Report
Dave Nicoski ...
  • Ross LaDuke
EUR 240.20 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Growth Over Value

We continue to see coronavirus concerns as helping correct the excess bullish sentiment in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted.

• Major Indexes Holding Up Well. As mentioned above, breakdowns in major indexes are hard to come by. EM (MSCI EM), China (MSCI China), Europe (STOXX 600), MSCI ACWI, ACWI ex-US, and EAFE have all pulled back to their 50-day MAs, while Japan (TOPIX) appears to be finding support at its 100-day MA. With support levels holding we continue to see this as a healthy and normal pullback opportunity... see page 2.

• US Dollar. A strengthening US dollar (DXY) is generally not a good sign for EM and international equities. While the DXY exhibits a short-term bullish reversal, it still faces an uphill battle and we believe new highs are unlikely. $98.50 is near-term resistance to watch.

• Commodities, Interest Rates, High Yield Spreads. Weakness in crude oil and copper prices raises some concern for global equities, however both commodities are now approaching logical support. Additionally, global interest rates are stumbling lower, signaling lower global growth expectations. Last but not least, high yield spreads have recently widened in the US and Europe, however longer-term trends remain conducive to a healthy equity market... see pages 3-4.

• European Banks. The STOXX 600 Banks supersector has pulled back to its 200-day MA, a key support level. The absence of breakdowns in key risk-on areas of the market such as European banks is a constructive signal for the broad market. For now we view this as a positive indicator and not a reason to pile into European banks, however there are select areas worthy of attention. Actionable bottom-fishing candidates include UBS (UBSG-CH) and Deutsche Bank (DBK-DE)... see page 5.

• Actionable Themes: Services, Technology, Financial Services, Real Estate, and Staples. Continue to favor growth (Services, Technology, Financial Services) which remains leadership relative to value. Additionally, with interest rates stumbling we are seeing some opportunities within defensive bond proxies... see chart below and pages 6-8.
Underlyings
Adyen NV

Adyen NV, formerly Adyen BV, is provider of mobile, online and point-of-sale (POS) payment solutions based in the Netherlands. It operates an online platform enabling merchants to accept payments internationally and from all sales channels, such as online shops, mobile payments from applications and Websites, and POS, such as countertops, mobile terminals, tablets and cash registers, among others. The platform covers the entire payment chain, including technical, contractual, reconciliation and settlement processes. The platform is available in the form of ready-to-use payment pages (HPP), application programming interface (API), and client-side encryption solution (EE). The Company's customers include Mango, KLM, Netflix, Superdry, Uber, Groupon and Crocs, among others. It has offices in the Netherlands, the United Kingdom, France, Germany, Belgium, Brazil, China, Australia, Mexico, Singapore, Spain, Sweden and the United States.

Argosy Energy Inc.

ASML Holding NV

ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.

BAJAJ FINANCE LIMITED

Bajaj Finance Limited is a non-banking finance company (NBFC). The Company is engaged in lending and allied activities. It focuses on consumer lending, small and medium-sized enterprises (SME) lending, commercial lending, rural lending, fixed deposits and value-added services. Its consumer lending products include two-wheelers and three-wheelers finance, consumer durables finance, digital products finance, retailer finance, salaried personal loans, e-commerce consumer finance, e-commerce seller finance and home loan. Its SME lending products include loan against property and business loans. Its commercial lending products include loan against securities and financial institutions group lending business. Its rural lending products include personal loans cross-sell, salaried personal loans and gold loans. It offers retail fixed deposits and wholesale fixed deposits. It is engaged in life insurance distribution, general insurance distribution and mutual fund distribution.

CD Projekt S.A.

CD Projekt is a holding company of the CD PROJEKT Capital Group which conducts its operations in two activity segments: CD PROJEKT RED and GOG.com. CD PROJEKT RED's activities cover the creation and publication of videogames, licensing the associated distribution rights and manufacturing tie-in products which exploit the commercial appeal of brands owned by Co. The activities of GOG Ltd. involve digital distribution of videogames via Co.'s proprietary GOG.com distribution platform, on the basis of contracts signed by GOG Ltd. with producers, IPR holders and external publishers. The platform enables customers to purchase games, remit payment and download game files to their personal devices.

Celestica Inc.

Celestica is engaged in delivering innovative supply chain solutions globally to customers in the Communications, Consumer, Diversified (comprised of aerospace and defense, industrial, healthcare, smart energy, and semiconductor equipment), Servers, and Storage end markets. Co.'s product lifecycle offerings include a range of services to Co.'s customers including design and development, engineering services, supply chain management, new product introduction, component sourcing, electronics manufacturing, assembly and test, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics and after-market repair and return services.

