| Ticker | Name | Research | View | What he said | At |
|---|---|---|---|---|---|
| DGX | Quest Diagnostics | QT · SA · STK · FA | Positive | Hold the core; the thesis is working and the price is extended. Marked to market: "we recommended Quest Diagnostics on June 5, 2026, at $200.29. The stock is trading today at approximately $236 for a gain of roughly 18% in just over two months, plus the $0.86 quarterly dividend. Considering the S&P's ~6% gain in that time, DGX is a respectable outperformer." The move has a dated cause — "the Q2 earnings report on July 23 was the catalyst, with the stock surging 11.15% on the day" — and the entry has a stated method: Haymaker "missed the key upside range expansion early last year, but we did catch a retracement to near the breakout point not that far above $180. It was also smack dab on the 200-day moving average. Buying relatively close to the resistance penetration spot and at the 200-day is typically a profitable tactic. Fortunately, this was no exception." Forward math: "consensus targets of $239 to $246 imply modest near-term upside, but the Argus and BofA bull case targets of $260 to $265 remain in play if Q3 delivers another beat-and-raise on October 27, which the volume momentum and conservative guidance pattern suggest is likely." Not-yet-in-the-numbers compounders: "the Corewell JV laboratory opening in 2027 and continued double-digit advanced diagnostics growth are the medium-term compounders not yet fully in run-rate numbers." The caveat is not hidden: "the valuation, along with the price chart, is undeniably extended presently. For those looking to book profits, and/or reduce market exposure, booking at least partial profits, like by selling one-third, might be advisable." Net instruction: "we lean toward holding the core position through October 27. Trim only if the position has grown to an uncomfortable share of your portfolio's weight. In our view, the business is still executing precisely as the June thesis described." No rating change; still a Haymaker Buy-list name. | read ↗ |
| IJH | iShares Core S&P Mid-Cap ETF | QT · SA · STK | Positive | Cautious near term, adamant over ten years. The mark is given straight: recommended "back on March 18th, 2024… IJH has risen about 30%. With dividends included, the total return has been 33%. That's a compound annual growth rate of around 12 ½%. Clearly a pleasant outcome, but the S&P 500 has significantly bested this with a 50% total return." The shortfall is then explained rather than excused — cap-weighted construction ("the top 10 S&P constituents represent 38%"), mega-cap earnings, and above all the quality of those earnings: the S&P's forward P/E went 21× → 20× across a 50% total return, so it was all E, and that E leans on "companies such as GOOG reporting massive gains on their holdings in AI entities like Anthropic." Hence: "Mid-Caps have lacked this immense, though unsustainable, earnings booster rocket. Our belief is that there is a looming mean reversion in the S&P 500's profit margins. If so, this will work in favor of IJH, as well as the other Mid-Cap ETFs." The valuation is stated without spin: mid-caps trade at "a forward P/E… of 17. That's not outrageous by any means, but it is close to the peak this decade outside of the pandemic period." The structural edge is the index-graduation argument — mid-cap indices hand their parabolic winners to the S&P at peak market cap (SMCI −70% post-"graduation," TSLA the bigger case) — "perhaps this effect is a prime factor behind Mid-Cap's long-term outperformance of the S&P 500," and "Mid-Caps/IJH have clobbered the S&P 500 for the full duration of the 21st century," despite badly lagging the last 15 years. Near term the house is cautious — "an unusually large number of threats hovering over the market. Margin debt having gone vertical is merely one of them, though among the most serious… we'd be cautious even with Mid-Caps and, for risk wary types, we wouldn't quibble with booking some gains on IJH." The conviction is on the horizon: "over the next 10 years, we are adamant that Mid-Caps will dramatically outperform the world's most beloved equity index." Sizing concession, not a downgrade; still a Haymaker Buy-list name. | read ↗ |
| SPY | S&P 500 (index proxy) | QT · SA · STK | Neutral | The comparator, and the note's real target — negative-leaning but no trade attached. Its 50% total return since March 2024 is acknowledged as genuine and earnings-driven: the forward P/E "has actually decreased slightly to 20 times the consensus projection for the next 12 months," from 21× in March 2024 — "this speaks to how strong profits have been for the blue chip index." The objection is to where those profits come from: "in addition to robust organic growth, this is a function of companies such as GOOG reporting massive gains on their holdings in AI entities like Anthropic," a booster mid-caps do not have and which Hay calls "unsustainable." Three structural criticisms follow — concentration ("the top 10 S&P constituents represent 38%"), a margin problem ("a looming mean reversion in the S&P 500's profit margins… on a normalized profit-margin basis, the S&P 500 is far more overpriced than it superficially appears"), and the index-inclusion drag from buying graduates like SMCI at their peak market cap, which "multiplied by dozens, if not hundreds, of these events… can add up to a material performance drag over time." Add the market-wide risk flag: "an unusually large number of threats hovering over the market. Margin debt having gone vertical is merely one of them, though among the most serious." Long-run verdict: "Mid-Caps/IJH have clobbered the S&P 500 for the full duration of the 21st century," and over the next decade mid-caps will "dramatically outperform the world's most beloved equity index." Rowed Neutral because the argument is relative — no short, no sell instruction, and the index's earnings strength is conceded. | read ↗ |
