SHORT SANDVIK

The arrival of the new CEO brought hopes of portfolio optimisation.

Since then Sandvik has rallied more than 30% off the lows.

With global data tepid at best and bond yields doing what they are doing, we want to get exposure to industrials on the short side. Sandvik is one of these.

Structural pressures in mining have not diminished.

China just printed its worst PMI in 3 years.

The US is facing an industrial recession (worst ISM manufacturing number since 2009).

Europe, the only ‘bright’ spot is bumping along just in expansionary territory.

SKF shutting production facilities in Europe for 10 days over Christmas does not sound like a bullish demand environment to me.

The normally very tight correlation with commodity prices and the SXPP has never been as wide.

Sandvik trades a premium to history on 13x EBITDA and 16.5x earnings and inline with the sector. Does that sound right given deteriorating end market exposure?

GET SHORT.