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Outlook

Kategori: Allmänt

Global equity markets continued their march upward in the first quarter, making undervalued stocks all that much more challenging to find. Our overall coverage universe is trading at 97% of fair value, based on a market-cap-weighted average. Within that, our U.S. coverage is the most expensive, trading at 99% of fair value, followed by Europe at 96% of fair value; Asia is the least expensive at 93% of fair value.

Buffett

Kategori: Allmänt

"Somebody once said that in looking for people to hire, you should look for three qualities: integrity, intelligence , and energy. And if they don't have the first, the other two will kill you. You think about it; it's true. If you hire somebody without the first, you really want them to be dumb and lazy."
-- Warren Buffett

Valuation

Kategori: Allmänt

The current forward 12-month P/E ratio for the index is 13.7. The P/E ratio is based on Thursday’s
closing price of 1563.23 and forward 12-month EPS estimate of 113.71.

This 13.7 P/E ratio is above the prior 5-year average forward 12-month P/E ratio of 12.8, but below the
prior 10-year average forward 12-month P/E ratio of 14.2. It is also slightly above the P/E ratio of 13.5
recorded one month ago. Over the past month, the price of the index has increased 2.8% (to 1563.23
from 1521.38), while the forward 12-month EPS estimate has risen 0.7% (to $113.71 from $112.93).
At the sector level, the Telecom Services sector has the highest forward 12-month P/E ratio at 17.3,
while the Financials (11.9) and Energy (12.0) sectors have the lowest forward 12-month P/E ratios.
Over the past month, the Telecom Services (to 17.3 from 16.7) sector has seen the largest increase in
forward 12-month P/E ratios of all ten sectors, while the Consumer Staples sector (to 12.0 from 12.1)
has witnessed the largest decline in the forward 12-month P/E ratio of all ten sectors.

Global Themes

Kategori: Allmänt

Europe is reporting a decline in economic growth relative to last year. According to FactSet Economics,
the European Union recorded a decrease in GDP of 0.6% in Q4 2012, compared to growth of 0.8% in Q4
2011. During the fourth quarter earnings season, many companies stated that economic conditions
were still weak in Europe.

“The decline in Ford Europe's fourth quarter pre-tax results was more than explained by unfavorable
volume and mix. The industry for the 19 markets Ford tracks in Europe was 13.5 million units, the lowest
quarterly SAAR since 1995.” – Ford Motor (Jan. 29)

Economic growth in countries in emerging markets has also been decreasing over the past year.
According to FactSet Economics, two of the four “BRIC” countries recorded slower GDP growth and one
country recorded constant growth during this time. For Q4 2011, China, India, and Brazil recorded GDP
growth of 8.9%, 5.8% and 1.4%, respectively. By Q4 2012, GDP growth rates for China, India, and Brazil
had fallen to 7.9%, 4.1% and 1.4%.

However, the 7.9% GDP growth reported by China reflected a sequential improvement relative to the
GDP growth reported for Q3 2012 (7.4%). A number of companies have stated that they saw strength in
emerging markets in the fourth quarter, or that they expect stronger economic growth and demand for
goods in emerging markets (particularly China) in 2013.

“Growth in China is showing signs of picking up with positive implications for the rest of Asia. The general
consensus of our business leaders on China is the economy is improving and this will continue through
2013.” –DuPont (Jan. 22)

Will revenue growth continue to be weak in Europe? Will revenue growth improve in emerging markets
(China)? These will be themes to monitor during the upcoming earnings season

France

Kategori: Allmänt

France is just tanking. PMI Services out at 41.9 vs. 44.0 expected in the lowest reading since the bottom of the crisis in 2008. Hollande's growth (or lack of) policies are failing miserably.
//Saxo Bank

VLO

Kategori: Allmänt

Valero Energy (NYSE: VLO) had its price target raised by Barclays Capital from $70.00 to $75.00 in a research report released on Friday morning. Barclays Capital currently has an overweight rating on the stock.

Just a reminder...

Kategori: Allmänt

... Cyprus is the 0.2% of Eurozone GDP

Daily round-up

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onday 18 March 2013 - A bad idea

Presented by Paul Donovan

UBS does not believe that the Euro will break up. We still do not believe that the Euro will break up. The bail out of Cyprus over this weekend has not helped that conviction, however, and contagion risks are higher as a result of the terms of the bail out.

