Everyone Else Is Selling Stocks, So Is It Time To Buy?
by ValueWalk - January 20th, 2019 1:01 pm
By Michelle Jones. Originally published at ValueWalk.
After a difficult few trading days in the beginning of the year, U.S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by more than half a percent by midday. It looks like investors could be taking advantage of the end-of-the-year declines, but is this a wise time to be buying?
Trying to time the bottom of the market will almost always be a fool’s errand, but one firm suggests equities could have much farther to fall before they hit bottom in 2019.
Q3 hedge fund letters, conference, scoops etc
2018 is in the books
In their “Flow Show” report last week, Bank of America Merrill Lynch Chief Investment Strategist Michael Hartnett and team suggested that it is time to buy, but stocks probably aren’t yet at the “Big Low of ’19.” They calculated flows for each major asset. The U.S. dollar was up 4.4%, while cash was up 1.9%. Bonds were down 1.2%, equities fell 8.7% and commodities declined 13.1%.
They also said 2018 was the first year cash has outperformed both bonds and stocks since 2000. With a dramatic flourish, they described the stock market in 2018 as “Apocalypse Dow” filled with “horror” since the “Big Top of Jan’ 18.”
All that drama seems warranted since the global equity market has shed $19.9 trillion in market capitalization from peak to trough. They also said 2,055 of the 2,767 U.S. and global companies were officially in a bear market, and the world’s banks were pricing similar to the low levels observed in 2008.
“Extreme bear” reading…
With all those declines, the BofAML Bull & Bear Indicator fell to 1.8, which Hartnett and team describe as an “extreme bear” reading. They also said their indicator has now triggered the first buy signal for risk assets since June 2016 when Brexit was hanging over the world’s markets.
Exactly one year ago, their Bull & Bear Indicator triggered a sell signal, they added.
But not the “Big Low of ’19″
Even though the BofAML team says a buy signal has been triggered, they do believe stocks have further to…
 Twitter
|
LinkedIn
|
 del.icio.us
|
|
#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts
by ValueWalk - January 19th, 2019 10:24 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Crescat Global Macro Fund update to investors on 1/19/2019
Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on Bloomberg reporting, Crescat had the number 1 and 2 performing US hedge funds in December and the number 1 and 3 performing US hedge funds for 2018.
We are pleased to announce the official performance for our three strategies in 2018:
We see tremendous continued opportunity to capitalize on Crescat’s global macro themes and investment process in 2019. In our analysis, China remains the largest credit bubble the world has ever seen. We strongly believe it is now in the process of bursting and will lead to a major currency devaluation. At the same time, the US stock market has only just started to correct from truly historic valuations late in an extended business cycle. We remain committed to exploiting these themes that we believe have much further to play out to help our clients grow and protect capital in this challenging macro environment.
We see the recent run-up in the US stock market as nothing more than a bear market rally as supported by our 16-factor US equity macro model. Given our equity net short position in our hedge funds, it could be an opportunity for new and existing clients to add to Crescat’s hedge funds at the end of the month on a pullback. We are confident that the US stock market will be turning back down soon, possibly before the end of the month.
We invite you to visit our website for more information about our investment…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
The Competition For Capital Has Made Stocks Cheap
by ValueWalk - January 19th, 2019 12:18 pm
By Michelle Jones. Originally published at ValueWalk.
The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.
Volatility carries into the new year
This past year was one of extremes, and the markets ended it on a down note which has spilled over into 2019. The S&P 500, Dow Jones Industrial Average, Nasdaq 100 and other major stock indices were firmly in the red in the first few trading sessions of 2019, which marks a strong departure from what stocks were doing at this time last year.
Q3 hedge fund letters, conference, scoops etc
However, it now looks like the Federal Reserve has bailed out U.S. stocks. All major indices are rallying big time after Fed Chair Jerome Powell said in a panel discussion that they plan to be “patient” with upcoming interest rate hikes. Investors were also pleased with the better-than-expected jobs report.
Competing for capital
Jefferies strategists believe 2018 was dominated by a long-running competition for capital. In fact, they noted that for most of the last eight years, equities have had very little competition for capital from other assets except for fixed income.
Darby and team also feel that the “reach for yield theme” is starting to fade now because investors “can now place money on deposit with cash rates being ‘floated’ and raised every quarter or semi-annually.” They believe the fact that Treasury yields were climbing as quickly as money was pouring into equities created a competition for capital in October—which stocks ended up losing.
Based on today’s strong rally, it’s possible the competition for capital isn’t over yet, but it’s too early to tell whether equities will gain enough traction to prolong the battle.
