Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>The pullback in global equities continues with the MSCI ACWI (ACWI-US) testing 1.5-month downtrend resistance while the STOXX Europe 50 tests resistance at 3800-3840.</li>
<li>We expect a rejection at the 1.5-month downtrend and for the stair-step lower to continue, with our targets being $84 (December 2022 low) and potentially $75-77 (the 2022 lows).</li>
<li>If ACWI-US is able to reverse above the 1.5-month downtrend, we still expect $93 to cap upside in 2023. Remain overweight Europe. Also highlighting individual stock buys on pullbacks.</li>
</ul>


The pullback in global equities continues with the MSCI ACWI (ACWI-US) testing 1.5-month downtrend resistance while the STOXX Europe 50 tests resistance at 3800-3840.
We expect a rejection at the 1.5-month downtrend and for the stair-step lower to continue, with our targets being $84 (December 2022 low) and potentially $75-77 (the 2022 lows).
If ACWI-US is able to reverse above the 1.5-month downtrend, we still expect $93 to cap upside in 2023. Remain overweight Europe. Also highlighting individual stock buys on pullbacks.


MSCI ACWI and EAFE Testing 1.5-Month Downtrends; Remain OW EU; Buys in Leading Sectors on Pullbacks

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Discounts to NAV of covered holdcos have mainly widened during September as a result of the bear market.</li>
<li>Discounts to NAV (5 September): Alba, 47.3%; GBL, 34.8%; Heineken Holdings 21.6%; Industrivärden C, 9.8%; Investor B, 17.9%; Porsche Automobile Holding 34.9%. The spread of Rio Tinto DLC tightened to 8.5%.</li>
<li>Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: Porsche SE, Rio Tinto (DLC).</li>
</ul>


Discounts to NAV of covered holdcos have mainly widened during September as a result of the bear market.
Discounts to NAV (5 September): Alba, 47.3%; GBL, 34.8%; Heineken Holdings 21.6%; Industrivärden C, 9.8%; Investor B, 17.9%; Porsche Automobile Holding 34.9%. The spread of Rio Tinto DLC tightened to 8.5%.
Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: Porsche SE, Rio Tinto (DLC).


Selected European Holdcos and DLCs: September ‘22 Report

<ul>
<li>Edizione/Blacktone have obtained clearances from Bank of Italy and Bank of Spain regarding their voluntary takeover offer for Atlantia. Once the Consob approves the prospectus the offer can be launched.</li>
<li>The offer period should start in October and should be completed after 40 working days, with settlement by the end of November, and delisting by the end of the year.</li>
<li>Gross spread is 1.13%, 7.06% annualised return assuming settlement by 30 November. <strong>Long ATL IM</strong>.</li>
</ul>


Edizione/Blacktone have obtained clearances from Bank of Italy and Bank of Spain regarding their voluntary takeover offer for Atlantia. Once the Consob approves the prospectus the offer can be launched.
The offer period should start in October and should be completed after 40 working days, with settlement by the end of November, and delisting by the end of the year.
Gross spread is 1.13%, 7.06% annualised return assuming settlement by 30 November. Long ATL IM.


Edizione & KKR/​Atlantia: All Clearances Obtained

Porsche Automobil Holding  / Event-Driven

<ul>
<li>Discounts to NAV of covered holdcos have mainly widened or stayed at the same level during August/beginning of September, in line with the loses in the main indexes.</li>
<li>Discounts to NAV (5 September): Alba, 46.1%; GBL, 34.1%; Heineken Holdings 21.3%; Industrivärden C, 10.1%; Investor B, 18.9%; Porsche Automobile Holding 29.4%. The spread of Rio Tinto DLC tightened to 14.5%.</li>
<li>Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).</li>
</ul>


Discounts to NAV of covered holdcos have mainly widened or stayed at the same level during August/beginning of September, in line with the loses in the main indexes.
Discounts to NAV (5 September): Alba, 46.1%; GBL, 34.1%; Heineken Holdings 21.3%; Industrivärden C, 10.1%; Investor B, 18.9%; Porsche Automobile Holding 29.4%. The spread of Rio Tinto DLC tightened to 14.5%.
Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).


