Financials

• The Nikkei 225 Index continues its going nowhere trend: there is a pattern however in what it does and it’s quite repetitive as of lately.
• While we don’t attribute predictive value to chart patterns, we do know that a flat trend sooner or later breaks out.
• Our models see limited upside for the current range-bound mini rally (2 weeks in the making). Next we will have a pullback, and it could happen already after this week.

• EAAA India Alternatives Ltd (1619210D IN) (EAAA) is planning to raise about US$177m through its upcoming India IPO. The lead bookrunners for the deal are Axis Capital, Jefferies, Motilal Oswal, Nuvama.
• EAAA is a fund management house with a diversified, multi-strategy platform in large, under-tapped, and fast-growing alternative asset classes, focusing on providing income and yield solutions to its clients.
• As per CARE report, EAAA is one of the leading alternatives platforms in India, in terms of assets under management (AUM) of INR572.62bn (US$6.7bn) as of Sept 24.

• Discussion of ins and outs of option pricing and market risk
• Examples of price volume spirals in meltdown and melt up scenarios
• Exploration of value and instability in market dynamics

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• Trump is gradually building a team to “make America great again” in the crypto space—a move that certainly cannot come soon enough.
• The most significant news from the past week includes the following highlights.
• Trump Names David Sacks as White House AI and Crypto Czar’ at Bloomberg

• Not so Outrageous Commodity Predictions Saxo Bank published their annual “outrageous predictions” for 2025.
• I actually found a few theses that I don’t even find that outrageous in its directionaly.
• For example: “The crypto market quadruples to more than USD 10 trillion, the US dollar falls 20% against major currencies and 30% versus gold.

• Intercontinental Exchange, Inc. (ICE) reported record results for the third quarter of 2024, underscoring strong performance across its diverse business segments.
• The company achieved record net revenues of $2.3 billion, marking an increase boosted by both transaction and recurring revenues.
• Notable growth came from its recent acquisition of Black Knight, contributing to a 7% increase in total pro forma revenue compared to the previous year.

• Marsh & McLennan Companies (MMC) delivered a solid financial performance in the third quarter of 2024, continuing its positive growth trajectory.
• The company achieved underlying revenue growth of 5%, supported by strong execution in Risk and Insurance Services (RIS) and Consulting.
• Adjusted operating income increased by 12%, and the adjusted operating margin expanded by 110 basis points, reflecting effective cost management and operational efficiency.

• What you need to know: • Moon River provided a review of its 2024 milestones as well as an outlook for an exciting 2025.
• • 2024 was a busy year for the Company, publishing a PEA on the Davidson Project and acquiring its interest in the Endako Mine.
• • MOO is setup for an active 2025 with several major catalysts planned, including an updated mineral resource estimate and an updated PEA.

• GSHD is a home and auto insurance broker with a mixed corporate and franchised model
• GSHD earns commissions on policy sales through distribution agreements with insurance companies
• Recent quarters have shown significant growth slowdown, leading to concerns about sustainability of franchise model due to high franchisee churn rates

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• There are 2 changes for the S&P 500 INDEX, 2 changes for the S&P Midcap400 Index and 6 changes for the S&P SmallCap600 Index at the December rebalance.
• Apollo Global and Workday will have large flows from S&P 500 INDEX trackers while AppLovin misses out. The SPX adds will have large inflows from the Select Sector index trackers too.
• The outright adds are up a lot in the after-hours and there could be further upside over the next couple of weeks as positioning ramps up.

• On Friday post-close, S&PDJI announced the changes to the S&P500, S&P MidCap400, and S&P SmallCap600 Indices. The S&P500 names will get added to/deleted from the S&P500 Equal-Weight Index too.
• Apollo Global Management (APO US) and Workday Inc Class A (WDAY US) are IN to the S&P500. Qorvo Inc (QRVO US) and Amentum Holdings (AMTM US) are demoted to SmallCap600.
• There is a theoretical quantity to trade, and an expected quantity to trade

• Price action has been mired in a sideways range since hitting these levels in Feb 2024.  Implied’s have come full circle and are at the same levels they were in Feb.
• Option volumes over the past week look to be playing for a break above the sideways range of the last two months or a break below it.
• Skew is very steep with heavy Put volumes and open interest at levels under the current range.

