Report
Dave Nicoski ...
  • Ross LaDuke
EUR 237.10 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Health Care Hitting On All Cylinders

Global equities remain in a short-term consolidation phase, however we continue to believe the longer-term trend is up and to the right for the MSCI ACWI following the late-October breakout... see chart below.

• Market Ignoring Negative Headlines. Global equity markets continue to generally shrug off seemingly bearish headlines surrounding trade, Trump impeachment hearings, and ongoing protests in Hong Kong. This tells us that the good outweighs the bad in the eyes of the market. While we view the fact that none of these issues have yet to derail global markets (esp. the trade headlines) as a positive, we continue to acknowledge the risk of a more meaningful setback due to US-China trade remains high.

• Bottoming Bond Yields to Fuel New Equity Bull Market. Over the past week the recent pause for global equities has coincided with gradually falling global bond yields. We believe this is a countertrend move within the longer-term bottoming process for rates -- something that has historically added fuel to new equity bull markets. We compare the behavior of interest rates in the early stages of prior equity bull markets with what we are seeing in today's markets. The conclusion: our belief that global equities are in the early stages of a new bull market are reinforced... see pages 2-4.

• Actionable Theme: Health Care. Global Health Care stocks are hitting on all cylinders, with plenty of opportunities across various industries (services, devices/equipment, pharmaceuticals, biotech, etc.) and geographies (Europe, Japan, China, EM, etc.)... see pages 5-6.
Underlyings
Aspen Pharmacare Holdings Limited

Aspen is a holding company supplying and manufacturing branded and generic pharmaceutical products as well as infant nutritionals and consumer healthcare products in selected territories. Co. supplies branded and generic pharmaceuticals to approximately 150 countries worldwide. Co. manufactures a range of product-types including oral solid dose, liquids, semi-solids, steriles, biologicals, active pharmaceuticals ingredients (API) and nutritionals Co.'s business unit include International, South Africa, Asia Pacific, and sub-Saharan Africa.

Bayer AG

Bayer is a life sciences group based in Germany. Co.'s operations are organized along three divisions: Pharmaceuticals (engaged in prescription pharmaceuticals for cardiology and women's healthcare); Consumer Health (engaged in non-prescription products in dermatology, dietary supplement, analgesic, gastrointestinal, allergy, cold and flu, foot care, sun protection and cardiovascular risk prevention categories); and CropScience (engaged in the development of seeds and plant traits; crop protection; and for gardens, the green industry and non-agricultural pest control). Co. also maintains an Animal Health business unit engaged in the development of products for farm and companion animals.

Carl Zeiss Meditec AG

Carl Zeiss Meditec is a holding company. Co.'s businesses are focused on two primary areas: Ophthalmology and Microsurgery. In Ophthalmology, Co.'s operations are divided in to two strategic business units: Ophthalmic Systems, which includes a range of laser and diagnostic systems for ophthalmology; and Surgical Ophthalmology, which consists of activities in the field of ophthalmic implants and consumables. In Microsurgery, Co. provides surgical microscopes and visualization solutions, e. g. for ear, nose and throat surgery, or neurosurgery. These products are mainly used to assist with the removal of tumors, as well as the treatment of vascular diseases and functional disorders.

Cochlear Limited

Cochlear is a for-profit entity and operates in the implantable hearing device industry. Co.'s implant systems comprise an implant which is inserted during surgery and an external sound processor. As of June 30 2016, Co. sold in over 100 countries and had a direct presence in approximately 20 countries and used distributors and agents in other areas. Manufacturing for the cochlear implant product range is based in Australia. The bone conduction implant product range is manufactured in Sweden. Co.'s supply chain operates with product being distributed from its manufacturing sites in Australia and Sweden to its regional distribution centres in the U.S., the U.K. and Panama.

DiaSorin S.p.A.

Diasorin is engaged in the market for in vitro diagnostics. Co. is developing, producing and commercializing diagnostic tests that are designed for hospital and private testing laboratories for use in different clinical areas in the market of immunodiagnostics and molecular diagnostics. In the immunodiagnostics market segment, Co. develops, produces and markets immunoreagent kits based on three different detection techniques. In the molecular diagnostics segment, Co. supplies end laboratories with an automated solution to perform the three steps required for the final diagnostic result.

Eurofins Scientific Societe Europeenne

Eurofins Scientific is an international life sciences company operating in food & pharmaceutical products testings. Co. provides analytical testing services to clients from various industries including pharmaceutical, food, and environmental sectors. Co. offers analytical methods for evaluating the authenticity, origin, safety, identity, composition, and purity of biological substances & products. Co. verifies authenticity of products analyzed to detect dangerous components (pathogens, prions, pesticides, asbestos, mycotoxins, dioxins, toxic substances, etc.). Co. operates in Benelux, France, Germany, North America, Scandinavia, British Isles (U.K. & Republic of Ireland), & other countries.

