to the value of SIRI shares it owns.  One reason we like LSXM is that at some point in the not too distant future the overwhelming majority of this discount will disappear providing a boost for LSXM shareholders.  Liberty management recently addressed a similar discount for one its investment vehicles that tracks the company’s ownership in Charter Communications.  With Liberty’s ownership of SIRI on a percentage basis rising each quarter as SIRI aggressively repurchases its non-Liberty held shares, it is only a matter of time – this year or within a year or two – for the discount to be resolved.  As long as we are comfortable with the underlying fundamentals at SIRI, we are willing to hold LSXM shares as a proxy.

FWONA, FWONK, LSXMA and LSXMK are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  FWONK is net long position in the Entermedia Funds.  LSXMK is held as an arbitraged long position against a short in SIRI in the Entermedia Funds. Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

 

Activision Blizzard Making Progress on E-Sports and Digital Advertising

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Activision Blizzard (ATVI) reported a strong quarter, beating consensus sales and profit expectations. Full year guidance was increased from prior levels but remained below consensus. In past quarters, ATVI has tended to offer conservative guidance leading to upside surprises when they report actual results. Investors focused on strength in the Blizzard and KING segments, while giving a pass to weakness in the Activision segment due to the disappointing performance of 2016 holiday release of Call of Duty: Infinite Warfare. ATVI continues to benefit from the secular tailwinds we have noted in past quarters, namely the shift to digital game downloads from physical packages and increased in game purchases and add-on downloadable content.

The Blizzard segment saw continued strength as their newest game, Overwatch, nears its one year launch anniversary. ATVI has positioned Overwatch to benefit from the growing e-sports trend by developing professional teams and a competitive league with impressive viewership metrics. The e-sports team initiative at ATVI is just beginning, and they are assembling an experienced internal team with people who have previously worked for ESPN, Fox Sports, the NBA, and other relevant sports organizations. Other Blizzard titles also exhibited strong engagement trends as ATVI ramps up the pipeline of add-on content.

The mobile gaming KING segment demonstrated positive engagement and monetization trends, with players averaging around 35 minutes of game time per day and bookings per player up for the 2nd consecutive quarter. KING has been carefully testing digital ads in mobile games, and continues to expect that the advertising effort will be profitable this year and scale up meaningfully in 2018. Due to the scale of the KING user base (led by Candy Crush), we believe this opportunity offers significant upside to ATVI. Another exciting development at KING is the recent announcement of a mobile version of Call of Duty. We believe this is just the beginning of KING leveraging ATVI’s large catalogue of intellectual property across the large mobile user base.

In the Activision segment, slightly disappointing results were largely driven by the worse than expected performance of Call of Duty: Infinite Warfare. While the Call of Duty franchise remains extremely important to the success of ATVI, we view the underwhelming reception of the last release as an anomaly. As we look forward to upcoming releases in key franchises including Destiny 2 and Call of Duty: WWII and the pipeline of accompanying add-on content, we believe the Activision segment is on track to return to strong performance. ATVI noted that the reveal trailer for Call of Duty: WWII was the most liked trailer ever for that franchise and the fastest to 10 million views along with extremely low negative social media sentiment, unlike the reveal trailer for the Infinite Warfare. Additionally, Destiny 2 preorders are already tracking as the highest in ATVI history.

In conclusion, we see further upside at ATVI as growth accelerates into next year. Aside from the ongoing secular tailwinds of the shift to higher profit digital downloads and increasing importance of add-on content and digital micro-transactions, ATVI also likely has upside to next year’s current consensus EPS estimate of $2.43 driven by e-sports and digital advertising initiatives. We expect ATVI could trade at 25x 2018 EPS, implying upside to the low-$60s.

ATVI is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov. 

Disney: ESPN vs Theme Parks and Studio

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Disney (DIS) reported first quarter earnings of $1.50, up 10% from a year ago, and ahead of Wall Street estimates of $1.41.  Revenues grew just 3% and operating income just 5% as EPS benefited from a lower than expected tax rate and share repurchases.  DIS shares have reacted negatively to the report, falling -2% to -3%.  Two factors are hurting the stock.  First, media stocks in general are under severe pressure due to a set of March quarter earnings reports that show acceleration in cord cutting and weaker than expected advertising trends.  Second, trends at DIS’s Media Networks, in particular at ESPN, were weaker than expected.