Cholamandalam Financial Holdings

Cholamandalam Financial Holdings Limited, formerly TI Financial Holdings Limited, is an India-based financial services company. The Company, through its subsidiaries, Cholamandalam Investment and Finance Company Limited (CIFCL), is engaged in non-banking financial business; Cholamandalam MS General Insurance Company Limited (CMSGICL), is engaged in general insurance business; and Cholamandalam MS Risk Services Limited (CMSRSL) is engaged in risk management and engineering solutions business. CIFCL is a financial services provider offering vehicle finance, home loans, home equity loans and a variety of other financial services. CMSGICL offers a wide range of insurance products that include motor, health, property, accident, engineering, liability, marine, travel and crop insurance for individuals and corporates. CMSRSL is a risk consulting company engaged in offering comprehensive risk management and engineering solutions in field of safety, health and environment.

CI Financial Corp.

CI Financial is a wealth management firm and an independent investment fund company. The principal business of Co. is the management, marketing, distribution and administration of mutual funds, segregated funds, exchange-traded funds, structured products and other investment products for investors. Co. has two main business segments: Asset Management, which is engaged in the management of families of mutual, segregated, pooled, exchangetraded, and closed-end funds, structured products and discretionary accounts; and Asset Administration, which is engaged in the sale of mutual funds and other financial products, and ongoing service to clients and capital market activities.

Computershare Limited

Computershare is engaged in the operation of investor services, which provides registry maintenance and related services; plan services, which provides administration and related services for employee share and option plans; communication services, which comprise document composition and printing, intelligent mailing, among others; business services, which provides bankruptcy, class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities; stakeholder relationship management services, which provides investor analysis, investor communication and management information services; and technology services.

Cyient

Cyient Limited, formerly Infotech Enterprises Limited, is engaged in providing software-enabled engineering and geographic information system (GIS) services. The Company's segments include Data & Network Operations (DNO); Engineering, Manufacturing, Industrial Products (EMI), and Product Realisation (PR). DNO vertical services industries, such as power, gas, telecom, transportation and local government, and offers data conversion, data maintenance, photogrammetry and information technology (IT) services to the DNO vertical. EMI vertical services customers in industries, such as aerospace, automotive, off-highway transportation and industrial and commercial products, engineering design, embedded software, IT Solutions, manufacturing support, technical publications and other strategic customers. PR vertical services is engaged in providing electronic manufacturing solutions in the fields of medical, industrial, automotive, telecommunications, defense and aerospace applications.

Dassault Systemes SA

Dassault Systemes provides software products & consulting services. Co.'s software applications allow businesses to digitally define, simulate products, the processes & resources required to manufacture, maintain & recycle them. Co. also provides services, principally to large customers. These services comprise mainly consulting services in methodology for design, deployment & support, training services & engineering services. Co.'s activities can be divided into two segments: the PLM market supports product development, production, maintenance & lifecycle management; & the Mainstream 3D market, which is primarily focused on product design.

Descartes Systems Group Inc.

Descartes Systems Group is a global provider of federated network and global logistics technology solutions that help customers make and receive shipments and manage related resources. Co.'s network-based solutions, which primarily consist of services and software, connect people to their trading partners and enable business document exchange (bookings, bills of lading, status messages); regulatory compliance and customs filing; route and resource planning, execution and monitoring; inventory and asset visibility; rate and transportation management; and warehouse operations.

Deutsche Boerse AG

Deutsche Boerse is a financial services provider. Co.'s segments include Eurex, which comprises areas such as T7 electronic derivatives market trading platform, T7 electronic options trading platform, and Eurex Repo® over-the-counter trading platform; Xetra, which comprises areas such as cash market, the Specialist trading, and Eurex Bonds® OTC trading platform. Clearstream, which comprises custody and settlement services, securities financing services and collateral management, and investment funds services; and Market Data + Services, which comprises areas such as Distribution of licenses for real-time trading and market signals, and development and sales of indices.

Domain Holdings Australia

Domain Holdings Australia Limited is an Australia-based company. The Company is focused on offering an ecosystem of multi-platform property solutions. The Company delivers property marketing solutions for residential, new development and commercial properties, plus the latest market intel. The Company's portfolios include Domain, Commercial Real Estate, Allhomes, The Weekly Review, MyDesktop, Pricefinder, and Homepass. The Company's agent center offers a range of solutions including agent news, domain complete solutions, domain digital solutions, and domain magazine solutions. Its Weekly Review is a free premium lifestyle and property magazine and can be accessed in print, online and social.