Fleury SA

Fleury SA, formerly Laboratorio de Analises e Pesquisas Clinicas SC Ltda, is a Brazil-based company engaged in the provision of medical laboratory services. The Company's activities are divided into three business segments: Diagnostic medicine, Integrated medicine and Dental. The Diagnostic medicine division provides clinical analysis and diagnostic imaging in partner hospitals. The Integrated medicine division offers private medical diagnostics, as well as tests for laboratories, hospitals and clinics. The Dental division focuses on dental diagnostic imaging. The Company provides services in Brazil through a number of brand names, such as Fleury, Felippe Mattoso, Weinmann, a+ Medicina Diagnostica, Labs a+, Diagnoson a+ and Papaiz.

FRESENIUS MEDICAL CARE AG

RegistrarFresenius Medical Care is a kidney dialysis company, operating in both the field of dialysis services and the field of dialysis products for the treatment of end-stage renal disease (ESRD). Co.'s dialysis business is vertically integrated, providing dialysis treatment at dialysis clinics it owns or operates and supplying these clinics with a range of products. In addition, Co. sells dialysis products to other dialysis service providers. In the U.S.A., Co. also provides inpatient dialysis services and other services under contract to hospitals. Co. provides patient services, including renal pharmaceutical products and in the U.S.A., laboratory services.

Fresenius SE & Co. KGaA

Fresenius is a health care group providing products and services for dialysis, hospitals and outpatient medical care. Co. operates four business segments: Fresenius Medical Care; Fresenius Kabi; Fresenius Helios; and Fresenius Vamed. Fresenius Medical Care provides dialysis care and dialysis products for patients with chronic kidney failure. Fresenius Kabi is engaged in the provision of generic drugs, infusion therapies, clinical nutrition products, related medical devices and transfusion technology. Fresenius Vamed manages projects and provides services for hospitals and other health care facilities. Fresenius Helios is a private hospital operator which only operates in Germany.

Genmab A/S

Genmab is a biotechnology company specializing in the creation and development of differentiated human antibody therapeutics focused on the treatment of cancer. Co.'s product pipeline includes one marketed product, Arzerra, daratumumab in late stage clinical development, four antibodies in clinical development, and over 20 in-house and partnered pre-clinical programs. Co.'s Arzerra (ofatumumab) is a human monoclonal antibody which targets an epitope on the CD20 molecule. Co.'s proprietary technologies include the DuoBody technology, which creates antibodies that can target two molecules at once, and the HexaBody technology, which allows for the creation of more potent antibodies.

Guangzhou Wondfo Biotech Co. Ltd. Class A

Guangzhou Wondfo Biotech Co Ltd. GUANGZHOU WONDFO BIOTECH CO., LTD. is a China-based company principally engaged in research, manufacture and sales of point-of-care testing (POCT) reagents, POCT instrument and related products. According to the testing result, the Company' products can be divided into qualitative testing products and quantitative testing products. According to the usage, the Company' products include pregnancy testing series, infectious diseases testing series, drugs (drug abuse) testing series and chronic disease testing series. The Company's products are used in POCT, clinical test, field test and personal health management, among others.

H.U.Group Holdings Inc.

Miraca Holdings is a holding company mainly engaged in the manufacture and sale of clinical reagents for agglutination and serology testing. Co. is engaged in the development, manufacture and sale of in vitro diagnostic reagents, including test reagents and testing devices mainly in the fields of infectious and oncological diseases to medical institutions and commercial laboratories; and the provision of all-round laboratory testing services, including general testing and esoteric testing, clinical trial-related services to support pharmaceutical research and development, as well as sterilization-outsourcing services of reusable medical and surgical instruments.

Hisamitsu Pharmaceutical Co. Inc.

Hisamitsu Pharmaceutical is a pharmaceutical company. Co.'s principal divisions are pharmaceuticals and related products, and other. Co. is engaged in the manufacture and sale of pharmaceuticals and related products in Japan and overseas. Co.'s principal brands are called "SALONPAS," "Air Salonpas," "ByeBye Fever," "Lifecella Gel Mask," "MOHRUS PATCH," and "KEPLAT." Co. is also involved in the urban cable television broadcasting business and Internet connection service business; the sale and rearing of experimental animals; and the provision of non-life insurance agency services and advertising agency services.

