Report
Dave Nicoski ...
  • Ross LaDuke

Vermilion Int'l Compass: Global Equity Strategy

The MSCI ACWI advanced to another new high yesterday - to levels not seen since mid-March - as global markets have shrugged off the Italian political situation. Both the U.S. and Emerging Markets are leading the move to new highs (more on EM later). While potential resistance levels exist, these recent developments only improve on our already positive outlook... see charts below.

• Major themes: Opportunities within Technology and Real Estate. Global Technology stocks are breaking out to new highs and are reasserting their leadership status. Remain overweight/add exposure... see pages 2 and 7-13 for actionable stocks. Many of our Real Estate Developers and REITs Groups within Financials and Consumer Discretionary are hitting 3-month relative strength highs. We suggest adding selective exposure... see pages 3 and 14-20 for actionable stocks.

• Developed international. Japan's TOPIX continues to provide opportunities -- remain overweight. Europe's STOXX 600 remains in consolidation, though relative strength has taken a turn for the worse. However, the UK (FTSE 100), Germany (DAX), and Norway (Oslo OBX) have held up well. Showing resilience, remain overweight Norway and be selective within the UK and Germany... see pages 4-5.

• Emerging markets. In recent months we have maintained our view that, as long as price and relative strength support levels continue to hold, we see recent weakness in EM as a buying opportunity. Led by strength in China and helped by recent deterioration in the USD, we believe this recommendation is finally demonstrating merit as relative strength for the MSCI EM index bullishly inflects... see page 6.
Underlyings
Allied Properties Real Estate Investment Trust

Allied Properties Real Estate Investment Trust is an unincorporated closed-end real estate investment trust.

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.

Autohome Inc. Sponsored ADR Class A

British Land Company PLC

British Land Company is a real estate investment trust. Co. is a U.K. commercial property company focused on retail and London offices. Co.'s Retail portfolio is focused on a network of multi-let Regional and Local centers, reflecting modern consumer lifestyles. Co. provides retail and leisure with services meeting a range of consumer needs. Co. provides places to shop, eat and be entertained. Co.'s Offices portfolio is focused on its London campuses which also include a mix of retail, leisure and residential.

BTG plc

BTG is engaged in the business of healthcare which focusing on Interventional Medicine therapies for cancer, severe emphysema, severe bloodclots and varicose veins, and Specialty Pharmaceuticals for acute care uses, and a licensing business. Co. manufactures a number of products in-house including the Bead products, the EKOS Endovascular System, Varithena®, the PneumRx® Coil, the GALIL™ Cryoablation Solutions, and the polyclonal antibodies CroFab® and DigiFab®. The EKOS® System is an ultrasonic catheter drug delivery device used in the treatment of blood clots, and Varithena® is a proprietary engineered microfoam used in the treatment of varicose veins.

Capgemini SE

Capgemini is a consulting and IT services provider. Co. works closely with technology partners at the cutting edge of innovation in major trends such as: Cloud, Big Data and mobility. Co. offers its clients skills in a variety of fields, such as digital transformation and digital customer experience, Cloud, Big Data, mobility, testing, cyber security, application management. In addition, Co. helps its clients enhance their performance and sharpen their competitive edge by offering them a range of skills grouped around four major businesses: Consulting Services through Capgemini Consulting, Technology Services (TS), Local Professional Services through Sogeti, and X Outsourcing Services (OS).

Castellum AB

Castellum operates as a real estate company in Sweden. Co.'s real estate portfolio is located in five regions: Greater Gothenburg, Oresund Region, Greater Stockholm, Malardalen and Eastern Gotaland. At Dec 31 2013 Co.'s real estate portfolio comprised 626 properties, of which 324 were office/retail properties, 263 were warehouse/industrial properties, 16 were for project, and 23 were undeveloped land.

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.

China Resources Land Limited

China Resources Land is an investment holding company. Through its subsidiaries, Co. is engaged in the development and sales of developed properties, property investments and management, hotel operations and the provision of construction, decoration and other property development related services in the People's Republic of China. As of Dec 31 2014, Co. operated in four segments: sale of developed properties, property investments and management, hotel operations, and construction, decoration services and others.

Com2uSCorp

Com2uS is engaged in the development and distribution of on-line and mobile game software. Co. provides its products to domestic and overseas markets.

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.