| GOOG | Alphabet (Google) | QT · SA · STK · FA | Neutral | Cited as the earnings-quality exhibit, not as a rated call. Named first among the mega-caps "that have been reporting blockbuster earnings," then used to make the specific point that those earnings are not all operating: "as several recent Haymaker notes have pointed out, in addition to robust organic growth, this is a function of companies such as GOOG reporting massive gains on their holdings in AI entities like Anthropic. In GOOG's case, those have represented more than 50% of its profits in the first two quarters of this year." The characterisation is blunt — an "immense, though unsustainable, earnings booster rocket" — which is what underwrites the "looming mean reversion in the S&P 500's profit margins" and the normalized-margin overvaluation conclusion. Continues the accounting-quality thread of Jul-15 (Minack's "earnings are an opinion; cash is a fact") and the Feb-20 trim, but no rating, target or portfolio action is attached here; the name is evidence, not a recommendation. | read ↗ |
| MSFT | Microsoft | QT · SA · STK · FA | Neutral | Named only as a mega-cap earnings driver. "It's been the mega-cap stocks, like Microsoft (MSFT) and Alphabet/Google (GOOG), that have been reporting blockbuster earnings" — the mechanism by which a cap-weighted index with its top 10 at 38% of the total delivered a 50% total return while its forward multiple fell. Unlike GOOG, no quantified accounting critique is attached to Microsoft in this post; it is cited as one half of the illustration. No view is taken on the shares. | read ↗ |
| SMCI | Super Micro Computer | QT · SA · STK · FA | Neutral | The worked example of the index-graduation derating — a case study, not a call. It was Haymaker's 2024 illustration of why mid-caps work: "one of the reasons we cited for preferring Mid-Caps in the late winter of 2024 was that this style often catches companies as their growth accelerates and their stock price reflects this uplift. The example we used back then was Super Micro Computer (SMCI)." Then the timing: "our suspicion was that it would soon be pulled up to the S&P 500 out of the Mid-Cap index because of its explosive market cap increase. That happened almost as soon as we hit 'Send'. To say the timing was unfortunate, at least for S&P 500 index investors, is a considerable understatement." And the outcome: "from the time of its 'graduation' to the Large-Cap index, SMCI has experienced a bit of a derating… like by nearly 70%." (A 10:1 split is noted; the split-adjusted peak was "roughly $114.") The generalisation is the point: "of course, it was a small part of the S&P so the cost of this value implosion to its shareholders was negligible. But when multiplied by dozens, if not hundreds, of these events, that can add up to a material performance drag over time." No view is taken on SMCI's shares today. | read ↗ |
| TSLA | Tesla | QT · SA · STK · FA | Neutral | The larger index-inclusion case, cited in passing. "Tesla was a much more impactful — and controversial — example of messy index inclusion," with readers pointed to a short video overview of "that fiasco." Used to scale the SMCI anecdote up to something that matters at the index level — a single addition large enough that the mechanics of when and at what price the S&P admitted it were consequential for every index holder. No view is taken on Tesla's shares, no video title is given, and no numbers are attached. | read ↗ |
| Anthropic | Anthropic (private) | — | Neutral | The asset behind the earnings, named but not investable. Cited as the "AI entit[y]" whose valuation marks flow into Alphabet's reported profits — "companies such as GOOG reporting massive gains on their holdings in AI entities like Anthropic," gains that "represented more than 50% of [GOOG's] profits in the first two quarters of this year." Private, so no ticker and no research links; it appears here purely as the mechanism of the "immense, though unsustainable, earnings booster rocket" that Hay expects to mean-revert. | read ↗ |
"View" is Haymaker's stance in this Portfolio Update. Only DGX and IJH are positions — both are existing Haymaker Buy-list names being reviewed, and in both cases the instruction is the same shape: the thesis is unchanged, the price is extended, so the only live question is position size ("selling one-third" on DGX if the weight is uncomfortable; "we wouldn't quibble with booking some gains" on IJH). No rating change, no new pick and no Buys/Trims-Holds tables were published with this issue. SPY carries the note's argument but is rowed Neutral: the critique is relative (mid-caps over large-caps) and negative-leaning on valuation — "on a normalized profit-margin basis, the S&P 500 is far more overpriced than it superficially appears," margin debt "having gone vertical," "an unusually large number of threats" — yet the index's earnings strength is explicitly conceded and no short or sell instruction is given. GOOG, MSFT, SMCI and TSLA are all evidence rather than calls: the first two illustrate cap-weighted mega-cap earnings (with GOOG additionally carrying the Anthropic-gains critique), the last two illustrate index-inclusion derating. Not rowed — deliberately: "the other Mid-Cap ETFs" are referenced generically with no vehicle named; the Corewell Health JV is a private joint venture (a 2027 laboratory), not a security; Argus and BofA appear only as the sources of the $260-265 bull-case targets; the Tesla index-inclusion video is linked without a title or author, so it is not captured as an education item. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
A jargon-free note on why each name matters here. (Companion to the table above; renders on each name's consolidated page.)
