Report
Dave Nicoski ...
  • Ross LaDuke
EUR 224.83 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Another test of support

Heightened trade tensions have caused global equities to move from resistance to support in a matter of days. Additional consolidation - i.e., no breakdowns - on the broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) remains the most likely scenario. At the same time, new cracks are beginning to show and as a result we believe global equities are vulnerable to a breakdown.

• New cracks emerging. Breakdowns in crude oil and new lows for the STOXX 600 Bank supersector are two recent developments which have dampened our overall outlook... see charts below.

• Testing support. Several equity indexes, Dr. Copper, and the global Discretionary vs. Staples ratio are all testing key support levels... see pages 2-3.

• High yield spreads. We examine U.S. and European high yield spreads, and see that recession probabilities are on the rise - especially in the U.S... see page 4.

• Actionable Themes: Health Care and Consumer Staples. Consumer Staples remains one of our favorite international Sector overweights and has been outperforming all year -- overweight/add exposure. Health Care is another Sector with defensive characteristics and several stocks are actionable -- add exposure... see pages 5-6.

• Actionable Themes: Advertising, retail, restaurants, and travel. In this section we flip through several attractive Groups and stocks which offer attractive pullback opportunities, with some being buy reiterations in stocks that we have previously recommended... see page 6.
Underlyings
a2 Milk

A2 Milk is principally engaged in the commercialization of a2 Milk™ related products as supported by the ownership of intellectual property that enables the identification of cattle for the production of a2 Milk™. Through its associated companies, Co. is also engaged in the distribution and marketing of a2 Milk™ in Australia and Japan and commercialize the sales and licensing rights for the supply, distribution and marketing of a2 Milk™ in the U.S. Co. products are also sold under the Jalna and Fresha Valley brand names. Co. operates predominantly in New Zealand and Australia.

Amplifon

Amplifon is multinational company engaged in the ddistribution, fitting, adaptation and personalization of hearing systems (hearing aids) designed to meet the needs of those suffering from hearing disabilities. Co. is also engaged in the sale of accessories such as batteries, consumables and spare parts, as well as in the distribution of biomedical devices. Co. is active in 20 different countries: Italy, France, Germany, Switzerland, The Netherlands, Belgium, Luxembourg, the U.K., Ireland, Spain, Portugal, Hungary, Turkey, the U.S., Canada, Australia, New Zealand, India, Egypt, and in Poland.

China Biologic Products Holdings Inc. (N Shares)

China Biologic Products is a biopharmaceutical company engaged in the research, development, manufacturing and sales of human plasma-based pharmaceutical products in China. Co.'s principal products are human albumin and immunoglobulin for intravenous injection (IVIG). Human albumin is principally used to treat ill patients by replacing lost fluid and maintaining adequate blood volume and pressure. IVIG products are primarily used to improve specific immunity, a defense mechanism by which the human body generates certain immunoglobulin, or antibodies, against invasion by potentially dangerous substances. All of Co.'s products are prescription medicines administered in the form of injections.

China Foods Ltd.

China International Travel Service (A)

China International Travel Service and its subsidiaries are engaged in the provision of travel agent and tour arrangement services; the development of tour package and facilities; the investment in travel services and products; and the sale of duty free merchandise.

China Mengniu Dairy

China Mengniu Dairy is an investment holding company. Through its subsidiaries, Co. is engaged in the manufacturing and distribution of dairy products including liquid milk products (such as ultra-high temperature (UHT) milk, milk beverages and yogurt), ice cream, milk formula and other products (such as cheese) in China. Co.'s core brand is MENGNIU. Co.'s segments include liquid milk products, which manufactures and distributes UHT milk, milk beverages and yogurt; ice cream products, which manufactures and distributes ice cream; milk powder, which manufactures and distributes milk powder; and other products, which includes Co.'s cheese, plant-based nutrition product and trading business.

Coca Cola European Partners

Coca-Cola HBC AG

Coca-Cola Hellenic Bottling Co. produces, sells and distributes an extensive portfolio of non-alcoholic ready-to-drink beverages. Co.'s business is engaged in producing, selling and distributing non-alcoholic ready-to-drink beverages under bottlers' agreements with The Coca-Cola Company. In some Territories, Co. also produces, sells, distributes and markets its own brands of juice and Water beverages. In addition, Co. bottles and distributes beer in Bulgaria and Former Yugoslav Republic of Macedonia and Co. distributes a selected number of third party premium spirit brands in certain central and eastern European operations.