Daiwa Office Investment Corporation

Daiwa Office Investment is a real estate investment trust that invests in office buildings and is managed by Daiwa Real Estate Asset Management Co., Ltd. The office properties Co. invests are buildings with floor area over 2,000 sq. m. They are within walking distance of train stations in the city center. As of Nov 30 2017, Co.'s portfolio consisted of 580 tenants and total leasable 338,377.31 sq. m. of area. Approximately over 60% of total portfolio is located in the central five wards of Tokyo. The remaining is in the Tokyo metropolitan area, as well as Osaka and Nagoya areas.

Derwent London plc

Derwent London is a holding company and a real estate investment trust. Co.'s property portfolio includes investment property, owner-occupied property and trading property. The majority of Co.'s properties are office buildings, and the remaining properties are a mixture of retail, hotel, residential and light industrial properties, as well as land. All of Co.'s properties are based in the U.K. The majority of Co.'s properties are located in London (West End central, West End borders and City borders), with the remainder in Scotland (Provincial).

Deutsche Wohnen SE

Deutsche Wohnen is a holding company. Co.'s business focus is on residential and nursing properties in conurbations and metropolitan areas of Germany. Co. conducts its operations through three segments: asset/property management, disposal and nursing. Co.'s asset/property management segment includes all activities relating to the management and administration of residential property, the management of rental contracts and tenant support. Co.'s disposal segment comprises the disposal of residential units and portfolios managed by its Deutsche Wohnen Corporate Real Estate GmbH subsidiary. Co.'s nursing segment manages and markets retirement and nursing homes for senior citizens.

Enghouse Systems Ltd.

Enghouse Systems is a provider of enterprise software solutions serving a range of vertical markets. Co. is organized around two business segments: the Interaction Management Group, which focuses on customer interaction software and services including contact center, attendant console, interactive voice response, agent performance optimization and analytics that support any telephony environment, deployed on-premise or in the cloud; and the Asset Management Group, which provides products including Operations Support Systems, Business Support Systems, Mobile Value Added Services solutions and data conversion services to telecom service providers, utilities and the oil and gas industry.

Fast Partner AB

FastPartner AB is a Sweden-based real estate company engaged in the ownership, management and development of its own properties. The Company focuses on managing commercial properties principally in Stockholm, as well as in Gavle, Sweden, among others. It offers premises primarily adjusted for offices, warehouses, shops and production areas. The Company also offers combined facilities, which are adapted to a variety of activities. The Company's portfolio also includes residential properties and hotels. The Company operates through a number of wholly owned subsidiaries. In July 2014, the Company acquired property Skebo 2 located in Lunda, Stockholm, which comprises warehouses and offices.

Goodman Property Trust

Goodman Property Trust is engaged in investment in real estate in New Zealand.

Great Portland Estates plc

Great Portland Estates is a property investment and development company. As of Mar 31 2017, Co. owned over £3.10 billion of real estate, 100.0% in central London. Co. focuses on London's property market by investing in and developing central London real estate, creating spaces for tenants.

Heiwa Real Estate REIT Inc.

Heiwa Real Estate REIT is a real estate investment trust that invests in office and housing properties and is managed by Heiwa Real Estate Asset Management Co., Ltd. Properties Co. invests include office buildings in Central Tokyo and suburban cities, as well as apartments and hotels in the city center. As of Nov. 30 2013, Co.'s portfolio consisted of 89 properties with 3,602 tenants and total rentable 196,809.84 sq. m. of area. Approximately 71.9% of total portfolio is in Central Tokyo and the Tokyo area. The remaining is in the Tokyo Metropolitan Area, including Kanagawa, Chiba and Saitama prefectures, as well as in Aichi, Hyogo, Miyagi, Fukuoka, Kyoto and Osaka prefectures.

Ichigo Inc.

Ichigo is a holding company mainly engaged in the investment in and operation of real estate. Co., along with its subsidiaries, operates in four business segments. The Asset Management segment is engaged in the operation of asset management for Ichigo REIT and private equity RE funds. The Real Estate Development segment is engaged in the development and management of real estate, as well as the operation of real estate solutions business in small-sized assets. The Clean Energy Segment is engaged in the operation of megasolar power production nationwide, Eco-related consulting, energy conservation, and LED exterior lighting enhancements.

