Value-Momentum Watchlist

Key News

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Recurring Events

Draghi’s commentary is likely to carry the highest uncertainty and potential volatility going forward, but its not obvious that the Euro is mispriced at current levels.

GBP is still undervalued so we’re watching BOE commentary very closely.

  • 22 Aug – Draghi speaks
  • 07 Sep – Eurozone minimum bid rate
  • 11 Sep – UK CPI
  • 13 Sep – UK official bank rate
  • 20 Sep – JP monetary policy statement
  • 21 Sep – BOJ policy rate

Tail Risks

  • Potential war breaks out with Korea (but is this priced in already?)
    • JPY undervalued and usually a haven asset but if Korea bombs Japan then JPY could weaken further
    • RUB could strengthen if tensions increase demand for oil but this argument sounds pretty weak

Pure Value Watchlist

BEST.SI: Best World International

Share price initially under-reacted to news of China cracking down on multi-level marketing companies. Potential boon from reduced competition but also hinders growth potential in China.

  • Direct sales beauty product company undergoing rapid but volatile growth
  • 15% revenue growth yoy, cash flow stagnant, potential inventory build up
  • Supernormal future growth depends on ability to direct sell in China
  • Fair value around $1 but only if cash flows start coming through

DBK.DE: Deutsche Bank

Potential overreaction to head of technology leaving for JPM.

  • German investment bank trading around 50% of tangible book value
  • Recently returned to profitability however CEO Cryan has guided revenues lower
  • Intrinsic value of future cash flows under negative growth is approx €5
  • Tangible book value is €27.24 per share

Momentum Watchlist

ACX.AX: Aconex

  • Growing software company using all cash flow to expand out of ANZ
  • First mover in construction industry software
  • Current revenue 250m, potential market size of 7b
  • Fair value is at 3-5x price to sales ratio (5x = $3.90)

BIDU: Baidu

  • Leading internet search engine in China, revenue from per click advertising
  • Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation
  • Subsidiary iQiyi has sole distribution rights of Netflix in China (3% of current revenue)
  • Potential free option: releasing open-source autonomous driving project Apollo over next few years (but this has to compete with Tesla)
  • Tangible fair value approx $130 but company is in monopoly position

TRIP: TripAdvisor

  • Travel website providing hotel bookings and user reviews of travel content
  • Revenue has flattened out despite a rapidly growing database of content
  • Current growth strategy is to launch a lowest price hotel search engine
  • Based on Trivago’s metrics this could increase TripAdvisor’s revenue by 9%
  • Fair value approx $30 until they figure out how to monetize their content

TSLA: Tesla

  • High growth, negative cash flow company that produces electric automobile and renewable energy solutions
  • Unforeseeable that the company will be profitable in the near future but cash burn rate is steady while growing revenue
  • Best case scenario after Model 3 release: revenue increases from 2.8b/qtr to 7.8b/qtr or $67 per share to $186 per share
  • Fair value after Model 3 growth expectations subside is likely 1.5x-2.5x price to sales or $280-$450 per share
  • People queue to buy their products, this company has intangible assets

Awaiting Catalyst Watchlist

API.AX: Australian Pharma

  • Largest Pharmaceutical wholesaler in Aus/NZ
  • Future growth relies on expanding the higher-margin retail revenue
  • Retail 30% of total revenue, brands include Priceline, competing against Sephora
  • 12% gross margin but only a 1-2% operating margin
  • Fair value around $1.50 under current revenue guidance

 

Value-Momentum Watchlist

Key News

Market developments

  • API fell more into the close hitting our value price
  • ACX had another green day, will be interesting to see if the momentum continues

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

API.AX: largest Pharmaceutical wholesaler in Aus/NZ with prominent retail brands such as Priceline. Revenues, earnings and return metrics have been improving while the company focuses on growing its higher-margin retail businesses to compete against Sephora, which make up 30% of total revenue. Buying for value @ 1.49, not buying momentum until volatility subsides.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).

GME: Omnichannel video game retailer. Same store sales are declining so there’s a possibility the street has over-extrapolated this negative growth. Meanwhile the company is focused on growing its higher margin revenue streams. The stock is either worth $20 or at least $28 depending on future results.