The "wealth tax" on all Cypriot domiciled bank deposits is effectively a grab of deposits. No matter what assurances are offered, it is likely in the future that depositors in ANY Euro banking system that is considered at risk of requiring a bailout will be more inclined to panic and withdraw their deposits in anticipation of similar treatment.

Every Euro area finance minister should be reminded, daily, that history tells us that monetary unions die as a result of bank runs. Preserving confidence in the integrity of banking systems is critical to a stable monetary union. Moreover, people will irrationally overreact to even a small threat of losing what they already own.

Elsewhere, Italy's Bersani got a speaker elected to the lower house and the Senate of the Italian parliament, but the level of support for his candidates underscores the weakness of parliamentary support for any possible Bersani administration. Euro trade data and US housing data make the calendar today.

Peter Garnry

Kategori: Allmänt

A stream of disappointing macro data and a political vacuum following the election in February has sent the FTSE MIB index down and relative to the DAX index the plunge has been quite significant. The ratio between the two indices is close to the low point from July 24 when the Italian 10-year bond yield peaked at 6.6 percent. Today the yield is 4.6 percent. When the smoke has settled again there will be good opportunities in FTSE MIB both on a relative and absolute basis.
 
 

STEEN JAKOBSEN

Kategori: Allmänt

As I normally open many of my speeches; I am the most optimistic ever in my 28 years, but mainly because it can't get any worse ;-)

Macro talk: CNBC interview

Kategori: Allmänt

http://video.cnbc.com/gallery/?play=1&video=3000152746

CDON GROUP

Kategori: Allmänt

STOCKHOLM (Direkt) SEB Equities upprepar sin köprekommendation för e-handelsbolaget CDON efter att banken tittat närmare på modesajten Nelly. I en analys daterad 6 mars, där även riktkursen på 69 kronor upprepas, menar SEB att signaler om en förbättring av Nellys verksamhet borde ge stöd för en omvärdering av CDON.

Ett besök vid Nellys huvudkontor i Borås samt bolagets distributionscenter i Falkenberg visade enligt SEB uppmuntrande tecken på att en stor del av de interna effektiviseringsförbättringarna nu har implementerats sedan Nellys nya ledning tog vid i det fjärde kvartalet i fjol.

"Vi väntar oss klara tecken på en marginalförbättring för Nellys del från och med det andra kvartalet, vilket i sin tur borde ge stöd för en omvärdering av aktien i CDON Group", skriver SEB.

Vid 13.30-tiden hade CDON under relativt stor omsättning handlats upp med 11,2 procent till 38:60 kronor.


Mats Torgander +46 8 5191 7915
Nyhetsbyrån Direkt

Master limited partnership

Kategori: Allmänt

Western Refining (WNR) +1.6% premarket after its board authorizes the company to explore the formation of a traditional master limited partnership. WNR would contribute a portion of its midstream and logistics assets to the MLP and sell a minority interest in the MLP in an IPO.

Olstein Market View

Kategori: Allmänt

With the onset of the Great Recession, investors fled equity markets seeking safety in cash and fixed income investments. A great many of these investors, in the interest of preserving capital, have remained sidelined even though equity markets have rebounded strongly from the lows of 2008 and 2009. In fact, from its March 9, 2009 low through December 31, 2012, the benchmark S&P 500® Index has posted a total return of more than 100%, with many value funds increasing by an even larger percentage. Yet, despite this strong performance, a significant number of investors remain on the sidelines immobilized by doom-filled headlines and afraid of a repeat of 2008.

From our perspective, the primary driver of equity market growth since the global financial crisis and market lows of 2008 and 2009 has been an aggressive easy monetary policy in order to jump start the economy and reduce unemployment. It has been the government’s stated objective to keep interest rates as low as possible for as long as possible. In our opinion, the current approach to monetary policy holds real risk for investors who are “in the now” and out of the market, that is, those investors who have sharply increased their holdings in bonds and cash and have decreased their holdings of common stocks. At some point, the aggressive monetary policy of the past four years is likely to trigger an increase in inflation that could negatively impact the value of fixed income and cash holdings. In fact, we believe that counter to past market cycles, an increase in interest rates from these abnormally low levels would be indicative of an increase in economic growth and be bullish for equity returns and bearish for bond returns.

