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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>On Friday post market close, S&amp;P Dow Jones announced the results of the March review for the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> that will be effective after the close of trading on 19 March.</p><p>There are 4 additions - <a href="https://www.smartkarma.com/entities/nxp-semiconductors-nv" target="_blank" data-smartkarma-citation="entities:9801:1" rel="noopener">Nxp Semiconductors Nv (NXPI US)</a>, <a href="https://www.smartkarma.com/entities/penn-national-gaming-inc" target="_blank" data-smartkarma-citation="entities:5588:1" rel="noopener">Penn National Gaming (PENN US)</a>, <a href="https://www.smartkarma.com/entities/generac-holdings-inc" target="_blank" data-smartkarma-citation="entities:16223:1" rel="noopener">Generac Holdings (GNRC US)</a> and <a href="https://www.smartkarma.com/entities/caesars-entertainment-corp" target="_blank" data-smartkarma-citation="entities:15532:1" rel="noopener">Caesars Entertainment (CZR US)</a>. To balance that out, there are 4 deletions - <a href="https://www.smartkarma.com/entities/flowserve-corp" target="_blank" data-smartkarma-citation="entities:20555:1" rel="noopener">Flowserve Corp (FLS US)</a>, <a href="https://www.smartkarma.com/entities/sl-green-realty-corp" target="_blank" data-smartkarma-citation="entities:1548:1" rel="noopener">Sl Green Realty (SLG US)</a>, <a href="https://www.smartkarma.com/entities/xerox-holdings-corp" target="_blank" data-smartkarma-citation="entities:17585:1" rel="noopener">Xerox Corp (XRX US)</a> and <a href="https://www.smartkarma.com/entities/vontier-corp" target="_blank" data-smartkarma-citation="entities:28857:1" rel="noopener">Vontier Corp (VNT US)</a>.</p><p>We estimate one-way turnover will be around US$22.4bn and the funding trade will see selling on a lot of the current index constituents.</p><p>The biggest impact of the changes will be on <a href="https://www.smartkarma.com/entities/nxp-semiconductors-nv" target="_blank" data-smartkarma-citation="entities:9801:1" rel="noopener">Nxp Semiconductors Nv (NXPI US)</a> where we estimate passive funds will need to buy around 11 days of ADV on the stock. The impact on the other stocks is much lower due to the move between the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> and the S&amp;P Mid Cap 400 indices.</p>

On Friday post market close, S&amp;P Dow Jones announced the results of the March review for the S&amp;P 500 (SPX INDEX) that will be effective after the close of trading on 19 March.There are 4 additions - Nxp Semiconductors Nv (NXPI US), Penn National Gaming (PENN US), Generac Holdings (GNRC US) and Caesars Entertainment (CZR US). To balance that out, there are 4 deletions - Flowserve Corp (FLS US), Sl Green Realty (SLG US), Xerox Corp (XRX US) and Vontier Corp (VNT US).We estimate one-way turnover will be around US$22.4bn and the funding trade will see selling on a lot of the current index constituents.The biggest impact of the changes will be on Nxp Semiconductors Nv (NXPI US) where we estimate passive funds will need to buy around 11 days of ADV on the stock. The impact on the other stocks is much lower due to the move between the S&amp;P 500 (SPX INDEX) and the S&amp;P Mid Cap 400 indices.

S&P500 Index Rebalance: NXPI Is the One to Watch

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

United Hampshire US REIT / Equity Capital Markets

<div><p>United Hampshire US REIT (UHUS) raised around US$324m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. </p></div><div><p>The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery &amp; necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.</p></div><div>
<p>In my previous notes I looked at:</p>
<ul><li>The company’s past performance and highlighted some of the issues, <a href="https://www.smartkarma.com/insights/united-hampshire-us-reit-ipo-e-commerce-resistant-maybe-but-still-not-doing-great" target="_blank" rel="noopener">United Hampshire US REIT IPO - E-Commerce Resistant Maybe but Still Not Doing Great</a>, </li></ul>
</div><div>
<ul><li>Talked about valuations and ran the deal through our ECM framework, <a href="https://www.smartkarma.com/insights/united-hampshire-us-reit-ipo-yield-looks-enticing-but-falls-short-on-multiple-measures" target="_blank" rel="noopener">United Hampshire US REIT IPO - Yield Looks Enticing but Falls Short on Multiple Measures</a>
</li></ul>
<p>In this insight, I'll re-visit some of the deal dynamics and provide a table with implied valuations at different share prices.</p>
</div>

