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Michael Allen was a top-rated equity analyst in Tokyo before taking leadership roles in two different multi-billion dollar hedge-funds where his average annual return exceeded 14 percent with no down years.
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The Journal of Asset Allocation Tactics and Strategy
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  • Buy Rangold Resources While There Is Still Blood In The Streets
    Randgold resources (GOLD US) had dropped 26% from its peak only 1 month ago, even though the price of gold, its main product, has fallen only 5.8% in the same time. The main catalyst for this fall was a coup de tat on March 22, but the beauty of owning a mining operation is that the underlying value of the company is indestructible. Not even natural disasters can really have much effect, let alone a little man-made skirmish.

    Rangold has always traded at a very consistent multiple to the value of these researves, less cash costs of extraction, of about 1.2 to 1. It now trades at a 50% discount. If one is worried about the price of gold, it is easy to hedge that with puts on the metal or on index funds that own gold, such as GLD.

    Technically, the firm value is also determined by the cost and time it takes to extract these reserves, and a pro-longed war could easily disrupt the supply of equipment, but this is not what is happening. There has been no significant interruption of mining operations. The airport was briefly closed, but has re-opened. All borders are open, and the materials that need to be transported to and from the mines go through southern borders that are hundreds of miles from any sign of violence.

    Since I originally wrote this piece, there have been threats by the international community to sanction the new regime in ways that would cut-off cross border trade. So far, the coup leaders have voiced their willingness to talk, and the threats have not been acted upon. If sanctions are enacted, they would result in delays in the realization of the value of the mines, not in destruction of the value.

    As will become clear from arguments below, the sanctions are unlikely to last long enough to have an effect that is worth 26% of the value of the mine. No matter what happens, the time to buy this stock is now, when the level of fear is at its highest and most irrational. Once there are any talks or discussions aimed at removing the threat of sanctions and leading to restoration of democracy, the stock will be bid only. Before that happens, you want to be the one who can offer the stock, not the one trying to get some.

    Some investors might have feared that the new government would nationalize the mines or otherwise tax or regulate the mining operations unfairly. but there is no reason to believe anything of the sort will happen here. Mali is an extremely poor country, with more than half the population living on income of less than US$1.25/day. Gold is the country's leading export and the only export that is not susceptible to drought or disease. No government can afford to treat the gold mining industry poorly and expect to survive. One of the first things the coup leaders did after securing their power was to meet with the gold minors to ensure that all of their needs were being met.

    But this discussion is taking the margin of safety rule to a ridiculous extreme anyway. The coup leaders have no political agenda and no desire to involve themselves in the operation of government. They are disgruntled soldiers, eager to stop a war that that they have no interest in fighting. They are not interested in money, or economics, or taxes, or anything other than avoiding meaningless death, which is not exactly an ignoble cause. While they may need time to secure their own pardons, there is otherwise, no reason for them not to return power to elected politicians.

    In the most recent quarter reported, Rangold's cash cost per ounce of gold was $753, while the average selling price was $1,666. Proven & probable reserves were 149mn ounces of gold, of which 11% is high-grade gold, leaving 16.4mn ounces. Multiplied by cash profts per ounce of $913, this gives an admittedly crude estimate of fair value of $164 per share. All things being equal, the shares would trade at a discount to this value because it takes time to extract the value, but Rangold has always traded at a premium to this value because investors have correctly credited the company with an ability to increase its reserves. A change in the company's ability to increase these reserves might easily explain why the company was no longer valued at a premium in 2011, but within a matter of weeks, or perhaps months, there will be no reason for the shares to be trading at a larger discount to the net value of reserves than they were a month ago.

    Chart 1: Value of Reserves Less cash Costs Per share vs. Share Price

    Source: Company reports

    Disclosure: I am long GOLD.

    Additional disclosure: I am long GOLD and Short GLD through options of various strikes and durations. I receive no compenstation to write aobut any specific stock, sector, or theme.

