'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• RELATIVE PRICE SCORE OUTLIERS •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/304/original/2021-01-18_07-21-17.png?1611015356" class="editor-image img-responsive" data-smartkarma-image-id="183304"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/305/original/2021-01-19_09-18-35.png?1611015525" class="editor-image img-responsive" data-smartkarma-image-id="183305"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>POLES APART</strong><strong>&amp; ECHOES OF 2000</strong>- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/321/original/2021-01-19_10-25-51.png?1611019564" class="editor-image img-responsive" data-smartkarma-image-id="183321"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/323/original/2021-01-19_10-27-10.png?1611019660" class="editor-image img-responsive" data-smartkarma-image-id="183323"></figure></section><p><strong>BLOW OUT</strong> - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/363/original/2021-01-19_12-45-46.png?1611027961" class="editor-image img-responsive" data-smartkarma-image-id="183363"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/367/original/2021-01-19_13-09-06.png?1611029374" class="editor-image img-responsive" data-smartkarma-image-id="183367"></figure></section><div><p>In the<strong> DETAIL</strong> section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.</p></div><div><div><div class="content-highlight"><p><strong>THE JAPAN ANALYTICS RELATIVE PRICE SCORE</strong> -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.</p></div></div></div>

• RELATIVE PRICE SCORE OUTLIERS •Source for all charts &amp; tables: Japan AnalyticsPOLES APART&amp; ECHOES OF 2000- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.BLOW OUT - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   In the DETAIL section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.THE JAPAN ANALYTICS RELATIVE PRICE SCORE -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.

🇯🇵 JAPAN • January Relative Price Scores -  Actionable Mean Reversion Trades

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. </p><p>When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. </p><p>My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.</p><p>Which is a lot.</p><p>The arithmetic, and an explanation of why it matters, follow.</p>

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

<p><strong><a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> stock closed near $2,100 per share on Friday</strong>, making it more expensive at more than $381 billion versus the combined equity of its next five competitors <a href="https://www.smartkarma.com/entities/general-motors-co" target="_blank" data-smartkarma-citation="entities:18811:1" rel="noopener">General Motors Co (GM US)</a>, <a href="https://www.smartkarma.com/entities/ford-motor-co" target="_blank" data-smartkarma-citation="entities:19225:1" rel="noopener">Ford Motor Co (F US)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp-spon-adr" target="_blank" data-smartkarma-citation="entities:8245:1" rel="noopener">Toyota Motor Corp Spon Adr (TM US)</a>, <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a>, and <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd-adr" target="_blank" data-smartkarma-citation="entities:8768:1" rel="noopener">Nissan Motor (ADR) (NSANY US)</a>. </p><p><strong>Notice I didn't say more "valuable."</strong> That's because the stock now is selling at <strong>1153x earnings</strong>, with enterprise value <strong>84x my 2020 EBITDA estimate</strong> (as affirmed in my report <a href="https://www.smartkarma.com/insights/investors-aren-t-worried-but-tesla-seems-to-be" target="_blank" data-smartkarma-citation="insights:39074" rel="noopener">Investors Aren't Worried, But Tesla Seems To Be</a> on 8/17/20).</p><p>Now, this doesn't mean I am a Tesla "hater" (or a seventh-grader) or "in the pocket of big oil." But then, people say a lot of dubious things to justify Tesla's stock price like:</p><ul>
<li>Tesla should be priced like a <strong>tech company</strong>, not an auto company. </li>
<li>Tesla is <strong>profitable and generates free cash flow</strong>.</li>
<li>Analysts just <strong>don't understand</strong> Tesla's business.</li>
<li>Tesla's <strong>insane demand</strong> plus its prospective <strong>battery-making business makes it worth the valuation</strong>.</li>
<li>Panic over COVID-19 is <strong>"dumb"</strong> and it will be <strong>over by April</strong>. Wait, those <a href="https://www.theguardian.com/technology/2020/may/01/coronavirus-has-elon-musk-acting-like-just-another-used-car-salesman" target="_blank" rel="noopener">statements came from Tesla CEO Elon Musk</a> and they were <strong>categorically false and dangerous misinformation when he said them</strong>.</li>
</ul><p>Meanwhile, we're still waiting for the <strong>"more than one million" Tesla "robotaxis"</strong> with "<strong>full self-driving hardware, feature complete</strong> at a reliably level that we would consider that <strong>no one needs to pay attention</strong>" as <strong>Musk promised by July of this year on Autonomy Day in April 2019</strong> and which <strong>now are significantly overdue</strong> (see <a href="https://www.smartkarma.com/insights/tesla-autonomy-day-takes-investors-for-another-ride" target="_blank" data-smartkarma-citation="insights:29339" rel="noopener">Tesla "Autonomy Day" Takes Investors For Another Ride</a> on 4/24/19).</p><p>I mean, if you can't trust claims from Elon Musk what about Tesla's bulls? </p><div class="content-highlight"><p><em>Read on as <strong>Bond Angle the Curmudgeon</strong> takes on Tesla myths <strong>even bigger than its stock price</strong>.</em></p></div>