United Hampshire US REIT (UHUS) raised around US$324m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery &amp; necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.
In my previous notes I looked at:
The company’s past performance and highlighted some of the issues, United Hampshire US REIT IPO - E-Commerce Resistant Maybe but Still Not Doing Great, 

Talked about valuations and ran the deal through our ECM framework, United Hampshire US REIT IPO - Yield Looks Enticing but Falls Short on Multiple Measures

In this insight, I'll re-visit some of the deal dynamics and provide a table with implied valuations at different share prices.


United Hampshire US REIT IPO Trading - Peers Have Corrected by 5-13%

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

<p>On April 24, 2019, we published an insight- <em><strong>SpinTalk: Spirit Realty Capital - A Rising Spirit</strong> </em>- in which we highlighted the transitioning process that Spirit Realty has been undergoing over the past year towards becoming a conventional triple net lease REIT  with the goal of closing its large valuation gap to its primary peers. There have since been significant developments which are likely to accelerate the process, notably the announcement on June 3, 2019 that Spirit MTA REIT (SMTA US) will sell the assets of its Master Trust in a process that will lead to its liquidation. Closing of the transaction is targeted by the end of 3Q 2019 at which time Spirit Realty' will receive gross proceeds od ~$260 MN from SMTA, which in addition to the expected ~$450 MN of net proceeds that will be available from its recent public offering, significantly increases Spirit Realty's deployable growth capital. Moreover, Spirit Realty's external management contract with SMTA will be replaced by a much more modest interim version to help manage the sale of SMTA's remaining assets.</p><p>Since our previous insight on Spirit Realty, the shares have risen by 12% in value, and are up ~30% since the start of the year. Still, our updated valuation thesis indicates further value upside of  ~20% plus as Spirit Realty continues its progress in narrowing its valuation gap relative to peers. But, our valuation assessment could prove quite conservative given the significant increase in deployable capital that Spirit Realty will enjoy. </p><p>Furthermore, having already received a credit rating upgrade from S&amp;P Global following the public stock offer launch, we expect both Moody's and Fitch to follow suit with the latest SMTA news only  being another source of encouragement.</p>

On April 24, 2019, we published an insight- SpinTalk: Spirit Realty Capital - A Rising Spirit - in which we highlighted the transitioning process that Spirit Realty has been undergoing over the past year towards becoming a conventional triple net lease REIT  with the goal of closing its large valuation gap to its primary peers. There have since been significant developments which are likely to accelerate the process, notably the announcement on June 3, 2019 that Spirit MTA REIT (SMTA US) will sell the assets of its Master Trust in a process that will lead to its liquidation. Closing of the transaction is targeted by the end of 3Q 2019 at which time Spirit Realty' will receive gross proceeds od ~$260 MN from SMTA, which in addition to the expected ~$450 MN of net proceeds that will be available from its recent public offering, significantly increases Spirit Realty's deployable growth capital. Moreover, Spirit Realty's external management contract with SMTA will be replaced by a much more modest interim version to help manage the sale of SMTA's remaining assets.Since our previous insight on Spirit Realty, the shares have risen by 12% in value, and are up ~30% since the start of the year. Still, our updated valuation thesis indicates further value upside of  ~20% plus as Spirit Realty continues its progress in narrowing its valuation gap relative to peers. But, our valuation assessment could prove quite conservative given the significant increase in deployable capital that Spirit Realty will enjoy. Furthermore, having already received a credit rating upgrade from S&amp;P Global following the public stock offer launch, we expect both Moody's and Fitch to follow suit with the latest SMTA news only  being another source of encouragement.

