Report
Dave Nicoski ...
  • Ross LaDuke
EUR 217.56 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Market internals sending mixed signals

• Mixed market internals; Expect continued volatility and consolidation. Though support levels on the MSCI ACWI and S&P 500 have held - namely the 200-day moving averages and the lows from 2/9/18 - various market internals have begun to show neutral or negative signals... see below and page 2.

• Europe at support; Hong Kong and Norway outperforming. The STOXX Europe 600 Index has managed to stay just at or above the important 365 support level that we have highlighted in previous reports. With Hong Kong and Norway continuing to outperform, we reiterate our overweight recommendations... see page 3.

• Focus on outperforming Brewers, Distillers & Vintners. Within defensive Consumer Staples, focus on alcoholic beverage stocks which have outperformed through both strong and weak market environments. We expect outperformance to continue and provide actionable stocks... see pages 4-8.

• Japan remains near support; Personal Goods stocks are outperforming. Similar to the above and in the same Sector, we focus on Japanese Cosmetics & Toiletries stocks that we believe will outperform in this uncertain environment. We provide actionable stocks... see pages 9-10.

• Maintain EM overweight; Within EM, favor BRIC. Through this volatile period, EM relative strength vs. the MSCI ACWI has remained in the confines of an uptrend. Within EM, look to BRIC countries for continued outperformance... see page 11.
Underlyings
Anadolu Efes Biracilik ve Malt Sanayii A.S.

Anadolu Efes Biracilik ve Malt Sanayii AS is a Turkey-based company, which is engaged in the production, bottling, selling and distribution of beer under a number of trademarks and also in the production, bottling, selling and distribution of sparkling and still beverages with The Coca-Cola Company trademark. The Group owns and operates more than 14 breweries, over five malt production facilities and over 15 facilities for sparkling and still beverages production. Furthermore, the Group has joint control over Anadolu Etap Penkon Gida ve Tarim Urunleri San. ve Tic. AS (Anadolu Etap) which undertakes production and sales of fruit juice concentrates and purees in Turkey. The Group also has joint control over Syrian Soft Drink Sales & Dist. LLC (SSDSD) which undertakes distribution and sales of sparkling and still beverages in Syria.

Asahi Group Holdings Ltd.

Asahi Group Holdings is a holding company. Co. and its subsidiaries are engaged in the manufacture and sale of alcoholic beverages, including beer, low-malt beer (happoshu), distilled spirits (shochu), wines and whiskey, as well as soft drinks and chilled beverages in its soft drinks business, along with baby foods, supplements and other products in the food business. Co.'s principal brands include "Asahi Super Dry," "Asahi Super Dry Back," "Asahi Dry Premium," "Asahi Style Free," "Asahi Dry Zero," "Clear Asahi," "Kanoka," "Black Nikka," "WONDA," "Mitsuya Cider" and "Calpis." Co. is also engaged in the manufacture and sale of beer and other alcohol products, and soft drinks in overseas.

Boston Beer Company Inc. Class A

Boston Beer Company is an alcoholic beverage company and a craft brewer. The company is engaged in the business of selling alcohol beverages throughout the United States and in selected international markets. The company's brands include Samuel Adams?, Twisted Tea?, Truly Hard Seltzer?, Wild Leaf? Hard Tea and Tura? Alcoholic Kombucha. The company produces alcohol beverages including malt beverages, hard cider and hard seltzer at the company-owned breweries and its cidery and under contract arrangements at other brewery locations. The company sells its products mainly in the United States, but also has markets in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America.

Brown-Forman Corporation Class B

Brown-Forman primarily manufactures, bottles, imports, exports, markets, and sells a range of alcoholic beverage brands. Co.'s principal brands include, among other, Jack Daniel's Tennessee Whiskey; Jack Daniel's Tennessee Honey; Jack Daniel's RTDs; Gentleman Jack Rare Tennessee Whiskey; Jack Daniel's Tennessee Fire; Jack Daniel's Single Barrel Collection; Jack Daniel's Winter Jack; Jack Daniel's Sinatra Select; Jack Daniel's No. 27 Gold Tennessee Whiskey; Jack Daniel's Tennessee Rye; Korbel California Champagnes; Korbel California Brandy; Woodford Reserve Kentucky Bourbon; Woodford Reserve Double Oaked; Woodford Reserve Kentucky Rye Whiskey; Finlandia Vodkas; and Slane Irish Whiskey.

Ci:z Holdings Co. Ltd.