Despite the massive success and scope of DIS films and theme parks, Media Networks still is by far the largest business segment. In the just reported quarter, Media Networks revenues represented 45% of revenues and 56% of segment operating income. Ever since DIS CEO Bob Iger discussed weakening subscriber trends at ESPN in August 2015, analysis of DIS shares has been dominated by the future of ESPN.  The concerns are legitimate given that ESPN is easily DIS’s largest business unit and has a unique economic model.  ESPN pays high rights fees for the best sports content (NFL, MLB, NCAA) under long-term contracts.  Rights fees escalate modestly each year and in recent cycles have stepped up dramatically as each contract is renewed.  Against this high fixed cost base, management must make assumptions about the number of subscribers and advertising revenue.  With subscribers declining and TV ratings and advertising under pressure the last few years, ESPN’s long-term outlook has come into question.

Escalating rights costs against slowing revenue pressures operating income growth and that pressure is peaking this year as ESPN faces a huge rights fee increase in the first year of its new NBA contract.  For example in 2Q17, Media Networks revenue grew 3% but operating income fell -3% as the escalating rights expenses overwhelmed the revenue gain.

Fortunately for DIS investors, Theme Parks and Filmed Entertainment continue to operate at incredibly high levels.  Each division beat estimates in the quarter.  Theme Parks is enjoying success at the new Shanghai park, which is operating profitably ahead of schedule.  Filmed entertainment continues with an unprecedented string of hit films that drives profits not only at the studio but also in Theme Parks and Consumer Products.  Each division appears in good shape looking out the next several quarters, although any one quarter can face challenging comparisons or timing issues on revenues and expenses.  Theme Parks should see continued benefits from Shanghai and the opening of the new Avatar land in Orlando.  Filmed Entertainment has another big success in Guardians of the Galaxy 2 and the upcoming film slate looks great, highlighted by a new Star Wars film this coming December.  Intellectual property at Marvel, Lucasfilm, Pixar, and Disney Animation gives confidence that the long-term outlook for DIS unique ability to drive growth throughout the company remains secure.

We are sticking with DIS despite the challenges at ESPN and investor skepticism.  The rights fee increases moderate significantly after the June quarter and most major sports rights are locked up at modest escalators for three to five years.  At the same time, ESPN’s contracts with MVPDs hit a new renewal cycle next year allowing for a step up in affiliate fees, albeit on lower subscribers.  In addition, although it has yet offset subscribers losses at traditional MVPDs, new OTT products all contain ESPN so far and growing sub counts will eventually stabilize total sub counts.

For Northlake, the bottom line is we view DIS as a blue chip company with a strong balance sheet, unrivaled intellectual property, and shareholder friendly capital allocation.  Management unexpectedly upped the 2017 share buyback by $2B indicating confidence in the intermediate term outlook.  At plus or minus $6.00 in EPS in 2017 and 2018 and against easing comparisons and higher growth in FY18, we think DIS shares can work higher over the balance of 2017.  In the meantime, we are willing to stick with this premier global powerhouse.

DIS is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov. 

CBS Tracking Above Long Term Guidance

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Amid a tough quarter for media earnings, CBS was a bright spot.  We have long liked CBS for two reasons and both were on display in 1Q17.  First, management continues to execute quite well as evidenced by better than peer trends in national and local advertising and subscription fees.  Second, and related to effective management, CBS has a narrow focus and unique revenue and cash flow drivers that leave it less impacted by secular concerns about the changing TV ecosystem.  CBS does not own any major cable networks, so is not materially impacted by cord cutting and cord shaving.  With a focus on its CBS Network and Showtime assets, the company is able to drive growth as retransmission and subscription fees grow for these networks that are highly valued by viewers.  The focus on just two networks has also allowed CBS to lead the industry by creating standalone direct consumer OTT products for both CBS and Showtime.  Additionally, CBS is able to monetize its own created content by selling it to multichannel and OTT providers around the world.

During 1Q17, each of these initiatives tracked above the long-term guidance CBS provided last year for 2020 revenue and profit targets.  Later this year, the company will complete divestiture of its radio division, providing a large cash inflow that will be used to shrink the share count, maintain a strong balance sheet, and continue above average dividend increases.

First quarter earnings results in media have reignited fears of a breakdown in the TV ecosystem as cord cutting picked up pace, TV ratings continued to fall, and advertising trends softened.  We think CBS is the best positioned company to weather these challenges due to the unique drivers outlined above.  CBS shares led the bounce back in media stocks in 2016 and early 2017 off the 2015 lows when secular fears about the TV ecosystem last turned investors bearish.  We see a similar dynamic playing out this year and believe CBS shares can make new highs north of $70 as investors realize the sky is not falling for the industry (or at least not falling as quickly as they fear) and reward CBS for its superior competitive position, management, and strategic decisions.