    Mar 31 11:34 AM | Link | Comment!
  • Japan's Generic Drug Market: A Giant Time Machine for Investors
    Toward the end of 1990, when generic drugs still accounted for less than 30% of the total US prescription market, Teva was just trading at just $0.47. Today, generics account for 72% of the market and Teva  is $47. You can tell by Teva’s strategy of acquiring innovative drug makers, that even the management of Teva thinks the game is just about over, but what if you could go back in time and buy Teva before anyone knew what was going to happen to the generic market? 
    Japan, of all places, offers just such an opportunity.   Generic penetration, at 22%, is the lowest of any OECD country and arguably, Japan has a greater incentive to promote generics than any other country. It has the most rapidly aging population in the world, has universal health care insurance that is administered by the government, and already expenditures on healthcare account for 9% of GDP.  The recent earthquake will only accentuate the urgency of Japan’s need to cut its healthcare bill.
    The Japanese government first enacted legislation to promote generic drugs in 2002 but until last year, the progress was disappointing. Japanese doctors had total control of the prescription process and no incentive to even learn about generic alternatives. But early in 2010, control shifted to the pharmacists, and incentives were altered to make certain that the more generics they substituted, the higher their profits would be.   Wouldn't you know it, the total generic market grew 25% in 2010, while total growth in prescription drug costs was held to 1% - after having averaged more than 6% annually for the past 5 years despite the country’s persistent problems with deflation in almost all other categories of goods and services.
    It is not too late for investors to capitalize on this change. Most local analysts are viewing this success as a one off, but more than $17bn worth of prescriptions drugs will go off patent in Japan during the next 5 years and the largest company local company in the space generated only about $770mn in revenues last year. Sawai Pharmaceuticals (Ticker symbol 4555) generated a return on equity that is twice that of any of its nearest rivals with less than half the debt/equity ratio.   Moreover, I believe Sawai has further distanced itself from competitors in terms of both product development and distribution capabilities during the past year, and these strengths should continue to drive share gains.  I expect the company’s average growth in net profits to exceed 25% annually during the next 5 years. On my projections, the stock trades 13x fully diluted EPS, 9x cash flow, and 1.9x book. Even if the P/E drops to 10x, which would be lower than Teva’s 12.6, long-term investors should still be handsomely rewarded.


    Japan’s Generic Market
    Generic drugs account for only about 22% of the prescription drug market in Japan, compared to over 60% in most other OECD economies. Japanese government incentives designed to promote generic drugs have consistently fallen short of expectations and most observers still express doubts that the government will achieve its goal of 30% penetration by March 2013.
    The economic incentives for achieving these goals are obvious.   Total nationwide growth in expenditures on prescription drugs increased an average of 6.44% during the past 5 years.   For a country in which the majority of all prescription costs are born by a government insurance program which is funded by a declining number of workers in a country where there has been no meaningful wage inflation, this is clearly an unsustainable path. In 2010, however, the growth rate was held to 1%, and for the first time since the government began setting targets, the share of generics rose by more than one percentage point.  

    Despite the significant change in effectiveness of these policies, the consensus view appears to be that the effect of stimulus has largely worn off and that while Sawai will continue to take market share, its growth rates will return to sub 15% rates in the year to 3/12, from in excess of 26% in 3/11.   
    In 2001, the government insurance program instigated a series of fees paid to pharmacies for various services related to the preparation of generic fees, and when this had little effect, the fee system was greatly simplified in 2003. The problem was that while the incentives were in place to influence pharmacists, it was doctors who were writing prescriptions, and Japanese doctors were unfamiliar with generics and continued to prescribe specific branded drugs. In 2006, prescription forms were revised to include a check box for doctors to make clear that substitution was acceptable, but doctors who were still unfamiliar with the generics and untrusting of them, took little advantage of this form. In 2008, power was finally placed in the hands of pharmacists by changing the form to require a doctors’ separate signature to prevent substitution.   Still, as it turned out, the overly complex set of incentives to pharmacists encouraged an increase in the number of prescriptions, but not the number of drugs. When these incentives were revised in 2010 to emphasize quantity, the generic drug market finally took off.
    It would be reasonable to assume that the 24%% growth in the generic market last year would taper off if it had been a result of one-off incentives that merely brought forward demand from future periods and there had been no supply constraints.   But the incentives are permanent, natural demand is still probably more than double the actual supply, and supplies of quality products are still very constrained. We simply do not know what will happen with these incentives in place when the more than 1.4trn worth of prescriptions drugs go off patent during the next 5 years, but it seems likely that penetration of new generics will increase at a much faster rate now than in the past. The key drivers of growth will depend on a company’s ability to develop and distribute new compounds at competitive prices. 
    There is still a great deal more that the government can do. Sawai’s web site lists 9 policies that various countries around the world have initiated to support generic drugs. Nine countries have initiated more than 4 of these policies, while Japan has initiated only two, namely the incentives to pharmacies and the substitute right, both of which are very recent.   Although we cannot set a specific date for any changes, we believe that incentives can and will be increased if generics do not continue to grow at extremely high rates.        


