European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Discounts to NAV of covered holdcos have either remained within same levels or widened during June: Alba, 40.3%; GBL, 34.7%; Heineken Holdings to 20.9%; Industrivärden C, 13.8%; Investor B, 15.6%; </li>
<li>Porsche Automobile Holding to 35.3%. Rio Tinto DLC widened to 23.4%.  Spreads tend to widen in bear markets but short term recoveries provide opportunities to bet on tightening discounts.</li>
<li>Recommended trades: Industrivärden C vs. listed assets, Rio Tinto (DLC).</li>
</ul>


Discounts to NAV of covered holdcos have either remained within same levels or widened during June: Alba, 40.3%; GBL, 34.7%; Heineken Holdings to 20.9%; Industrivärden C, 13.8%; Investor B, 15.6%; 
Porsche Automobile Holding to 35.3%. Rio Tinto DLC widened to 23.4%.  Spreads tend to widen in bear markets but short term recoveries provide opportunities to bet on tightening discounts.
Recommended trades: Industrivärden C vs. listed assets, Rio Tinto (DLC).


Selected European Holdcos and DLCs: June ‘22 Report

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

Shanghai Stock Exchange Composite Index / Technical Analysis

Cracks are beginning to show, particularly in EM/China where the MSCI EM index (EEM-US) is breaking below major $52 base support, the Shanghai Composite is breaking below 3500, the CSI 300 is breaking below 4885, and Hong Kong's Hang Seng is breaking below 27,000 support. Thankfully we have stayed away from areas hardest hit since EM/China has had poor relative performance for quite some time. Despite this being largely self-induced and very China-specific due to China's regulatory crackdown, the overhang could linger as additional Sectors/industries could be targeted. Moreover, it certainly does not help our already cautious and neutral outlook, but rather reinforces it.

Cracks are beginning to show, particularly in EM/China where the MSCI EM index (EEM-US) is breaking below major $52 base support, the Shanghai Composite is breaking below 3500, the CSI 300 is breaking below 4885, and Hong Kong's Hang Seng is breaking below 27,000 support. Thankfully we have stayed away from areas hardest hit since EM/China has had poor relative performance for quite some time. Despite this being largely self-induced and very China-specific due to China's regulatory crackdown, the overhang could linger as additional Sectors/industries could be targeted. Moreover, it certainly does not help our already cautious and neutral outlook, but rather reinforces it.

Weakness Contained To EM & China Thus Far; Actionable Themes: Tech, Utilities, Financials, Materials

MSCI Emerging Markets Index / Technical Analysis

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

TSE Tokyo Price Index TOPIX / Technical Analysis

Global technicals remain on a bullish footing. There’s a lot to like across global markets, chart-wise, particularly the catering-sized amount of base patterns. These patterns, which act as foundations for rallies, are visible throughout developed and emerging markets, pointing to another leg higher and endorsing our positive outlook.In our October Strategy (See attached), we highlight actionable themes in EM, Energy, and materials.  The attached document also contains links to an in-depth analysis of each of our 12 sectors.

Global technicals remain on a bullish footing. There’s a lot to like across global markets, chart-wise, particularly the catering-sized amount of base patterns. These patterns, which act as foundations for rallies, are visible throughout developed and emerging markets, pointing to another leg higher and endorsing our positive outlook.In our October Strategy (See attached), we highlight actionable themes in EM, Energy, and materials.  The attached document also contains links to an in-depth analysis of each of our 12 sectors.

Global Equity Strategy: Overweight EM, Japan Breaking Out, Europe in Recovery

Pullback opportunities are currently in limited supply. While most markets are advancing to 12+ month highs, including the U.S., Japan, and EM, Europe is still trading at its 200-day MA, as a result of its recent four-month decline. This presents an attractive entry point, especially for small-cap investors.  In this report we highlight opportunities in: steel companies, trucks/construction/farm machinery, auto parts manufacturers and energy companies.

Pullback opportunities are currently in limited supply. While most markets are advancing to 12+ month highs, including the U.S., Japan, and EM, Europe is still trading at its 200-day MA, as a result of its recent four-month decline. This presents an attractive entry point, especially for small-cap investors.  In this report we highlight opportunities in: steel companies, trucks/construction/farm machinery, auto parts manufacturers and energy companies.

Pullback Opportunities in European Small Caps

Luxembourg

APERAM manufactures specialty steel. The Company produces stainless and grain-oriented and non grain-oriented electrical steel and nickel alloys. APERAM markets its products in Brazil, France, and Belgium.

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APERAM SA (APAM NA)

Selected European Holdcos and DLCs: June ‘22 Report

Discounts to NAV of covered holdcos have either remained within same levels or widened during June. Spreads tend to widen in bear markets, it pays...

Jesus Rodriguez Aguilar

Weakness Contained To EM & China Thus Far; Actionable Themes: Tech, Utilities, Financials, Materials

Cracks are beginning to show, particularly in EM/China. Key support violations include the MSCI EM index below $52, the Shanghai Comp below 3500,...

Vermilion Research

Global Equity Strategy: Overweight EM, Japan Breaking Out, Europe in Recovery

Global technicals remain on a bullish footing. There’s a lot to like across global markets, chart-wise, particularly the catering-sized amount of...

Vermilion Research

Pullback Opportunities in European Small Caps

Pullback opportunities are currently in limited supply. While most markets are advancing to 12+ month highs, including the U.S., Japan, and EM,...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Selected European Holdcos and DLCs: June ‘22 Report

Discounts to NAV of covered holdcos have either remained within same levels or widened during June. Spreads tend to widen in bear markets, it pays...

Jesus Rodriguez Aguilar

Weakness Contained To EM & China Thus Far; Actionable Themes: Tech, Utilities, Financials, Materials

Cracks are beginning to show, particularly in EM/China. Key support violations include the MSCI EM index below $52, the Shanghai Comp below 3500,...

Vermilion Research

Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

Global Equity Strategy: Overweight EM, Japan Breaking Out, Europe in Recovery

Global technicals remain on a bullish footing. There’s a lot to like across global markets, chart-wise, particularly the catering-sized amount of...

Vermilion Research

Pullback Opportunities in European Small Caps

Pullback opportunities are currently in limited supply. While most markets are advancing to 12+ month highs, including the U.S., Japan, and EM,...

Vermilion Research