Vermilion Int'l Compass: Global Equity Strategy
Opportunities In Real Estate and Health CareThe weight of the evidence continues to support our mixed, but overall constructive outlook. Below we outline the basis for our outlook, and we also highlight opportunities within Real Estate and Health Care.
Positive Signs For Global Equities. (1) The broad global indexes remain bullish with the MSCI ACWI, ACWI ex-US, and EAFE in uptrends, and the MSCI EM index holding above base support at $55.35 on the EEM-US. (2) Small-caps remain leadership outside of the US, and they are also re-emerging as leadership in the US. (3) Commodities remain bullish as crude oil and base metals remain in uptrends. (4) High yield spreads remain devoid of bullish inflections in the US and Europe/Germany. (5) The US dollar (DXY) remains near the lows of 2021. (6) Cyclical Sectors such as MSCI ACWI Energy, Financials, Materials, and Industrials are outperforming. These are all bullish signals for global equities.
But Not Everything Is Positive. The above is counterbalanced by a number of concerns which results in our mixed, but overall constructive outlook. (1) Several defensive Sectors display improving RS, including Real Estate, Health Care, and Consumer Staples (Staples mainly improving in Europe). (2) 10-year sovereign bond yields are testing key 1.5% support in the US, and appear to be breaking down in Germany. These are signs that investors are shifting to a more defensive posture and this is the main reason for our mixed outlook... see page 2.
Actionable Themes: Real Estate & Health Care. Since late March we have highlighted our belief that defensives warrant attention, while simultaneously recommending an overweight to cyclical value; and nothing has changed. Global Real Estate (RWO-US) remains arguably the most attractive “defensive” Sector, while Health Care is particularly attractive in Europe... see pages 3-16.
Aedes SIIQ SpA. Aedes SIIQ SpA is an Italy-based real estate company. The Company owns a portfolio of local properties divided into three segments: Office, which includes office properties; Retail, which includes retail properties and Other, including hotel properties. The Company is also developing properties for rent.
Aroundtown Property Holdings Plc (Co.) is a specialist real estate investment group, focusing in the German real estate markets. Co. covers the main real estate segments which benefit from strong fundamentals and growth prospects: residential (through its holding in Grand City Properties S.A.), commercial and hotel properties. The Co.'s vision is buying, redeveloping, turning around and optimizing real estate properties in Germany.
CK Asset Holdings and its subsidiaries are engaged in the property development and investment; hotel and serviced suite operation; property and project management; and aircraft leasing business.
Henderson Land Development is an investment holding company, engaged in property development and investment in Hong Kong and mainland China, hotel operation, project and property management, construction and provision of finance. Co.'s segments include Property development, property leasing, construction, infrastructure, hotel operation, department store operation, utility and energy, and others. Co.'s others segment is involved in the provision of finance, investment holding, project management, property management, agency services, cleaning and security guard services, as well as the trading of building materials and disposal of leasehold land.
Kojamo Oyj is a Finland-based private residential real estate company. It offers rental apartments and housing services for tenants primarily in the Helsinki region, the Tampere, Turku, Kuopio and Lahti regions, as well as in the cities of Oulu and Jyvaskyla. The Company's portfolio comprises over 35 000 rental apartments. The Company operates within two segments: Lumo and VVO. The Lumo segment includes commercial housing services and apartments primarily are free from restrictions under state-subsidized housing loans (ARAVA) and/or interest subsidy legislation. The VVO segment includes the rental apartments subject to restrictions on rent levels under ARAVA and/or interest subsidy legislation.
Unibail-Rodamco is a commercial property operator, investor and developer. Co. is operationally organized in six geographical regions: France, Spain, Central Europe, Austria, the Nordics and The Netherlands. Its activities are divided into three business lines or segments: Shopping Centres, Offices and Convention & Exhibition. Co.'s Shopping Centres segment focuses primarily on the retail sector; the Offices segment takes care of office assets that are mainly located in the Parisian Central Business District; and the Convention-Exhibitions segment consists of a real estate venues and operations organization, and trade show organization.
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.
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