• Just two days ago, Bitcoin surged past the $100,000 milestone for the first time, reaching a peak of $104,000.
• This achievement is highly significant, not only because it represents a critical psychological threshold but also due to the immense media attention such milestones attract.
• Historically, this kind of coverage has often spurred increased interest from retail investors, who may be prompted to purchase Bitcoin as a result.

• In the US, the November nonfarm payrolls came in marginally above expectations at 227 k (220 k e), and were up significantly from the upwardly revised 36 k figure for October (which was impacted by two hurricanes and a strike at Boeing).
• Still, the three-month average payroll growth slowed from earlier in the year to 173 k.
• Meanwhile, the unemployment rate inched up to 4.2% (4.1% e / 4.1% p). Average hourly earnings growth remained steady at 0.4% m-o-m (0.3% e / 0.4% p) and 4.0% y-o-y (3.9% e / 4.0% p).

• Gordan Tang (& his wife Celine) acquired 2.14% in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
• The Offer Price is $1.16/share against a recent close of $1.17. The Offer will be conditional on a 50% acceptance hurdle. That’s it. This is purely a technical Offer. 
• Share popped 7% on the news, and closed up ~5%. This appears unwarranted. Tang is not going to take Suntec private. But ESR Group (1821 HK) may be exiting. 

• There are 8 adds and 7 deletes for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
• Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
• There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

• Short-Date IVs reprice higher as active contract rolls over to 12.12.2024 expiry. Elevated risk-premia justified as contracts capture RBI rate decision & U.S. NFP event risks.
• Re-Pricing of front-end IVs has kicked Vol term-structure into Backwardation. Monthly & Quarterly IVs remain unchanged. Current Vol curve shape is at odds with improving sentiment in underlying Index.
• Strategic Implications: (1) Avoid Short Gamma exposure. (2) Continue allocation to Short Vega + Short Smile structures. (3) Look for Nifty50 trading range to stabilize as trigger for Skew harvesting.   

• Ares Management (ARES US) entered into a definitive agreement a $3.7 billion acquisition of GLP Capital Partners’ international operations.
• The acquisition is structured with a mix of cash and stock, including performance incentives.
• The deal, subject to regulatory approvals, will impact Ares’ presence in a global and a major US index, potentially creating significant passive demand.

• Donald Trump’s election and the subsequent bull run to 100k has emboldened Bitcoiners. Many of them are now calling for the US government to build what they call a Strategic Bitcoin Reserve.

• This idea has been floating around for a while. Robert Kennedy Jr. gave it a big boost in July when he promised to make the Treasury buy a quarter of all Bitcoin in circulation was he elected as president.

• Since the election, various crypto celebrities have chimed in and politicians at the state and the federal level have come up with policy proposals to push this agenda.

• Aviva’s sweetened 275p proposal for Direct Line, with a 73.3% premium, aims to strengthen its UK insurance market leadership and achieve £100M+ cost synergies, enhancing profitability and competitiveness.
• The proposal values Direct Line at an 13.05x forward P/E multiple, higher than its five-year average of 9.95x. The acquisition is a transformative move for Aviva amidst ongoing sector consolidation.
• PUSU deadline is 25 December. Gross spread is 8.8%. I believe Aviva will make a firm offer and would be long the spread. 

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Kioxia Holdings (285A JP) IPO, Hulic Co Ltd (3003 JP) and Sanrio (8136 JP) placements.
• Event-Driven developments: ESR Group (1821 HK), HKBN Ltd (1310 HK), Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), De Grey Mining (DEG AU), Sg Fleet (SGF AU). 