Ichigo Office REIT Investment Corporation

Ichigo Office Reit Investment is a real estate investment trust that invests primarily in housing properties and is managed by Ichigo Real Estate Investment Advisors Co., Ltd. As of Apr 30 2015, Co.'s portfolio consisted of 65 properties with 605 tenants and total rentable 184,919.13 sq. m. of area. Co. invests include 48 office buildings, 17 other properties including housing properties, commercial facilities, and hotels. More than 70% of total portfolio is in Tokyo and the Tokyo metropolitan area including Kanagawa, Chiba and Saitama prefectures. The remaining is in Aichi, Miyagi, Toyama, Oita, Saga, Kagawa, Akita, Kumamoto, Osaka, Hokkaido and Fukuoka prefectures.

Iljin Materials

Iljin Materials is engaged in the manufacturing of elecfoils used in electronic products. Co. develops and produces elecfoils needed for printed circuit board ("PCB"). Co.'s elecfoil is used for cathode collectors in rechargeable lithium batteries for cellular IT products such as cellular phones, laptop computers, digital cameras, and camcorders. Co. is also engaged in the business of light emitting diode (LED).

INFINEON TECHNOLOGIES AG

Infineon Technologies is a semiconductor manufacturing company. The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive applications. The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the generation, transmission and economy in the use of electrical energy. The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors for power supplies, mobile devices and mobile phone network infrastructures. The Chip Card & Security segment designs, develops, manufactures and markets semiconductor-based security products for card applications and networked systems.

Inmobiliaria Colonial SOCIMI SA

Inmobiliaria Colonial SOCIMI is engaged in the acquisition, construction, sale, disposal and lease of real estate and related activities, including car garages and parking lots, and the administration and management of real estate properties and land.

IRISO Electronics Co. Ltd.

IRISO ELECTRONICS is mainly engaged in the manufacture and sale of multiple-pin connectors. Along with its subsidiaries, Co. is engaged in the development, manufacture and sale of various connectors. Co.'s principal products include board to board connectors, compression connectors, FPC/FFC connectors, interface connectors, pin headers, sockets, terminals and others. Co.'s businesses are divided into four segments: Japan, Asia (excluding Japan), Europe and North America.

L&F
L&F

L&F Co., Limited.. L&F CO.,LTD is a Korea-based company mainly engaged in the production and distribution of electronic materials. Along with its subsidiaries, the Company mainly provides positive electrode active materials for secondary batteries. The Company also provides other electronic materials, such as optical materials, decoration materials, heat proof materials and others. The Company distributes its product in domestic markets and to overseas markets.

LondonMetric Property Plc

LondonMetric Property is engaged in property investment and development, both directly and through joint venture arrangements.

MERLIN Properties SOCIMI S.A.

Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.

Murata Manufacturing Co. Ltd.

Murata Manufacturing is mainly engaged in the development, manufacture and sale of electronic components and modules in Japan, North America and certain other Asian and European countries. Co.'s products are sold mainly to electronics companies for use as components in telecommunication, computer, audio, video, automotive electronics and other electronic products. Co. is engaged in the development, manufacture and sale of electronic parts and related products, including components for capacitors and piezoelectric products, as well as modules products; the provision of welfare services, personnel services, education and training services, as well as the leasing and management of real estate.

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.

Nihon Unisys Ltd.

Nihon Unisys is mainly engaged in the provision of information technology solution services. Co.'s principal business segments are system services, support services, outsourcing, software, and hardware. Co. offers software development, system engineering services, and consulting services. Co.'s principal services include software and hardware maintenance and support services, installation services as well as contracted information system administration services. Co. also provides software through software license agreement, and hardware through sales or lease contracts.

Nokia Oyj

Nokia is an Internet and communications technology company based in Finland. Co.'s operations are focused on three businesses: network infrastructure software, hardware and services, which Co. offers through Networks; location intelligence, which Co. provides through HERE; and advanced technology development and licensing, which Co. pursues through Technologies. Co. maintains a global presence with operations and Researh & Development facilities located in Europe, North America and Asia, and sales in approximately 130 countries. Co. has an installed base of around 600 customers worldwide and these operators serve over 4 billion subscribers.

OBIC Co. Ltd.

OBIC is mainly engaged in the provision of system integration, system support, office automation and other computer related services. Along with its affiliates, Co. operates in three business segments. System Integration Services segment develops software for customers based on an analysis of customer requirements for the system. System Support Services segment provides system operation support and maintenance, and hardware maintenance for customers that use Co.'s products. Office Automation Services segment is engaged in the sale of PC-peripherals, telecommunication equipment and related supplies, as well as office furniture. Co. also provides packaged software of financial accounting.

