BUYING ON THE DIP
CLIENT TALKING POINTS
BUYING ON THE DIP
We go through a risk management process on a daily basis. We look at the market and make our decisions based on what it has done. Apple (AAPL) was oversold, so we bought Tech (XLK). Utilities (XLU) have been one of the top performers since the Bernanke top, so we bought that as well. And we bought one more asset class that’s correlated to the US dollar - see below for that one.
GOLDENEYE
We’ll leave James Bond be for now, as we’re more interested in the precious metal itself. We bought gold in the Real-Time Alerts yesterday because the US dollar signaled it was immediate-term TRADE overbought. That means we think the USD is ready to make a move to the downside. Dollar down, gold up. It’s pretty simple. Get the dollar right, you get other things right. The name of the game is correlation.
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ASSET ALLOCATION
Cash: DOWN
U.S. Equities: UP
Int'l Equities: Flat
Commodities: Flat
Fixed Income: DOWN
Int'l Currencies: Flat
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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
HCA HOLDINGS (HCA)
While political and reimbursement risk will remain near-term concerns, on the fundamental side we continue to expect accelerating outpatient growth alongside further strength in pricing as acuity improves thru 1Q13. Flu trends may provide an incremental benefit on the quarter and our expectation for a birth recovery should support patient surgery growth over the intermediate term. Supply costs should remain a source of topline & earnings upside going forward.
- TRADE: NEUTRAL
- TREND: LONG
- TAIL: LONG
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THREE FOR THE ROAD
TWEET OF THE DAY
“these Las Vegas Strip numbers are even worse than the down 1% would indicate. high margin slot revs down 9%. bad for $MGM” -@HedgeyeSnakeye
QUOTE OF THE DAY
“No one means all he says, and yet very few say all they mean, for words are slippery and thought is viscous.” -Henry Adams
STAT OF THE DAY
Greek unemployment rate hits record high of 25.1% in July