Danone

Danone is engaged in activities in the global food and beverages industry. Co. operates in four markets: Fresh Dairy Products (Co. produces and sells yogurts, fermented dairy products and other fresh dairy products); Waters (Co. produces and sells natural waters as well as flavored and vitamin-enriched waters products); Early Life Nutrition (Co. produces baby formula, milk-and fruit-based desserts, cereals, small pots of baby food and ready-made baby food); and Medical Nutrition (Co. develops adult and pediatric clinical nutrition products to be taken orally, or through a catheter in the event of malnutrition related to illness or other causes).

Dechra Pharmaceuticals PLC

Dechra Pharmaceuticals is engaged in the veterinary pharmaceuticals and related products business. Co. has three reportable segments: European Pharmaceuticals, manufactures and markets Companion Animal, Equine and Food producing Animal Products and also includes third party manufacturing; North American Pharmaceuticals, which consists of Dechra Veterinary Products US, Putney, Dechra Veterinary Products Canada, and Dechra-Brovel, which sells Companion Animal, Equine Products and Food producing Animal Products in those territories; and Pharmaceuticals Research and Development, which includes all of Co.'s pharmaceutical research and development activities.

DiaSorin

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.

Ebos Group

EBOS Group is a provider of medical and healthcare products to the human and animal markets. Co. operates in two business segments, being Healthcare, which incorporates the sale of healthcare products in a range of sectors, own brands, retail healthcare, wholesale activities, and logistics; as well as Animal Care, which incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities. Co.'s operations are primarily in New Zealand and Australia.

Elekta AB Series B

Elekta AB is a human care company providing clinical solutions for treating cancer and brain disorders. Co. develops tools and treatment planning systems for radiation therapy including brachytherapy and radiosurgery, as well as workflow improving software systems across the field of cancer care. Co. has four product areas: Elekta Neuroscience, which develops solutions for the diagnosis and treatment of neurological diseases; Elekta Oncology, which develops clinical solutions for radiation therapy, imaging systems and clinical solutions for patient positioning and immobilization; Elekta Brachytherapy, which is engaged in cancer treatment based on internal radiation; and Elekta Software.

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.

George Weston Ltd.

George Weston is a holding company. Co. has two reportable operating segments: Weston Foods and Loblaw. The Weston Foods operating segment is engaged in fresh and frozen baking company in Canada and frozen baking and biscuit manufacturing in the United States. The Loblaw operating segment is engaged in distributing and providing drugstore, general merchandise and financial products and services.

GFPT

GFPT Public Company Limited. GFPT Public Company Limited is a Thailand-based company engaged in the production and distribution of frozen and cooked chicken products. The Company and its subsidiaries operate fully integration of chicken business under GFPT brand in both domestic and international markets. The Company's operating segments consist of evisceration chickens, hatchery farms, broiler farms, feed mills, parent chickens and chicks distribution, processed food production and distribution, and grandparent chickens. The products are divided into cooked products and frozen products. Cooked products include roasted skinless and boneless breasts, roasted dice breasts, roasted inner fillets, flavored karaages, nuggets, breaded breast steaks, breaded bones in drums and steamed leg meat. Frozen chicken products are wings, boneless breasts, inner fillets, drum sticks and boneless legs.

Grifols

Grifols is engaged in developing, manufacturing and distributing a range of plasma derivative products. Plasma derivatives are proteins found in human plasma, which once isolated and purified, have therapeutic value. These protein-based therapies extend the lives of individuals who suffer from chronic and acute conditions. Co. also specializes in providing infusion solutions, nutrition products, medical devices, diagnostic instrumentation and reagents for use in hospitals and clinics. Co.'s products and services are used by healthcare providers in approximately 100 countries. Co.'s business is organized into three divisions: Bioscience, Diagnostic, Hospital and Raw Materials.