• JB Financial is a Korean regional bank involved in traditional banking services such as mortgage loans, auto loans, and asset management
• The bank has a stable performance with a 10-12% return on common equity and a strong 12.5% CET1 ratio, but trades at a low valuation of .56xTBV and 4-5x earnings
• Activist fund Align Partners has influenced JB’s capital allocation decisions, advocating for buybacks and higher capital returns, while the bank offers a significant 6.6% dividend that has been growing at a double-digit rate

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• I tally 52 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Five new deals this week: De Grey Mining (DEG AU)‘s scrip merger; and cash Offers for ESR (1821 HK), HKBN (1310 HK), Lifestyle China (2136 HK), and Suntec (SUN SP).
• Key updates/news took place on: Latin Resources (LRS AU), Hotel Property Investments (HPI AU), Sg Fleet (SGF AU), Malaysia Airports (MAHB MK), Greatview Aseptic Packaging (468 HK), and MPHB (MPHB MK).

• St. James’s Place plc experienced a 50% decline in shares due to changes in fee structure impacting earnings
• Despite challenges like regulatory provision and dividend cut, the company’s long-term SaaS conversion remains promising
• Estimates project a 6% decline in earnings power but potential for significant value increase by 2030, making the current low valuation an opportunity for investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Back in August 2021, ESR Group (1821 HK) acquired unlisted ARA Asset Management for US$5.2bn. This was discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management. 
• Included in the transaction (completed early-2022) was ARA’s ~30.7% stake in office play Cromwell Property (CMW AU). 
• ESR has in the past said Cromwell was a non-core holding. With ESR now expected to be privatized by Warburg/Starwood, does this accelerate the narrative?

• The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 6th December 2024.
• There will be one ADD/DEL for T50, five ADDs/DELs for T100, and 8 ADDs/7 DELs for TDIV. All of these are perfectly in line with our final expectations. 
• In this insight, we take a look at Quiddity’s final flow expectations for the December 2024 index rebal event and potential trade ideas based on the flow dynamics.

• Michael discusses the journey from being a non-believer in bitcoin to a strong advocate and investor in the asset class
• He compares his investment strategy in bitcoin to Warren Buffet’s investment in Apple, emphasizing the importance of owning and holding onto assets
• Michael explains his belief that there are three ways to make money: making something, trading something, or owning something, and highlights his focus on owning and holding assets as a key to success.

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• RHB Bank is our Malaysian bank top pick, with its real turnaround potential for returns; CIMB remains a buy but is less compelling than RHB given its marked re-rating year-to-date
• Our new buy RHB Bank is stand-out value versus its Malaysian peers and it is improving returns from low levels; its main delinquency challenges are concentrated in small overseas portfolios
• We reiterate our buy on CIMB; management continues to drive credit quality with cost of risk improvements, and we see potential for operating efficiency gains, combined with its attractive valuations

• Our previously posted view on an upcoming KOSPI 200‘s rally has not been changed by the attempted political coup. The market pulled back a bit, no big deal.
• The index is in the process of bottoming, as we will see from the analysis of our QUANTCHARTS / models.
• Even if the index suddenly crashes, we have identified an area for support in that event (keep reading).

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The rankings used for the December 2024 index rebal event will be based on yesterday’s (4th December 2024) opening prices. Announcement date will be 
• Inside we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review. 

• Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
• Charter Halls currently has 31.37%, including 6.66% via the acceptance facility.  That facility has now closed following this unconditional statement. 
• It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.

• Implementation of SEBI’s new F&O circular to remove weekly option contracts, is expected to significantly impact BSE’s market share in derivatives. 
• The new F&O circular is anticipated to considerably affect BSE’s topline and bottom line. Management believes the initiatives will ultimately enhance market efficiency and benefit investors. 
• With removal of weekly contracts, it is expected that volumes will increase in existing contracts, which will benefit more to BSE vs NSE. 