Quest Diagnostics runs the largest network of medical testing laboratories in the United States. When a doctor orders blood work, someone has to draw it, process it and report the result — Quest does that at enormous scale, which is a steady, unglamorous, recession-resistant business.
Haymaker told readers to buy it on June 5th at $200.29. It is now around $236 — up about 18% in a little over two months, plus a quarterly dividend of $0.86 a share — while the S&P 500 rose about 6%. Almost all of that gain came in a single day: the company reported second-quarter results on July 23rd and the stock jumped 11.15%.
The part worth learning is how the purchase was timed. The stock had broken out above an old ceiling around $180 sometime earlier — Hay admits Haymaker missed that move — and then drifted back down to roughly that same level. An old ceiling that a stock has climbed above tends to act as a floor on the way back, and in this case the level also coincided with the 200-day moving average, the average price over the past ten months, which is the line long-term buyers tend to defend. Two supports landing at the same price is the setup Haymaker bought.
From here the honest arithmetic is thin. Wall Street's average target of $239 to $246 is barely above today's price. The more optimistic targets from Argus and Bank of America, $260 to $265, only come into play if the next quarterly report on October 27th beats again and management raises its forecast again — which Hay thinks is likely, because the company has been guiding conservatively. Two things he says are not yet fully reflected in the numbers: a joint-venture laboratory with Corewell Health opening in 2027, and continued double-digit growth in the higher-value specialist tests.
The catch is stated plainly: both the price chart and the valuation are "undeniably extended." So the advice splits in two. On the business, hold your core position through the October 27th report — nothing has gone wrong, and "the business is still executing precisely as the June thesis described." On your portfolio, if the position has grown into an uncomfortably large share of it, or if you want to raise cash generally, selling one-third is a sensible way to bank part of the gain without giving up the thesis.
IJH is a fund that owns the 400 medium-sized American companies that sit just below the S&P 500 in size — big, established businesses, but not household-name giants. Haymaker recommended it in March 2024 as a low-risk way to own US stocks.
Hay marks the result honestly, and it is a mixed one: IJH is up about 30%, or 33% including dividends, which works out to roughly 12½% a year. Perfectly good in isolation — but the S&P 500 returned 50% over the same period. He spends most of the note explaining why, because the explanation is the reason to keep holding.
First, the S&P is weighted by company size, so the biggest names dominate: the ten largest now make up 38% of the whole index. Second, and this is the key observation, the S&P got 50% more expensive in price but actually got slightly cheaper on earnings — its forward price-to-earnings ratio went from 21 to 20. That means every bit of the gain came from profits growing, not from investors paying up. So the whole case for the S&P rests on those profits being real and durable.
Hay's argument is that a large slice of them are neither. Alphabet, for example, owns a stake in the private AI company Anthropic; when Anthropic's valuation rises, Alphabet books a paper gain that flows through its reported profits. In the first half of this year, those kinds of gains made up more than half of Alphabet's profits. That is not money from selling ads or cloud services — it is a mark-up on an investment, and it stops the moment private AI valuations stop rising. Mid-sized companies have no equivalent, which is why their earnings looked so dull by comparison. If, as Hay expects, the S&P's unusually fat profit margins revert toward normal, the comparison flips: measured on normal margins, "the S&P 500 is far more overpriced than it superficially appears."
The second structural argument is more interesting and less familiar. Index funds must buy what the index adds. When a mid-sized company's shares go parabolic, its market value eventually qualifies it for the S&P 500 — so the mid-cap index sells it and the large-cap index buys it, at or near the peak. Super Micro Computer is the example: Haymaker cited it as a mid-cap winner in early 2024, it was promoted to the S&P almost immediately, and it has since fallen nearly 70%. Any one such event is too small to matter, but "multiplied by dozens, if not hundreds," it becomes a permanent drag on the large-cap index and a quiet gift to the mid-cap one, which keeps the steady compounders and hands off the blow-offs. Tesla, he notes, was a much bigger and more controversial version of the same problem.
