THE MILLEGAN MEMO: APRIL 2025
Brought to you by The Woodworth Contrarian Fund
Your new Monday commute podcast - The Capital Call: with the Millegan Brothers and we explore Stellantis (formerly Fiat-Chrysler) and Moderna’s current value propositions in the market.
- Managing Partners Drew Millegan & Quinn Millegan
“I never in all my life bought a stock because I liked it. I bought it because it was a cheaper bargain than any similar stock I would buy anywhere in the rest of the world.”
THE CAPITAL CALL PODCAST: YOUR NEW MONDAY MORNING COMMUTE
Welcome to the next episode of the Capital Call: with the Millegan Brothers, managing partners of the Woodworth Contrarian Fund. Starting next week you will see a new episode released every Monday morning at 2 AM Eastern / 5 AM Pacific.
This week, Quinn and Drew tackle trade wars, why tariffs age worse than milk, the hidden stupidity behind sales taxes, and the booming business of shipping empty containers across oceans. They dig into SpaceX's money machine, explain why manufacturing didn’t really "die," and marvel at a new $20K EV truck that's basically a grown-up Lego set.
Plus: the guy who missed the Titanic because he hated fancy typewriters, Greece’s 1930s currency chaos, and why we're all secretly working for the IRS.
Checkout CapitaCall.Stream for details!
BETTING AGAINST MATH? PERFECT. I’LL BE BUYING MORE STELLANTIS (STLA)
Stellantis is an underappreciated gem in an out-of-favor market. Recent layoffs at their Michigan plant unrelated to tariffs have only compounded the malaise brought on by recent whiplash trade policy changes. Investors have been understandably risk-averse in the auto manufacturing space, as supply chains tend to be both long and cross international borders many times before final assembly. Still, the name is a standout in the sector, boasting an industry leading balance sheet, relatively low current valuations, and a seductively low price-to-book ratio. For fundamental investors, Stellantis is the absolute best value in the sector. The company also boasts a current annualized dividend yield of over 8.2%, if investors are willing to remain holders for long enough. Stellantis only pays their dividend once per year as opposed to quarterly, meaning timing is uniquely important to secure such an attractive yield.
Investors seem forgetful that Stellantis is considered one of the “Big Three” US automakers, and includes a catalog of brands that are built and sold in North America. Investors could be forgiven for failing to recognize the brand name, given that Stellantis is the result of a relatively recent 2021 merger between the Italian-American conglomerate Fiat Chrysler Automobiles and the French PSA Group (Peugeot). The company is at the end of a planned drawdown in inventories as well as being between brands, which has resulted in a substantial retreat in both American and global market share. This has caused the company to appear to be in a larger contraction than future plans might otherwise suggest, and the company has made repeated contentions that they expect a return to growth in 2025 with the mass rollout of new product lines, particularly in the second half of the year. Time will tell if this pans out, but at current prices the risk of further downside is relatively muted relative to higher-flying competitors such as Tesla, GM, or even Ford. Moreover, Stellantis is a global company with global exposure, so it is important to keep in mind that the US is not their only market - the company’s margins, though historically low, remain healthy, and non-US markets keep the company’s revenue streams diversified in the event of protracted trade uncertainty or a broader economic slowdown. Automakers are cyclical, so it is important not to get too attached to them as investments, but Stellantis certainly stands out.
Please note that the Woodworth Contrarian Stock & Bond Fund, LP, of which the Millegan Brothers manage and are invested in, currently holds a position of STLA as of the publication date of this article.
MODERNA (MRNA): WALLSTREET THREW IT OUT - I’LL PICK IT UP AND CASH THE CHECK
Despite the defunding of US governmental research and health services, Moderna remains in a commanding fundamental position. The company that made its name during the COVID-19 pandemic developing and manufacturing vaccines for the disease at breakneck pace also happened to have bagged a historic windfall in exchange for its performance. Less well-known is how Moderna reinvested the windfall in the wake of its success. The company has spent years plowing its profits into new innovations while maintaining a relatively pristine balance sheet for a company as large as it is. In biotech it is not uncommon for companies to keep low levels of debt, Moderna is unique among its peers for its particularly low valuation relative to its assets. Currently, the company is trading below its book value, with the potential for explosive growth depending on how any one of its numerous drug and treatment investments pan out. Even without any additional investment in medical innovation, the company has a lot of products in its pipeline ready to go.
Not just a startup vaccine manufacturer anymore. On a historic basis, Moderna can be somewhat difficult to value. This is common for biotech companies, and those whose business is innovation generally by their very nature - such companies are valued based on future potential and not necessarily current assets or past operational performance. However, the multi-billion dollar boon that Moderna received during the pandemic makes such relative valuations particularly fraught, as on a year-over-year basis the pullback from pandemic spending will tend to make it appear as though MRNA is a business in decline. On the contrary, the pullback in Moderna’s stock price - the company trades just shy of $28 as of current writing compared to nearly $500 per share at its pandemic peak - is now attractive enough to warrant calling the decline an overreaction. Despite declining COVID-19 revenues, the company can be thought of as being in a transition period, as initial biotech investments made several years ago with pandemic windfalls take several years to work their way through research and clinical trials. The company expects the clinical results of some of these investments as early as this year, but the sheer number of innovative products in the company’s pipeline make it likely that at least a few of them will be hits. Uniquely for value investors, Moderna is positioned to be a solid lower-risk biotech investment on the upswing in its research to revenue cycle.
Please note that the Woodworth Contrarian Stock & Bond Fund, LP, of which the Millegan Brothers manage and are invested in, currently holds a position of MRNA as of the publication date of this article.
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Drew Millegan (left) & Quinn Millegan (right) in front of the Charging Bull in New York City.
About the Managers: Brothers Drew Millegan and Quinn Millegan manage the Woodworth Contrarian Stock & Bond Fund, a hedge fund based in McMinnville, Oregon. They grew up in the finance world, and specialize in contrarian investment strategies in the US Public and Private markets.
Something missing from your portfolio may be a diversification into the Woodworth Contrarian Fund for accredited investors. Now is a great time to diversify your portfolio with an investment into a multi-award-winning fund. An exposure to a value-based contrarian strategy is a unique opportunity for your long term capital that you’re seeking aggressive returns for. With eight years of the Woodworth Fund under management, the Millegan Brothers are trained stock-pickers and experienced venture capital investors with a proven track record. Give us a call today to discuss a liquid investment with independent administration and independently audited monthly statements and a personal relationship.