CBS is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  CBS is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

Facebook Targeting Video Advertising Budgets

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Facebook (FB) reported a strong quarter, pacing ahead of expectations both for financial results and user engagement. Sales grew 51% from last year despite the widely expected decrease in ad load growth. Disciplined cost control limited expense growth to only 40%, below expectations. Facebook, Messenger, Instagram, and Whatsapp each continued to accelerate user growth above expectations. FB has been a nice winner for Northlake, and we continue to see upside given the relatively inexpensive valuation and the explosive growth trajectory.

One concern in the past for FB has been that expenses would grow more than expected as the company invested in innovation. Recent quarters have shown FB management’s discipline, as illustrated by the reiterated guidance of 40-50% expense growth this year. Last year, FB narrowed the top end of that range throughout the year, and the 40% expense growth seen in the first quarter leaves us hopeful that a similar pattern could repeat in 2017.

Another concern developed after FB warned investors that ad load growth was expected to decline in 2017. The reduced ad loads are intended to improve user experience while FB attempts to increase video views and drive customers to become accustomed to coming to FB to find premium video (and premium video ads). This is reminiscent of Mark Zuckerberg’s focus on user experience before monetization on the original Facebook website. We are curious to see how the video initiatives at FB develop over the coming quarters, and believe success could lead to further shifting of TV advertising budgets to FB. As an offset to the slower ad load growth, we expect that FB has meaningful upside to current ad prices driven by their unique targeting and measuring capabilities.

The recent IPO of Snapchat (SNAP) spurred several concerns about FB’s future. However, we were comforted to see that Instagram’s stories feature grew to have more users than SNAP extremely quickly. This illustrates FB’s ability to innovate (or copy) to fend off competition by leveraging its various brands.

In summary, FB remains on a strong growth path with disciplined spending while maintaining innovation. Each of the core apps continue to perform well and drive user engagement. FB’s video initiatives appear promising so far. Further upside is expected over time as FB monetizes Messenger and Whatsapp. In the near-term, we believe FB could trade at 30x 2017 EPS of $5.28, or $158, potentially moving toward $200 as investors become comfortable with 2018 EPS of $6.50 or higher.

FB is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  FB is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

Sinclair Reports Mixed 1Q17, Reiterates Long Term Guidance

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Sinclair Broadcasting (SBGI) reported 1Q17 earnings in line with analyst estimates.  Guidance for the second quarter appears a little light although management reiterated all guidance for 2017 and 2018 suggesting it is mostly timing issues.  The stock is responding poorly to the earnings report and was falling heading into the report.  The timing of Northlake’s recent purchase of SBGI was certainly off base.  We remain highly confident in the intermediate term upside target of near $50 driven by future highly accretive acquisitions of TV stations.  Announcement of deals is probably now necessary for the shares to rebound.

Investors have turned negative on media stocks over the past two weeks on accelerating cord cutting and weak advertising trends.  All the large cable and satellite companies have reported and subscriber losses for video clearly picked up in 1Q17.  The first quarter is seasonally strong and housing data has been firm, so it is hard to conclude anything beyond more cord cutting.  At the same time, advertising trends have softened, something evident even at SBGI, which showed the best ad trends of companies that have reported thus far.  Management reassurances on ad trends fell on deaf ears as there is plenty of noise and adjustments in SBGI’s reported numbers and guidance for a suddenly skeptical investor community.

We see the current selling of media stocks and SBGI as overdone, although with many larger companies still to report, there could be further controversy.  For the past six to nine months, media stocks have done very well as investors flocked to the group and exited retail and other troubled consumer industries.  Media stocks are probably over owned at the moment by investors who are not experts in the industry.  This is exacerbating current selling.  With big profits and big positions, the sentiment shift is particularly harsh on the stocks.  Valuations have already reset substantially, particularly given modest reductions in 2017 and 2018 estimates.  We expect support nearby for SBGI and the rest of the group.  We also reiterate that SBGI has positioned its balance sheet to take advantage of loosened TV station ownership rules and these deals will be highly accretive to earnings, cash flow, and shareholder value.  We reiterate our positive view of SBGI and refer you to our very recent blog post outlining our investment thesis.

SBGI is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  SBGI  is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

Apple Gearing Up For Supercycle

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Apple reported a mostly inline March quarter and issued guidance for June quarter that was within its usual range.  Revenues for the March quarter fell slightly short of estimates driven by iPhone unit shipments of 50.8 million compared to consensus of 52.3 million.  That equates to about $1 billion in lost revenue relative to expectations.  Overall revenue was just $104 million light with the difference being made by better than expected results from iPad, Other products (Watch, Beats, AirPods), and Macs.  EPS ended up a little ahead of consensus at $2.10 vs. $2.02.  The upside came from better margins as Apple managed gross margins well despite headwinds form higher memory prices and foreign exchange.