    It is easy to forget that in the United States, the largest generic market in the world, it was not so long ago that generics accounted for only 19% of total market share as well. This was in the mid-80s. By 1996, generics had surpassed 43% of total countable units.   Today, these drugs account for more than 72% of prescription drugs sold in America.    
    Sawai Generates its own Growth
    A significant portion of Sawai’s growth is driven by innovation and not by market forces.   Sawai’s quarter on quarter growth follows two distinct seasonal patterns apparently affected by the enforcement of cuts in drug prices every other year.   In odd years, when the cuts are enacted, Sawai’s 1st quarter is routinely more than 25% higher than the previous quarter, and its second quarter is routinely some 5% below that of the first quarter.   In even years, when there are no price cuts, the first quarter is routinely 10% to 15% above that of the previous quarter, and the second quarter also grows at a single digit pace.   For Sawai, there was mothering different in 2011 than in any other odd year. The 27% growth that we think the company achieved in 3/11 was actually routine for an odd-numbered year.   As shown in the chart below, our forecast for 3/12 shows above average growth for an even-numbered year, but the difference is all concentrated in the first quarter and is primarily a result of our view about new product introductions.


    On closer examination, Sawai has over 560 different products, and quite obviously, not all of them are growing at the same rate.   Sawai discloses revenues based on the year in which the product was introduced and it is clear from this data that newer drugs grow significantly faster than older drugs.   For example, in the year just ended, we believe that all products introduced before the year to 3/03 grew well below the market rate and that even some introduced as late as FY2005 grew at sub-market rates. These slow growing products probably accounted for 57% of Sawai’s revenues in the year just ended, so to the extent that Sawai outperformed industry growth, it was dependent on the explosive growth of 43% of its revenue base. While market growth in the year to 3/12 may slow significantly, the percentage of Sawai’s revenue base that is still in the explosive growth phase will rise to 47%. 
    There are occasional hiccups in this pattern that complicate long-term forecasting.  Typically, the most newly introduced group of products have accounted for 3% to 4% of revenues in their first year and 6% to 7% in their second year.   Products introduced in the year to 3/10, however, generated 7% of revenues in their first year and probably approached 14% in the year just ended. The increased size of this rapidly growing group should significantly alter the company’s growth trend in 3/12 in a way I think the consensus may be under-estimating.  On the other-hand, products introduced in the year to 3/11 have been disappointing and probably accounted for only about 1% of revenues in their first year.   To a very large extent, the initial impact of new products depends on the market size of the product being replaced and the difference in price between the original drug and the generic version. Sawai does not like to discuss the details of upcoming product launches, but products that recently came off patent have aggregate market potential nearly as large as that for the drugs introduced in 3/10.   We expect these new products alone to contribute about 20% of the new growth in revenues in the coming term.
    Sawai has a tremendous ability to control its own destiny.   Obviously, I can’t forecast the growth rates for 560 individual product lines. We can see the trends in products grouped by year of introduction, but it is difficult to be sure about what is driving these trends, so no matter how sophisticated and detailed ones forecast is, ultimately, it boils down to whether or not you think the company is being conservative or aggressive, and whether or not you think they can execute. If this company’s management believes they can achieve 62bn, 74bn in the following term, and then 100bn in the 4th year, and the consensus estimates are even slightly below this, at 72bn, followed by 83bn, then, in my view, the consensus is making a risky bet.
    Sawai
    I think the consensus case on margins is even weaker than its case on revenues. We believe that Sawai increased its operating margin to nearly 22% in the term just ended, compared to only 10.5% just two years earlier.   The consensus assumes that these margins have peaked and will enter a period of decline. I think the achievement was a simple case of revenues growing faster than overhead costs, and that while revenue growth may not always exceed 26%, it should continue to exceed the growth in over-head. 
    The only conceivable reason for a decline in margins would be an expectation for falling unit prices as competition heats up.   Currently, Sawai has only two meaningful domestic rivals for generic drugs in Japan, Nichi-iko Pharmaceuticals (4541), and Nippon Chemiphar (4539). Sawai generated twice the return on equity with half the amount of debt as the nearest of these two.  Sawai continues to add unit capacity at a rate exceeding 15% per annum, and claims that new machinery being installed today has an average cost per unit of roughly half that of its average existing facilities.    
