Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

Reckitt Benckiser Group  / Equity Bottom-Up

<ul>
<li>Reckitt Benckiser has been one of the worst performers in the large cap household &amp; personal products space.</li>
<li>Past mistakes in strategic capital allocation are still lingering over the business, while debt levels will likely require more divestments.</li>
<li>The business, however, is in a good position to regain shareholders' trust and its leading position in the industry.</li>
</ul>


Reckitt Benckiser has been one of the worst performers in the large cap household &amp; personal products space.
Past mistakes in strategic capital allocation are still lingering over the business, while debt levels will likely require more divestments.
The business, however, is in a good position to regain shareholders' trust and its leading position in the industry.


Reckitt Benckiser - Still Paying For Past Mistakes

<ul><li>Procter &amp; Gamble is unlikely to repeat its stellar performance of recent years, however, it is an excellent wealth preservation vehicle.</li><li>From a macroeconomic point of view, 2022 has the early signs of a strong year for consumer staples.</li><li>P&amp;G is also well-positioned to retain its high profitability and asset efficiency, which for now puts a floor to its valuation.</li></ul>

Procter &amp; Gamble is unlikely to repeat its stellar performance of recent years, however, it is an excellent wealth preservation vehicle.From a macroeconomic point of view, 2022 has the early signs of a strong year for consumer staples.P&amp;G is also well-positioned to retain its high profitability and asset efficiency, which for now puts a floor to its valuation.

Procter & Gamble: The Pinnacle Of Capital Preservation

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

Procter & Gamble Co / Equity Capital Markets

<ul><li>Consumer goods as a sector is hurting from lower margins as a result of the rising cost inflation and Procter & Gamble is no exception to this rule.</li><li>P&G’s positive revenue performance was a function of strength across all segments coupled with robust volume, pricing and mix, and a favorable impact of foreign currency fluctuations.</li><li>The management’s expectation of a continued rise in input costs does add a certain amount of pessimism to the stock.</li></ul>

Consumer goods as a sector is hurting from lower margins as a result of the rising cost inflation and Procter & Gamble is no exception to this rule.P&G’s positive revenue performance was a function of strength across all segments coupled with robust volume, pricing and mix, and a favorable impact of foreign currency fluctuations.The management’s expectation of a continued rise in input costs does add a certain amount of pessimism to the stock.

<ul><li>Unilever's business fundamentals would suggest a higher valuation with respect to peers.</li><li>Even after accounting for higher capital expenditure, the company is still valued conservatively on a free cash flow basis.</li><li>While rising commodity prices could continue to be a headwind, business related risks don't fully justify the discount in Unilever's share price.</li></ul>

Unilever's business fundamentals would suggest a higher valuation with respect to peers.Even after accounting for higher capital expenditure, the company is still valued conservatively on a free cash flow basis.While rising commodity prices could continue to be a headwind, business related risks don't fully justify the discount in Unilever's share price.

Unilever: The Disconnect Between Fundamentals And Price

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Allocations in Consumer Staples stocks are at decade-long lows.  Average fund weights among active Global managers stand at 7.65% following an aggressive slump after the onset of COVID-19 in early 2020.The spread between Consumer Discretionary weights and Consumer Staples weights in active Global portfolios is close to it's all-time wides, but is turning lower after peaking in April this this year.What stands out in our data is the cutting back of Consumer Staples allocations by Growth investors, with a number of high profile stocks cut from Aggressive Growth portfolios since last 2019 (<a href="https://www.smartkarma.com/entities/reckitt-benckiser-group-plc" target="_blank" data-smartkarma-citation="entities:22105:1" rel="noopener">Reckitt Benckiser (RB/ LN)</a>, <a href="https://www.smartkarma.com/entities/colgate-palmolive-co" target="_blank" data-smartkarma-citation="entities:15093:1" rel="noopener">Colgate Palmolive Co (CL US),</a><a href="https://www.smartkarma.com/entities/anheuser-busch-inbev-sa-nv" target="_blank" data-smartkarma-citation="entities:865:1" rel="noopener">Anheuser Busch Inbev Sa/Nv (ABI BB)</a> )For the Consumer Staples sector to see a turnaround, perhaps growth, or at least the perception of growth needs to return for these investors.

Allocations in Consumer Staples stocks are at decade-long lows.  Average fund weights among active Global managers stand at 7.65% following an aggressive slump after the onset of COVID-19 in early 2020.The spread between Consumer Discretionary weights and Consumer Staples weights in active Global portfolios is close to it's all-time wides, but is turning lower after peaking in April this this year.What stands out in our data is the cutting back of Consumer Staples allocations by Growth investors, with a number of high profile stocks cut from Aggressive Growth portfolios since last 2019 (Reckitt Benckiser (RB/ LN), Colgate Palmolive Co (CL US),Anheuser Busch Inbev Sa/Nv (ABI BB) )For the Consumer Staples sector to see a turnaround, perhaps growth, or at least the perception of growth needs to return for these investors.

Global Consumer Staples: Allocations at Rock Bottom as Growth Investors Flee

United States

The Procter & Gamble Company manufactures and markets consumer products in countries throughout the world. The Company provides products in the laundry and cleaning, paper, beauty care, food and beverage, and health care segments. Procter & Gamble products are sold primarily through mass merchandisers, grocery stores, membership club stores, drug stores, and neighborhood stores.

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Procter & Gamble Co (PG US)

Reckitt Benckiser - Still Paying For Past Mistakes

Reckitt Benckiser has been one of the worst performers in the large cap household & personal products space. Past mistakes in strategic...

Vladimir Dimitrov, CFA

Procter & Gamble: The Pinnacle Of Capital Preservation

Procter & Gamble is unlikely to repeat its stellar performance of recent years, however, it is an excellent wealth preservation vehicle. From...

Vladimir Dimitrov, CFA

Procter & Gamble Co - Investment Thesis

Consumer goods as a sector is hurting from lower margins as a result of the rising cost inflation and Procter & Gamble is no exception to this...

Baptista Research

Unilever: The Disconnect Between Fundamentals And Price

Unilever's business fundamentals would suggest a higher valuation with respect to peers. Even after accounting for higher capital expenditure, the...

Vladimir Dimitrov, CFA

Global Consumer Staples: Allocations at Rock Bottom as Growth Investors Flee

Allocations in Consumer Staples stocks are at decade-long lows. Average fund weights among active Global managers stand at 7.65% following an...

Steven Holden

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