Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber Technologies (UBER US)</a>, <a href="https://www.smartkarma.com/entities/jabil-circuit-inc" target="_blank" data-smartkarma-citation="entities:16674:1" rel="noopener">Jabil Circuit (JBL US)</a> and <a href="https://www.smartkarma.com/entities/builders-firstsource-inc" target="_blank" data-smartkarma-citation="entities:4720:1" rel="noopener">Builders Firstsource (BLDR US)</a> will be added to the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a> at the close on 15 December.</li>
<li>There are a bunch of inclusions. deletions and migrations across the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a>, the S&amp;P Midcap 400 Index, and the S&amp;P SmallCap 600 Index.</li>
<li>We estimate passive trackers will need to buy around US$18bn of <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber Technologies (UBER US)</a>. There has been positioning in the stock for just over a month now. </li>
</ul>



Uber Technologies (UBER US), Jabil Circuit (JBL US) and Builders Firstsource (BLDR US) will be added to the S&amp;P 500 INDEX (SPX INDEX) at the close on 15 December.
There are a bunch of inclusions. deletions and migrations across the S&amp;P 500 INDEX (SPX INDEX), the S&amp;P Midcap 400 Index, and the S&amp;P SmallCap 600 Index.
We estimate passive trackers will need to buy around US$18bn of Uber Technologies (UBER US). There has been positioning in the stock for just over a month now. 


Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>In Q2FY24, <a href="https://www.smartkarma.com/entities/avid-bioservices-inc" target="_blank" data-smartkarma-citation="entities:13309:1" rel="noopener">Avid Bioservices (CDMO US)</a> reported 27% YoY and 33% QoQ revenue decline to $25.4M, due to annual maintenance shutdown and reduction in process development services from early-stage customers.</li>
<li>During Q2FY24, Avid Bioservices signed $35M in net new business orders from both new and existing customers, resulting in a record high backlog of $199M, up 35% YoY.</li>
<li>Avid Bioservices has lowered FY24 revenue guidance to $137–147 million from $145–165 million. For reference, the company reported revenue of $149 million in FY23.</li>
</ul>


In Q2FY24, Avid Bioservices (CDMO US) reported 27% YoY and 33% QoQ revenue decline to $25.4M, due to annual maintenance shutdown and reduction in process development services from early-stage customers.
During Q2FY24, Avid Bioservices signed $35M in net new business orders from both new and existing customers, resulting in a record high backlog of $199M, up 35% YoY.
Avid Bioservices has lowered FY24 revenue guidance to $137–147 million from $145–165 million. For reference, the company reported revenue of $149 million in FY23.


Avid Bioservices (CDMO US): Q2 Result Falls Below Expectation; FY24 Guidance Lowered Amid Slowdown

<ul>
<li>The announcement of the inclusion of <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber Technologies (UBER US)</a> in the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX</a> was a big one last week. There were announcements for some other indices too.</li>
<li>There are many indices in China that will be rebalanced at the close on Friday, the biggest being the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300</a>, <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500</a>, <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50</a>, <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50</a> and <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KWEB US</a>.</li>
<li>Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.</li>
</ul>


The announcement of the inclusion of Uber Technologies (UBER US) in the S&amp;P 500 INDEX was a big one last week. There were announcements for some other indices too.
There are many indices in China that will be rebalanced at the close on Friday, the biggest being the CSI 300, CSI 500, STAR50, SSE50 and KWEB US.
Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.


Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

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 Russell 2000 ETF / Technical Analysis

<ul>
<li>The market continues to send mixed signals - some neutral or healthy signals but some risk-off signals as well.</li>
<li>As long as the Russell 2000 index (IWM) is above $208, Russell Micro Cap index (IWC) is above $134-$135, and the S&amp;P 500 is above 4495, we cannot be bearish.</li>
<li>Treasury yields are not breaking down below 1.40%-1.45% support on the 10-year Treasury yield and 1.76% support on the 30-year Treasury yield.</li>
</ul>


The market continues to send mixed signals - some neutral or healthy signals but some risk-off signals as well.
As long as the Russell 2000 index (IWM) is above $208, Russell Micro Cap index (IWC) is above $134-$135, and the S&amp;P 500 is above 4495, we cannot be bearish.
Treasury yields are not breaking down below 1.40%-1.45% support on the 10-year Treasury yield and 1.76% support on the 30-year Treasury yield.