• By driving double-digit sales and OP growth at both Wealth Consulting and Real Estate Solutions during Q1-3 FY12/24, the company continues to demonstrate positive earnings momentum as well as its ability to ride the powerful trend in Japan’s aging demographics.
• Management continues to show improvement in capital allocation by announcing an earnings- accretive acquisition of the Chester Group, a domestic inheritance specialist firm, together with a 5.12% share buyback program.
• This approach to reinvesting capital into the growth of the business together with the buyback shows an effort to offset dilution, demonstrating a commitment to shareholder value and financial strength.

• Investors are cautious about EPR Properties due to concerns about the movie theater industry’s impact on its financial performance
• EPR has a diversified portfolio, strong lease metrics, and potential for growth in other leisure sectors
• Despite short-term industry challenges, EPR Properties offers long-term value and potential for growth with solid underlying property fundamentals and a track record of success

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
• The precondition relates to several regulatory approvals. The precondition satisfaction does not carry the same risk as the China Traditional Chinese Medicine (570 HK) deal break.   
• The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done deal, with timing the key risk. 

• HK$13.00/Share (deemed final). That’s the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.
• Pre-Conditions are extensive, with a long stop date of the 4th September 2025.
• HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.

• GEM banks Bradesco, Hana and Bank of Baroda are buys due to deep value with positive returns catalysts; the sell on premium-valued Nubank is due to fundamental return headwinds emerging
• In the Japanese banks we identify Mizuho and Resona as key beneficiaries of higher benchmark rates going forward, alongside very attractive valuations and supported by strategic share portfolios
• CME Group is our 2025 pick in global exchanges, as a flow monster with a very strong competitive position; PagSeguro is the deep value, contrarian pick in payments

• The KOSPI 200 is in a steady bear market with political turmoil further depressing the outlook. Volatility increased in the near term, leading to an inverted term structure.
• The Nifty 50 is approaching its 50-day average from below. Call options profit from low implied volatility and present an attractive opportunity to profit on the upside.
• The Hang Seng continues to stand out as the index with positive correlation between implied volatility and index performance. Interestingly, the relationship is not symmetric between up- and down moves.

Georgia Capital’s (GCAP’s) net asset value (NAV) per share increased by 6.2% q-o-q in Q324 in Georgian lari terms (3.3% in sterling). The private portfolio companies performed well operationally, whereas the stock value of GCAP’s holding in Bank of Georgia (BoG) remained flat quarter-on-quarter, after de-rating in Q224 amid political uncertainty. Meanwhile, international strategic investors seem to remain confident in Georgia’s prospects, as highlighted by GCAP’s strong uplift on the disposal of the beer and distribution business to Royal Swinkels, which added 1.8pp to its NAV performance. GCAP continues NAV-accretive buybacks (+2.4pp accretion in Q324) financed by record-high recurring dividends received from the portfolio. However, its shares continue to trade at a wide discount to reported NAV of 48.9% (narrowing slightly versus the one-year average of 54.6%).

Q324 DPS was fully covered by adjusted earnings and despite a delay in resolving rent collection with My Space, one of the two recent problem tenants, we expect this to remain the case. My Space has ceased its partial rent payments since June but rent collection on the assets re-tenanted from Parasol to Westmoreland is expected to increase. With a My Space resolution taking longer, our forecasts for FY24 are reduced but are sufficient to cover DPS., while the shares continue to yield more than 9%.

• Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
• The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
• Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.

• China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
• Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
• There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.

• CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
• Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• DigiCo REIT (DIGICO AU) is looking to raise around US$1.3bn in its Australian IPO.
• DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• Chailease offers an alternative view on China lending than the large mainstream banks there
• Data through 9M24 shows very high growth of its China impairment costs at +62% YoY
• Its lending in China is slowing sharply, often a reaction to worsening credit metrics

• In a previous insight we presented a forecast where the Hang Seng Index could bounce after a 2-3 weeks pullback. The index started to rally from there.
• Currently the index is up for 2 consecutive weeks and from the charts and models that we will present here, you can see that it has room to go higher.
• Right now the index has not even reach the 25% (price) resistance level, and this confirms the bullish view.

