Stay the Course

Client Talking Points

Stay the Course

While the fear mongering about the end of the world continues, we stay the course with our research process. They key element of our bull case is the strong dollar, which got stronger again Monday. The Dollar Index is up for the sixth week out of the last seven. Commodities have been down six of the last seven weeks. With commodities lower, it’s a de facto tax cut for the consumer who pays less.

What Could Go Wrong?

It’s simple. The thing that are going right are the ones that could go wrong. That’s why we’re looking closely at US employment and housing. We’ll look closely at all the housing data this week, including today’s February housing starts that rose 0.8%, as well as the jobless claims numbers on Thursday. Oh, and we would be remiss if we didn’t mention Cyprus. As we have said, Cyprus doesn’t matter.

Asset Allocation

CASH 38% US EQUITIES 20%
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

“The art of storytelling; make enough calls so that something is always working.” -- @KeithMcCullough

 

QUOTE OF THE DAY

“After six years, I feel it is the right time to pass the baton.” – Electronic Arts CEO John Riccitello, who resigned Monday, sending the stock of the video game maker higher.

 

STAT OF THE DAY

23, the consecutive-game winning streak of the Miami Heat, who beat Boston last night 105-103 to extend the second longest winning streak in the NBA