Tesla Motors (TSLA US) stock closed near $2,100 per share on Friday, making it more expensive at more than $381 billion versus the combined equity of its next five competitors General Motors Co (GM US), Ford Motor Co (F US), Toyota Motor Corp Spon Adr (TM US), Volkswagen (VOW GR), and Nissan Motor (ADR) (NSANY US). Notice I didn't say more "valuable." That's because the stock now is selling at 1153x earnings, with enterprise value 84x my 2020 EBITDA estimate (as affirmed in my report Investors Aren't Worried, But Tesla Seems To Be on 8/17/20).Now, this doesn't mean I am a Tesla "hater" (or a seventh-grader) or "in the pocket of big oil." But then, people say a lot of dubious things to justify Tesla's stock price like:
Tesla should be priced like a tech company, not an auto company. 
Tesla is profitable and generates free cash flow.
Analysts just don't understand Tesla's business.
Tesla's insane demand plus its prospective battery-making business makes it worth the valuation.
Panic over COVID-19 is "dumb" and it will be over by April. Wait, those statements came from Tesla CEO Elon Musk and they were categorically false and dangerous misinformation when he said them.
Meanwhile, we're still waiting for the "more than one million" Tesla "robotaxis" with "full self-driving hardware, feature complete at a reliably level that we would consider that no one needs to pay attention" as Musk promised by July of this year on Autonomy Day in April 2019 and which now are significantly overdue (see Tesla "Autonomy Day" Takes Investors For Another Ride on 4/24/19).I mean, if you can't trust claims from Elon Musk what about Tesla's bulls? Read on as Bond Angle the Curmudgeon takes on Tesla myths even bigger than its stock price.

Things People Believe: Flat Earth, Faked Moon Landings, and Tesla $2100

HK/China Equity Long-Short

Osbert Tang, CFA

<p>China's aerospace and defense industry offers unique investment opportunity to investors, but due to its high sensitivity, all major companies involved are listed as A-shares in either the Shanghai or the Shenzhen Stock Exchanges only.  With the rise in global geopolitical tension, increase in the civilian uses of defense technology, the government's support of the industry and the potential for further asset injection and restructuring of the listed companies, we are positive on the outlook of the sector.</p><p>While there are risks in the investment in this industry of national importance, we believe that they are outweighed by the potential returns. Among the MSCI China A-share constituents in the sector, we prefer <a href="https://www.smartkarma.com/entities/avic-shenyang-aircraft-co-ltd" target="_blank" data-smartkarma-citation="entities:12150:1" rel="noopener">Avic Shenyang Aircraft (600760 CH)</a> and <a href="https://www.smartkarma.com/entities/aecc-aviation-power-co-ltd" target="_blank" data-smartkarma-citation="entities:2461:1" rel="noopener">AECC Aviation Power (600893 CH)</a>. These are then followed by <a href="https://www.smartkarma.com/entities/avic-aircraft-co-ltd" target="_blank" data-smartkarma-citation="entities:15174:1" rel="noopener">Avic Aircraft Co Ltd A (000768 CH)</a> and <a href="https://www.smartkarma.com/entities/china-spacesat-co-ltd-a" target="_blank" data-smartkarma-citation="entities:6142:1" rel="noopener">China Spacesat Co Ltd A (600118 CH)</a>, respectively. However, we ranked <a href="https://www.smartkarma.com/entities/china-avionics-systems-coltd" target="_blank" data-smartkarma-citation="entities:11393:1" rel="noopener">China Avionics Systems Co (600372 CH)</a> as the least attractive play among the five stocks. </p><h2>What's Original?</h2><p>This Smartkarma Original covers the opportunities and risks for the sector by looking at the recent geopolitical developments, including the US-China political and trade tension, and their implications on the future development of China's defense spending and the market outlook of the aerospace and defense industry. We analyse the revenue and margin drivers, provide global comparison and present our views on the A-share aerospace &amp; defense companies. We also look from the perspectives of potential asset restructuring and industry consolidation given the many unlisted central State-owned enterprises (SOEs) involved in this business and the numerous listed companies under these SOEs. In addition, we address the background and characteristics of the aerospace &amp; defense central SOEs (unlisted parents of these listed companies) as they are essential to the understanding of the listed companies. </p>

