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Client Talking Points

End of the World?

While the world of Old Media wrings its hands and furrows its brow over the situation in Cyprus, we don’t for a second think it’s the end of the world by any means. Here’s some context. In the last year, the market’s down 62%; in the last three months, it’s off 16%; and in the last month it’s down 8% in the last month. In other words, this is not news. It’s been happening for a while.

There Goes the VIX

The US Equity Volatility index was down 10.2% last week to a fresh five-year weekly closing low of 11.30. It’s also down 41% since the last time many could have freaked out, Italian Election Day on February 25. So, don’t get too freaked out today about the situation in Cyprus.

Asset Allocation

CASH 40% US EQUITIES 18%
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

“If you were a Cypriot, would you prefer a) deposit tax of 7-9% or b) a Venezuela style devaluation of 40%?” – HedgeyeDJ, our own director of research, Daryl Jones

QUOTE OF THE DAY

“Mr. Dimon’s failure on this score comes from the hubris of having too much power in his hands.” – John Liu, the New York City Comptroller on the way JP Morgan’s CEO Jamie Dimon handled the London Whale trading losses

STAT OF THE DAY

12.14%, the year-to-date change in the Russell 2000