Please see below for our usual MicroQuad and other weekly data updates. As always, email us if you have any questions on any of the data or our takeaways. - .
KEY CALL OUT - Estimate Revisions & 2022 Consensus
CLICK HERE for the full weekly update (deck). As we wrote in this morning's AM Brief, the Macro Themes outlook for Q421 is lining up with our fundamental view and the MicroQuad outlook. There's an increasing probability of accelerating GDP as we head into Q421, which is a Macro Quad 2 backdrop. It's in a Macro Quad 2 that shorting gets harder and the long side gets easier. The right call is not to give up on a well-researched idea but lean longer, both in terms of where the research is focused and the threshold of conviction. The MicroQuads show the same setup as the Macro Team is calling for; as the Delta Variant fades, economic acceleration and medical utilization will take hold. Of course, this will exacerbate supply chain and labor supply issues which we have seen already and despite Delta Variant squelching demand. We try to express the Macro Quads at the healthcare portfolio level in our Model Portfolio analysis, and we've also included the S&P 500 sector breakout below for reference. For our Health Care Position Monitor stocks, we're expecting the Macro Quad 3 factor headwinds that have punished some of the smaller cap longs to ease in Macro Quad 2. Those stocks, like BFLY, DRIO, et al. could have a tailwind into year's end.
MICROQUADS*
As a reminder, if you have questions about the MicroQuad process, please try to find ~20 minutes to watch our Dec 30, 2020 call replay: Process & Utility of the Hedgeye Health Care #MicroQuads - CLICK HERE for event details (includes video link and materials link).
The MQ4 bucket has thinned out, but AMN rotated into MQ4. NTRA and GH in MQ3 are both longs in the model portfolio, just smaller allocations. It remains to be seen if/when NEO and DGX can rotate over to MQ2, or if EXAS and TDOC estimates can gain enough momentum to escape the penalty box. The model continues to work well, generating attractive risk-adjusted performance.
Position Monitor MQ Updates**
All data available upon request. Please reach out to with any feedback or inquiries.
Best,
Thomas Tobin
Managing Director
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William McMahon
Analyst
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Justin Venneri
Director, Primary Research
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*Please note, not all Position Monitor names make it into the MicroQuad output - most likely due to a lack of sufficient historical trading and estimate data.
**We may show stocks that we have data for but the correlation fails to meet the criteria for MQ bin inclusion week-to-week.