Ci:z Holdings is a holding company primarily engaged in the cosmetic, health food, and esthetic salon businesses. Along with its subsidiaries, Co. is involved in the planning, development, manufacture, and sale of cosmetic products including "Dr. Ci:Labo," "Labo Labo" and "Genomer" as well as health food products. Co. is engaged in the mail order sales mainly at call centers, as well as through online, postcards and fax; the operation of Dr. Ci:Labo corners in directly managed stores, department stores and shopping centers; the sale of its products mainly to variety shops and drug stores. Co., through its subsidiary, is also engaged in the operation of esthetic salon.

Constellation Brands Inc. Class A

Constellation Brands is an international beverage alcohol company. The company is a producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. The company has two segments: Beer, in which the company is engaged in the U.S. beer market that includes the imported, craft, domestic super premium, and alternative beverage alcohol categories and it has the right to import, market and sell these Mexican beer brands in the U.S.; and Wine and Spirits, in which its wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S., New Zealand and Chile, and vineyard holdings in the U.S., New Zealand and Italy.

Kose Corporation

Kose is a parent company of a group engaged in the manufacture and sale of cosmetics both in domestic and overseas markets. Co.'s principal products include skin care products, base make-up products, hair care products, nail polish, among others. Co. operates in two business segments. The Cosmetic segment offers high-prestige brands such as "INFINITY Kose" and "DECORTE" sold mainly at specialty cosmetics stores and department stores, as well as prestige brands such as "SEKKISI" sold at specialty cosmetics stores, drugstores and e-commerce. The Cosmetaries segment offers self-selection brands such as "Visee" sold at mass retailers, drugstores, convenience stores and other retail outlets.

LT Group

LT Group, Inc. is a Philippines-based company that purchases, exchanges, assigns and holds investments and properties. The Company's segments include Banking, Distilled Spirits, Beverage, Tobacco, Property Development and Others. The Banking segment provides a range of banking and other financial services to corporate, middle-market and retail customers and various government agencies. The Distilled Spirits segment is involved in manufacturing, compounding, bottling, importing, buying and selling rum, spirit beverages and liquor products. The Beverage segment is engaged in brewing, and soft drinks and bottled water manufacturing. The Tobacco segment manufactures and supplies cigarettes, casings, tobacco, packaging, labels and filters. The Property Development segment owns, develops, leases and manages residential properties. The Others segment consists of holding companies that provide financing for working capital and capital expenditure requirements of its operating businesses.

MGP Ingredients Inc.

MGP Ingredients is a producer and supplier of distilled spirits and specialty wheat protein and starch food ingredients. The company has two reportable segments: distillery products and ingredient solutions. The distillery products segment processes corn and other grains (including rye, barley, wheat, barley malt, and milo) into food grade alcohol and distillery co-products, such as distillers feed (called dried distillers grain in the industry), fuel grade alcohol, and corn oil. The company also provides warehouse services. The ingredient solutions segment consists primarily of specialty wheat starches, specialty wheat proteins, commodity wheat starches, and commodity wheat proteins.

Paltac Corporation

Paltac is engaged in the wholesale of cosmetics, daily necessities and over-the-counter drugs. Co. is engaged in the wholesale of cosmetics, daily necessities and over-the-counter drugs to drug stores, home centers, supermarkets, and convenience stores throughout Japan. Co. is also engaged in the contract operation and management of logistics centers including receipt/placement of orders, warehousing, inventory management, and shipping.

Pernod Ricard SA

Pernod Ricard produces and distributes wines and spirits. Co. produces aniseed products, vodka, whisky, cognac, rum, gin, liqueurs, champagnes and wines. Co.'s activity is organized around families of products built around brands. Its brands portfolio includes: ABSOLUT vodka, Ricard pastis, Ballantine's, Chivas Regal and The Glenlivet Scotch whiskies, Jameson Irish whiskey, Martell cognac, Havana Club rum, Beefeater gin, Kahlua and Malibu liqueurs, Mumm and Perrier-Jouet champagnes as well as Jacob's Creek and Brancott Estate wines. Co. is structured into four segments constituted by the following geographic regions: France, Europe (excluding France), Americas, Asia/Rest of the World.

Pola Orbis Holdings Inc.