Quantitative changes
The Jefferies team also pointed out that the fourth quarter brought a “perfect storm”…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Whitney Tilson Wants You To Know He Might Not Be The Best HFM But His Finger Grip Is 95 Percentile
by ValueWalk - January 18th, 2019 12:04 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email discussing his plans to climb El Cap and training his grip strength.
With my plans to climb the Nose of El Cap later this year, I’m starting to train for it: I joined a rock gym (Steep Rock Bouldering) a few blocks from my house and try to stop by for a half hour of climbing every other day, plus I bought the various exercise devices below.
[REITs]
Q3 hedge fund letters, conference, scoops etc
One key element of climbing is grip strength, so I bought a grip strength measurement meter to measure my progress (pic below; $30 on Amazon). I just tested my right and left hands and they’re at 59.2 and 59.5 kg, respectively. I had no idea what that meant, so I Googled it and found the chart below and a different one attached (from Canada) – they’re slightly different, but I’m somewhere in the 90th-95th percentile for my age (52). I’ll be curious to see how much I’m able to increase this.
PS—It’s fascinating to compare the men’s and women’s scores – a MASSIVE difference. Basically, top 5-10% women have the same grip strength as bottom 5-10% men.
Reference values for selected percentiles for maximum grip strength (in kilograms), by sex and age, based on reference equations for Canadians aged 6 to 79
Grip strength reference values for Canadians aged 6 to 79: Canadian Health Measures Survey, 2007 to 2013
The post Whitney Tilson Wants You To Know He Might Not Be The Best HFM But His Finger Grip Is 95 Percentile appeared first on ValueWalk.
Sign up for ValueWalk’s free newsletter here.
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
State Street Global To Focus On Human Capital Management In 2019
by ValueWalk - January 18th, 2019 11:21 am
By ActivistInsight. Originally published at ValueWalk.
Larry Fink has a new letter for public company CEOs. Or rather, there are two different letters from Larry Fink – an interesting one, which was sadly revealed to be a fake – and a real one.
The real letter, which I suppose people should be more interested in, sees Fink effectively repeating last year’s entreaties for companies to define their purpose and pursue it, stressing a little more, perhaps, that this should be to the benefit of the bottom line and not to the detriment of profits. “[W]hen a company truly understands and expresses its purpose, it functions with the focus and strategic discipline that drive long-term profitability,” he writes.
Q3 hedge fund letters, conference, scoops etc
Aligned with this, but less remarked upon, was a letter from State Street Global Advisors earlier in the week. Substitute “purpose” for “corporate culture,” and you have a substantially similar approach; companies can differ, but their boards and senior managers must be increasingly fluent at explaining the intangible strengths of their businesses. Indeed, alongside old standards like governance, both State Street Global Advisors and BlackRock (and from my own observations, many others) will be focusing on the more easily defined “human capital management” in 2019 and beyond.
2019 is off to a bracing start. Many of the advisers I’ve spoken to this month say a lot is going on behind the scenes, which they usually do – but this time they really do sound tired.
At the same time, votes are scheduled for proxy contests in each of the next three weeks, giving us a first look at how campaigns might play out this year. For the record, between eight and 11 contests have either settled or gone to a vote worldwide in January or February over the last five years, according to Activist Insight Online – so the numbers are not especially high. Moreover, there hasn’t been a clear relationship between the first few volleys and how busy the rest of the year has been, suggesting that yearly trends are determined earlier – based on last year’s proxy season and market movements – or change rapidly throughout the year.
What can be said…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Top 10 Fastest Growing Cities In The World Between 2019 And 2035
by ValueWalk - January 18th, 2019 7:30 am
By Vikas Shukla. Originally published at ValueWalk.
New York, Tokyo, London, and Los Angeles are the world’s largest cities in terms of economic output. They are predicted to stay at the top for another couple of decades. But Asian cities are growing fast and the epicenter of global economic output is rapidly shifting from the West to Asian countries. A study recently conducted by Oxford Economics ranked the fastest growing cities in the world in terms of GDP growth between 2019 and 2035.
Top 10 fastest growing cities: All of them are in India
All of the ten fastest growing cities are from India. In fact, Oxford Economics said 17 of the top 20 fastest growing cities belong to the South Asian nation. The economic output of many of these cities will remain small compared to big Western cities such as New York and London. But Oxford Economics predicts the combined GDP of all Asian cities will overtake the combined GDP of all European and North American urban centers by as early as 2027.
