AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<ul>
<li>Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  </li>
<li>Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside </li>
<li>Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.</li>
</ul>


Splitting GE into 3 independent, unconnected companies makes strategic sense, and barring unforeseen exogenous factors, should unlock meaningful value for its shareholders  
Based on 2023 estimates, our valuation analysis indicates a SOTP value for GE of  $139-$152 for an up to ~50% upside 
Despite the extended break-up execution timeline, there is a case to be made for investors to use the current share price lull to jump in and enjoy the catalyst-driven ride.


SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Among active Global investors, EMEA Industrials are the 6th largest regional sector allocation and the largest in the EMEA region, with a 4.80% holding weight on average.  This allocation places EMEA Industrials as the largest regional sector overweight at +2.05% above benchmark (vs MSCI ACWI) with 72.9% of funds holding more than the benchmark weight.Over the last 6-months, cash flows have been among the highest across all Regional Sector groups, with $1bn in net inflows, more buyers than sellers and a marginal uptick in absolute and relative weights.Over the last 6-months, German Industrials stand out as the key recipient of increased levels of positioning, with 4.2% of funds moving to overweight and 3.4% of funds buying in to the sector.Ownership in <a href="https://www.smartkarma.com/entities/deutsche-post-ag" target="_blank" data-smartkarma-citation="entities:21608:1" rel="noopener">Deutsche Post AG (DPW GR)</a> more than doubled from 9.2% in July 2020 to 20.8% today, with every month in between seeing new funds enter the name.  Key holders are RBC, Artemis and Nuveen, all of whom hold north of a 3% allocation.  Over the last 6-months, no closures were registered and instead 2.9% of funds opened positions, led by Cambriar's Global Equity Fund (1.88%) and John Hancock's Global Equity Fund (1.81%).The analysis looks at the positioning of 380 active Global investors with combined AUM of $1.1tr.

Among active Global investors, EMEA Industrials are the 6th largest regional sector allocation and the largest in the EMEA region, with a 4.80% holding weight on average.  This allocation places EMEA Industrials as the largest regional sector overweight at +2.05% above benchmark (vs MSCI ACWI) with 72.9% of funds holding more than the benchmark weight.Over the last 6-months, cash flows have been among the highest across all Regional Sector groups, with $1bn in net inflows, more buyers than sellers and a marginal uptick in absolute and relative weights.Over the last 6-months, German Industrials stand out as the key recipient of increased levels of positioning, with 4.2% of funds moving to overweight and 3.4% of funds buying in to the sector.Ownership in Deutsche Post AG (DPW GR) more than doubled from 9.2% in July 2020 to 20.8% today, with every month in between seeing new funds enter the name.  Key holders are RBC, Artemis and Nuveen, all of whom hold north of a 3% allocation.  Over the last 6-months, no closures were registered and instead 2.9% of funds opened positions, led by Cambriar's Global Equity Fund (1.88%) and John Hancock's Global Equity Fund (1.81%).The analysis looks at the positioning of 380 active Global investors with combined AUM of $1.1tr.

EMEA Industrials: Global Consensus Overweight

Founder of Antler Capital

Stanley Tsai, CFA

Equity Bottom-Up

BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> 
As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

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

The S&amp;P 500, Nasdaq 100, and Russell 2000 are all holding above their respective short-term support levels and market dynamics remain positive. As a result, our outlook remains bullish and we continue to believe a “buy the dip” mentality is warranted. In today’s report we highlight attractive Groups and stocks within Services, Transportation, &amp; Utilities: Construction &amp; Engineering, Large-Cap, Auctions, Vehicle Rentals/Leasing, Electric, Southwest

The S&amp;P 500, Nasdaq 100, and Russell 2000 are all holding above their respective short-term support levels and market dynamics remain positive. As a result, our outlook remains bullish and we continue to believe a “buy the dip” mentality is warranted. In today’s report we highlight attractive Groups and stocks within Services, Transportation, &amp; Utilities: Construction &amp; Engineering, Large-Cap, Auctions, Vehicle Rentals/Leasing, Electric, Southwest

U. S. Equity Strategy: Upgrading Utilities; Downgrading Communications

Ireland

AerCap Holdings NV is the world's largest aircraft leasing firm by fleet value, and is listed on the New York Stock Exchange (AER). It has its headquarters in Dublin with offices in Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

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AerCap Holdings NV (AER US)

SpinTalk: Thoughts On GE's Break-Up Strategy And Why We Think The Stock Is Ready To Fly Again

Despite the long timeline restructuring play, there is a good case to be made for investors to use the lull in the share price to jump onto the GE...

Robert Sassoon

EMEA Industrials: Global Consensus Overweight

Over the last 6-months, cash flows into EMEA Industrials have been among the highest across all sectors, with inflows of $1bn, more buyers than...

Steven Holden

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA

U. S. Equity Strategy: Upgrading Utilities; Downgrading Communications

We are upgrading Utilities and downgrading Communications. We recap important technical levels across major indexes and share actionable ideas...

Vermilion Research

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