China's aerospace and defense industry offers unique investment opportunity to investors, but due to its high sensitivity, all major companies involved are listed as A-shares in either the Shanghai or the Shenzhen Stock Exchanges only.  With the rise in global geopolitical tension, increase in the civilian uses of defense technology, the government's support of the industry and the potential for further asset injection and restructuring of the listed companies, we are positive on the outlook of the sector.While there are risks in the investment in this industry of national importance, we believe that they are outweighed by the potential returns. Among the MSCI China A-share constituents in the sector, we prefer Avic Shenyang Aircraft (600760 CH) and AECC Aviation Power (600893 CH). These are then followed by Avic Aircraft Co Ltd A (000768 CH) and China Spacesat Co Ltd A (600118 CH), respectively. However, we ranked China Avionics Systems Co (600372 CH) as the least attractive play among the five stocks. What's Original?This Smartkarma Original covers the opportunities and risks for the sector by looking at the recent geopolitical developments, including the US-China political and trade tension, and their implications on the future development of China's defense spending and the market outlook of the aerospace and defense industry. We analyse the revenue and margin drivers, provide global comparison and present our views on the A-share aerospace &amp; defense companies. We also look from the perspectives of potential asset restructuring and industry consolidation given the many unlisted central State-owned enterprises (SOEs) involved in this business and the numerous listed companies under these SOEs. In addition, we address the background and characteristics of the aerospace &amp; defense central SOEs (unlisted parents of these listed companies) as they are essential to the understanding of the listed companies. 

China Aerospace & Defense A Shares: An In-Depth Walkthrough

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<ul>
<li>
<em><strong>Increasing Systemic Risks:</strong></em>Events are moving quickly and the fluidity of this pandemic has created a destructive amount of market volatility, which likely is the new normal given issues Quant Funds, illiquidity, the lack of US preparation and global leadership, and the corporate bond market are all becoming systemic risks.</li>
<li> <em><strong>Global Recession Already Underway:</strong></em> A global recession is already well underway, which should worsen given how much this pandemic is having on consumer confidence.  </li>
<li><p><em><strong>Financial Stability Called Into Question:</strong></em>The global market rout is calling financial stability into question. This crisis of confidence and increased likelihood of waterfall of losses that will make for a VERY toxic cocktail – especially considering that many names are still not profitable on an operating basis.   </p></li>
</ul>



Increasing Systemic Risks:Events are moving quickly and the fluidity of this pandemic has created a destructive amount of market volatility, which likely is the new normal given issues Quant Funds, illiquidity, the lack of US preparation and global leadership, and the corporate bond market are all becoming systemic risks.
 Global Recession Already Underway: A global recession is already well underway, which should worsen given how much this pandemic is having on consumer confidence.  
Financial Stability Called Into Question:The global market rout is calling financial stability into question. This crisis of confidence and increased likelihood of waterfall of losses that will make for a VERY toxic cocktail – especially considering that many names are still not profitable on an operating basis.   


United States

The Boeing Company, together with its subsidiaries, develops, produces, and markets commercial jet aircraft, as well as provides related support services to the commercial airline industry worldwide.  The Company also researches, develops, produces, modifies, and supports information, space, and defense systems, including military aircraft, helicopters and space and missile systems.

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Boeing Co (BA US)

🇯🇵 JAPAN • January Relative Price Scores - Actionable Mean Reversion Trades

As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold and those that are...

Campbell Gunn

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

Things People Believe: Flat Earth, Faked Moon Landings, and Tesla $2100

Tesla Motors (TSLA US) stock closed near $2,100 per share on Friday, making it more expensive at more than $381 billion versus the combined equity...

Vicki Bryan

China Aerospace & Defense A Shares: An In-Depth Walkthrough

China's aerospace and defense industry offers unique investment opportunity to investors, but due to its high sensitivity, all major companies...

Osbert Tang, CFA

Toxic Cocktail

Increasing Systemic Risks:Events are moving quickly and the fluidity of this pandemic has created a destructive amount of market volatility,...

Thomas J. Monaco

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