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

<ul>
<li>Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.</li>
<li>Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.</li>
<li>Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.</li>
</ul>


Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.
Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.
Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.


Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Our payment company screens focus on the market value to processed volume ratio versus the take rate, market value to sales, and valuations relative to EBITDA and earnings growth</li>
<li>In the megacaps, we like Mastercard on valuation and growth; in emerging markets we favour PagSeguro and SBI Card, and small cap Getnet, also we believe that Stone is oversold</li>
<li>We are negative on Paytm and DLocal, which both did IPOs in 2021; we believe that both companies’ growth prospects are more than discounted by their earnings and EBITDA valuations</li>
</ul>


Our payment company screens focus on the market value to processed volume ratio versus the take rate, market value to sales, and valuations relative to EBITDA and earnings growth
In the megacaps, we like Mastercard on valuation and growth; in emerging markets we favour PagSeguro and SBI Card, and small cap Getnet, also we believe that Stone is oversold
We are negative on Paytm and DLocal, which both did IPOs in 2021; we believe that both companies’ growth prospects are more than discounted by their earnings and EBITDA valuations


Payment Companies – Focus on Value and Growth

Event-Driven

Banco Bilbao Vizcaya Argentari / Event-Driven

<ul>
<li>BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive</li>
<li>The negative reaction to BBVA’s move reflects investor concerns surrounding macro-economics and politics in Turkey, and the weak Turkish Lira; we believe that Turkish monetary policy easing is largely done</li>
<li>BBVA shares provide exposure to its best-in-class return group emerging market banks at an attractive PBV ratio; in addition, BBVA shares are supported by its big share buy-back plan</li>
</ul>


BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive
The negative reaction to BBVA’s move reflects investor concerns surrounding macro-economics and politics in Turkey, and the weak Turkish Lira; we believe that Turkish monetary policy easing is largely done
BBVA shares provide exposure to its best-in-class return group emerging market banks at an attractive PBV ratio; in addition, BBVA shares are supported by its big share buy-back plan


BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

GigaDevice Semiconductor  / Technical Analysis

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

China Technology Sector Improving -- Add Exposure

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Executive Summary: Issuance expectations are often a topic of anxiety for actively trading investors. The concern is that if issuance is expected to be large, then the value of the currently on-the-run security may fall as the market moves into the new security. Our experience is that timing matters. Any decline generally represents a buying opportunity in the older security; however, it can take a week or two for the security to regain lost value. As such, unexpected debt issuance just before quarter-end can be painful.With leverage ratios yet to be a requirement for Eurozone area banks, risk-weighted asset (RWA) capital ratios remain the constraining capital measure. By this standard, <a href="https://www.smartkarma.com/entities/bnp-paribas" target="_blank" data-smartkarma-citation="entities:525:1" rel="noopener">BNP Paribas (BNP FP)</a> and <a href="https://www.smartkarma.com/entities/credit-agricole-sa" target="_blank" data-smartkarma-citation="entities:21373:1" rel="noopener">Credit Agricole Group (ACAFP)</a> remain underweight in Additional Tier 1 (AT1) bond issuance.Amongst UK banks, <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc-a723bd63-0890-486f-aaa0-3bb9ad2b95ce" target="_blank" data-smartkarma-citation="entities:21976:1" rel="noopener">HSBC Holdings (HSBA LN)</a> looks to have a surplus of AT1 bonds from a RWA capital ratio perspective. However, we calculate a deficiency relative to its leverage capital ratio needs. Basel IV inflation may diminish the RWA-base surplus; but for now, HSBC’s leverage ratio is its AT1 governor.In terms of Tier 2 needs, Eurozone banks are largely where they need to be from an efficiency perspective with the main exception of <a href="https://www.smartkarma.com/entities/cooperatieve-rabobank-ua" target="_blank" data-smartkarma-citation="entities:28085:1" rel="noopener">Cooperative Rabobank UA (RABO NA)</a>. Meanwhile, HSBC may be in a position to reduce its Common Equity Tier 1 levels by issuing Tier 2 bonds while remaining well above minimum capital requirements. Concurrently, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered's (STAN LN)</a> Tier 2 levels are materially more than minimum regulatory requirements. These look better value than HSBC’s.

Executive Summary: Issuance expectations are often a topic of anxiety for actively trading investors. The concern is that if issuance is expected to be large, then the value of the currently on-the-run security may fall as the market moves into the new security. Our experience is that timing matters. Any decline generally represents a buying opportunity in the older security; however, it can take a week or two for the security to regain lost value. As such, unexpected debt issuance just before quarter-end can be painful.With leverage ratios yet to be a requirement for Eurozone area banks, risk-weighted asset (RWA) capital ratios remain the constraining capital measure. By this standard, BNP Paribas (BNP FP) and Credit Agricole Group (ACAFP) remain underweight in Additional Tier 1 (AT1) bond issuance.Amongst UK banks, HSBC Holdings (HSBA LN) looks to have a surplus of AT1 bonds from a RWA capital ratio perspective. However, we calculate a deficiency relative to its leverage capital ratio needs. Basel IV inflation may diminish the RWA-base surplus; but for now, HSBC’s leverage ratio is its AT1 governor.In terms of Tier 2 needs, Eurozone banks are largely where they need to be from an efficiency perspective with the main exception of Cooperative Rabobank UA (RABO NA). Meanwhile, HSBC may be in a position to reduce its Common Equity Tier 1 levels by issuing Tier 2 bonds while remaining well above minimum capital requirements. Concurrently, Standard Chartered's (STAN LN) Tier 2 levels are materially more than minimum regulatory requirements. These look better value than HSBC’s. 

Debt Capital Surplus (Shortfall) And Trading Opportunities in European Banks

Spain

Banco Santander SA attracts deposits and offers retail, commercial and private banking, and asset management services. The Bank offers consumer credit, mortgage loans, lease financing, factoring, mutual funds, pension funds, insurance, commercial credit, investment banking services, structured finance, and advice on mergers and acquisitions.

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Banco Santander Sa (SAN SM)

Stick With Energy and Financials

Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward. Attractive Sectors include Energy and...

Vermilion Research

Payment Companies – Focus on Value and Growth

A number of payment fintechs, after the recent market slide, are trading at attractive valuations again; we like Mastercard, SBI Card, Pagseguro,...

Victor Galliano

BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

BBVA shares provide exposure to its high return group emerging market banks in Mexico, Turkey and other LatAm at an attractive PBV ratio; plus BBVA...

Victor Galliano

China Technology Sector Improving -- Add Exposure

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity....

Vermilion Research

Debt Capital Surplus (Shortfall) And Trading Opportunities in European Banks

Timing matters. A price decline in an on-the-run bond due to issuance represents a buying opportunity; however, it can take time to regain value....

Hank Calenti, CFA

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