PAX Global Technology Limited

PAX Global Technology Limited is a Hong Kong-based investment holding company principally engaged in the provision of e-payment terminal solutions. The main businesses of the Company include the development and sales of countertop and mobile e-payment terminals. It is also involved in the development and sales of consumer activated devices, contactless card-reading devices and e-payment terminal software. The Company mainly operates businesses in China, the United States and Italy.

Riken Corp.

Riken and its affiliates are mainly engaged in the manufacture and sale of automotive parts, industrial machinery parts and other products. Co.'s principal products include piston rings for automobiles and motorcycles, steering knuckles, brake parts, camshafts, valve seats, valve lifters engine parts, split rings, oil drainage rings and cylinder heads. In addition, along with its subsidiaries, Co. is engaged in the manufacture and sale of fittings for iron/steel/stainless steel pipes, EMC products, and thermal engineering products; and the provision of construction contract works, and environmental improvement and building repair services.

S IMMO AG

S Immo AG is an Austria-based company engaged in the real estate sector. The Company specializes in the acquisition, letting and sale of properties. Furthermore, It offers real estate project developments, which includes Einsteinova office, Quartier Belvedere Central, and The Mark office project, among others, renovation of existing properties, asset and portfolio management and a range of services, such as facility management and brokerage. The Company's real estate portfolio comprises residential, office, retail and hotel properties. It operates four geographical segments: Austria, Germany, Central Europe (CEE) and Southeastern Europe (SEE). In addition, the Company is a parent of CEE Immobilien GmbH, Hansa Immobilien EOOD, Rega Property Invest sro, Ikaruspark GmbH, SC Societate Dezvoltare Comercial Sudului (SDCS) SRL, Maior Domus Hausverwaltung GmbH, and Eurocenter doo, among others.

Safecharge International Group

SafeCharge International Group is a global provider of payments services, technologies and risk management solutions for online and mobile businesses. Co. has a diversified, blue chip client base and is a trusted payment partner for customers from various verticals. Co. has been Payment Card Industry Data Security Standard Level 1 certified since 2007 and Co. has operations in the United Kingdom, Guernsey, Cyprus, Bulgaria, Israel, Austria, Singapore and Hong Kong. Co. has four products: multi-channel payments, payment acceptance, card services and professional services.

Safestore Holdings plc

Safestore Holdings is engaged in the rental of self-storage space and the sale of ancillary products such as insurance and merchandise (for example, packing materials and padlocks) in both the U.K. and Paris.

Samsung SDI Co. Ltd

Samsung SDI is engaged in the manufacture, sale and export of miniature to wide screen color picture tubes, including Liquid Crystal Displays ("LCDs") and plasma display panels (PDPs). Co. is also engaged in the manufacture of small-sized lithium-ion battery, automotive battery, and lithium-ion energy storage.

SEGRO plc

Segro owns, develops, and manages warehouse properties in selected markets in the U.K. and Continental Europe. Co.'s reportable segments are the geographical business units, Greater London, Thames Valley and National Logistics, Northern Europe (principally Germany), Southern Europe (principally France) and Central Europe (principally Poland).

SK hynix Inc

SK hynix is engaged in the manufacture and sale of semiconductors and related devices. Co.'s memory semiconductors include dynamic random access memory ("DRAM") modules, multi-chip products (MCPs) and NAND flash memory semiconductors. Co.'s memory semiconductors are used for desktops, notebooks, smartphones, tablets, game consoles, MP3, PMP, USB drive, televisions, and digital cameras. Co. also develops non-memory semiconductors such as complementary metal oxide semiconductor image sensors used in digital imaging devices.

Sony Corporation

Sony is engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets such as network services, game hardware and software, televisions, audio and video recorders and players, still and video cameras, mobile phones, and semiconductors. Co. is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as the production and distribution of animation titles. Co. is also engaged in the production, acquisition and distribution of motion pictures and television.

STMicroelectronics NV

STMicroelectronics is a global independent semiconductor company that designs, develops, manufactures and markets a broad range of semiconductor integrated circuits (“ICs”) and discrete devices. Co. offers a diversified product portfolio and develops products for a wide range of market applications, including automotive products, computer peripherals, telecommunications systems, consumer products, industrial automation and control systems. Within its diversified portfolio, Co. is focused on developing products that leverage its technological strengths in creating customized, system-level solutions with digital and mixed-signal content.