SpinTalk: Spirit Realty Capital (SRC US) -Transition To Be Completed Sooner Than Expected

<p>On May 31, 2018,  Spirit Realty Capital (SRC US), a triple net lease REIT that is primarily focused on single tenant retail real estate in the US, completed the spin-off of its lower quality and debt encumbered assets into a vehicle named Spirit MTA REIT (SMTA US). But, as we approach the first anniversary of the spin-off event, we believe it is worthwhile revisiting the situation since we continue to identify Spirit Realty as an attractive misvaluation opportunity, particularly as it has entered the last phase of its transition into a more typical triple net lease REIT which we believe should catalyze a value re-rating in the coming quarters.</p><p>Our valuation thesis points to a shareholder return well in excess of 20% (including the dividend) that should be achievable within a year if the aforementioned last phase of its transition progresses as expected. </p>

On May 31, 2018,  Spirit Realty Capital (SRC US), a triple net lease REIT that is primarily focused on single tenant retail real estate in the US, completed the spin-off of its lower quality and debt encumbered assets into a vehicle named Spirit MTA REIT (SMTA US). But, as we approach the first anniversary of the spin-off event, we believe it is worthwhile revisiting the situation since we continue to identify Spirit Realty as an attractive misvaluation opportunity, particularly as it has entered the last phase of its transition into a more typical triple net lease REIT which we believe should catalyze a value re-rating in the coming quarters.Our valuation thesis points to a shareholder return well in excess of 20% (including the dividend) that should be achievable within a year if the aforementioned last phase of its transition progresses as expected. 

SpinTalk:Spirit Realty Capital (SRC US)- A Rising Spirit

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

Cross Asset Strategy

<p>In this report, we analyse the staggering inflows into US passive equity funds over the past 6 years, identify the key players and how these inflows translate to the holdings in the underlying companies.  We compare this picture with $1tr in actively managed funds in the US and find a stark difference in fortunes.  We propose that the switch from passive to active has affected the ability of active managers to consistently outperform and highlight some of the stocks riding on the wave of the passive inflows, yet roundly ignored by the active investor community.  </p>

In this report, we analyse the staggering inflows into US passive equity funds over the past 6 years, identify the key players and how these inflows translate to the holdings in the underlying companies.  We compare this picture with $1tr in actively managed funds in the US and find a stark difference in fortunes.  We propose that the switch from passive to active has affected the ability of active managers to consistently outperform and highlight some of the stocks riding on the wave of the passive inflows, yet roundly ignored by the active investor community.  

Passive Vs Active:  ETF Flows Dominate, Stock Prices Distorted, Active Managers on the Ropes

United States

Realty Income Corporation owns and manages a portfolio of commercial properties located across the United States. The Company focuses on acquiring single-tenant retail locations, leased to regional and national chains, and under long-term net lease agreements.

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Realty Income (O US)

S&P500 Index Rebalance: NXPI Is the One to Watch

There are 4 changes to the S&P500 with NXP Semiconductors the largest beneficiary of the changes. Estimated one-way turnover is US$22.4bn and there...

Brian Freitas

United Hampshire US REIT IPO Trading - Peers Have Corrected by 5-13%

United Hampshire US REIT (UHUS) raised around US$324m in its Singapore IPO. UHUS will invest in grocery-anchored and necessity-based retail...

Sumeet Singh

SpinTalk: Spirit Realty Capital (SRC US) -Transition To Be Completed Sooner Than Expected

On April 24, 2019, we published an insight- SpinTalk: Spirit Realty Capital - A Rising Spirit - in which we highlighted the transitioning process...

Robert Sassoon

SpinTalk:Spirit Realty Capital (SRC US)- A Rising Spirit

On May 31, 2018, Spirit Realty Capital (SRC US), a triple net lease REIT that is primarily focused on single tenant retail real estate in the US,...

Robert Sassoon

Passive Vs Active: ETF Flows Dominate, Stock Prices Distorted, Active Managers on the Ropes

In this report, we analyse the staggering inflows into US passive equity funds over the past 6 years, identify the key players and how these...

Steven Holden

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52-week Range

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