Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

<ul><li>In this report, we identify financial forensics as an indispensable part of the short-seller's tool-kit.  Specifically, we examine the role that a deterioration in earnings quality has played in the demise and poor performance of two high profile Australian small caps that were once market darlings: electronic retailer, Dick Smith Holdings and law firm, Slater &amp; Gordon.</li><li>Now that over three quarters of the ASX200 companies have reported their 2016 full year results, Evidente has undertaken a comprehensive analysis of company annual accounts and identified three companies that have reported a high non-cash component of earnings and a substantial deterioration in earnings quality in the past year: A2M, BAP and BLK. </li><li>In the second instalment of Financial Forensic, Evidente will use its cash based accruals measure to develop a more robust and clean estimate of cash based operating profitability.</li></ul>

In this report, we identify financial forensics as an indispensable part of the short-seller's tool-kit.  Specifically, we examine the role that a deterioration in earnings quality has played in the demise and poor performance of two high profile Australian small caps that were once market darlings: electronic retailer, Dick Smith Holdings and law firm, Slater &amp; Gordon.Now that over three quarters of the ASX200 companies have reported their 2016 full year results, Evidente has undertaken a comprehensive analysis of company annual accounts and identified three companies that have reported a high non-cash component of earnings and a substantial deterioration in earnings quality in the past year: A2M, BAP and BLK. In the second instalment of Financial Forensic, Evidente will use its cash based accruals measure to develop a more robust and clean estimate of cash based operating profitability.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

<ul><li>From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. </li><li>For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.</li><li>Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. </li></ul>

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. 

Bespoke Research on China and neighbouring regions, Bixmoor

Bixmoor

Bespoke Research on China and neighbouring regions

Bixmoor specialises in providing bespoke research to business, governments and the financial community on China and neighbouring regions. We seek to build long-term relationships with our clients, based on our expertise, our reliability and our determination to find the right solution.

A comprehensive world survey of population heights over the last century has thrown up some surprising results. Americans have had the smallest height gain of any developed country, whereas Koreans have grown by an average of six inches over the last 100 years.

A comprehensive world survey of population heights over the last century has thrown up some surprising results. Americans have had the smallest height gain of any developed country, whereas Koreans have grown by an average of six inches over the last 100 years. 

Macroeconomics

<ul><li>Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on Tuesday.  Real rates have effectively lifted in the first half of CY2016, with the 25 basis point cut to the OCR in May only partially offsetting the 50 basis point decline in underlying inflation.</li><li>Consequently, Evidente believes that the central bank should deliver another rate cut this week of 25 basis points.  With the Governor’s ten year term about to end in September, surely Mr Stevens will not want to leave a legacy of have tolerated a 50 basis point undershoot on the RBA’s inflation target?</li><li>Since its launch a month ago, the key macro principle guiding Evidente’s model portfolio has been the prospect that interest rates will remain low for an extended period due to the shortfall in aggregate demand.  As a result, the portfolio retains a strong defensive bias, with an overall beta of less than 0.85.  Over the past month, the portfolio delivered alpha of 1.2%, reflecting stock selection within the small cyclical budget, including overweights in MND (+41%), BSL (+32%), MYR (+19%) and PMV (+14%). </li></ul>

Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on Tuesday.  Real rates have effectively lifted in the first half of CY2016, with the 25 basis point cut to the OCR in May only partially offsetting the 50 basis point decline in underlying inflation.Consequently, Evidente believes that the central bank should deliver another rate cut this week of 25 basis points.  With the Governor’s ten year term about to end in September, surely Mr Stevens will not want to leave a legacy of have tolerated a 50 basis point undershoot on the RBA’s inflation target?Since its launch a month ago, the key macro principle guiding Evidente’s model portfolio has been the prospect that interest rates will remain low for an extended period due to the shortfall in aggregate demand.  As a result, the portfolio retains a strong defensive bias, with an overall beta of less than 0.85.  Over the past month, the portfolio delivered alpha of 1.2%, reflecting stock selection within the small cyclical budget, including overweights in MND (+41%), BSL (+32%), MYR (+19%) and PMV (+14%). 

Retain Defensive Bias as the Reluctant Rate Cutter Likely to Deliver More Stimulus

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Democratic presidential candidates' potential drug policy reforms have pressured drug stocks, and ongoing political campaigns are likely to continue to create volatility despite the Republican-majority Congress and low probability of reforms passing into law.Among all the reforms, dual-eligible legislation—offering mandatory Medicaid-level drug rebates to some Medicare Part D beneficiaries— looks the most likely, and most impactful (5% earnings cut on average).Analysts: Karen Andersen, Damien Conover &amp; Kelsey Tsai

Democratic presidential candidates' potential drug policy reforms have pressured drug stocks, and ongoing political campaigns are likely to continue to create volatility despite the Republican-majority Congress and low probability of reforms passing into law.Among all the reforms, dual-eligible legislation—offering mandatory Medicaid-level drug rebates to some Medicare Part D beneficiaries— looks the most likely, and most impactful (5% earnings cut on average).Analysts: Karen Andersen, Damien Conover &amp; Kelsey Tsai

Low Odds of U.S. Drug Pricing Reforms Create Favorable Valuations

Australia

CSL Limited develops, manufactures and markets human pharmaceutical and diagnostic products derived from human plasma. The Company's products include pediatric and adult vaccines, infection, pain medicine, skin disorder remedies, antivenoms, anticoagulants, and immunoglobulins.

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CSL Ltd (CSL AU)

Financial Forensic - Part I

In this report, we identify financial forensics as an indispensable part of the short-seller's tool-kit. Specifically, we examine the role that a...

Sam Ferraro

Key Drivers of Asia's Healthcare Sector

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and...

Singapore Exchange Ltd (SGX)

A 'heads Up' on Changing World Heights

A comprehensive world survey of population heights over the last century has thrown up some surprising results. Americans have had the smallest...

Bixmoor

Retain Defensive Bias as the Reluctant Rate Cutter Likely to Deliver More Stimulus

Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on...

Sam Ferraro

Low Odds of U.S. Drug Pricing Reforms Create Favorable Valuations

Democratic presidential candidates' potential drug policy reforms have pressured drug stocks, and ongoing political campaigns are likely to...

Morningstar, Inc.

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