Guidance for revenues in the June quarter fell about $1 billion short at the midpoint.  The midpoint of gross margin guidance is 37.9% vs. street expectations of 38.3%.  We find the gross margin guidance impressive despite the small shortfall given continued elevated memory prices and deleverage from the seasonally small revenues in the June quarter.

Apple also updated its capital allocation program.  The total program was extend one year into 2019 and increased by $50 billion to $300 billion.  Share buybacks will consume most of the incremental $50 billion but the dividend was also raised by 10.5%.  Management pointed out that the increase in capital return to shareholders is based on current U.S. tax law.  They went further to state that should tax law change they would reassess.  Apple would be a major beneficiary if repatriation of foreign cash at a very low tax rate is ever put into law.  A very significant of portion of Apple’s $256 billion in cash is held abroad.  Net cash after debt is $162 billion or almost $31 per share.

The reality is that all you just read is small potatoes as it concerns the next big move in Apple’s stock price.  Small fluctuations will take place.  We expect the stock to be down a few percent on the latest news since there was no upside and there is a lack of catalysts until the new iPhones are announced and hit stores next holiday season.  And it is the success of the next generation of iPhones that will determine if Apple is still viewed as a growth company or has finally matured into very profitable, but low-growth free cash flow machine.

Apple does have growth businesses in wearables and services.  Together these business lines are 21% of revenues.  These businesses are growing fast and can lift overall revenue growth by a few percent a year for the next several years.  Services (Apple Pay, Apple Music, App Store subscriptions) have high gross margins that can also support profitably.

But the next iPhone cycle is what really matters.  There is a huge installed base of 2-4 year old iPhones currently in use and the next phone is expected to be offered in at least one variation with a new hardware form.  Analysts believe this sets up a “super cycle” where iPhone units boom, like they did for iPhone 6 when larger screens were first offered.  The super cycle is critical not just for iPhone but also for sustaining the growth in services and wearables by continuing to grow the global network of iPhone users.

Northlake’s bottom line is that Apple is likely to a boring stock until we get close to the announcement of the new iPhones this fall.  Investor expectations are in check so as long as the launch of new phones is on track, there should not be much downside independent of overall market moves.  However, we also see little upside for a few months as the shares are fairly valued at a P-E of 14X 2018 estimated earnings.

We have some concerns regarding the super cycle thesis.  Will there be enough demand for a higher priced iPhone 8 or have phones reached the point where they do not need to be replaced often, much like PCs and tablets?  Will Apple actually ship an entirely new form factor this holiday season in volume or will we get more of the standard iPhone S upcycle and a new form factor with new features a little later?  We are willing to wait a few quarters to find out the answer as we lean firmly to good demand for the new phones and if that occurs, especially along with repatriation of foreign cash at a low tax rate, AAPL shares still have significant upside.

AAPL is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  AAPL is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

 

Large Cap Growth and Mid Cap for May

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Each of Northlake’s models has a new signal for May.  The Market Cap model is now recommending mid caps after four consecutive months at small cap.  The Style model now favors growth after two months at a neutral reading.  As a result of the new signals, client positions in the Russell 2000 (IWM) have been sold and proceeds reinvested into the S&P 400 Mid Cap (MDY).  We have also sold all client positions in the Russell 2000 Growth (IWO) and the Russell 2000 Value (IWN) and reinvested proceeds into the Russell 1000 Growth (IWF).

The shift in the Market Cap model away from small cap triggers the move out of small cap growth and value into a large cap growth.  Northlake only uses small cap in the Style model when the Market Cap model is on a small cap signal.  Any time the Market Cap signal is on mid or large cap, the Style model is executed using large cap growth and/or value.

The shift in the Market Cap model to mid cap is a function of changes in the external indicators.  Three of the eight external indicators moved from small to large cap for May, leaving six of the right indicators on large cap.  The indicators that shifted are related to more modest expectations for economic growth and corporate earnings.  Small caps are more sensitive to economic fundamentals given they get more benefit from a favorable economic tailwind.

The Style model saw less overall movement but since it was positioned on neutral and titled toward growth, the movement of just a couple of indicators toward growth was enough to trigger a new signal.  The recent decline in the dollar on President Trump’s comments and the French election results is good for growth stocks.  Dollar weakness is often interpreted as a sign of weaker domestic GDP, an environment that favors growth stocks that do not need the economy to meet their earnings targets.  The other change was to an internal indicator.  Growth stocks have done well so far in 2017, driven by large cap internet and technology stocks.  This moved one of the trend following indicators to growth from value.

The recently completed signals could have been better.  Although small caps made up a lot of ground in April, overall they have lagged in 2017, pulling down the returns in the Market Cap and Style models.  In addition, the neutral reading over the past two months for the Style model would have been better in a pure growth.

MDY and IWF are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.