Two caveats he raises himself. Mid-caps are not bargain-priced — 17 times next year's expected earnings is "not outrageous… but close to the peak this decade." And the overall market worries him: there is "an unusually large number of threats," of which the most serious he names is margin debt — money investors have borrowed against their portfolios to buy more stock — "having gone vertical." Borrowed money is what turns an ordinary decline into a forced-selling one.
So the position is being held with two different time horizons. Near term he is cautious and "wouldn't quibble with booking some gains" if you are risk-averse. Over ten years he is "adamant" that mid-caps will dramatically outperform the S&P 500 — the long structural arguments need time to work, and he says so.
The S&P 500 is the index most people mean when they say "the market" — the 500 largest US companies, weighted so the biggest count most. It is the thing Hay is arguing against here, though he is careful not to call it a short.
He concedes the good news first: the index really did return 50% since March 2024, and it did it on profits rather than on hype — its price relative to expected earnings actually fell slightly, from 21 times to 20 times. Normally that would be the end of the argument.
His objection is to the composition of those profits. A meaningful chunk comes from big technology companies revaluing their stakes in private AI firms — Alphabet's holding in Anthropic accounted for more than half of Alphabet's profits in the first half of the year. Those are accounting gains on investments, not operating income, and Hay calls the effect "unsustainable." Strip them out and normalise profit margins back toward historical levels, and the index's earnings are lower than they appear, which makes the price higher than it appears: "on a normalized profit-margin basis, the S&P 500 is far more overpriced than it superficially appears."
Two other criticisms sit alongside it. The index is extremely concentrated — its ten largest members are 38% of the whole thing. And it has a mechanical bad habit: it admits companies after their share price has already exploded, which means index funds buy them near their peak. Super Micro Computer, added right at the top, is down about 70% since; Tesla was a bigger and more disputed instance of the same thing.
Finally the market-wide risk flag: "an unusually large number of threats," the most serious being margin debt — borrowed money used to buy shares — going "vertical." That is a leverage problem, and leverage is what converts a fall in prices into forced selling.
Rowed Neutral rather than Negative because there is no instruction attached. Hay is not telling anyone to sell the index or bet against it; he is saying that over the next decade, medium-sized companies should beat it — and he is "adamant" about that.
Super Micro Computer builds the server hardware that AI data centres run on. It appears in this note not as a recommendation but as a cautionary case study — and, awkwardly, one of Haymaker's own.
In early 2024 Haymaker used it to illustrate why medium-sized companies are a good hunting ground: they are big enough to be real businesses but small enough that a growth acceleration moves the share price a lot. SMCI was doing exactly that. Haymaker also predicted what would happen next — its market value would grow so fast that it would be promoted out of the mid-cap index into the S&P 500.
It was, "almost as soon as we hit 'Send'" — and that promotion marked the top. Since graduating into the S&P 500 the stock has fallen nearly 70%. So the mid-cap index captured the run up and handed the collapse to the large-cap index, whose funds were obliged to buy at the peak.
Hay is careful to size the damage honestly: SMCI was a small piece of the S&P, so the direct cost to index holders was negligible. His point is cumulative — this happens over and over, "multiplied by dozens, if not hundreds, of these events," and the sum is a real long-run drag on the large-cap index. No opinion is offered on whether SMCI is worth owning today.
Alphabet is Google's parent — search, YouTube, cloud computing and a large stake in the private AI company Anthropic. It appears here purely as evidence, not as a recommendation.
Hay's point is about how its profits are made up. When a private company you own a piece of is revalued higher, accounting rules let you book the increase as a gain, and that gain lands in reported profit alongside money you actually earned selling things. In Alphabet's case those gains "represented more than 50% of its profits in the first two quarters of this year."
That matters for the market as a whole, because the S&P 500's impressive earnings growth — the thing that justified its 50% return since March 2024 — is partly built from this. It is a real accounting number and an unreal economic one: it stops the moment private AI valuations stop climbing, and it reverses if they fall. Hay calls it an "immense, though unsustainable, earnings booster rocket," which is why he expects the index's profit margins to revert toward normal, and why he prefers medium-sized companies that never had the rocket in the first place. No view is taken on Alphabet's shares here.
Summary derived from the paid Haymaker Portfolio Update (text in transcript.txt) for personal study. Charts referenced in the original (Bloomberg) are omitted. Not investment advice. © Haymaker / David Hay for source material.