GLOBAL CENTRAL PLANNERS
CLIENT TALKING POINTS
TWIN PEAKS
Skipping the acclaimed David Lynch television series and going straight to the market for our peaks. When cycles peak and stocks appear to be “cheap,” it’s easy to want to buy into them. We sell into peak cycles because cheap gets cheaper and right now, one of our finest shorts is Caterpillar (CAT), which appears to be the epitome of the aforementioned thesis.
GLOBAL CENTRAL PLANNERS
There are two kinds of central planners out there. One kind is keen on Keynesian economics and does what the US and Japan have been doing a lot of: printing money. Some people think that works but take a look at the Nikkei in Japan and its performance since March of this year and you’ll begin to think twice. The other kind of planner is one like that of Glenn Stevens, the Reserve Bank of Australia’s chief banker. He’s raised rates and cut rates where appropriate and it seems to have worked out nicely for everyone. Remember when you could go into a bank and actually get yield on a CD or a savings account? Those were the days and Australians have plenty of those days ahead of them.
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ASSET ALLOCATION
Cash: DOWN
U.S. Equities: Flat
Int'l Equities: Flat
Commodities: Flat
Fixed Income: UP
Int'l Currencies: UP
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TOP LONG IDEAS
BRINKER INTL (EAT)
Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
PACCAR (PCAR)
Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
UNDER ARMOUR (UA)
This company’s on track to post $3Bn in revenues by ’14 – impressive given a $1.5Bn print in 2011. Perhaps more impressive is the breadth of growth drivers that will get it there – women’s, accessories, new underwear platform etc. in addition to footwear. UA is gaining share in both apparel and footwear quarter-to-date. While some may be concerned over the loss of UA’s SVP/Sourcing we’re 8% ahead of the Street in the upcoming quarter and buyers on weakness.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
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THREE FOR THE ROAD
TWEET OF THE DAY
“Anti momentum market continues, Fade every move higher and lower” -@MissTrade
QUOTE OF THE DAY
“Never be afraid to laugh at yourself, after all, you could be missing out on the joke of the century.” -Dame Edna Everage
STAT OF THE DAY
ISM U.S. factory Index rose to 51.5 in September from 49.6 a month earlier.
