Client Talking Points
Macro Themes Confirmed
At the beginning of the quarter, two of our three key Macro Themes that we saw were Growth Stabilizing and Housing’s Hammer. Data points from Tuesday confirmed what we already knew. Durable goods orders rose 5.7% in February and Case-Shiller’s home price index rose 8.1% last month. All of that helped send the S&P 500 to within two points of its all-time closing high in Tuesday trading.
A Look at the VIX
The VIX, the US equity volatility index, is making lower-highs, and lower-lows these days. That puts the VIX into a Bearish formation, essentially telling us that fear, too, remains in a bearish formation. It doesn’t mean that we don’t keep a close eye on what’s happening around the world or that we manage risk any less closely.
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Top Long Ideas
Darden stands to be a beneficiary from a housing recovery and an improved employment picture, which boosts casual dining trends. Darden reported earnings today that beat Wall Street expectations, though net income declined 18%.
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 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
“Raising money for some gardening tasks around the yard. #hedgefund.” -- @SteveMartintoGo
QUOTE OF THE DAY
“I am never going to have anything more to do with politics or politicians. When this war is over I shall confine myself entirely to writing and painting.” – Winston Churchill
STAT OF THE DAY
$155 million, the price SAC’s Steve Cohen paid for a Picasso painting, “La Reve”