Richard Holt, the head of global cities research at Oxford Economics, said India will dominate the global economic growth over the next couple of decades. The research group analyzed 780 cities to compile this list. Holt said cities – which are expected to grow at 2.8% a year between 2019 and 2035 – will drive global economic growth.
According to the International Monetary Fund, India has replaced China as the world’s fastest growing economy. Driven by a favorable demographic profile, economic reforms, strong domestic consumption, and foreign investments, India accounts for 15% of the global economic growth. It’s no wonder then that ten of the fastest growing cities in the world are all from India. Here’s the list, according to Oxford Economics.
10- Vijayawada, India
Vijayawada in the southern state of Andhra Pradesh also happens to be one of the world’s most overcrowded cities. Research firm McKinsey has described it as the “Global City of the Future.” Located on the banks of Krishna River, Vijayawada has a population of 1.9 million. According to Oxford Economics, its GDP would grow at an annual rate of 8.16% between 2019 and 2035. It means its GDP will go up from $5.1 billion in 2018 to $21.3 billion in 2035.
9- Chennai, India
…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
The SEC’s Unconstitutional Conditions Doctrine?
by ValueWalk - January 17th, 2019 5:07 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Princeton, NJ – A new commentary by Crow & Cushing, the SEC’s Unconstitutional Condition, examines a lawsuit challenging the constitutionality of the SEC’s practice of prohibiting defendants who settle civil charges with the SEC from making any public statement, even an indirect one, which takes issue with the validity of the SEC’s charges.
According to one study, the SEC settles 98% of the civil actions it institutes. In order to induce defendants to settle, the SEC customarily permits those defendants to say in the consent order that they neither admit nor deny the SEC’s allegations. In other words, the SEC does not require that you admit wrongdoing, but you can’t deny it either.
Q3 hedge fund letters, conference, scoops etc
On January 9, 2019, the Cato Institute, a libertarian think tank, filed an action in Federal Court in the District of Columbia challenging the SEC’s practice. The Institute, it tells us, has contracted with an author who was sued civilly by the SEC, consented to a settlement which bars public statements critical of the SEC’s practices and its lawsuit and, therefore, cannot publish his book. Then author, at least for now, must remain anonymous because of the settlement agreement he (or she) signed.
In a private dispute between private parties, a prohibition against disparaging an adverse litigant is perfectly proper and indeed commonplace—it is commonly referred to as a “non-disparagement clause.” The government, on the other hand, is bound by the First Amendment and may curb freedom of expression only where the state has a compelling interest to do so, such as in the case of child pornography.
The question which the Cato Institute’s case squarely projects is whether the consent of those that the SEC settles with to waive their constitutional right to free speech in exchange for the benefits the settlement affords them permits the government to do what the First Amendment otherwise forbids: to curb critical comments.
The question calls for application of a constitutional principle known as the “unconstitutional conditions doctrine,” under which the government may not exploit someone’s need for a benefit by conditioning the benefit on the waiver of…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Disruption: Traditional Vs Digital Business Practices
by ValueWalk - January 17th, 2019 4:55 pm
By Jacob Wolinsky. Originally published at ValueWalk.
The idea of having a business of our own is a leap that some would call courageous, adventurous or a bad idea. The history of how businesses evolve and innovate around us is a fascinating journey. According to academia, Malaysia’s history in dealing businesses with foreign countries dates back to the year 1957, just before the independence day which produced a total revenue of 313 million sterling pounds which is RM 1.6 billion in today’s amount. Over 3 decades ago in 1988, the introduction of the internet had begun to revolutionise the Malaysian’s way of life. This was when the Malaysian Institute of Microelectronic Systems (MIMOS) started to set up their network system called Rangkaian Komputer Malaysia. In 1996 Telekom Malaysia Berhad (TMB) received a license to launch their services which was when TMnet was introduced to the Malaysians.
Taken from ITU.int
In the December of 2000, it was recorded that the penetration had reached up to 17.2% which translates to 4 million users. Ever since the introduction of the internet, Malaysians were quickly evolving with the trend and same goes to the structure of the businesses. According to statista, the revenue earned on e-commerce alone in Malaysia is up to RM16.05 billion as of 2018.
[REITs]
Q3 hedge fund letters, conference, scoops etc
Entrepreneurs today have the ability to be born global in a matter of a few hours and a few clicks at the comfort of their own home. How you may ask? Today we see a variety of choices and opportunities to explore with the introduction and rapid popularity of e-commerce platforms like Lazada, eBay, Shopee and Alibaba.
