*The Sell Side Report
on Value Investing: by Joao Toniato, Ph.D. @ Barclays. 3 main lessons: (1) Value
stocks experienced a positive P/E rerating in all but one of the past 13 years.
On the other hand, growth names rerated negatively in 12 of the past 13 years.
In relative terms the rerating of value stocks was higher than that of growth
stocks in all years; (2) Value and growth react very differently to earnings
news due to the different growth expectations of each class of stock. Value
stocks, on average, still show positive returns even after missing earnings
forecasts. On the other hand growth names are punished by the market for
missing consensus forecasts and only get rewarded when the company beats consensus
by a large margin; (3) Value is not necessarily riskier than growth. The
volatility of value stocks is more often than not lower than that of growth
names. In addition, the volatility of negative movements in price is higher in
growth stocks in all of the past 13 years.
[Note: an excellent report. Worthy of serious read-through]…Source: http://www.valuewalk.com/2013/06/value-investing-why-works/
A Tale of Two Gas
Stations: Long Susser Holdings, Short CST Brands: Susser has higher Texas
exposure, bigger stores w/ more merchandise sales and higher margin (and both
growing faster than CST), and a CEO who knows the business vs. CST’s lawyer
CEO. W/ fuel margin reverting back to historical means and CST trading at 1.7
turns premium in terms of EV/EBITDA, the long-short pair should work within the
next few quarters. [Note: Well laid out thesis, this feels like a much more
robust case than simply shorting CST outright]…Source: http://www.marketfolly.com/2013/06/a-tale-of-two-gas-stations-long-susser.html
Why Netflix is
producing original content: There’s the way in which that content keeps
people subscribing for longer; the way in which original content will allow
Netflix to raise its prices in the future; and then there’s this the hedge
against rising content licensing costs, which are up 700% over the past 2
years. While per-show licenses will never surpass the cost of original
producing a series, their increases will make ongoing investments in House of
Cards less expensive on a differential basis. [Note: like I have hinted before,
if Netflix can become a content provider (instead of receiver) and develop robust
pipelines, it is then a fully vertically integrated media juggernaut with the
best technology. How much is that worth?]…Source: http://blogs.reuters.com/felix-salmon/2013/06/13/why-netflix-is-producing-original-content/
Richard Bernstein’s
view of the world: (1) people are dramatically underestimating emerging
market risks; (2) he likes the American industrial renaissance idea; (3) he
likes small US banks because they are the ones lending money while the big
banks shrink balance sheet, plays back to the renaissance thesis; (4) he likes
the US consumer; (5) he is underweight energy and commodities---here is a good,
insightful quote from him:
“Two reasons, one cyclical, the other secular. Starting with
the cyclical: Energy and commodities are traditional late-cycle plays. Why?
Because inflation is a late-cycle play. You need bottlenecks in the economy,
and you need demand to outstrip supply. I don't care about all these guys who
say inflation is imminent because the Fed is printing money. Demand must
outstrip supply to get inflation. But we aren't late in the cycle. The Fed
isn't tightening. The secular reason is that if you agree with us that emerging
markets have been overstimulated by the global credit bubble, that explains the
demand for commodities on a secular basis. Again, commodities are very
credit-sensitive. I find it quite amazing that people will generally agree that
the global credit bubble is deflating. But then they want to play
credit-sensitive investments like energy and commodities and gold. That doesn't
make a lot of sense."
Big muniland haircuts:
on average, the ultimate recovery for municipal bonds was about 60 percent
for the period 1970-2012. The low recoveries were almost always associated with
housing or hospitals projects…Source: http://blogs.reuters.com/muniland/2013/06/12/big-muniland-haircuts/
Wheel of Fortune: The
Battle for Oil and Power in Russia: Gustafson, a leading consultant and
analyst of the politics of energy in the former Soviet Union, draws on
interviews with key players over the course of two decades to provide a
detailed history of the oil industry’s evolution since the breakup of the
Soviet Union. A phenomenal Russian O&G primer….Source: http://www.amazon.com/Wheel-Fortune-Battle-Power-Russia/dp/0674066472/ref=sr_1_1?s=books&ie=UTF8&qid=1370995947&sr=1-1&keywords=wheel+of+fortune/marginalrevol-20
The big-screen battle
between DC and Marvel: cool interactives. Give it a try. Source…http://www.economist.com/blogs/graphicdetail/2013/06/daily-chart-7
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