Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Equity Bottom-Up

INVESTMENT VIEW:  We believe <a href="https://www.smartkarma.com/entities/13" target="_blank" data-smartkarma-citation="entities:13:1">Rio Tinto Ltd (RIO AU)</a> shares are oversold versus <a href="https://www.smartkarma.com/entities/147" target="_blank" data-smartkarma-citation="entities:147:1">Bhp Billiton (BHP AU)</a> and recommend a pair trade: long Rio; short BHP.  Our analysis of each company’s earnings sensitivities to recent commodity price changes reveals much less contention to their earnings outlook than their share price changes since mid-June implies.  We look for Rio’s shares to regain 16% on a relative basis versus BHP into the next earning cycle.

INVESTMENT VIEW:   We believe Rio Tinto Ltd (RIO AU) shares are oversold versus Bhp Billiton (BHP AU) and recommend a pair trade: long Rio; short BHP.  Our analysis of each company’s earnings sensitivities to recent commodity price changes reveals much less contention to their earnings outlook than their share price changes since mid-June implies.  We look for Rio’s shares to regain 16% on a relative basis versus BHP into the next earning cycle. 

US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP

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

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform using the Discovery Tool.  See the attached report for a complete list of our recommendations from this list.

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform using the Discovery Tool.  See the attached report for a complete list of our recommendations from this list.

MSCI Emerging Markets Index / Technical Analysis

Global markets have deteriorated considerably over the past couple weeks. The MSCI EM index has decisively broken down below the 60,000 major support level we identified as support, and the MSCI ACWI ETF has broken below its 200-day MA, leading us to believe additional consolidation is likely.

Global markets have deteriorated considerably over the past couple weeks. The MSCI EM index has decisively broken down below the 60,000 major support level we identified as support, and the MSCI ACWI ETF has broken below its 200-day MA, leading us to believe additional consolidation is likely. 

EM and ACWI Showing Decisive Breakdowns - Metals & Miners Still Attractive

Amareos

Federico Bagiotti, CFA

BHP - Constructive Neutrality BHP’s motto is “Think Big”. Pertinent given it is the world’s largest mining company. However, in seeming contradiction to its corporate tag line, the recent focus of the company has been towards streamlining its businesses and selling underperforming assets.This corporate diet, so to speak, has had considerable benefits, especially the improvement in profitability, which are widely recognized and BHP’s stock price has been on a solid upward trend since the early…

BHP - Constructive Neutrality BHP’s motto is “Think Big”. Pertinent given it is the world’s largest mining company. However, in seeming contradiction to its corporate tag line, the recent focus of the company has been towards streamlining its businesses and selling underperforming assets.This corporate diet, so to speak, has had considerable benefits, especially the improvement in profitability, which are widely recognized and BHP’s stock price has been on a solid upward trend since the early…

LNG, Oil & Gas, M&A Market Intelligence Specialist

Massimo Bellino

Thematic (Sector/Industry)

More inorganic growth from the M&amp;A "winners". <a href="https://www.smartkarma.com/entities/2616" target="_blank" data-smartkarma-citation="entities:2616:1">Concho Resources Inc (CXO US)</a> said March 28 it will acquire <a href="https://www.smartkarma.com/entities/3645" target="_blank" data-smartkarma-citation="entities:3645:1">Rsp Permian Inc (RSPP US)</a> for $9.5bn, including RSP’s net debt. The all-stock merger of the two Permian-focused E&amp;P is expected to create the largest unconventional shale producer in the prolific Permian Basin. Concho Resources and RSP Permian were among the M&amp;A winners as listed in my latest report <a href="https://www.smartkarma.com/insights/oil-gas-m-a-update-part-3-who-are-the-winners-in-the-m-a-market" target="_blank" data-smartkarma-citation="insights:17445">Oil &amp; Gas M&amp;A Update (Part 3): Who Are the Winners in the M&amp;A Market?</a>. The report ranked the…

More inorganic growth from the M&amp;A "winners". Concho Resources Inc (CXO US) said March 28 it will acquire Rsp Permian Inc (RSPP US) for $9.5bn, including RSP’s net debt. The all-stock merger of the two Permian-focused E&amp;P is expected to create the largest unconventional shale producer in the prolific Permian Basin. Concho Resources and RSP Permian were among the M&amp;A winners as listed in my latest report Oil &amp; Gas M&amp;A Update (Part 3): Who Are the Winners in the M&amp;A Market?. The report ranked the…

Concho Resources, RSP Permian in $9.5bn Merger Deal. Kick-Off for More Consolidation in Oil & Gas?

Australia

BHP Billiton Limited is an international resources company.  The Company's principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.  Dually-listed company with BLT LN.

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BHP Group Ltd (BHP US)

Popular Stocks, Attractive Charts

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform...

Vermilion Research

EM and ACWI Showing Decisive Breakdowns - Metals & Miners Still Attractive

Global markets have deteriorated considerably over the past couple weeks. The MSCI EM index has decisively broken down below the 60,000 major...

Vermilion Research

BHP - Constructive Neutrality

BHP - Constructive Neutrality BHP’s motto is “Think Big”. Pertinent given it is the world’s largest mining company. However, in seeming...

Amareos

Concho Resources, RSP Permian in $9.5bn Merger Deal. Kick-Off for More Consolidation in Oil & Gas?

More inorganic growth from the M&A "winners". Concho Resources Inc (CXO US) said March 28 it will acquire Rsp Permian Inc (RSPP US) for $9.5bn,...

Massimo Bellino

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP

INVESTMENT VIEW: We believe Rio Tinto Ltd (RIO AU) shares are oversold versus Bhp Billiton (BHP AU) and recommend a pair trade: long Rio; short...

Charles Spencer

Popular Stocks, Attractive Charts

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform...

Vermilion Research

EM and ACWI Showing Decisive Breakdowns - Metals & Miners Still Attractive

Global markets have deteriorated considerably over the past couple weeks. The MSCI EM index has decisively broken down below the 60,000 major...

Vermilion Research

BHP - Constructive Neutrality

BHP - Constructive Neutrality BHP’s motto is “Think Big”. Pertinent given it is the world’s largest mining company. However, in seeming...

Amareos

Concho Resources, RSP Permian in $9.5bn Merger Deal. Kick-Off for More Consolidation in Oil & Gas?

More inorganic growth from the M&A "winners". Concho Resources Inc (CXO US) said March 28 it will acquire Rsp Permian Inc (RSPP US) for $9.5bn,...

Massimo Bellino