UPDATE: 2014 Ideas

Strategy Update
  • I find it strange that after Mario Exceeded expectations it seems most people are still not happy.
  • Not saying what he will do will light up the European economy but he has far exceeded expectations. This picture sums it up nicely
  • It will take time for everything to be digested and will take time to see if funds flow through.
  • But whichever way you read it i think it is an incremental positive and QE is still an option and he may well be forced into it eventually.
  • Our bullish view on Europe has not changed and we still think it is the place to be. The encouraging thing for us is the services PMIs in Europe. They have been strong which is a much better reflection of the local economies than manufacturing PMI . If Mario can succeed in getting the euro down then the Exporters and the Manufacturing PMIs will also push on. The euro is what is currently holding back European earnings.
  • This is not a buy everything moment we are well past that point but it is about being selective on themes/events and self help stories from a micro to macro that you like.
  • Currently we are long Various French names and others ALO/ATOS/CRED AG/ SU/SAN FP/UG/SKYD/BAE/BATS/GSK/ALO/WOS/DL NA and short EDEN/ENEL/IMT

 

  Wed, 16 Apr 2014 09:42

 

Strategy Update

  • Some week to have a few days off! But we still remain bullish on Europe for 2014 and see the macro in Europe, the periphery and especially France improving. Happy to buy more of our favourite names on this weakness
  • Easter won’t help the situation as people continue to de risk but let’s see what the summit on Thursday in Geneva between the Russian/Ukraine/US/EU foreign ministers brings
  • It’s all about picking the right names or countries. Europe is still one of the most interesting places to be in the DM
  • We would still play Europe over US and see France as the most exciting place to be with the government policy and the corporate landscape drastically changing and offering great opportunities with the CAC vs DAX a great way to play it

 

 Tue, 11 Feb 2014 14:06

 

  • YELLEN headlines in line with expectations. Can read them as inline or slightly hawkish. Either way it means more of the same for the FED for now. The Taper continues…
  • As we said in our 2014 piece we think Europe outperforms the US in 2014
  • If anything there is even more reason for that to be the script for 2014 following recent data and Yellens comments. The risk with her was always here dovishness. For now she is sticking with the same script
  • European PMIs continue to show improvement as the US slows or has less incremental positives
  • Although I still believe in the US recovery/economy Europe is 2/3 years behind and this is where the rate of change/improvement has a lot more upside
  • Europe still cheap on a relative basis to the US
  • Even though Draghi has not acted the FED is in the process of tapering where Europe is just starting down the easing route. One of the big obstacles was Germany’s supreme judges who last week decided to let Mario Draghi continue and “ do whatever it takes” to preserve the euro..Leaving the judgment to the EU’s High court
  • No reason to change for me..Keep buying Europe over the States….

 

 Fri, 20 Dec 2013 13:49

 

Taper/Macro/Europe/CBK/ATOS/ABB/RIO/BAE/PHARMA/BSY/KPN/KBC

  • Taper is on the tape finally. Taken well and it should be. Given us the clarity we needed. An eventual exit is in sight. Now hopefully it is back down to the fundamentals.
  • Inflows into Europe will continue and i believe the macro improves and Europe out performs US
  • In Europe it does not take much improvement to turn companies around as we have already had big constructive destruction in various industries
  • Small change/improvement will have a direct and immediate effect on EPS. Most PMs expect single digit EPS growth. Expectations are low.
  • Return of the capex cycle as as most investors think companies are under invested and % that want corporate cash to be used for capex is the highest since Dec 05 according to MLs FMS
  • European PMIs will continue to pick up next year
  • Having said that it is not just about buying the market. Stock pickers market call it what you want but as macro stabilises it is less about overall macro and individual/sector fundamentals
  • Names that we have been looking at and involved with towards the end of this year and see continued momentum catalysts into 2014

 

BAE: Opportunity to buy into defence which should see a good 2014..US Budget /China/Japan

ATOS: World Wide ipo. Cheap to peers Cap and Accenture

KPN: Tele2 out the way the big bear case. Cheap

CBK: Why buy distressed banks with poor economies behind them? Spain Italy… Cbk can double

RIO: Cost saving/ Capex no m&a diff regime.. ..Cash levels increasing Divi vs bhp. Feb numbers key for this and divi increase

ABB: Cheap industrial clean energy back in focus

PHIA: LED

PHARMA: Basket, Global obesity and China +ve influences

BSY: Very beaten done and hated but the quality of content will shine through…

ING: Story continues as moves back to being a bank.

KBC: 2014 improving profitability and rebuilding to continue

BARC vs. LLOY: Restructuring on track should give some confidence . LLloyds alot more exensive on many metrics