    Foreign competition has begun to take notice of the Japanese opportunity.   Teva, the largest generics-specialist manufacturer in the US, which is actually an Israeli-based company, is six times the size of Sawai and has production facilities all over the world.  Teva currently generates $250mn in revenue in Japan and grew at 25% in 2010, which means that in Japan, Sawai is 3x the size of Teva and Sawai is growing faster.   This could change.   Teva has plans to grow this business to $1bn by 2015. By this time, we expect Sawai to reach $1.7bn assuming no change in the exchange rate. Teva clearly gains some advantages from its global scale, particularly in its ability to absorb the cost of basic research.   But it’s not clear that this will translate into any manufacturing advantage.   In the generics business, there are hundreds of minute variations in compounds for every major drug, and advantage goes to the company with the ability to produce small quantities efficiently. Indeed, Sawai already earns a higher gross margin than TEVA, despite its much smaller size and concentration of production facilities within Japan.    
    We don’t believe any participants in the market other than TEVA pose a meaningful threat to Sawai, and there is still plenty of room for both to grow.   Innovator-drug companies are all interested because they face a flood of patent expirations and profitability is about to fall off a cliff.   However, as Teva’s president has put it so eloquently, “You can’t train a Persian cat to be an ally cat.” There are very few examples anywhere in the world of a branded drug maker doing well in the generics business.   As Sawai increases in scale, we think there will continue to be a linear relationship with its overhead cost reductions, while gross margins can probably be sustained at the current level as Sawai reduces its production costs in line with any declines in unit prices.
    Technical Notes (for Geeks only)
    My technical models are unique in that they are based on the price/benchmark relative movement, parameters adjust on the basis of each stock’s volatility relative to the index, and finally, in that they are back-tested one stock at a time.   It is not a one-size fits all methodology, but all of the models involve mean-reverting strategies, as this is what works most consistently in Japan.   There are also several different models that are uncorrelated to each other, and are weighted by efficacy.   Sawai is an exceptional case, which only one of the models actually adds value, and even then, it is not nearly as consistent as with most other stocks in the universe. Still, my models have an advantage in that they are back-tested one stock at a time, so I don’t have to use them for any given stock if they don’t work. 
    In the case of Sawai, the probable explanation for a lack of efficacy is the company’s unique combination of very predictable earnings and a growth rate that is literally off the charts. For one, this makes the hurdle rate of the buy-and-hold strategy very difficult to outperform, and for another, the high predictability reduces the magnitude of mean reversion, at least at the frequency levels that I try to exploit. 
    It is still possible to use the charts to avoid entry points that are at extreme levels and to occasionally make astute judgment calls if a rare opportunity develops.     I was able to make such a call on January 11, when I issued my first report on Sawai. At that point, the thesis was simple: the MACD had reached its lowest point in three years on fall-out from a failed merger attempt, (which, incidentally, was actually a good thing, from a fundamental viewpoint). The MACD then crossed over, indicating a buying opportunity.  The multiples seemed reasonable, and earnings surprises uncommon, so for one of the few, perhaps only Japanese stocks that are demographically blessed, this was enough information in my view.     Since then, the stock has outperformed Topix by 18%. Now, however, I needed to either close the trade or come up with a more sophisticated argument, hence this report.  
    There are analysts who insist on only one or the other: technical or fundamental analysis. There are some who insist on using both. My methodology is much fuzzier. I will emphasize one over the other, depending on the situation.   Given my fundamental conclusion that a much longer-term and more substantial opportunity exists, the technical analysis is now useful only to avoid entry at any extreme over-bought condition. In this analysis, I’m pleased to report that the relative price is within 4% of the 90-day moving average of the relative price. The standard deviation is 9%, so the stock is not over-bought.   One might argue that the stock is even less over-sold, but this is not necessarily true either. The moving average is currently on a very strong upward slope. Whenever this has been the case, the price actually very rarely dips below the moving average, and in fact, rarely even touches it. So a level of 4% above the moving average might easily prove to be the low point, especially if the market likes what it sees in the upcoming results announcement. In short, I am turning the technical analysis to the off position.