Sun Communities Inc.

Sun Communities is a self-administered and self-managed real estate investment trust. The company is engaged in acquiring, operating, developing manufactured housing (MH) and recreational vehicle (RV) communities. An MH community is a residential subdivision designed and improved with sites for the placement of manufactured homes, related improvements, and amenities. Modern MH communities contain improvements similar to other garden style residential developments, including centralized entrances, paved streets, curbs, gutters, and parkways.An RV community is a resort or park designed and improved with sites for the placement of RVs for varied lengths of time.

Sunny Optical Technology (Group) Co. Ltd.

Sunny Optical Technology Group is an optical manufacturing group based in Hong Kong. Co. is engaged in the design, research and development, manufacture and sales of optical and optical-related products. These products include optical components (such as glass spherical and aspherical lenses, plane products, handset lens sets, vehicle lens sets and other lens sets), optoelectronic products (such as handset camera modules, smart television video modules, security surveillance cameras and other optoelectronic modules) and optical instruments (such as microscopes, optical measuring instruments and various optical analytical instruments).

Tech Mahindra Limited

Tech Mahindra Limited is engaged in the business of computer programming, consultancy and related services. The Company's segments include Information Technology (IT) Services and Business Processing Outsourcing (BPO). The Company operates in various sectors, including telecom business and enterprise solutions business. The telecom business provides consulting-led integrated portfolio services to customers, which are telecom equipment manufacturers, telecom service providers and IT infrastructure services, and BPO, as well as enterprise services (banking, financial services and insurance (BFSI), retail and logistics, and manufacturing, among others) of IT and IT-enabled services delivered through a network of various locations around the world. The enterprise solutions business provides IT services, including IT enabled services, application development and maintenance, consulting and enterprise business solutions, extended engineering solutions and infrastructure management services.

TLG Immobilien AG

TLG Immobilien AG. TLG Immobilien AG, formerly TLG Immobilien GmbH, is a Germany-based company engaged in the financial industry. The Company acquires, develops and markets real estate properties in the domestic market. It constructs, modernizes, renovates, buys, sells and rents various types of office and retail properties. In addition, the Company manages various hotel properties. The Company's portfolio includes Edeka Group, Lidl, Kaiser's Tengelmann, SAP, Daimler Real Estate and Free State of Tguringia, as well as hotels, such as Motel One, Steigenberger, THR Hotel (Ramanda) and Winters Hotel. TLG Immobilien AG focuses, as an active portfolio manager, on Berlin, Potsdam, Eastern German regions of the Baltic coast as well as the Middle German core region, among others.

Tokyu Fudosan Holdings Corp.

Tokyu Fudosan Holdings is a holding company mainly engaged in the real estate business. Co., through its subsidiaries and associated companies, operates in seven business segments: Urban Development, Residential, Property Management, Real-Estate Agents, Wellness, Tokyu Hands, and Innovation Business. Co. is engaged in the development, construction and sale of condominiums, detached houses and buildings; the contracted construction of custom-built houses; the retail sale of materials for living; the development, lease, under lease and management of buildings; the facilities management for buildings and condominiums; the operation of leisure and sports facilities; and others.

UNITE Group plc

Unite Group is a provider of purpose built student accommodation in the U.K. Co. has two activity lines, Operations and Property. The Operations segment manages rental properties, owned directly by Co. or by joint ventures. The Property business undertakes the acquisition and development of properties.

United Urban Investment Corporation

United Urban Investment is a real estate investment trust that invests in commercial facilities, office buildings, hotels, and housing properties and is managed by Japan REIT Advisors Co., Ltd. As of May 31 2015, Co.'s portfolio consisted of 108 properties with 1,860 tenants and total rentable 1,177,654.28 sq. m. of area. Co.'s most of portfolio is in Central Tokyo Area in Japan. The remaining is in the Tokyo Metropolitan Area including Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Gunma, Tochigi and Yamanashi Prefectures in Japan as well as major cities including government-ordinance-designated cities and the peripheral cities in Japan.

Warehouses De Pauw SCA

Warehouses De Pauw and its subsidiaries are engaged in investment in the Belgian semi-industrial property market. Co. is a closed-end property investment company which specializes in: development of storage and distribution premises; customized projects in line with the user's request; acquiring premises for customers who wish to engage in sale and leaseback transactions.

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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