European Problems

Client Talking Points

Greek Tragedy

Greece just can't get its act together. It really is one big tragedy full of bailouts, misconceptions, deception, and cheating investors. Every time Greece needs a bailout, it gets one. What if we just yanked the money away this time around and let them deal with their debt problems head on. I'm sure taxpayers in Europe wouldn't have any issues keeping their money.

Asset Allocation

CASH 55% US EQUITIES 6%
INTL EQUITIES 0% COMMODITIES 6%
FIXED INCOME 18% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
TCB

After a long downward slide, TCB has finally turned the corner. The margin has stabilized after the balance sheet restructuring. Loans are growing thanks to the equipment finance business. Non-interest income is more likely to go up than down going forward, a reversal from the past 18 months. Credit quality has a tailwind from a distressed housing recovery in TCB’s core markets: Minneapolis, Detroit and Chicago. On top of this, the CEO, Bill Cooper, is one of the oldest regional bank CEOs, which raises the probability that the bank will be sold. Expectations are bombed out at this point, so we think it’s time to move from bearish to bullish on TCB.

IGT

There is improving visibility on 20%+ EPS growth with P/E of only 11x with better content leading to market share gains. New orders from Canada and IL should be a catalyst. Additionally, many people in the investment community are out in Las Vegas at the annual slot show (G2E) and should hear upbeat presentations by management.

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.

Three for the Road

TWEET OF THE DAY

“New Jersey had one of the weakest U.S. housing markets--high foreclosures, soft prices--and that was before Sandy hit http://on.wsj.com/RjNGJy" -@NickTimiraos

QUOTE OF THE DAY

“There are two ways to pass a hurdle: leaping over or plowing through... There needs to be a monster truck option.” -Jeph Jacques

STAT OF THE DAY

Q3 GDP Growth Revised To 2.7%


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