The Secret PM

The Secret PM is your man on the inside. Tips, tricks and thought provoking trading ideas.

SECRET PM CLOSING OUR LT BUY IN ADIDAS

+174.5%

We feel it is right to sell Adidas and shift the capital into better opportunities. Although the market overall has been broadly flat for 2 years there have been and we feel there still are lots of opportunities within that. It has been a great trade for our Secret PM product. Trade was initiated October…

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THE SECRET PM

STRATEGY NOTE

From a top down view, and since mid-2014, the main challenge for an equity investor is the ultra-low level of government bond yields or risk-free rates. Low risk-free rates translate into low corporate bond yields – long dated corporate cash flows are currently discounted at 4.98% – which is the equivalent of a stock valuation…

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UPDATE: THE SECRET PM

LATEST ON HSBC AND IMI

HSBC HSBC is a long term investment – in 5 years or perhaps longer we will know how good the investment has been. The central thesis is that every profit line at HSBC has been hit over the past 10 years. Regulation has hurt the fee earning businesses as card swipe fees have been regulated…

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THE SECRET PM: BUY FOX

WITH CORPORATE BOND YIELDS AT 5% FOX's SHARE CAN EASILY DOUBLE

US TV and media content producers have suffered tremendous de-ratings over the past year. And in particular since Disney results in August, which showed a drop in pay-TV subscribers. Viacom, for example, which has delivered free cash flow of nearly $2.5bn during each of the past four years fell to a market cap of about…

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UPDATE: THE SECRET PM

ADIDAS An Adidas investment is built on the prospect for margin expansion. Despite similar gross profit margins to Nike, adidas has reported operating margins averaging 7.5% over the past 5 years versus Nike’s 13%. This shows up in their relative valuations: 1x EV/sales for adidas compared to 3.5x for Nike. Sure, Nike has some enduring…

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THE SECRET PM: BUY HEINEKEN

AFRICA TO DOUBLE GROUP PROFIT

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…

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THE SECRET PM: NIFTY FIFTY

DON'T GET SOLD ON EUROPE'S NIFTY FIFTY!

“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…

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THE SECRET PM: BUY IMI

LET'S GET READY TO COMPOUND

From 37,000 feet managers of manufacturing businesses have three tools at their disposal to increase business value. First, management can devote resources to develop more bespoke and customer-valued products, these command higher prices and generate higher gross margins. Second, management can improve operating efficiency by closing high-cost capacity and holding less inventory, in so doing…

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THE SECRET PM: BUY HSBC

COLLED SPRING SET TO OUTPERFORM

The sweet-spot for investors is typically a company that can re-invest its profits in expanding its asset base for many years into the future. In doing so such companies compound their shareholders’ capital. HSBC’s $2.6trn balance sheet and presence in 73 countries is thus enough to put off any investor looking for a long runway…

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THE SECRET PM: 2015 H1

IIT'S TIME TO CASH OUT YOUR STOCK HOLDINGS

There is good reason to believe that right now stock markets in the US and Europe are putting in highs and that going forward high investment returns are going to be just a lot harder to come by. For the past few years stock markets have enjoyed a perfectly proportioned cocktail of low and falling…

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