    Sawai shown Relative to Topix whith MAV, Parabolic SAR and MACD
     
     
     


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 09 1:26 PM | Link | Comment!
  • Japan - The Pair Trader’s Paradise
    America’s fight with deflation has brought to the surface much debate about Japan’s lost 2-decades, but for many savvy investors following a particular type of market neutral strategy called mean reversion pair-trading, Japan has been and always will be a gold-mine quite unlike any other in the world.    
    I have identified more than 50 pairs among Japan’s largest capitalization stocks in which a simple mean-reversion model yields an average compound average annualized return of 33% in a 3-year out-of sample test.   Many of these pairs have had no losing trades if held through to the closing signal is triggered, and the maximum negative excursions average only 15%.   These trades all have effectively zero-betas, near zero currency exposure, and usually zero industry sector exposure.  The average holding period is 51 days, so it is not a difficult strategy to execute. It makes no difference whether monetary policy is enlightened or pathetic. It makes no difference whether the yen is over or under-valued.   And it makes no difference whether the global economy is expanding or retracting. For a strategy with such low risk, the prospect of 33% annual returns is extraordinary.
    A similar search in the US market yields similar results for only a handful of pairs. What makes Japan the pair trader’s paradise?      First let me explain the strategy and the types of pairs that I look for. The most important characteristic of a good pair is that the stock prices must be highly correlated. This is not a strategy in which I look for a good company to buy and a bad company to short. That is a high risk strategy, in my view, because good companies can always get worse and bad companies can always improve. I am looking for companies that get better or worse at the same time so that the spread between the two companies moves within a well-defined range. Contrary to popular belief, this is not a low return strategy.   Very few strategies outperform this one on any kind of a consistent basis.   One of the reasons for the strong performance is that losses are extremely rare. 

    I require an R-Squared of at least .75. In Japan, almost every one of the largest 50 stocks by market cap has at least 3 potential pairs when this rule is applied.  In the United States, more than half of the top 50 have no potential pairs at all.    The second requirement is that the ratio of the two stock prices actually returns to mean on a frequent basis.   Stocks can be highly correlated and still drift apart at a constant rate, which would be detrimental to a mean-reversion strategy.   This second requirement eliminates almost all of the remaining potential trades in the US, but leaves me with many spectacular opportunities in Japan.

    In my view, these trading characteristics of the two markets reflect fundamental differences in business culture and industrial structure that are unlikely to go away any time soon.   Shusaku Endo compared Japan to a swamp in his 1967 novel Silence. "This country is a more terrible swamp than you can imagine.  Whenever you plant a sapling in this swamp the roots begin to rot."   For the pair trader, there is nothing quite like two saplings rotting together. 

    One of the unique aspects of Japanese industrial structure is the much greater level of direct competition in almost every industry. For example, there are 20 listed drug store chains, 20 private railway companies, and 12 electric power companies. There are 14 auto assemblers, and 129 listed parts suppliers.   Of course, there are many companies in the US who compete in the same industries, but they tend to pursue strategies of differentiation, while Japanese companies have a stronger tendency to pursue cost leadership strategies. The result is that they invest in the same projects at roughly the same times and none ever achieve any remarkable differentiation from their rivals.   If a leading retailer decides to open a store in China, within six months, ten other Japanese retailers will be all over China. If a Railway operator opens a hotel, 8 other railway operators will get into the hotel business over night.   An unexpected but delightful result of this pattern is that even companies in different businesses tend to be highly correlated because all companies become much more geared to the same macro-economic inputs.  Endo was right.  It's a giant swamp. 
      
    Another aspect of Japanese culture that helps the pair trader and frustrates the long-only investor is the lack of any serious merger and acquisition activity.   There is a widespread and highly mistaken view that Japanese managers do not care about their shareholders. They care about their shareholders a lot, but only in the way one cares about a migraine.   The real purpose of running a business is to provide stable and meaningful employment.   To do that well, you must find a way to placate shareholders, but merging with another company for the purpose of eliminating redundant positions is something that will never make any sense in a Japanese business context. 

    Every now and then, there is a wave of mergers in Japan that ignites speculation that Japan is going to change. Don’t ever be fooled by this. There is nothing in the performance of western economies that is likely to convince any Japanese manager that there is anything wrong with their approach. Mergers happen in Japan, more so in recent years than in the past, but almost always as a matter of last resort and almost always as measures of desperation. The ultimate purpose of such mergers is almost always to save as many jobs as possible. 
    As a pair-trader you have to fall in love with this custom because the odds of waking up in the morning and finding one of your shorts has been bid up 30% before the open is almost zero.   Although I’m not aware of it happening recently, it used to be common for Japanese acquisitions to be arranged at prices that were well below the prevailing market.   We called these happy situations the take-under. Imagine being short and hoping that your position gets a bid!