Hualan Biological Engineering Inc. Class A

Hualan Biological Engineering is engaged in the production and sale of biotechnological and blood products. Co.'s products are classified into four categories: plasma infusion products, such as albumin prepared from human plasma; immunization products, including human immunoglobulin, human tetanus immunoglobulin, human hepatitis B immunoglobulin and human immunoglobulin (PH4) for intravenous injection; coagulation factor products, including lyophilized human prothrombin complex concentrates and lyophilized human coagulation factor VIII; and wound healing products, such as lyophilized fibrin sealants for surgery.

Jiangsu Hengrui Medicine Co. Ltd. Class A

Jiangsu Hengrui Medicine is engaged in the development, manufacture and distribution of raw chemical pharmaceuticals, tablets, capsules, powder injections, lyophilized powder for injections, sterile poured-in powder injections, large & small volume parenteral solutions, bulk drugs, western medicines, eye-drops, medicine packaged materials and raw medicines. Through its subsidiaries, Co. is also engaged in the development, manufacture and wholesale of spray solutions, chinese medicines and raw chemicals and research and development of producing new medicines.

Kaken Pharmaceutical Co. Ltd.

Kaken Pharmaceutical is mainly engaged in the manufacture and sale of pharmaceuticals and agrochemical products. Along with its subsidiary, Co. operates pharmaceuticals and real estate businesses. Co.'s principal products include pharmaceuticals such as Artz (anti-osteoarthritic), Procylin (prostacyclin analog), Adofeed (pain-relieving plaster), Brufen, Froben, Fiblast Spray (wound healing agent), Keiperazon (cephem antibiotic), and Pronase-MS (pretreatment for gastro-endoscopy); and Agrochemical products such as Polyoxin (fungicide) and Pentoxazon (herbicide). Real Estate segment is engaged in the leasing and brokerage of real estate and the provision of building maintenance services.

Kissei Pharmaceutical Co. Ltd.

Kissei Pharmaceutical is a pharmaceutical company engaged in the research and development, manufacture and sale of pharmaceutical products. Co.'s major research and development areas are urogenital system, metabolism and endocrinology, as well as immunology and allergy. Co.'s principal products include a treatment for hyperphosphatemia "P-TOL Chewable," dysuria associated with benign prostatic hyperplasia (BPH) "Urief®," a rapid onset and short acting insulin secretagogue "Glufast®" and a therapeutic agent for patients with dry mouth "Salagenan®." In addition, Co., through its subsidiaries, is engaged in the purchase and sale of primary materials, and the development of information systems.

Livzon Pharmaceutical Group Inc. Class A

Livzon Pharmaceutical Group is engaged in the production, operation and sales and technological research of Chinese and western finished medicines, raw materials for medicines, medicine intermediate, Chinese medicine materials, tablet of Chinese medicines, healthcare and invigorative products, healthcare foodstuff, healthcare drinking, cosmetics, sanitation materials, biological products, bio-chemical reagents and medical instruments. Through its subsidiaries, Co. is also engaged in the design, production, agency and publication of various advertisements at home and abroad.

Mediclinic International Plc

Menicon

Menicon is a contact lens manufacturer which engaged in the manufacture and sale of contact lenses and related products. Co. manufactures and sells rigid gas permeable contact lenses, soft contact lenses, and disposal contact lenses of 1 day disposal type, 2 weeks exchange type, and 1 month exchange type, as well as contact lens care products such as contact lens cleaner, disinfectant solution and preservation solution. Co. offers a fixed-rate membership system "MELS Plan" to provide guarantee services for loss, damage, and lens power change. In addition, Co. is also engaged in the veterinary business, environmental biotechnology business, and life science business.

Nagaileben Co. Ltd.

NAGAILEBEN Co., Ltd. is a Japan-based company mainly engaged in the medical wear business. The Company operates medical wear business. The medical wear business purchases and sells medical wear products used by medical professionals and care workers from subsidiaries. In addition, the Company is also engaged in the sale of shoes and other products.

Nippon Shinyaku Co. Ltd.

Nippon Shinyaku is engaged in the manufacture and sale of pharmaceuticals and functional food and ingredients. The Pharmaceuticals segment is engaged in the manufacture and sale of medicines to treat urological diseases, hematologic cancer, gastrointestinal diseases, allergy, inflammation, and other diseases. Co.'s main products include "Zalutia" for urinary disorder, "Vidaza" for myelodysplastic syndrome, and "Tramal" for chronic pain. The Functional Food segment manufactures and sells health food ingredients, preservatives, protein preparations and nutritional ingredients, apices and condiments. Co. is also engaged in the provision of insurance agency and real estate leasing businesses.

Nipro Corporation

Nipro and its affiliates are mainly engaged in the manufacture and sale of medical products and glass products. Co. operates in four business segments: medical-related, pharmaceutical-related, pharma packaging and others. Co.'s principal products include injection and infusion-related products, artificial organ-related products, highly functional products, dialysis-related products and diabetic-related products; injectable drug and oral drugs; and glass for glass tube, ampoule, syrings and cartridges. In addition, Co. is engaged in the manufacture and sale of medical products manufacturing machines, the real estate leasing and the non-life insurance agency business.