Entrepreneurs can simply use the network which these platforms had built for potential consumers and business partners at their own advantage. That, to some entrepreneurs is why digitalisation of businesses is a preferred choice today. However, with the help of these platforms to make entrepreneurs born global, this would also mean that the competition will be tougher from the get go.
As technology continues to evolve, we can see disruptions occurring within businesses from the introduction of apps which replaced GPS devices to Grab Car disrupting the taxi business. But the question remains, does the introduction of e-commerce platforms mean that it would…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Sam Zell Says Gold ‘Is A Good Hedge’
by ValueWalk - January 17th, 2019 4:40 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Sam Zell, the founder of Equity Group Investments, says he bought gold for the first time in his life because “it’s a good hedge.” Zell also talks about the oil and energy markets. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Sam Zell Says Gold ‘Is a Good Hedge’
Q3 hedge fund letters, conference, scoops etc
Sam Zell Says Liquidity Has Decreased ‘Significantly’
Sam Zell, chairman and founder at Equity Group Investments, discusses how declining liquidity impacts the real estate market. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Zell Sees ‘Minimal’ DC Real Estate Impact From Shutdown
Sam Zell, chairman and founder at Equity Group Investments, discusses the impact of the partial government shutdown on real estate and how his firm approaches clients affected by not receiving paychecks. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Sam Zell Says Liquidity Has Decreased ‘Significantly’
Sam Zell, chairman and founder at Equity Group Investments, discusses how declining liquidity impacts the real estate market. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Sam Zell Remembers Vanguard’s John Bogle
Sam Zell, chairman and founder at Equity Group Investments, reflects on his dealings with and the legacy of Vanguard Group Inc. founder John Bogle who passed away Wednesday at 89. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Zell Calls WeWork a Negative Example of Creating Unicorns
Sam Zell, chairman and founder at Equity Group Investments, discusses lease deals by the CEO of WeWork Cos. and what Amazon.com Inc. brings with its new campus in New York. He speaks on “Bloomberg Daybreak: Americas.” (Source: Bloomberg)
Transcript
Sam we talked earlier that you’re buying a few refineries since 3PAR. What other energy assets are you interested in pursuing in the United States. We’ve been buying up stranded oil and gas. We’ve. Had some participations in. Ghana. And in this that. Can handle various plays that we think are interesting and we’re pretty comfortable. At the price of oil is not going down. I think I mentioned the one thing that the gold guy didn’t mention is the fact that the amount of capital being put into new gold mines is almost nonexistent.…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Time To Buy? Tilson: If I Were To Pay Up For One Stock It Would Be This Retailer
by ValueWalk - January 17th, 2019 4:19 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing ICR conference; Floor & Decor (FND); pot bubble; Brexit; Bezos’ divorce; China; drug prices; women investors.
1) I enjoyed my day and a half at the ICR conference in Orlando on Monday and Tuesday. I wish, however, that I had found more investment ideas, but instead found mostly a bunch of crappy dying retailers like Stage Stores, Stein Mart, Ascena Retail Group, Vince, Build-a-Bear Workshop, and Chico’s FAS plus some popular but overvalued companies that have crushed short sellers like Five Below, Planet Fitness, Domino’s Pizza, Shake Shack, Chipotle, and Wingstop. The latter was trading at 12x revenues when I pitched it as a short at the Robin Hood conference a couple of years ago – and now trades at 19x revenues! A good lesson on the dangers of valuation shorts – but, mark my words, this stock is going to be a dud going forward.
Q3 hedge fund letters, conference, scoops etc
If I were to pick one stock to pay up for, it would be Floor & Decor (FND). I first became aware of the company years ago when I was short Lumber Liquidators and saw that it was a formidable competitor with a far superior business model: 70,000 square foot superstores with a huge selection and inventory on hand (here is a link to their investor presentation). They have nearly 10% net margins, 30%+ returns on equity, consistent double digit comps, and are growth their store base 20% annually (currently 105 stores with plans to grow to 400). The stock has been cut in half in the last seven months, not due to any missteps by the company but rather concerns about the housing market. The stock, at 26x this year’s estimates, isn’t cheap, but if the company can sustain 20%+ EPS growth, which I think is likely, the stock will do well.
Lastly, I saw a bunch of cannabis companies: Tilray, Acreage Holdings, Cronos Group, Cresco Labs, MJardin Group and Green Growth Brands (which made the silly “bid” for Aphria). The good news for the sector is that there’s going to be a lot of growth and I didn’t detect any…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
