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Client Talking Points

Dealing With It

Yesterday, we bought Chinese equities via the Morgan Stanley China A Share Fund (CAF) ETF. While the position ended up going against us, we did our homework and still believe that being long Chinese equities makes sense from the TREND and TAIL durations that we work with. With China targeting +7.5% GDP growth and CPI at +3.5%, our thesis is emboldened by these numbers. The waiting game can be hard to deal with sometimes, but you have to know when to suck it up and play the cards you're dealt.

Asset Allocation

CASH 42% US EQUITIES 20%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% 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.

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

"We didn't know that Vornado was going to sell 9mm shares, but clearly someone did yesterday $JCP" -@HedgeyeDJ

QUOTE OF THE DAY

"You can pretend to be serious; you can't pretend to be witty." -Sacha Guitry

STAT OF THE DAY

Dow Jones Industrial Average just 36 points away from all-time closing high of 14,163.