Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Thematic (Sector/Industry)

<ul><li>This post provides an update of Evidente&rsquo;s currency model.&nbsp; Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also points to deep A$/US$ under-valuation.&nbsp; ASX listed US$ earners have performed poorly despite the renewed deprecation of the A$ over the past six months.&nbsp;</li><li>I also assess the investment case against Brambles, which generates around half of its revenue in North America.&nbsp; The company will be undergoing a capex hump at a time when its marginal return on capital has been deteriorating to the point of recently turning negative.&nbsp;</li><li>I examine its remuneration scheme and conclude that the fact that the board, ESG advisory firms and institutional investors endorse complex and opaque Long Term Incentive plans of this kind, suggests that the bloated corporate governance industry has a long way to go to achieving adequate alignment of interests between senior executives and shareholders.</li></ul>

This post provides an update of Evidente&rsquo;s currency model.&nbsp; Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also points to deep A$/US$ under-valuation.&nbsp; ASX listed US$ earners have performed poorly despite the renewed deprecation of the A$ over the past six months.&nbsp;I also assess the investment case against Brambles, which generates around half of its revenue in North America.&nbsp; The company will be undergoing a capex hump at a time when its marginal return on capital has been deteriorating to the point of recently turning negative.&nbsp;I examine its remuneration scheme and conclude that the fact that the board, ESG advisory firms and institutional investors endorse complex and opaque Long Term Incentive plans of this kind, suggests that the bloated corporate governance industry has a long way to go to achieving adequate alignment of interests between senior executives and shareholders.

A$ buy signal strengthens | Investment case against Brambles

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

FleetPartners Group  / Equity Capital Markets

<p>Eclipx Group plans to raise US$200m through its IPO.&nbsp;While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the deal doesn't score well on our framework), however, we would consider subscribing to the IPO given:</p><ul><li>The company recently (in 2014) got in a new CEO and CFO, who were both previously working at FlexiGroup and have demonstrated a good track record there. This is not reflected in the company's historic financials, which have shown slow/degrowth over the past three years.</li><li>We are hearing that the book build is going strong with investors showing a lot of faith in the new management. If the management is able to steer a turnaround then the stock should hold up well given that the company can still tap into new segments and build upon its recent acquisitions as well.</li><li>The stock is being offered at 11x p/e, vs an average of 12.4x for peers, and offers a dividend yield of 4.8-5.6% vs. 4.5-5.5% for peers.</li><li>In terms of momentum the deal scores well on our framework, largely because previous deals in the sector &nbsp;and in the country have performed well.&nbsp;</li></ul><p>Risks:</p><ul><li>Given the sustained fall in PATMI over the past three years, combined with investors having the option to invest in the sector through its three other broadly similar listed peers, the stock is unlikely to warrant strong long only demand, in our view.</li><li>Recent similar sized IPO of its directly comparable peer - SG Fleet Group (SGF AU, listed in Mar-2014), promptly fell below IPO price, although now the stock is trading 27% above its IPO price.</li></ul>

Eclipx Group plans to raise US$200m through its IPO.&nbsp;While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the deal doesn't score well on our framework), however, we would consider subscribing to the IPO given:The company recently (in 2014) got in a new CEO and CFO, who were both previously working at FlexiGroup and have demonstrated a good track record there. This is not reflected in the company's historic financials, which have shown slow/degrowth over the past three years.We are hearing that the book build is going strong with investors showing a lot of faith in the new management. If the management is able to steer a turnaround then the stock should hold up well given that the company can still tap into new segments and build upon its recent acquisitions as well.The stock is being offered at 11x p/e, vs an average of 12.4x for peers, and offers a dividend yield of 4.8-5.6% vs. 4.5-5.5% for peers.In terms of momentum the deal scores well on our framework, largely because previous deals in the sector &nbsp;and in the country have performed well.&nbsp;Risks:Given the sustained fall in PATMI over the past three years, combined with investors having the option to invest in the sector through its three other broadly similar listed peers, the stock is unlikely to warrant strong long only demand, in our view.Recent similar sized IPO of its directly comparable peer - SG Fleet Group (SGF AU, listed in Mar-2014), promptly fell below IPO price, although now the stock is trading 27% above its IPO price.

Eclipx Group - All hope on new management driving a turnaround

Australia

FleetPartners Group Limited provides vehicle fleet leasing, fleet management, and diversified financial services. The Company offers consumers and businesses access to funding solutions including fleet leasing, vehicle sales, commercial equipment finance, and consumer motor vehicle finance. FleetPartners Group serves customers in Australia and New Zealand.

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FleetPartners Group (FPR AU)

A$ buy signal strengthens | Investment case against Brambles

This post provides an update of Evidente’s currency model. Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also...

Sam Ferraro

Eclipx Group - All hope on new management driving a turnaround

Eclipx Group plans to raise US$200m through its IPO. While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the...

Sumeet Singh

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