Research

We provide a detailed mid-year summary of our research and forward outlook, which is designed to help investors to identify emerging trends and risk management concerns, find new long/short ideas, and help with all upcoming communications. This note addresses the current macro setup, perspective on the recent drawdown, earnings, risks, long/short ideas, and more.

In this note, we take an unemotional look at longer-term revenue growth trends, multiples, and near-term expectations for growth to see if the meaningful market pull-back implies any relative opportunities. While quantitative tightening requires a different investing roadmap than quantitative easing, we do not believe all innovation is dead. Even if growth stocks continue to lag until any directionally dovish commentary surfaces, we want to provide “growth-neutral” pair trades for stock pickers in this environment.

The investment landscape is presenting different and potentially unconventional ways to outperform as the Fed implements quantitative tightening. One possible paradigm shift could be how investors think about buying cyclicals given how anticipatory markets have been of a recession-induced earnings decline.

The market drawdown has caused continued investor angst, and most of our client meetings have had an increasingly bearish overtone. Few, if any, want to take the bull side in a bull-bear debate.

Every market pundit tries to predict the market trough by using a combination of sentiment, positioning, fundamentals, macro, and valuation to reach their conclusion. Because many of those metrics do not have consistent predictive value, we thought it would be instructive to take a step back and look at the longer-term history of price performance to contextualize this current sell-off.

Many long-only portfolio managers do not view utilities as particularly important, given the bench-weight is around 2.6%, and most hedge funds do not cover the space. However, as the market has been declining, and it feels late to short hyper growth stocks (many of which are down more than 50% YTD), our view is that CIOs should be looking to the utilities sector to find short ideas. In this note, we examine utilities front to back and give our case for why this sector is underexamined and what to look for in short/long ideas.

Our latest market overview: a comprehensive document containing the best of our recent work and up-to-date views.

In this note, we digest and analyze the first 10 days of earnings season, with a focus on three major themes: the US consumer, growth stocks, and a recap of earnings. All things considered, we continue to recommend energy as our top sector and offer seven reasons we are still bullish.

During our recent investor meetings, four topics have consistently surfaced. We address those questions in today’s note. Topics include whether the market is discounting higher rates, growth stocks, energy, and the greater meaning of the recent NFLX miss.

Over the past several months we have researched the implications of management decision-making, by analyzing various capital uses and their consequences. This our fourth of five studies, as we previously have analyzed buybacks, dividends, and M&A. In this note, we investigate trends in the levels and changes in capital and R&D intensity, current trends, and the efficacy of these signals in terms of predictive value for stock performance.