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Client Talking Points

Go With The Flows

You can’t fight a tidal wave, but you can surf with it and use it to reach the beach. That’s what happens when fund flows move to US equities and the big asset managers start buying stocks. You might have a stock that seems like a great idea for a short and all of the math adds up...until it doesn’t, because some fund manager is buying a huge block of it and driving the price up. This is why timing is more important than ever right now. You can’t fight big beta, so embrace it and make sure that if you’re going to fight against the majority, you get the timing right.

Asset Allocation

CASH 52% US EQUITIES 12%
INTL EQUITIES 12% COMMODITIES 0%
FIXED INCOME 6% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“I DON"T FLIPPING BELIEVE IT!! Mary Jo White has been nominated for head of the SEC. Another Lawyer who doesn't understand markets.” -@SapienQuis

QUOTE OF THE DAY

“Life isn't fair. It's just fairer than death, that's all.” -William Goldman

STAT OF THE DAY

US weekly jobless claims fall by 5000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008.