Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Quantitative Analysis

<p>Subsequent to our earlier update a quarter ago, below we publish updated results from our dividend forecasting models. Our models take into account most recent reported fiscal year-end financials to provide updated results. We also discuss notable changes within our top 10 conviction list.</p>

Subsequent to our earlier update a quarter ago, below we publish updated results from our dividend forecasting models. Our models take into account most recent reported fiscal year-end financials to provide updated results. We also discuss notable changes within our top 10 conviction list.

Asia Dividend Forecasting | Quarterly Update 2.0

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div><p>In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a position where there are gains and the price ratio is near a turning point.</p></div><div><p>These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.</p></div><div>
<p>These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.</p>
<p>Over the last couple of months, our pair trades have returned 2.54% on average.</p>
</div>

In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a position where there are gains and the price ratio is near a turning point.These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.
These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.
Over the last couple of months, our pair trades have returned 2.54% on average.


<div><p>In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a few positions, especially where there are gains and the price ratios are at turning points.</p></div><div>
<p>These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.</p>
<p>These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.</p>
</div>

In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a few positions, especially where there are gains and the price ratios are at turning points.
These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.
These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.


Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*CBA’s Foray Into BNPL Adds Pressure:</em></strong> Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] FY 1H21 Buy Now Pay Later (BNPL) operating results have turned the corner and are close to break-even, by our calculation. The competition is noticing Afterpay’s performance.  Commonwealth Bank of Australia (CBA.AU) [CBA] has announced its own BNPL product beginning June 2021 which will pressure Afterpay in its home market; and</p><p><strong><em>*Tencent’s Midas Touch:</em></strong> Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 390% over the past nine months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways. </p>

*CBA’s Foray Into BNPL Adds Pressure: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] FY 1H21 Buy Now Pay Later (BNPL) operating results have turned the corner and are close to break-even, by our calculation. The competition is noticing Afterpay’s performance.  Commonwealth Bank of Australia (CBA.AU) [CBA] has announced its own BNPL product beginning June 2021 which will pressure Afterpay in its home market; and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 390% over the past nine months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways. 

Tencent Holdings – Replication Is Flattery

<p><em><strong>*Swimmingly Down Under: </strong></em>Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] reported FY 1H21 operating results. Although operating losses expectedly persist (AUD 79.2 mn vs. AUD 8.2 mn in 2H20), the numbers overall exhibited significant improvement: Financially, we see a light at the end of the tunnel for Afterpay on two fronts: a) receivables impairment increased AUD 25.4 mn (54.5%) HOH. As the global market recover post-vaccine, we’d expect impairments to decline; and b) fair value losses increased AUD 63.7 mn (58.6x). Simply excluding the fair value challenge, After pay would have operated at break-even;  and</p><p><em><strong>*Tencent’s Midas Touch:</strong></em> Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 322% over the past nine  months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways. </p>

*Swimmingly Down Under: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] reported FY 1H21 operating results. Although operating losses expectedly persist (AUD 79.2 mn vs. AUD 8.2 mn in 2H20), the numbers overall exhibited significant improvement: Financially, we see a light at the end of the tunnel for Afterpay on two fronts: a) receivables impairment increased AUD 25.4 mn (54.5%) HOH. As the global market recover post-vaccine, we’d expect impairments to decline; and b) fair value losses increased AUD 63.7 mn (58.6x). Simply excluding the fair value challenge, After pay would have operated at break-even;  and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment of nearly 322% over the past nine  months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways. 

Australia

National Australia Bank Limited is an international banking group which operates in Australia, New Zealand, Europe, Asia and the United States.  The Group offers banking services, credit and access card facilities, leasing, housing and general finance, international and investment banking, wealth and funds management, life insurance and custodian, trustee and nominee services.

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National Australia Bank (NAB AU)

Asia Dividend Forecasting | Quarterly Update 2.0

Subsequent to our Dividend Forecasting Original in Sep 2020, this is our second quarterly update. Our models take into account latest reported...

Ankit Agrawal, CFA

Pair Trading Ideas - Asian Financials

We highlight potential trades among liquid large cap Asian financial stocks that are correlated and exhibit mean reversion. We recommend closing...

Brian Freitas

Pair Trading Ideas - Asian Financials

Pair trades on large cap Asian financials that trade in excess of US$20m a day. These pairs trade in bands versus each other and currently offer...

Brian Freitas

Tencent Holdings – Replication Is Flattery

TENCENT HOLDINGS: Tencent’s Afterpay BNPL performance is turning heads. Commonwealth Bank of Australia has announced its own BNPL product which...

Thomas J. Monaco

Tencent Holdings – Money to Burn

TENCENT HOLDINGS: Tencent's Afterpay expectedly reported FY 1H21 operating losses, but the numbers overall exhibited significant improvement as it...

Thomas J. Monaco

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