We are in a period of quantitative tightening, a hawkish Fed, rising inventory levels, and estimates that are likely excessively optimistic. All of this has fueled one of the worst six-month stretches in a century for US stocks. “High quality” businesses are down as much as “junk” businesses. Given the broad sell-off, clients have asked
Trivariate’s research and advice centers around risk management. Today’s level set illustrates why decisions made by Chief Investment Officers (CIO) and Portfolio Managers (PMs) about portfolio construction and risk management can be far more important than bottom-up stock picking. Experienced bottom-up stock pickers have struggled to generate alpha over the last 18 months. Their process
With the NASDAQ down over 33% YTD, we believe it is a good time to evaluate the technology sector the Trivariate way – by analyzing the available alpha, macro relationships, quantitative signals, and fundamentals to see if the valuation reset has created any compelling dislocations or specific sub-industry, style, or stock opportunities. Available alpha
Mixed sentiment: Sentiment continues to fluctuate as rapidly as the market indices heading into Q3 earnings season, but we think rhetoric is more negative than positioning. Investors started the quarter in a dour mood after one of the worst six-month periods for equities in the last one hundred years. Until Q2 and Q3 of this
This document is meant for those who want to sit down for 60-90 minutes, once a month, and take full stock of major issues impacting US equities. It includes a summary of all our idea generation, risk management, and macro data and services. For further information on our Quantitative Frameworks or to view our full
At the start of each quarter, we provide a detailed summary of the just completed quarter with the goal of helping investors make better investment decisions, in addition to provide insights that will facilitate investor communications, client conversations, and quarterly letters. Furthermore, our quarterly report seeks to identify emerging risk management concerns and give investment
In today’s research we assess the industrials sector the “Trivariate Way” by analyzing available alpha, macro conditions, fundamentals (growth and profits), valuation, quant signals and efficacy. Our proprietary industrial activity gauge has been declining for three months now, with key inputs like durable goods and ISM down and overall transportation data (trucks and rails) also
In today’s note, we identify a major reason why stock picking and alpha generation have been so challenging in recent months. Fundamental investors often cite several variables when outlining their thesis to buy a stock. These variables include like revenue growth, EBITDA margin expansion, shareholder return (dividend plus buyback yield), price-to-free cash flow, and other signals.
Our focus over the last two weeks when writing the Level Set has been on corporate earnings. We detailed the primary risks to 2023 earnings, as well as our growing concern that SP500 2024 earnings could be below 2023. This week we pivot our focus to interest rates, which now sit at levels many market
For several months we have been monitoring an important dynamic – manufacturing production vs. consumption in various industries. Inventory will be the single most important KPI during Q3 earnings. For large cap stocks, inventory-to-sales is near all-time highs. The industries and stocks that are at particular risk of material downward revisions are… 202209_Inventory_Trivariate-1Download