Hangzhou Tigermed Consulting (A)

Hangzhou Tigermed Consulting Co Ltd. Hangzhou Tigermed Consulting Co., Ltd. is a China-based company principally engaged in the provision of clinical research services. The Company provides clinical research related consulting services and clinical test technical services. Its technical services include researcher selection, experiment plan designing, test monitoring, the management and collection of clinical test data, as well as the management of drugs applied in experiments, among others. Its research projects cover hepatitis, oncology and cardiovascular fields, among others. The Company operates businesses in both domestic and overseas markets.

Hikari Tsushin Inc.

HIKARI TSUSHIN is a holding company. Co., through its affiliates, operates in three principal business segments. Corporate segment is engaged in the door-to door sale of office automation ("OA") equipment, eco-friendly products, telecommunication line service, and enterprise solution services for small and medium-sized enterprises. It also provides the communication line such as fixed line and broadband line. SHOP segment is engaged in the sale of mobile phones, mobile Wi-Fi routers and mobile applies (contents) through its nationwide sales channels. Insurance segment is engaged in the sale of insurance policies to customers using telemarketing at its nationwide call centers.

Hoya Corp.

HOYA and its affiliates are mainly engaged in the manufacture and sale of electronics-related products, imaging products, health care products and medical products. Co.'s principal products are photomasks/maskblanks for semiconductors, photomasks/maskblanks and devices for liquid crystal displays ("LCDs"), glass disks for hard disk drives ("HDDs"), optical lenses/glasses, and electro optical glasses; eyeglass lenses, eyeglass frames, contact lenses and accessories, intraocular lenses, endoscopes, bone prosthesis, and medical accessories; cameras, interchangeable lenses, digital camera modules, micro lenses, and CCTV lenses; and crystal glass products.

J.D. Wetherspoon PLC

Wetherspoon (J.D.) is engaged in owning and operating pubs and hotels throughout the U.K. and Ireland.

Kitanotatsujin

Kitanotatsujin Corporation is a Japan-based company mainly engaged in the e-commerce business. The Company is mainly engaged in the sale of health foods and beauty-related products through Internet, and the operation of related businesses, such as the order receipt and shipment business, the production of mail order Websites, the plan and production of sales promotion tools, as well as the development of systems. The Company provides its products through mail order Websites http://www.kaitekikobo.jp/ and http://www.kaitekikobo.jp/sp/ operated by the Company.

Lien Hwa Industrial Corp.

Co. is engaged in agricultural products; grain processing; multi-level processing of grain; purchasing and sale of fructose, glucose and other raw materials; processing, purchasing, transport, manufacturing and sale of wheat flour, wheat bran, rice flour, buckwheat flour, barley without bran, oatmeal, barley bran, rice and coarse cereals; manufacturing, transport and sale of yacht.

Lonza Group AG

Lonza supplies services and products that range from active pharmaceutical ingredients and stem-cell therapies to drinking water sanitizers, from vitamin B compounds and organic personal care ingredients to agricultural products, and from industrial preservatives to microbial control solutions. Co. operates in two segments: Lonza Pharma & Biotech, which clusters all of Co.'s offerings for pharmaceutical markets, focuses on providing custom development, custom manufacturing, cell therapy, viral therapeutics and bioscience solutions; and Lonza Specialty Ingredients, which includes offerings in its consumer care, agro ingredients, industrial solutions, wood protection and water treatment.

Minerva SA

Minerva is engaged in the slaughtering of livestock and processing of meat products. Co. produces, markets, and sells beef, leather, live cattle, and its by-products, as well as processes beef, pork, and poultry products. It is also involved in the meat packing and processing, slaughtering, and deboning activities; sale and export of chilled, frozen, and processed meats; and export of live cattle.

Nitori Holdings

Nitori Holdings is a holding company engaged in the retail sale of household furniture and home furnishings. Co. operates its chain stores under the name of "Nitori" "Nitori Express" and "Deco Home Nitori" offering household furniture, floor coverings, curtains, bedding, kitchenware, housewares, other home furnishings, small household appliances, garden supplies, outdoor goods, exercise equipment and miscellaneous daily goods. Co. also operates shopping malls "Nitori Mall." In addition, Co. provides kitchen and bathroom remodeling services, as well as office and commercial facility design services. As of Feb 20 2017, Co. operates 428 stores throughout Japan and 43 stores in overseas.