• Equity Commonwealth is in late-stage liquidation; a $19/share dividend is set for December 6, with a remaining distribution expected in Q1 2025 between $1-$2/share.
• The Denver property, 17th Street Plaza, is expected to sell for $142 million, with potential risks of sale delays beyond Q1 2025.
• Wind-down expenses are estimated at $0.40-$0.50/share, mainly for executive compensation, with contingency reserves expected to be under $10 million.

• In Crypto Moves #44 from September 19, we stated that Ethereum would shine again.
• This prediction appears to be steadily materializing.
• Since the U.S. Presidential election, Ethereum has regained some of the ground it has lost against Bitcoin during the year.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan
• In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.
• Equities rallied, with the S&P 500 rising 0.6% to a new record high of 6,032.

• Moreover, reflecting discussions concerning TRC’s business, financial performance and other matters, TRC reached a standstill agreement last month with Nitor Capital, which had voiced concerns about the company’s direction and operations.
• We view the agreement as a positive outcome of their discussions, particularly in light of the new board composition.
• The substantial need for industrial, commercial and residential space near TRC’s land — likely heightened by the opening of the nearby Hard Rock Hotel & Casino Tejon next year — underscores the attractiveness of TRC’s property, in our view.

• The review period for the December rebalance ended on 29 November. There could be one deletion, plus there will be capping changes.
• Waypoint REIT (WPR AU) is the lowest ranked current index constituent and is very close to the deletion threshold.
• We estimate the one deletion and capping changes could result in one-way turnover of 3.6% resulting in a one-way trade of A$23m.

• Put trading was heavy in the Financial sector this week. ICBC and Bank of China were the main contributors to that with 73% and 63% of their volume in Puts.
• ANTA Sports Products had a notable pick up in Call activity this past week as the stock bounces around 3 year lows vs the Hang Seng index (graph at bottom)
• Energy and Real Estate sectors might be the best area to look for low vol opportunities.

• SpareBank 1 Sr-Bank (SRBANK NO) is the number one addition candidate following the merger with SpareBank 1 Sørøst-Norge which increased the security’s float shares.
• Schibsted ASA (SCHB NO) – Class B – is estimated to have surpassed Class A in liquidity which deems it eligible for selection with a high conviction.  
• Carnival PLC (CCL LN) is one of the top three addition candidates after experiencing a ~50% price rally over the last three months. 

• Our positive focus remains on three smaller cap Indian banks, namely Bandhan, Baroda and Union Bank of India (UBI); we stay negative on richly valued ICICI Bank and Kotak Mahindra
• Bandhan has its NPL challenges, but its pre-provision returns have improved and it is a value stand-out; Baroda remains our favourite and UBI has delivered better profitability and credit quality
• Kotak Mahindra is the peer group’s highest return bank post credit costs, but returns continue to erode; ICICI is on premium valuations and we expect credit costs to go higher

• The UK market currently has a lot of companies trading at very cheap valuations, some justifiably, some less so.
• Liquidity and investor interest has just dried up as UK equities have seen 2 straight years of record outflows.
• I’ve found success this year specifically looking at asset backed financial entities such as GABI and DNA2.

• TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
• 344 new CGRs were filed since 31 October. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
• The TSE Council for the Followup to Market Restructuring met a month ago. They want more progress and more fairness in fair takeovers. Worth reading the docs (here).

• IV PercentRank metrics indicate middle-of-the-range Risk Premia. “High & Down” vol-state persists for the Vol Regime-Switching model.   
• Front-End IVs battered  as Weekly options expire prior to Friday’s tier-1 event risks. IVs marked down -3.6 vols. 
• IV Term-Structure shifts drastically – from Backwardation to Kinked-Shape. Year-end calendar effects causing Vol-surface distortions.

• dLocal Limited experienced a robust third quarter in 2024, demonstrating strong operational performance with record levels in both Total Payment Volume (TPV) and gross profit.
• Key developments indicate the company is effectively regaining momentum after a less-than-stellar start to the year.
• Positives from the quarter include a notable 41% year-over-year increase in TPV, reaching $6.5 billion.