Beer requires no introduction. Across countries three factors overwhelmingly determine the size of the beer profit pool: population size, GDP per capita, and market structure. North America and Western Europe serve as an example of market structure. Market size (300 million hectolitres) and wealth ($40,000 GDP per cap) are roughly equivalent, yet operating margins are…
Locking in +6.2% in our trading short initiated post the placing. We are in the eye of the market unwind where placing stocks tend to get punished as we saw yesterday. There was no fundamental basis for the trade and for that reason we are happy to take profits. DIA SHORT-TERM SELL Tuesday •…
We initiated the bear on the basis of it being a short post the spinoff and the re-concentration of the market on its remaining commodity exposure. Since initiation we are +9.68% absolute and 5.512% rel without a significant move lower in oil or iron ore. While we still think this will transpire over the next…
With more than a 15% pull back, IAG now looks too cheap on 8.5x next years earnings. With solid traffic stats yesterday we view this potentially MERS related weakness as a good entry point. Since EZJ numbers the market has been concerned with the increased competition/price cuts on the back of the lower oil price,…
Been poor of late, some of which is related to a continued decline of power prices. However, more significant is the take up of the scrip div which is priced today. http://www.eon.com/en/investors/stocks/scripdividend/scripdividend.html The EON short interest averages 27mn shares, but on ex-date it rose 264mn shares (borrowed for arbitrage vs the scrip. Assuming the increased…
Still think it is the short in the sector with margins peaking and the ongoing normalisation of the Chinese market. We are stepping aside for now and booking profits and will look to re enter the short at a later date. We are closing for +9.25% return. BMW SHORT GO SHORT: TAILWINDS TURN INTO…
S32 closed at 108p yesterday and is going to open up again this morning. BLT traded down 70p. So immediate value creation. BLT now trades on more than 25x spot commod prices, with more than 70% exposure to Oil (rally in the price) and Iron Ore (in continued structural decline). The yield will continue to…
We continue to like the stock at 15x next year. With attractive exposure to the European consumer, we continue to think that trends will improve from the flat Q2 group sales ex-FX that the street expects. Guidance for a slight increase in FY EBIT should be maintained. A key driver will be the RUB, and…
“Men marry because they are tired; women, because they are curious: both are disappointed.” That quote from Wilde’s, The Picture of Dorian Grey, neatly describes the dilemma faced by European investors today. “Giving up” and buying bonds is going to leave you disappointed with your returns, but so is “optimistically” buying high-quality stocks. The average…
The bear story in Rio is well known. The super cycle in iron ore is over and is now structurally oversupplied. This will remain so given the low marginal cost of production of the tier 1 suppliers. As a result everyone is downgrading their commodity estimations making Rio’s marked to market P/E over 20x and…