Novartis AG

Novartis is a multinational healthcare group based in Switzerland. Co. provides healthcare solutions that address the evolving needs of patients and societies worldwide. Co.'s broad portfolio includes innovative medicines, eye care products and cost-saving generic pharmaceuticals. Co.'s operations are organized along three operating divisions: Innovative Medicines Division; Sandoz Division; and Alcon Division. Co.'s operations are supported by the Novartis Institutes for BioMedical Research and Novartis Business Services.

oOh!media

oOh!media Limited is engaged in providing a range of Out Of Home advertising solution for customers in Australia and New Zealand. Co. operates in four segments namely road, which provides large format roadside billboards; retail, which provides signs in shopping centers; fly, which provides coverage across all domestic airport terminals in Australia, and also provides media to Qantas Lounge, and integrated Wi-Fi site network; and place, which operates in cafes, bars, universities and indoor social sports centers, and also operates Websites. Co. also provides complementary services, such as campaign production, campaign management, creative and digital services, and experiential advertising.

Recordati

Recordati-Industria Chimica e Farmaceutica is a pharmaceutical group based in Italy. Co.'s operations are divided into two operating segments: pharmaceuticals (and pharmaceutical chemicals) and orphan drugs. Co.'s products include ZANIPRESS®/ZANEXTRA®/LERCAPREL®/LERCARIL®, an antihypertensive drug; ZANIDIP®/CORIFEO®/LERCADIP® (lercanidipine), an antihypertensive drug discovered and developed in Co.'s research laboratories; UROREC® (silodosin), a new drug indicated for the treatment of benign prostatic hyperplasia; and LIVAZO®/ALIPZA® (pitavastatin), a statin for the treatment of dyslipidemia, among others.

Saizeriya Co. Ltd.

Saizeriya is a chain restaurant operator engaged in the operation of Italian wine and cafA(c) restaurants under the name of "Saizeriya." As of Aug 31 2017, Co. operates 1,053 "Saizeriya" restaurants nationwide, 4 fast food restaurants under the name of "Mariano," as well as 312 "Saizeriya" restaurants in Shanghai, Guangzhou and Beijing, China, and 59 "Saizeriya" restaurants in Taiwan, Hong Kong and Singapore. In addition, Co., through its subsidiary, is also engaged in the manufacture, process and distribution of food ingredients and food products for its restaurants.

Skylark Holdings

Skylark is a holding company mainly engaged in the restaurant business. Through its subsidiaries, Co. is engaged in the operation of casual dining restaurants known in Japan as "family restaurants" and buffet-style restaurants in Japan and Taiwan as well as the sale of processed food and other products. As of Dec 31 2017, Co. operates total of 3,145 restaurants and stores. In addition, Co., through its subsidiaries, is engaged in the sale of patisseries and delicatessen foods at train stations and commercial facilities, the distribution operations for the Group, the provision of restaurant cleaning and maintenance services, the delivery of merchandise to shops, and the linen supply.

Sonic Healthcare Ltd.

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.

Stroeer SE & Co KGaA

Stroeer SE & Co KGaA. Stroeer SE & Co KGaA is a Germany-based digital multi-channel media company and provider of out-of-home (OOH) and online advertising. The Company operates through three segments: Content Media, Direct Media and OOH Media. The Content Media segment includes display and video advertising, as well as digital marketing services. The Direct Media segment comprises dialog marketing and transactional product groups. The services include direct sales and non-voice channels, such as social media and chat, among others. The OOH Media segment covers activities related to large-format advertising, street furniture and advertising on public transport, and includes the giant poster business BlowUP and the online platform for booking of regional out-of-home campaigns, stroeer-direkt.de, among others.

Universal Robina Corp.

Universal Robina is engaged in a range of food-related businesses. Co. operates within three business segments: the branded consumer food segment which manufactures and distributes a range of salty snacks, chocolates, candies, biscuits, bakery products, beverages, noodles and tomato-based products; the agro-industrial segment, which engages in hog and poultry farming, production and distribution of animal health products and manufacture and distribution of animal feeds, glucose and soya bean products; and the commodity food segment, which engages in sugar milling and refining, flour milling and manufacture and marketing of pasta.

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.

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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