Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Our outlook remains unchanged as the weight of the evidence continues to suggest a mixed, but overall constructive market. Cyclical value Sectors continue to be our favorite areas to overweight (i.e., Energy, Materials, Manufacturing, and Transportation), while defensive Sectors also continue to be worth a look (i.e., Staples, Health Care, and Real Estate). </p>

Our outlook remains unchanged as the weight of the evidence continues to suggest a mixed, but overall constructive market. Cyclical value Sectors continue to be our favorite areas to overweight (i.e., Energy, Materials, Manufacturing, and Transportation), while defensive Sectors also continue to be worth a look (i.e., Staples, Health Care, and Real Estate). 

Global Equity Strategy: Value Remains Leadership But Defensives Improving

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>Lexus announced its new LF-Z EV concept yesterday, laying out broad plans for its electrification strategy and future development outlook. The brand has seen less news flow than the main Toyota brand in terms of technological progress but this appears to now be changing. This has implications for a variety of suppliers.</p>

Lexus announced its new LF-Z EV concept yesterday, laying out broad plans for its electrification strategy and future development outlook. The brand has seen less news flow than the main Toyota brand in terms of technological progress but this appears to now be changing. This has implications for a variety of suppliers.

<p>Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.</p>

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div><p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 2nd FEBRUARY •</strong></p></div><div><p>Of Tuesday's 86 results announcements, 70% scored positively for earnings momentum despite trailing revenues falling by 5.9% on average and a 0.3 percentage point decline in operating margins. Only 3% of companies were in the red for the quarter.  62% of the 50 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +2.9 points.</p></div><div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><p>Tuesday's best and worst large-cap pairing is the Toyota Group parts Peer Group led by <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>, and <a href="https://www.smartkarma.com/entities/aisin-seiki-co-ltd" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin Seiki (7259 JP)</a> and <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO (3064 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/401/original/2021-01-27_06-56-24.png?1612302725" class="editor-image img-responsive" data-smartkarma-image-id="186401"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/402/original/2021-02-03_06-52-38.png?1612302769" class="editor-image img-responsive" data-smartkarma-image-id="186402"></figure></section><div class="content-caption">     Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 2nd FEBRUARY •Of Tuesday's 86 results announcements, 70% scored positively for earnings momentum despite trailing revenues falling by 5.9% on average and a 0.3 percentage point decline in operating margins. Only 3% of companies were in the red for the quarter.  62% of the 50 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +2.9 points.• BEST &amp; WORST •Tuesday's best and worst large-cap pairing is the Toyota Group parts Peer Group led by Denso Corp (6902 JP), Toyota Industries (6201 JP), and Aisin Seiki (7259 JP) and MonotaRO (3064 JP).     Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​02 - Aisin, MonotaRO

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p><a href="https://www.smartkarma.com/entities/owari-precise-products" target="_blank" data-smartkarma-citation="entities:7242:1" rel="noopener">Owari Precise Products (7249 JP)</a> known as <em>Owari Seiki</em> in Japanese makes precision-forged metal parts for the automotive (synchronizer rings for transmissions), aircraft (fasteners), and bicycle (cranks, etc) manufacturing industries. </p><p>The largest corporate shareholders are <a href="https://www.smartkarma.com/entities/hitachi-metals-ltd" target="_blank" data-smartkarma-citation="entities:8561:1" rel="noopener">Hitachi Metals (5486 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/aisin-seiki-co-ltd" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin Seiki (7259 JP)</a>, and there are several financial crossholders. </p><p>Today it was announced that a fund called Rising Japan Equity Fund 2 would launch a takeover of the company. RJE describes itself as having been founded in 2010 as "5 core members" who have markets experience along with SMBC and Mitsui Sumitomo Trust. </p><p><strong>So... the company which is owned by cross-holders to the level of 57-60% is selling itself to a fund sponsored by one of those cross-holders for.... checks notes... </strong></p><h3>...0.34x Book Value Per Share and 1.9x 5yr EBITDA?</h3><h3> </h3><p>And if you take out the securities and the net receivables (67 days of A/R, 30 days of A/P), it is 0.3x 5yr average EBITDA. </p><p>And the company appears to have net surplus assets connected to its pension benefit obligations which would take that to below zero. And that does not count the fact that it has another 75% of its market cap in &lt;3 months of inventory, where near 40% of sales goes to relatively large and stable customers like Aishin AW, Toyota, and Mazda) on long-term supply contracts. </p><h3>So the purchase price is below net cash, securities, and high-quality receivables. </h3><p></p><p>This is going too cheap. </p><p>And there is probably not much you can do about it except complain.</p><p>Or launch a competing bid.</p><hr><p>Some corporate and financial crossholders should really be ashamed of themselves for allowing this to happen at this price. If a company needs cash, they can sell securities holdings, factor receivables, get some of their customers to pay more quickly, push back payables, sell and lease back real estate, etc. This is being done for virtually free, and the forecast the "fair" value is based on expects to make JPY 500mm a year of OP two years out. </p>

