CLOSING LONG NESTLE +13.45% & SHORTING UNILEVER
On a sector and macro level we would be short food and bev and have held that view in Q1.
Nestle was an exception on the long side due to extreme underweight positioning and the new CEO enacting portfolio change. However to move the dial in a mega cap like Nestle is no easy task, so we will book some profit.
The sector still has poor earnings momentum. Yields should continue higher in the near term given the data, eventually that will weigh.
Thanks to Jeremy G for the inspiration for the Nestle trade.
Closing NESTLE for a return of +13.46% and we initiate a short in Unilever.
NESTLE a BUY
TIME FOR CHANGE
Monday • 21 November 2016 • 17:21
That UBS piece on crowded trades shows Nestle as a crowded underweight and with what the sector has done and how far ahead of itself the mkt has got I think it is a decent BUY.
Lets not forget the new CEO as a catalyst too as he will aim to boost shareholder returns by expanding margins and re shaping the portfolio. He starts in Jan 2017 and is the first external CEO for almost 100 years….time for change.