Elis SA

Elis is a multi-service group in the rental, laundry and maintenance of textile, hygiene and well-being items in Europe and Latin America. Co. serves hundreds of thousands of customers of all sizes, belonging to various professional customer segments: hospitality, healthcare, industry, trade and services. Co. also has a manufacturing business carried out by two entities, Le Jacquard FranASSais and Kennedy Hygiene Products which together form one of the company's operating segments.

EXOR N.V.

GDS Holdings Ltd. Sponsored ADR Class A

GlobalWafers Co. Ltd.

GlobalWafers.Co.,Ltd is a Taiwan company principally engaged in the design, research, development, manufacture and sales of semiconductor rods and wafers. The Company's main products include semiconductor ingot products, semiconductor chip products and other products. The Company distributes its products in domestic market and to overseas markets, such as the rest areas of Asia and the Americas.

Information Services International-Dentsu Ltd.

Information Services International-Dentsu is engaged in the provision of information technology ("IT") services. Co. provides consulting, custom system and software development, sales and support of software, outsourcing, operation and management services and IT equipment sales. Along with its affiliates, Co. operates in four business segments. Co. is engaged in the provision of IT solutions for financial institutions; core systems and the business management field; the product development and production fields in the manufacturing industry; and core systems at Dentsu Group as well as in collaboration with Dentsu Group.

J.M. Financial

JM Financial Ltd.. JM Financial Limited is a holding company. The Company operates as core investment company. It offers customized financial solutions to a range of client base. Its segments include investment banking and securities business, fund-based activities, alternative asset management and asset management. Its investment banking and securities business segment includes investment banking, institutional and non-institutional equity sales, trading, research, broking and distribution, private and corporate wealth management, commodity broking and portfolio management. The fund-based activities segment includes non-banking financial activities (NBFC) and asset reconstruction. Its alternative asset management segment includes managing funds of institutional and non-institutional investors raised under various schemes for investments. The asset management segment includes managing mutual fund assets through several schemes, offering a range of investment options to investors.

Larsen & Toubro Infotech Ltd

Larsen & Toubro Infotech Limited is an India-based company, which is engaged in computer programming, consultancy and related activities. The Company's business segments include Industrials Cluster and Services Cluster. The Industrials Cluster segment consists of the business verticals of energy and process, consumer packaged goods, retail and pharmaceuticals, hi-tech and consumer electronics, automotive and aerospace, plant equipment, and utilities, engineering and construction. The Services Cluster segment consists of the business verticals of banking and financial services, insurance, media and entertainment, travel and logistics, and other miscellaneous business verticals. The Company offers a range of services, such as Analytics & Information Management (AIM), Consulting, Internet of Things, Applications Management, Enterprise Integration, Industrial Internet of Things, System Integration, Assurance Services, Geographical Information System (GIS) and Infrastructure Management.

Lotes

Lotes and its subsidiaries are engaged in the design and manufacture of connectors, CPU socket, coolers and antennafor notebook computer, personal computer, mobile electronic device and digital video.

Nextdc Limited

NEXTDC is engaged in the development and operation of independent data centres in Australia. Co. has identified five reportable segments, being each state where Co. operates data centre facilities: Queensland, Victoria, New South Wales, Western Australia, and Australian Capital Territory.

NICE Ltd

Nice is an enterprise software provider that enables organizations to improve customer experience, drive business performance, ensure compliance and fight financial crime. Co. helps companies understand their customers and predict their needs, optimize their workforce to drive greater efficiency, and identify suspicious behavior to prevent financial crime by capturing customer interactions and transactions across multiple channels and sources. Co. then applies best-in-class analytics to this data to provide real-time insight and uncover intent. Co.'s solutions allow organizations to operationalize this insight and embed it within their workflows and daily business processes.

Nomura Research Institute Ltd.

Nomura Research Institute is mainly engaged in the provision of consulting, financial and industrial IT services, and IT platform services. Consulting Services segment offers management consulting and system consulting services. Financial IT Solutions segment provides IT services including system development, operation outsourcing, and shared-online services for securities, insurance, banking, and other financial industries. Industrial IT Solutions segment provides IT services for distribution, manufacturing, service, and healthcare industries. IT Platform Services segment offers IT infrastructure services, managed services, and advanced information technology services.

Panasonic Corporation

Panasonic offers a range of products, systems and components for consumer, business and industrial use based on electronics and precision technology, expanding to building materials and equipment, and housing business. Co. divides its businesses into five segments: Appliances, Eco Solutions, Connected Solutions, Automotive & Industrial Systems and Other. Co.'s principal products include home appliances such as refrigerators, room air conditioners, washing machines and vacuum cleaners; lighting fixtures and electric lamps, video and audio equipment, electrical components, batteries, semiconductors and optical devices.

