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All posts for the month October, 2015

The much maligned Basic Resources sector continues to be under heavy scrutiny by investors having suffered heavy falls in response to plunging commodity prices and stalling Chinese economic growth. From peak to trough this year, the STOXX Europe 600 Basic Resource Index(SXPP) had fallen over -42% but a recent rally off the lows has divided the investment community as to which way the shares move next. Detailed ‘top down’ analysis across OTAS factors can help highlight sectoral themes to give a better understanding as to whether the latest move is further sustainable and what factors, if any, support this.

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A good starting point is understanding current equity market sentiment. We capture this by (amongst other things) analysing trends in Short Interest. The current median for the SXPP is around 1.6% which is towards the higher end of its 1yr range, highlighted in the Stamps.

The chart below shows that the rally in basic resource share prices over the last month has been countered by a considerable up-tick in the median percentage of free float shares on loan suggesting that faster money accounts are continuing to position negatively into the rally. Whilst there has seen a small retracement in the last week or so, Short Interest still remains highly elevated compared to the last year.

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The main table ranks those shares which currently have the highest total % of shares on loan, Fresnillo (12.5%) and Arcelormittal(8.85%) are by far the most borrowed shares currently, whilst Voestalpine and Rangold Resources saw the most aggressive increase in the last week. Clicking ‘Current’ under Days to Cover, the column will re-rank and the stocks with the highest degree of squeeze risk will be shown: Fresnillo, Voestalpine and Polyus Gold with 8, 7 & 6 days to cover respectively.

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Further analysis can be gauged using the detail in other factors like EPS momentum, where the main stamp shows a continued downward average trend in earnings momentum, with c-10% negative revisions over the last month, whilst the valuation chart on the main page shows the median sector P/E is currently still only mid-range and(even after the downturn,) is not flagging as extremely undervalued as share prices have kept pace with downgrades.

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There is some good news however, 4 names have seen sector beating EPS revisions in the last month: Stora Enso, UPM, Polyus Gold & Mondi have all seen small upgrades to consensus earnings. Changing the price column will let you see if these shares have performed in a similarly positive manner over the same period or whether potential opportunity is evident. There is also a column which shows whether stocks are currently trading at a discount or premium to the current analyst price target.

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Additional sentiment may be provided by the Insiders stamp which analyses discretionary buy & sell transactions by company directors and large shareholders. Neither have been heavily investing in their own shares with just €2.8m worth of stock being bought in the last month by internal directors at Glencore, RIO’s & Imerys.

 

As we saw Qunar (QUNR US) and Ctrip (CTRP US) merged news yesterday, the China Internet sector is getting more momentum recently. Tonight we will have the e-Commerce giant Alibaba earnings out, and most of the analysts on the street have been rated outperform on the company. The company share price is also expected to be supported by the upcoming MSCI inclusion in November. Investors are also looking forward to the 11/11 Guanggun Jie (Single Day) which has become the largest online shopping day in the world with sales in Alibaba sites Tmall and Taobao at US$5.8bn in 2013 and US$9.3bn in 2014. OTAS has indicated a green flag on valuation of the stock. Time to bargain hunt?

OTAS has fired a green flag on valuation – current 12 months forward EV/EBITDA is 15.7x forward earnings, which is low compared with valuations over the last two years.

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The share price has been fallen to a record low of $57.20 on September 29th, or 16% below its IPO price. Since then it has surged 33%, closing Monday at $76.35.

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On OTAS News you can also find some bullish headlines on Alibaba – “Why is GS buying Alibaba and Baidu this week?”

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http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5942540/why-is-goldman-buying-alibaba-and-baidu-this-week?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+benzinga+%28Benzinga+News+Feed%29

 

The OTAS Earnings Positioning View can be a particularly powerful tool in a Portfolio Manager or Traders armoury by allowing them to quickly analyse a complete range of factors which help interpret how shares may trade ahead of and post earnings releases.
This screen pinpoints potential positive and negative risks and data points to better gauge the following elements:

  • Recent Performance
  • Current Technical conditions
  • Fundamental Extremes
  • Analyst Expectations
  • Investor Positioning (incl. short squeeze risk)
  • Market and Insider Directional sentiment

To access the Earnings Positioning view, click on the Core Dashboard from the OTAS Launcher.l

Using the ‘Select View’ drop-down function choose Earnings Positioning option.
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To determine only upcoming Company Earnings events use the filter option in Events column header.

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If you require assistance in navigating the Earnings Positioning view or any other aspect of OTAS, please contact support@otastech.com or your Account Director.

 


OTAS Earnings Positioning View coming to Lingo soon … let us know if interested in having access.


 

Don’t have an OTAS login? Request a free 14 day trial from our new website www.otastech.com

The addition of the new Microstructure Stamps to the existing Microstructure chart stack gives traders the clearest view yet of intra-day behavioural shifts in stocks they are trading by providing them with clear and concise signals when short term trends in weight of momentum is changing.
By designing such granularity, decision making around participation rates and identifying potential reversion points has never been more transparent.

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Through comparison analysis on Volume and Liquidity characteristics over a 15 minute moving average period and further breaking these components out into directional indicators, traders can pro-actively react and adjust strategy based on the direction of their order. Spread too is factored over a similar period, identifying those times during the day when price uncertainty is at its greatest and when it is most costly to trade whilst the Return(of the stock) vs Basket chart highlights idiosyncratic price moves over the last hour and flagging when these are extreme.