Selected European Holdcos and DLCs: August ‘22 Report

<ul>
<li>Discounts to NAV of covered holdcos haven't shown a clear trend during July/beginning of August. Investors have favored Swedish hodlcos, disliked GBL's results and avoided the Heineken/Heineken Holdings trade.</li>
<li>Discounts to NAV: Alba, 42.8%; GBL, 34.5%; Heineken Holdings to 21.5%; Industrivärden C, 7.8%; Investor B, 14.3%; Porsche Automobile Holding to 29.4%. Rio Tinto DLC tightened to 16.2%.</li>
<li>Spreads tend to widen in bear markets but short term recoveries provide opportunities on tightening discounts. If anything, recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).</li>
</ul>


Discounts to NAV of covered holdcos haven't shown a clear trend during July/beginning of August. Investors have favored Swedish hodlcos, disliked GBL's results and avoided the Heineken/Heineken Holdings trade.
Discounts to NAV: Alba, 42.8%; GBL, 34.5%; Heineken Holdings to 21.5%; Industrivärden C, 7.8%; Investor B, 14.3%; Porsche Automobile Holding to 29.4%. Rio Tinto DLC tightened to 16.2%.
Spreads tend to widen in bear markets but short term recoveries provide opportunities on tightening discounts. If anything, recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).


Selected European Holdcos and DLCs: July ‘22 Report

Spain

Fomento de Construcciones y Contratas S.A. (FCC) offers construction services and manufactures building materials.  The Company offers civil engineering services, constructs housing and commercial buildings, roads, and other infrastructure projects, develops real estate, collects, treats, and disposes of solid waste, markets street cleaning machines, and produces cement.

Fomento De Construcciones Y Contratas (FCC SM)

Sacyr S.A. offers construction services, operates concessions and develops and rents real estate in Spain.  The Company develops housing, office buildings, factories, shopping malls, hotels and retirement homes, offers building maintenance services, and administers and markets real estate.

Elecnor, S.A. generates, transmits, and distributes electrical power and gas. The Company also engineers, constructs and installs power lines and pipelines for the electrical power, water and gas, railroad and telecommunications industries. Elecnor operates in Spain, Portugal, Argentina, Ecuador, Peru, Venezuela, Brazil, Mexico, and Morocco.

Ferrovial SA is an infrastructure operator and industrial company. The Company operates in multiple countries in a range of sectors including construction, airport, toll road, and municipal services.  Ferrovial SA also has a services division in which they provide facility management, infrastructure maintenance and upkeep, and energy and waste management services.

Obrascon Huarte Lain, S.A. is a construction and engineering company. The Company builds highways, waterworks, civil engineering projects, residential housing and public buildings.  Obrascon also offers public works maintenance and water management services.

Siemens Gamesa Renewable Energy, S.A. designs and manufactures renewable energy equipment. The Company offers wind turbines, turbine gearboxes, offgrid, and other related equipment, as well as provides maintenance and reconditioning services. Siemens Gamesa Renewable Energy serves industrial facility management, automotive industry, and new technology development worldwide.

Siemens Gamesa Renewable Energy, S.A. (SGRE SM)

Construcciones y Auxiliar de Ferrocarriles SA manufactures railroad cars and components, as well as complete turnkey transportation systems. Exports are increasingly important to the Company, with customers in the UK, Finland, Poland Hong Kong, Brazil and elsewhere. Domestically, the Company has, and will, supply rolling stock to the Madrid and Bilbao subway systems.

Construcciones Y Auxiliar De Ferrocarriles SA (CAF SM)

Construcciones Y Auxiliar De Ferrocarriles SA

Talgo S.A. is a Spain-based specialized rolling stock engineering company focused on the designing, manufacturing and servicing of lightweight trains.

Compania de Distribucion Integral Logista Holdings, S.A. operates as an international logistical solution provider. The Company offers logistics, parcel and express courier transport, industrial parcel transport, and long distance and full truck load transport management services.

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

China Railway Group Ltd. offers transportation systems construction services. The Company builds railroads, roads, tunnels, and bridges.

China Communications Construction Company Ltd. is a transportation infrastructure group.  The Company is involved in infrastructure construction, infrastructure design, dredging, and port machinery manufacturing.  China Communications has operations worldwide.