Orion Oyj Class B

Orion and its subsidiaries develop and manufacture pharmaceuticals, active pharmaceutical ingredients and diagnostic tests that are marketed globally. Co. and its subsidiaries have two segments: Pharmaceuticals and Diagnostics. The Pharmaceuticals business develops, manufactures and markets pharmaceuticals and active pharmaceutical ingredients. The Pharmaceuticals business portfolio includes Co.'s Stalevo® (carbidopa, levodopa and entacapone) and Comtess®/Comtan® (entacapone) Parkinson's drugs. The Diagnostics business develops, manufactures and markets diagnostic tests.

RYMAN HEALTHCARE LTD.

Ryman Healthcare develops, owns and operates integrated retirement villages, resthomes and hospitals for the elderly within New Zealand and Australia.

Sonic Healthcare Limited

Sonic Healthcare is involved in the provision of medical diagnostic services and the provision of administrative services and facilities to medical practitioners. Co. provides specialized pathology/clinical laboratory and diagnostic imaging services to clinicians, hospitals, community health services, and their patients. Co.'s segments are comprised of: Laboratory, which provides Pathology/clinical laboratory services in Australia, New Zealand, the U.K., the U.S., Germany, Switzerland, Belgium and Ireland; Imaging, which provides diagnostic imaging services in Australia; and Other, which Includes medical center operations and occupational health services.

Terumo Corporation

Terumo is engaged in the manufacture and sale of medical products and equipment. Co.'s principal businesses are cardiac and vascular, general hospital, and blood management. Co.'s principal products are I.V. catheter, nelaton catheter, surgical tape, wound care dressing, syringe hypodermic needle, safety syringe and IV administration set; angiographic catheter, PTCA dilatation catheter, coronary stent, microcatheter and artificial vascular grafts; automated blood collection system, automated blood component processing device, blood bag system with leukocyte reduction filter, sterile tubing welder, pathogen reduction technology system, therapeutic apheresis system, and cell expansion system.

Topchoice Medical Corp. Class A

Top choice Medical Investment Co.,Inc. is a China-based company engaged in the provision of healthcare service. The Company mainly operates through the segment of oral healthcare service. The Company operates its businesses primarily in domestic market, with Zhejiang province as its major market. The Company operates various oral healthcare hospitals, including Hangzhou Dental Hospital, Hangzhou Chengxi Dental Hospital and Ningbo Dental Hospital. The Company is also engaged in the in vitro fertilization (IVF) service business.

United Laboratories International Holdings Ltd.

The United Laboratories International Holdings is an investment holding company. Through its subsidiaries, Co. is engaged in the manufacturing and sale of pharmaceutical products Hong Kong, the manufacturing and sale of soft capsules casings and production and sale of organic fertilizer in the People's Republic of China, research and development of pharmaceutical intermediate products and trading of pharmaceutical products in India and Germany. Co.'s operations are organized into three business segments: sale of intermediate products; sale of bulk medicine; and sale of antibiotics finished products, non-antibiotics finished products and capsule casings.

Vifor Pharma AG

Vifor Pharma is a holding company. Through its subsidiaries, Co. develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. Pharma markets pharmaceutical iron-based products and offers a broad range of OTC products, prescription products, herbal remedies and parapharmaceutical products. Logistics delivers supplies to pharmacies, physicians, drugstores and hospitals and also handles and coordinates the purchase, sale, warehousing and distribution of products for third parties. Healthcare Information provides ways of networking the healthcare market. Retail runs pharmacies and participates in Coop Vitality.

Walvax Biotechnology Co. Ltd. Class A

Walvax Biotechnology Co., Ltd. is a China-based company principally engaged in the research, development, production and distribution of vaccines, monoclonal antibodies and blood products. The Company's main products include haemophilus influenza type b conjugate vaccines, freeze-dried group A,C meningococcal polysaccharide conjugate vaccines, group ACYW135 meningococcal polysaccharide vaccines and group A and C meningococcal polysaccharide vaccines, among others. The Company distributes its products mainly in domestic market.

Ypsomed Holding AG

Ypsomed Holding operates in the field of medical technology and is an independent manufacturer of injection pens for pharmaceutical and biotech companies. Additionally, Co. supplies pen needles. Co.'s core business consists of developing and marketing products and services allowing patients to administer their own medication, in particular diabetes patients. Co. distributes its products worldwide by pharma and biotech companies under their own brand names. Co. operates production sites in Burgdorf, Solothurn, Grenchen and Tabor and has a sales and distribution network across Europe.

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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