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Client Talking Points

Energy Crisis

The issue with energy right now is that oil isn’t soaring to $150 a barrel and driving profits at E&Ps and other companies the way it did in 2009 and 2010. That’s good for the consumer who doesn’t want to pay $5 a gallon when they fill up their car and good for global growth, but it’s bad for the energy guys. Still, interestingly enough, Energy is top performing sector in the S&P 500, up +7.6% year-to-date versus the S&P 500 which is up +5.04% for the same time period. The second best sector behind energy is financials at +5.77% year-to-date; clearly, energy has the legs. Our Energy Analyst Kevin Kaiser wrote this morning’s Early Look, the sum of which leads to this statement:

 

“Over our long-term TAIL duration, we believe that select companies highly-levered to US natural gas prices will generate the best risk-adjusted investment returns in the space.”

 

So there you have it. Have an excellent Friday and make sure you’re trading the risk range properly out there. 

Asset Allocation

CASH 43% US EQUITIES 15%
INTL EQUITIES 18% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 24%

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.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

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

“Murder on the dancefloor $CL-F” -@NicTrades

QUOTE OF THE DAY

“No one has ever had an idea in a dress suit.” -Sir Frederick G. Banting

STAT OF THE DAY

The U.S. created a less-than expected 157,000 jobs in January and the unemployment rate ticked up to 7.9%.