China Communications Construction (1800 HK)

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

OBAYASHI CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, institutional buildings with earthquake-resistant technology.  Obayashi also performs civil engineering works for such as railroads.  The Company, through its subsidiaries, operates real estate, golf course, and financial businesses.

Fluor Corporation is a professional services company. The Company provides engineering, procurement, construction and maintenance as well as project management services on a global basis. Fluor also provides outsourcing of maintenance services and asset operations, equipment rental and sales, business support services, and other services.

KBR, Inc. is a global engineering, construction, and services company supporting the energy, petrochemicals, government services, and civil infrastructure sectors.  The Company offers a wide range of services through two business segments, Energy and Chemicals (E&C) and Government and Infrastructure (G&I).

KAJIMA CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, and institutional buildings with high-rise and earthquake-resistant construction technology.  Kajima also performs large scale civil engineering works such as nuclear power plants. The Company operates real estate and office automation equipment businesses.

Comfort Systems USA, Inc. provides heating, ventilation, and air conditioning system installation, maintenance, repair, and replacement services. The Company's commercial and industrial markets include office buildings, retail centers, apartment complexes, hotels, manufacturing plants, and government facilities.

MasTec, Inc. is a specialty contractor operating across a range of industries. The Company activities are the building, installation, maintenance, and upgrade of utility and communications infrastructure, including electrical utility transmission and distribution, wind farms, solar farms, renewable energy and natural gas infrastructure, wireless, and wireline.

TAISEI CORPORATION is a general contractor operating nationwide and overseas. The Company builds residential, commercial, and institutional buildings such as condominiums and single-family houses.  Taisei also performs civil engineering works for roads.  The Company, through its subsidiaries, operates real estate, resort development, and financial businesses.

ACS, Actividades de Construccion y Servicios, S.A. is an engineering and contracting company that develops civil and industrial infrastructures. The Company provides Civil Works Construction, Greenfield Concession Development, Industrial Services (electricity, oil and gas) and Environmental Services (waste treatment and facility management).

ACS, Actividades de Construcción y Servicios (ACS SM)

ACS, Actividades de Construcción y Servicios

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ACS, Actividades de Construcción y Servicios (ACS SM)

MSCI ACWI and EAFE Testing 1.5-Month Downtrends; Remain OW EU; Buys in Leading Sectors on Pullbacks

Pullback in global equities continues with MSCI $ACWI testing 1.5-month downtrend resistance as $STOXX Europe 50 tests 3800-3840 resistance....

Vermilion Research

Selected European Holdcos and DLCs: September ‘22 Report

Discounts to NAV of covered holdcos have mainly widened during September as a result of the bear market. Spreads tend to widen in bear markets but...

Jesus Rodriguez Aguilar

Edizione & KKR/Atlantia: All Clearances Obtained

The Benettons/Blackstone offer for Atlantia has obtained all clearances, and just pending prospectus authorization by the Consob, should be...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: August ‘22 Report

Discounts to NAV of covered holdcos have mainly widened or stayed at the same level during August/beginning of September, in line with the loses in...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: July ‘22 Report

Discounts to NAV of covered holdcos haven't shown a clear trend during July/beg. of August. Investors have favored Swedish hodlcos, disliked GBL's...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

MSCI ACWI and EAFE Testing 1.5-Month Downtrends; Remain OW EU; Buys in Leading Sectors on Pullbacks

Pullback in global equities continues with MSCI $ACWI testing 1.5-month downtrend resistance as $STOXX Europe 50 tests 3800-3840 resistance....

Vermilion Research

Selected European Holdcos and DLCs: September ‘22 Report

Discounts to NAV of covered holdcos have mainly widened during September as a result of the bear market. Spreads tend to widen in bear markets but...

Jesus Rodriguez Aguilar

Edizione & KKR/​Atlantia: All Clearances Obtained

The Benettons/Blackstone offer for Atlantia has obtained all clearances, and just pending prospectus authorization by the Consob, should be...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: August ‘22 Report

Discounts to NAV of covered holdcos have mainly widened or stayed at the same level during August/beginning of September, in line with the loses in...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: July ‘22 Report

Discounts to NAV of covered holdcos haven't shown a clear trend during July/beg. of August. Investors have favored Swedish hodlcos, disliked GBL's...

Jesus Rodriguez Aguilar

Edizione & KKR/Atlantia: All Clearances Obtained