Pushpay Holdings

Pushpay is engaged in the provision of a platform for mobile commerce and electronic payments, text messaging servicing and tools for merchants to engage with consumers primarily in New Zealand and the U.S. Co. operates in two operating segments: text messaging segment and mobile payment solutions segment. The text messaging segment involves integrating text messaging with core business applications using a SMS gateway and facilitates personalized communication and other mobile commerce experiences; and the mobile payment solutions segment involves operating in the U.S. faith market delivering mobile payment solutions between consumers and merchants using software and applications.

Quess Corp

Quess Corp Limited is engaged in the business of temporary staffing services, executive search, recruitment services, housekeeping and facility management services, including engineering services, food services and skill development. The Company's segments include People & Services (P&S), Global Technology Services (GTS), Integrated Facilities Management (IFM) and Industrial Asset Management (IAM). Its P&S segment provides specialized service offerings in search, recruitment and recruitment process outsourcing, general staffing, training and skill development, payroll and compliance and retail solutions. Its GTS segment focuses on three areas, including information technology (IT) staff augmentation, solution and products. Its IFM segment offers facility management services, including soft services, hard services, food and hospitality and pest control. Its IAM segment provides plant asset management and it offers solutions in industrial operations and maintenance and managed services.

S&T AG

S&T AG is an Austria-based supplier of information technology (IT) solutions, specializing in Industry 4.0, embedded computer systems and Internet of Things (IoT) technology. The Company operates through three segments: IT Services, which handles the end-to-end realization of IT projects, from planning (consulting), through implementation (integration) to long-term operation (outsourcing); IoT Solutions, which focuses on the development of IoT and Industry 4.0 solutions combining hardware, middleware and services marketed to the industrial automation, medical technologies, infotainment and smart energy sectors, and Embedded Systems, which provides hardware featuring embedded technologies used by the transport, aviation and communication sectors. The Company is a full-service-provider of IT services in Central and Eastern Europe. Its core markets are Germany, Austria, Switzerland, Eastern Europe and North America.

Samsung Electronics Co. Ltd.

Samsung Electronics is engaged in the manufacture and sale of electronic goods, communication products, semiconductors, telecommunication equipment, home appliances and other similar products. Co.'s products are mobile phones, MP3 Players, DVD players, video equipment, including Blu-Ray, TVs and VCRs; household appliances, including microwave ovens, refrigerators, home air conditioners, washing machines, ultrasonic humidifiers, dehumidifiers, vacuum cleaners and other small electrical goods; audio equipment, including semiconductors, information systems, and computers; miscellaneous parts; other products, including automatic vending machines, refrigerated display cases and electric tools.

SHOPIFY INC.

Shopify provides a cloud-based commerce platform designed for small and medium-sized businesses. Merchants use its software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops. Co. provides a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand and grow its business. Co.'s platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting.

Siltronic AG

Siltronic AG is a Germany-based producer of hyperpure silicon wafers. The Company offers polished wafers, epitaxial wafers and annealed wafers, among others. Its products are used for semiconductor components, including high-voltage applications, low resistivity devices in automotive engineering and telecommunications, as well as integrated microprocessors and memory modules for information processing in cell phones, laptops and other consumer goods. The Company also produces high reflectivity (HiREF) wafers, as well as PowerFZ wafers for power applications and Ultimate Silicon for complementary metal-oxide semiconductor (CMOS) applications. It operates production facilities in Europe, Asia and the United States.

Teleperformance SE

Teleperformance is engaged in outsourced customer experience management. Co. delivers integrated solutions to corporations and administrative bodies worldwide to manage all aspects of the customer-relations cycle on their behalf. Co.'s activities include four core business areas: customer care (these are services provided as part of customer service management); technical support; debt collection; and business information and marketing actions. As of Dec. 31, 2013, Co. had approximately 110,000 computerized workstations across 46 countries. Co.'s client includes industries like Telecoms, Internet, Financial services, Technology/media, Insurance, Government sector and Utilities.

Waste Connections Inc.

Waste Connections is a solid waste services company in North America, providing waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the U.S. and Canada. Through its R360 Environmental Solutions subsidiary, Co. is also a provider of non-hazardous exploration and production (E&P), waste treatment, recovery and disposal services in several of the natural resource producing areas in the U.S. Co. also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities.

Wolters Kluwer NV

Wolters Kluwer operates through four divisions: Health is a global provider of information for medical and health professionals; Financial & Compliance Services is a U.S. provider risk management, compliance, finance, and audit professionals the services they need to optimize risk and business performance, and ensure compliance with local, regional, and global regulation; Tax & Accounting is a provider of tax, accounting, and audit information, and services; and Legal & Regulatory provides customers with expert content, software, and services in the areas of law, business, and regulatory compliance in Europe, North America and Asia Pacific.

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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