Owari Precise Products (7249 JP) known as Owari Seiki in Japanese makes precision-forged metal parts for the automotive (synchronizer rings for transmissions), aircraft (fasteners), and bicycle (cranks, etc) manufacturing industries. The largest corporate shareholders are Hitachi Metals (5486 JP), Toyota Motor (7203 JP), Aisin Seiki (7259 JP), and there are several financial crossholders. Today it was announced that a fund called Rising Japan Equity Fund 2 would launch a takeover of the company. RJE describes itself as having been founded in 2010 as "5 core members" who have markets experience along with SMBC and Mitsui Sumitomo Trust. So... the company which is owned by cross-holders to the level of 57-60% is selling itself to a fund sponsored by one of those cross-holders for.... checks notes... ...0.34x Book Value Per Share and 1.9x 5yr EBITDA? And if you take out the securities and the net receivables (67 days of A/R, 30 days of A/P), it is 0.3x 5yr average EBITDA. And the company appears to have net surplus assets connected to its pension benefit obligations which would take that to below zero. And that does not count the fact that it has another 75% of its market cap in &lt;3 months of inventory, where near 40% of sales goes to relatively large and stable customers like Aishin AW, Toyota, and Mazda) on long-term supply contracts. So the purchase price is below net cash, securities, and high-quality receivables. This is going too cheap. And there is probably not much you can do about it except complain.Or launch a competing bid.Some corporate and financial crossholders should really be ashamed of themselves for allowing this to happen at this price. If a company needs cash, they can sell securities holdings, factor receivables, get some of their customers to pay more quickly, push back payables, sell and lease back real estate, etc. This is being done for virtually free, and the forecast the "fair" value is based on expects to make JPY 500mm a year of OP two years out. 

Owari Precise Products - Another Tiny Cap Takeover at <0.5 Book

Japan

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

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Aisin (7259 JP)

Global Equity Strategy: Value Remains Leadership But Defensives Improving

Cyclical value Sectors continue to be our favorite areas to overweight, while defensive Sectors also continue to be worth a look (i.e., Staples,...

Vermilion Research

Toyota – Electrifying Lexus

Lexus has seen less EV related news flow than the main Toyota brand in terms of technological progress but this appears to now be changing and has...

Mio Kato

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

We are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Vermilion Research

🇯🇵 JAPAN • Results & Revisions 02/02 - Aisin, MonotaRO

Of Tuesday's 86 results announcements, 70% scored positively for earnings momentum despite trailing revenues falling by 5.9% on average and a 0.3...

Campbell Gunn

Owari Precise Products - Another Tiny Cap Takeover at <0.5 Book

A largely cross-held microcap gets a Tender Offer proposal at a 34% premium which takes the company out at 0.34x book, and 0.0-2.0x EV/EBITDA...

Travis Lundy

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Global Equity Strategy: Value Remains Leadership But Defensives Improving

Cyclical value Sectors continue to be our favorite areas to overweight, while defensive Sectors also continue to be worth a look (i.e., Staples,...

Vermilion Research

Toyota – Electrifying Lexus

Lexus has seen less EV related news flow than the main Toyota brand in terms of technological progress but this appears to now be changing and has...

Mio Kato

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

We are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Vermilion Research

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​02 - Aisin, MonotaRO

Of Tuesday's 86 results announcements, 70% scored positively for earnings momentum despite trailing revenues falling by 5.9% on average and a 0.3...

Campbell Gunn

Owari Precise Products - Another Tiny Cap Takeover at <0.5 Book

A largely cross-held microcap gets a Tender Offer proposal at a 34% premium which takes the company out at 0.34x book, and 0.0-2.0x EV/EBITDA...

Travis Lundy

🇯🇵 JAPAN • Results & Revisions 02/02 - Aisin, MonotaRO