TRIP: American travel website providing hotel bookings and user reviews of travel content. Revenue has flattened out despite a rapidly growing database of content. Current strategy is to launch a Trivago-like lowest price hotel search engine. Based on Trivago’s metrics this could increase TripAdvisor’s revenue by 9%. Buy for value @ $29.50 plus whatever TRIP’s user base is worth. Can’t see a momentum angle at this point in time.

Value-Momentum Watchlist

Key News

Market developments

  • API seems to have bottomed out for now, looking to cut the rest of the position on price spikes

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

API.AX: largest Pharmaceutical wholesaler in Aus/NZ with prominent retail brands such as Priceline. Revenues, earnings and return metrics have been improving while the company focuses on growing its higher-margin retail businesses to compete against Sephora, which make up 30% of total revenue. Buying for value @ 1.49, not buying momentum until volatility subsides.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).

TRIP: American travel website providing hotel bookings and user reviews of travel content. Revenue has flattened out despite a rapidly growing database of content. Current strategy is to launch a Trivago-like lowest price hotel search engine. Based on Trivago’s metrics this could increase TripAdvisor’s revenue by 9%. Buy for value @ $29.50 plus whatever TRIP’s user base is worth. Can’t see a momentum angle at this point in time.

Value-Momentum Watchlist

Key News

Market developments

  • ACX seems to have bounced just a bit higher than our target level
  • API came out with revised down earnings guidance.

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

API.AX: largest Pharmaceutical wholesaler in Aus/NZ with prominent retail brands such as Priceline. Revenues, earnings and return metrics have been improving while the company focuses on growing its higher-margin retail businesses to compete against Sephora, which make up 30% of total revenue. Buying for value @ 1.49, not buying momentum until volatility subsides.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).

TRIP: American travel website providing hotel bookings and user reviews of travel content. Revenue has flattened out despite a rapidly growing database of content. Current strategy is to launch a Trivago-like lowest price hotel search engine. Based on Trivago’s metrics this could increase TripAdvisor’s revenue by 9%. Buy for value @ $29.50 plus whatever TRIP’s user base is worth. Can’t see a momentum angle at this point in time.

Value-Momentum Watchlist

Key News

Market developments

  • ACX potential momentum buy today
  • API near value range, watching closely

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

API.AX: largest Pharmaceutical wholesaler in Aus/NZ with prominent retail brands such as Priceline. Revenues, earnings and return metrics have been improving while the company focuses on growing its higher-margin retail businesses to compete against Sephora, which make up 30% of total revenue. Buying for value @ 1.73, buying momentum below 1.94.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).

TRIP: American travel website providing hotel bookings and user reviews of travel content. Revenue has flattened out despite a rapidly growing database of content. Current strategy is to launch a Trivago-like lowest price hotel search engine. Based on Trivago’s metrics this could increase TripAdvisor’s revenue by 9%. Buy for value @ $13.50 plus whatever TRIP’s user base is worth. Can’t see a momentum angle at this point in time.

Value-Momentum Watchlist

Key News

Market developments

  • ACX fell to $3.66, into momentum buy range. We’re waiting for price to turn around before jumping in but will be watching this closely.
  • API is right on the edge of our value buy range ($1.62-$1.73). Watching for momentum to start today.

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

API.AX: largest Pharmaceutical wholesaler in Aus/NZ with prominent retail brands such as Priceline. Revenues, earnings and return metrics have been improving while the company focuses on growing its higher-margin retail businesses to compete against Sephora, which make up 30% of total revenue. Buying for value @ 1.73, buying momentum below 1.94.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).

The World’s Best Watchlist For Value-Momentum Traders

Key News

Stocks

ACX.AX: a leading provider of cloud based collaboration software for the construction industry. Profit margins are below expectations while the company is trying to expand outside of ANZ region. Current revenue of 250m in a potential future market size of 7b. Buying for value @ 3.40, buying momentum below 3.70.

BIDU: leading internet search engine in China. Revenue growth guided by company to resume from a 1-year halt following increased online advertising regulation. Own a subsidiary (iQiyi) which has sole distribution rights of Netflix in China (3% of current revenue). Partnered with Microsoft to work on autonomous driving project which a potential free option for the stock. Buying @ 130 for value, buying momentum below 220.

DBK.DE: German investment bank. Returned to profitability however CEO Cryan has recently guided future revenues lower. Buying for value at potential arbitrage boundary of €15 per share based on 25% of tangible book value (€6.75) + intrinsic value of cash flows (€5.20) + litigation premium (€3).