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OAK: Going Alternative

Takeaway: Oaktree has grown assets significantly over the past five years and on top of it, the stock pays a healthy dividend. We like $OAK.

Keith bought Oaktree Capital (OAK) for the Virtual Portfolio yesterday and today, Hedgeye Financials Sector Head Josh Steiner is backing up the call. Oaktree is one of the few publicly traded alternative asset management firms out there. You’ve seen us buy and sell Och-Ziff (OZM) before and now we’re long Oaktree. Why?

 

 

OAK: Going Alternative - OAK quants

 

 

Alternative asset managers (read: hedge funds) perform well in periods of quantitative easing. Seeing as how the Fed just extended QE3, this is likely to be a positive period for OAK. During QE1 alternative asset managers were the fifth best performing subsector (out of 31), rising 183% in absolute terms and outperforming the XLF by 102%. During QE2 it was the best performing subsector, rising 69% in absolute terms and outperforming the XLF by 42%.

 

The stock also has a dividend yield of 8.1% and Oaktree has seen its assets under management grow rapidly over the past five years by 16.1%.


Presidential Election Preview Call Tomorrow

Takeaway: There are many factors weighing on the outcome of the upcoming election. Get all the facts by listening to our Presidential Election Call.

Based on the major impact U.S. policy has on global financial markets, our Macro Team, Financials Team, and Healthcare Team will join forces and dissect the most likely scenarios leading into and out of the 2012 Presidential Election.

 

 

CONFERENCE CALL DETAILS 

  • Wednesday, September 19th  
  • 11 a.m. EST
  • Participant Dialing Instructions:
    • Toll Free Number:
    • Direct Dial Number:
    • Conference Code: 324541#
  • Materials will be distributed prior to the call

Presidential Election Preview Call Tomorrow - obama romney 300x200

 

Our Global Macro research process at Hedgeye focuses on three key factors: growth, inflation, and policy.  As our Director of Research, Daryl Jones, has noted, the policy and/or perception of future policy is often the most critical factor to handicap.  In the United States, the President, and his or her party (if they control Congress) have the power to set the economic agenda and fiscal outcomes.  Moreover, they appoint the Federal Reserve Board which has increasingly-politicized control of monetary policy.

 

For additional information regarding this call or any other upcoming Hedgeye event please email .  

 

"In America, anybody can be president. That's one of the risks you take."

-Adlai E. Stevenson


Devaluing The Dollar

Takeaway: Unless central planners change, the dollar is likely to continue falling further.

Often we discuss how Ben Bernanke and the policies of the Federal Reserve have destroyed the US dollar and driven up food and fuel prices. The correlation risk involving the dollar is strong no doubt, with yesterday’s slide in oil attributed to a move in the dollar and rumors of the Strategic Petroleum Reserves opening up. But just how far has the dollar fallen in the past three months? Take a look at the chart below for your answer:

 

Devaluing The Dollar - USD 3mo


the macro show

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CHART DU JOUR: TAXI ME TO THE TABLES

The correlation between taxi trips and table play on the Strip

 

  • The correlation between the YoY change in taxi trips and non-baccarat table drop is 0.68 over the past 5 years
  • Since we get taxi and airport data 2-3 weeks before the state releases gaming stats and both are statistically significant variables in explaining gaming volumes, they are major inputs in our monthly projection model
  • August taxi trip data was released today and it was down 1.7%.  We don’t yet have the McCarran airport data but assuming no surprises, gaming revenues could be flat to slightly down with normal hold.

CHART DU JOUR: TAXI ME TO THE TABLES - vvv


Hedgeye Heads to Houston: Hedgeye Energy Corporate Access Trip

Takeaway: Get an Edge in the Game, Talk to the Leaders

Hedgeye’s Director of Research, Daryl Jones, and Energy analyst, Kevin Kaiser, are traveling to the oil and gas capital of North America, Houston, TX to gain insight on the current energy environment from the leaders of top E&P and oilfield services companies.

 

Below is the current schedule, please email if you would like to be a part of this expedition or would like additional details.

 

Hedgeye Heads to Houston: Hedgeye Energy Corporate Access Trip - TX  Sch


Chinese Rebar Prices Rebound

Takeaway: Chinese rebar may have bounced but it'll be short-lived as it continues to drop in price heading into 2013.

We’ve examined the relationship between Brent crude oil and the price of Chinese rebar as the price of rebar fell nearly 50% over the last year. Though there is a significant bounce in September pricing, we believe it’s nothing but a dead cat bounce and that rebar prices will continue to fall.

 

The spot rebar price is +7% off the September 7 low, coinciding with the rip in most risk assets after the ECB announced its new bond-buying program.  That makes intuitive sense – Europe is China’s #1 export customer.  China likely has a bunch of steel it can’t get rid of or we’re not getting the entire picture.

 

 

Chinese Rebar Prices Rebound - china rebar


Early Look

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