In today’s briefing:
- [Quiddity Index] MV Global Defense Jun25 Rebalance Results: Flow Expectations
- HLB Merger Arb’s Unique Timing Dynamics for a Juicy 8% Swap Spread
- Korea Small Cap Gem #36: FnGuide [Increasing Moat for Its Index Business]
- MV Global Defense Industry Index Rebalance: US$1.1bn Round-Trip Trade as Stocks Soar
[Quiddity Index] MV Global Defense Jun25 Rebalance Results: Flow Expectations
- The MV Global Defense Industry Index represents the performance of companies in national defense industries.
- There will be 3 ADDs for the MV Global Defense Index in June 2025.
- We expect one-way flow of US$505mn for June 2025, which translates to a turnover of 8.8%.
HLB Merger Arb’s Unique Timing Dynamics for a Juicy 8% Swap Spread
- Some local desks think the company pushed the timeline back to align with a potential FDA Class 1 approval for Rivoceranib expected by July.
- No word yet if it’s Class 1 or 2; Class 2 means November decision. Despite risks, local hedge desks are building arb plays, betting on the July FDA timing dynamics.
- No FDA decision by July means Class 2 and a sell-off, hitting HLB Co. hardest. Class 1 approval boosts both stocks, cuts cancellation risk, and sets the 8% spread floor.
Korea Small Cap Gem #36: FnGuide [Increasing Moat for Its Index Business]
- FnGuide has been able to capitalize on its excellent brand name in the financial industry (especially for research used in equity trading) to profitably expand into the index development business.
- Although the index business accounted for 25% of its sales in 2024, it has been the fastest growing business in the past six years.
- Valuations are reasonable and it is trading at 27% below four year historical EV/EBITDA basis. We like FnGuide as a long-term investment story.
MV Global Defense Industry Index Rebalance: US$1.1bn Round-Trip Trade as Stocks Soar
- Hyundai Rotem, RENK Group and Karman Holdings will be added to the MV Global Defense Industry Index after the close of trading on 20 June.
- Constituent changes, float changes and capping changes result in an estimated one-way turnover of 8.8% and a round-trip trade of US$1.1bn.
- The index has moved up steadily over the last few years and the ETF has taken in a big chunk of money over the last 6 months.
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