At this stage of the economic recovery, we believe investors should prepare for the long-term effects of the current low-interest rate monetary policy and seek ways to improve investment returns in a low-growth environment. The real possibility of increased inflation combined with the realities of investing in a low-growth economic environment should compel investors to find ways to benefit from both productivity growth and capital appreciation in their portfolios. While many investors are nervous about equity markets or remain sidelined waiting for robust improvement in the economy, we believe there is a strong case for investing in the equity securities of companies whose real economic value is unrecognized by the market, obscured by market uncertainty or overshadowed by temporary problems. We believe our free cash flow accounting-based investment discipline of looking behind the numbers of individual companies to identify undervalued securities has a decided advantage in the current market environment.

While we attribute much of the current under-exposure in equities to macro- economic concerns and doom and gloom scenarios by most investors and the press, we prefer to focus on the undervalued securities of good companies with strong balance sheets and unique business models that generate (or have significant potential to generate) sustainable free cash flow. In addition, we prefer management teams that are deploying their cash balances to either grow through value-added capital expenditures or return excess cash to shareholders through dividends or stock buybacks.

We also believe it is important to identify those companies that not only have correctly focused their priorities in the face of a fragile economic recovery but have also identified options that have created a substantial strategic advantage for what we believe is an eventual inevitable acceleration of economic growth. As we have stated many times, the Fund focuses on a company’s ability to generate normalized free cash flow as the primary determinant of value. In particular, companies that continue to thrive in a challenging or stagnant economic environment eventually draw the favorable attention of investors.

Above-average long-term returns are generated by paying attention to the cash return an investor can expect from owning a share of a business and whether or not the potential return has enough of a premium (to the risk free rate) to compensate an investor for the risks of the company’s business model and to correctly predict its ability to produce normalized free cash flow. Assessing the adequacy of the cash flow return is of greater importance during an uneven economic recovery especially during a time when investors are being told, often quite loudly, to avoid equities and seek safer opportunities. We believe such times have the potential to set up significant above-average long-term investment returns.

Meridian Value Fund - Q4 2012

Kategori: Allmänt

Flowserve is a leading manufacturer of pumps, valves and seals found in a variety of end- markets such as oil & gas, power generation and chemicals. The company holds leading market positions across various geographies, product segments and end-markets. It is also ahead of the competition with aftermarket service centers located throughout the world, providing it with deeper customer relationships and steadier demand for higher margin replacement and repair business. Flowserve’s late cycle markets have bottomed and pricing on new projects is beginning to improve as excess capacity gets absorbed. Additionally, the company should, in our opinion, benefit from the build-out of emerging market infrastructure and domestic opportunities such as new chemical plants and pipeline expansions brought on by abundant natural gas. Flowserve maintains modest financial leverage and generates returns on equity of 20%. We believe the company is attractively valued at 12x our $13 per share estimate of potential earnings power.

WNR Smashes Earnings

Kategori: Allmänt

http://www.fool.com/investing/general/2013/02/28/western-refining-smashes-earnings.aspx

Steen Jakobsen

Kategori: Allmänt

Macro Update: China PMI weaker than expected at 50.1 after 50.5 in January. Chinese model is broken but market continue to ignore it:

http://www.bloomberg.com/news/2013-03-01/china-feb-manufacturing-pmi-at-50-1-economists-est-50-5.html

Now in Singapore - after South Africa - Budget here was balanced but with a big of focus on the social fabric which is very admirable - This was in my opinion the key statement:
"We need to intensify this economic restructuring and skills upgrading so as to achieve quality growth... If we do not do better in raising productivity, we will be caught in a situation where businesses lose competitiveness and wages eventually stagnate," Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his budget speech.

The offical link: http://app.singaporebudget.gov.sg/budget_2013/default.aspx

Singapore remains in my opinion one of the few pragmatic economies in the world - growth and bull markets mean everyone needs to benefit - everyone.