    Finally, there is the dirth of venture capital in Japan which makes it so difficult for new companies to emerge. Amongst the largest 100 US corporations, a dozen were start-ups less than two decades ago. In Japan, only 3 companies were start-ups in any living person’s memory. Two others were spin-offs. It is incredibly difficult to fund a new idea in Japan unless you work through existing companies. It is not a coincidence that these account for most of the companies in the top 50 of Japan for which we cannot find good pairs. This does not mean there are never any new ideas.  Quite the contrary, in fact. Usually, new ideas are embraced by all existing companies at exactly the same time and reach saturation points far more rapidly than in the West, but no manufacturer ever gets a significant head start on its rivals.   This keeps the playing field level and prevents any of the pair relationships that we’ve identified from ever changing significantly.

    A Note on Execution
    A trade is signaled when the ratio of the two stock prices moves past one standard deviation from the mean and the trade is closed when it returns to the mean.   As long as the long-term relationship is stationary, a single standard deviation signifies that 97.5% of the future prices will be at levels that are profitable but it is important to realize that on 2.5% of occasions, losses, sometimes in the double-digits can easily occur. Do not cut losses when this happens.  The old trader’s maxim of cutting losses early and running with winners will only destroy this strategy. Don’t do it. Especially if a pair ratio falls to 2-standard deviations, this will signify the point where 98.75% of future prices are likely to be at levels that are profitable to the trade.  Cutting losses at this point would be ridiculous.  The only reason you would cut any of these trades before the closing signal occurs is if there is a total game-changing event. Examples of this might include a pair of food processors in which one of them suddenly decides to acquire a very large hazardous waste disposal business.   That would probably change the relationship between the two companies.

    Separated at Birth
    A recent example that illustrates some of these points is the East Japan Rail vs West Japan Rail spread.   These two companies were both part of the National Railway before they were split up and sold to the public.   They are identical twins with 75% of their revenues from transporting commuters and 25% from selling goods and services to these commuters in station buildings and hotels and shopping facilities along the way.   The probability of one significantly outperforming the other over the long run is practically nil. Even their quarterly earnings are practically identical as can be seen in chart 2. R2 of the underlying instruments is 95%.
     Nevertheless, in the past 4 months, West has outperformed East by about 30%, bringing the spread to within 2 standard deviations away from norm.   Unless something has happened to change the long-term relationship dramatically, this means there is less than 2% chance of losing money on this trade. This is unlikely. It does not cost more to build railways in the East than it does in the West, nor can one charge much more than the other for its services.     

    Buy JR East/Sell JR West Trade Model with signals
    Jrmodel

    JR East/West Quarterly Earnings Comparison
    jr eps comparison


    Different but Similar          
    Another current favorite of mine is the Denso/Honda trade. Although Denso is a supplier of high-tech parts to Honda’s rival Toyota, it’s hard to find many differences in the performance of the two companies, and the R-squared of the stock pair is .85. One difference we think will prove important is that Denso earns 54% of its profits from Asia while Honda gets 67% from the US. Denso is also increasing its share of sales to US assemblers - something Honda can’t do.   Investor aversion to Toyota has skewed the relationship of these two companies more than one standard deviation in favor of Honda. How do you imagine a US assembler sustaining outperformance against an Asian parts supplier? 

    Buy Denso/Sell Honda Trade Model with Signals
    densoHonda trade model

    Remember, no M&A

    Recently, we added the Long Sharp / Short Sony trade when specualtion about an Apple acquistion of Sony got crazy.  The story that ran in Tokyo went something like "Apple has 51mn to spend and Sony has many things Apple needs."  Doesn't anyone do the math anymore?  Apple has $24bn, but Sony would cost at least $36bn even at the current market price and has nothing that Apple needs.   It is a bureucratic and impossible to managed behomoth that wouldn't even be on Apple's long list.  If you are smart enough to have $24bn, you would not be stupid enough to spend $36 of it to create nothing but headaches. 

    Buy Sharp/Sell Sony trade and Model Signals
    Sharp/Sony



    Disclosure: No Positions
    Oct 23 9:46 PM | Link | Comment!
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