Continued Absence Of Breakdowns Is A Positive Sign; Many Bottoms-Up Stock Recommendations

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

<p><a href="https://www.smartkarma.com/entities/avid-bioservices-inc" target="_blank" data-smartkarma-citation="entities:13309:1" rel="noopener">Avid Bioservices Inc (CDMO US)</a> reported record revenues in Q3FY21 of of USD 21.8mm (61% YoY Growth). More importantly it reported its highest ever order backlog of USD 120mm (80% QoQ Growth). Avid's order backlog, since it became a pure-play CDMO in late 2017, has tended to be in the USD 40-70mm range. The current order backlog puts Avid into a completely different orbit. This has also led Avid to raise its FY21 (May 2020 - Apr 2021) revenue guidance to USD 88-91mm from previous guidance of USD 84-88mm.</p>
<p>The strong operational performance at Avid, particularly over the past three quarters, has propelled Avid's stock up ~2x over the past seven months, since we initiated coverage on it at <a href="https://www.smartkarma.com/insights/us-hidden-gems-avid-bioservices-transitioning-avidly-to-pure-play-biologics-cdmo" target="_blank" data-smartkarma-citation="insights:42254" rel="noopener">US Hidden Gems | Avid Bioservices: Transitioning Avidly to Pure-Play Biologics CDMO</a>.</p>
<div class="content-highlight">
<p>Note that yesterday, Avid's stock was down over -8% in anticipation of pricing uncertainty and/or hedging activity around its USD 125mm senior unsecured exchangeable note offering. The pricing has been since announced and we think it came out quite favorable with annual coupon rate of just 1.25% with an option for Avid to redeem in full in cash during Mar 2024 to Sep 2025 period, subject to certain conditions.</p>
</div>

Avid Bioservices Inc (CDMO US) reported record revenues in Q3FY21 of of USD 21.8mm (61% YoY Growth). More importantly it reported its highest ever order backlog of USD 120mm (80% QoQ Growth). Avid's order backlog, since it became a pure-play CDMO in late 2017, has tended to be in the USD 40-70mm range. The current order backlog puts Avid into a completely different orbit. This has also led Avid to raise its FY21 (May 2020 - Apr 2021) revenue guidance to USD 88-91mm from previous guidance of USD 84-88mm.
The strong operational performance at Avid, particularly over the past three quarters, has propelled Avid's stock up ~2x over the past seven months, since we initiated coverage on it at US Hidden Gems | Avid Bioservices: Transitioning Avidly to Pure-Play Biologics CDMO.

Note that yesterday, Avid's stock was down over -8% in anticipation of pricing uncertainty and/or hedging activity around its USD 125mm senior unsecured exchangeable note offering. The pricing has been since announced and we think it came out quite favorable with annual coupon rate of just 1.25% with an option for Avid to redeem in full in cash during Mar 2024 to Sep 2025 period, subject to certain conditions.


Avid Bioservices | Up ~2x in 7 Months - Since We Initiated Coverage; Highest Ever Order Backlog

United States

Avid Bioservices, Inc. operates as a pharmaceutical company. The Company focuses on development and manufacturing of biopharmaceutical products derived from mammalian cell culture, as well as provides clinical and commercial manufacturing services. Avid Bioservices serves customers in the United States.

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Avid Bioservices (CDMO US)

S&P500 Index Rebalance: Calling an UBER

Passive S&P500 index trackers will need to buy around US$18bn of Uber in two weeks. Positioning in the stock began a month ago and just ahead of Q3...

Brian Freitas