POLA ORBIS HOLDINGS is a holding company of group companies mainly engaged in the cosmetics business. Co., through its subsidiaries, operates in two principal business segments. The Beauty Care segment is involved in the research, manufacture, and sale of cosmetics as well as the provision of body fashion products, clothing, jewelry goods and kimonos. The Real Estate segment is engaged in the leasing of real estate properties, such as office buildings and condominiums. In addition, Co., through its subsidiaries, is engaged in the research, development, manufacture and sale of medical products; the provision of building maintenance services; and the insurance agency business.

Radico Khaitan Ltd.

Radico Khaitan Limited. Radico Khaitan Limited manufactures alcohol and alcoholic products. The Company operates through the segment of liquor and related products. It offers various brands of Whisky, including 8PM Whisky, Royal Whytehall Whisky and After Dark Whisky; Rum, including Contessa Rum and 8PM Bermuda Rum; Brandy, including Old Admiral Brandy, 8PM Excellency Brandy and Morpheus Brandy; Vodka, including Magic Moments Vodka, Magic Moments Remix Vodka and Verve, and Ready to Drink, including Electra. It produces extra neutral alcohol from molasses, as well as grain. It produces malt spirit and aged grain spirit, as well as matured malt spirit. It has over 33 bottling units spanning across the entire country, of which over five belong to it and over 28 are contract bottling units. Its Rampur Distillery manufactures various brands of Indian-made foreign liquor (IMFL) and country liquor. It operates over three distilleries and one joint venture with total capacity of over 150 million liters.

Remy Cointreau SA

Remy Cointreau is an operator in the global wines and spirits market. Co. produces, markets and distributes Cognac, Liquors and Spirits and other non-group brand alcoholic beverages. Co.'s primary cognac brand is Remy Martin, produced from Petite Champagne and Grande Champagne eaux-de-vie. Co.'s principal liquor and spirits include the following brands: Cointreau, Passoa, Metaxa, St Remy, and Mount Gay. Co. also operates a distribution network that handles products from partners and third-party companies. Major non-group products distributed by Co. include Scotch Whiskies (Edrington brand), Champagne (Piper-Heidsieck and Charles Heidsieck brands) and Vodka.

Royal Unibrew A/S

Royal Unibrew is a holding company based in Denmark. Co. is engaged in the production, marketing, sale and distribution of beverages. Co.'s main focus is on branded products, such as beer, malt, and soft drinks, including carbonated soft drinks, mineral water and fruit juices. Co.'s portfolio comprises both its own international brands, such as Royal, Ceres, Faxe, and national brands, such as Lomza in Poland, Lacplesa Alus in Latvia. Co. also offers license-based brands, such Heineken and the Pepsi Group's products, which are distributed in Denmark on the basis of license agreements. Co. is primarily active in Western and Eastern Europe and in the international malt drinks markets. .

Schloss Wachenheim AG

Sektkellerei Schloss Wachenheim is a producer and supplier of sparkling wine. Co. offers sparkling, semi-sparkling and carbonated sparkling wine products, non-alcoholic sparkling wine, imported wine from Italy and Romania and various wine-based beverages. Co. has an annual sparkling wine production capacity of around 256 million bottles. Co.'s brand portfolio includes Faber, Feist, Schloss Wachenheim, Nymphenburg, Schweriner Burggarten, Light live, Dorato, Cin&Cin, Charles Volner, Muscador and Opera.

Treasury Wine Estates Limited

Treasury Wine Estates is engaged in viticulture and winemaking, and the marketing, sale and distribution of wine. Co.'s wine portfolio includes wine brands such as Penfolds, Beringer, Lindeman's, Wolf Blass, Stags' Leap, Chateau St Jean, Beaulieu Vineyard and Sterling Vineyards. Co. also distributes beer and cider under license in New Zealand and provides contract bottling services to third parties. Co. maintains its operations in four regions: Australia and New Zealand, Asia, Europe, and Americas.

Tsingtao Brewery Co. Ltd. Class H

United Breweries

United Breweries is an alcoholic brewing company based in India. Co. is engaged in the manufacturing and marketing of beer made from malt and allied products. Co.'s brewery products include Kingfisher, UB Premium Ice Beer, Charger Extra Strong Beer, Kalyani Black Lable, Kalyani Export Special, Kalyani Black Label Strong, Bullet Super Strong Beer and UB Export. Co. is also engaged in manufacturing of liquors, beer, leather shoes, organic and inorganic petrochemicals, ciprofloxacin, amitriptylene, and ibuprofen. Co.'s other activities include publishing and printing newspaper and journals; selling and servicing of Hitech Medical equipment; operation of a cable television network and others.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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