As an example, a trader with an order in ICAP this morning would have seen the following alert and flags in the Microstructure Stamps:

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Microstructure characteristics:-

  • Alert identifying unusually high volume over the last 15 minutes, driven by a high intensity of sellers as flagged in the Stamp.
  • As a result this has caused the shares to significantly under-perform the bespoke basket. The Return Stamp flag denotes this aggressive move is atypical for ICAP.
  • However, the overall Liquidity picture is also extremely high, with buyers displaying a greater degree of intent to trade than sellers indicating an area of potential price support for the shares.
  • At this point valuable information is available to both buyers and sellers.

Armed with such analysis active traders would have been able to make an informed judgement based on the conditions presented to them, potentially prompting a change in their trading strategy, impact and cost.

The Pair View in the OTAS Core Dashboard can provide long/short or underweight/overweight trade and investment ideas as well as assist in the rotation of holdings.  Users can quickly establish a closely correlated or cointegrated list of stocks that can add to the decision making process.

  • Analyse Correlation and Cointegration over different time periods.
  • See diverging factors against share price across the stocks and its peers (1m)
  • Chart the difference in price performance for two stocks over custom periods for detailed spread analysis.
  • Compare current and historical data points and delta’s in Short Interest, CDS and Volatility of the stock and its chosen pair, as well as relative valuation.

 

To access the Pair View, click on the Core Dashboard from the OTAS Launcher.

Launcher

Type a stock into the Search box.

Vodafone search

Once selected, simply select ‘Pair View’ from the ‘Select view’ dropdown.

Pair View Dropdown

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If you require assistance in navigating the Pair View or any other aspect of OTAS, please contact support@otastech.com or your Account Director.

 

Coming soon…

A ‘Pair View’ App featuring enriched analytics and functionality, but accessible as a floating panel for users on the move or those wanting to save on desktop real estate.

With the US soft economic data that bolstered the case for a delay in the rise of US interest rate, sentiment in Asia becomes increasingly positive. MSCI Asia Pacific Index +8.22% MTD, we see inflows into EM market this week and lots of bargain hunting in Asia quality names. US treasury 10-yr yields slump to around 2% with JGB yields also fallen to 6 months low, perhaps it’s time to look at equity high dividend yield names?

Here are the list stocks with 5% dividend yield.  Just to share some idea of stock chasing.

*SAIC Motor suspended

(Click on the pictures below to get an enlarged view)

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To see which ones of these stocks are cheap from a fundamental, you can cross check with their P/E or book value:

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With earnings season in full swing, the OTAS app, Express, can be helpful to give you a quick snapshot of stocks to watch in your watch lists or a sector. By loading in Watch lists or searching for a sector, you can have OTAS analytics at your fingertips.

With many Consumer Services names reporting soon, looking at the Top Positive and Top Negative Stocks in the Express app, you can quickly see any stress points developing in your names of interest. By selecting a stock, you will see further details to help aid your decision.

Express TACO Insiders DetailEPS

Extreme intraday moves can now be set up for all flags within the Microstructure Analysis in OTAS.

OTAS Alerts highlight exceptional occurrences in volume, return, liquidity and spread across your watchlist, portfolio, or order pad in live time. By having the ability to pick and choose the level of the alert to be received under each component, OTAS users can customise their alerts feeds to highlight the most significant developments in the stocks they are trading whilst eliminating unnecessary noise.

Alerts
To set up an Alert, go to either the Alerts App or the Alerts tab within the Express App from the OTAS Launcher.

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Then simply click on the ‘Settings’ icon settingicon.png located towards the top right hand corner of the window. Remember to click ‘save’ once you have selected your chosen alerts.

Order Blotter

If you require assistance in accessing the Alerts, or navigating any other aspect of OTAS, please contact support@otastech.com or your Account Director.

The Macau space had a good run last week and it continues to rally this morning. The first 11 days of GGR numbers were released overnight (GGR -23% YoY) indicating that the Golden Week Revenue is better than street expected which may narrow October GGR decline. Also news of the Macau government continued to provide accommodative policies to support the industry.

Macau Gaming Stocks

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It is interesting to see how OTAS has put together the short interest indications for the below stocks:

  1. The days to cover (1 week change) has been dropped significantly for both SJM and Sands, indicating lots of covering on the street

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  1. Sands, SJM and Melco short interest median are near 6 months low, while WYNN is at 6 months SI high which means there are limited of covering

Sands China (1928 HK)

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SJM Holdings (880 HK)

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Melco International Development (200 HK)

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Wynn (1128 HK)

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3. Despite Melco SI near 6 months low, it is still very well shorted and needs 23.64 days to cover

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Crude oil surged overnight and continued to grow high on Asia names on hope of OPEC cutting production to support oil price. Quite a few Asia names had increased more than 3% compare to previous close.

Energy names across Asia climbed with a short squeeze vibe, helping to pull most Asia markets into a positive territory today.

CNOOC +11.5%

Petrochina +7.9%

Woodside Petroleum +6%

Origin Energy +9.7%

INPEX +7.2%

JX Holding +3%

PTT PCL +4 %

PTT Explor and Prod Public +5.4%

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Indeed the oil names have been hammered quite badly for the past 3 months. As you can see from the Short Interest graphs below some big names like 857 HK, 883 HK and WPL AT, their % of free float shares on loan have been at 2 year high for the past month. It would be interesting to see the heavily shorted energy sector in the process of playing catch up with the better sentiment.

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