Global Markets - Financials Update - January 18, 2018

publication date: Jan 18, 2018

Cerundolo Investment Research    

Global Update  

Volume 1, Issue 1
January 18, 2018

Download PDF Version here


Items of Interest:

The iShares Global Financials ETF (IXG) is comprised of 191 companies from the banking, insurance, and financial services industries in 16 countries.  With the U.S. making up 45% of the constituents, we also have representation of developed Europe, Asia and Brazil.

After ranking the stocks in our multi-factor model, we find 105 companies with a favorable score.  As a refresher, the model ranks stocks based on a number of factors from benchmark performance, trending strength on an absolute and relative basis to name a few.  The scoring is based on an intermediate-term time frame so we are not interested in short-term wiggles and want investors to focus on sustainable trends. Some interesting stats are:

                                                                                       Relative to

                                                                         Price          ACWI

Percent of stocks in an established uptrend:     78%            37%

Percent of stocks in a weak trend:                     11%             46%

 

As one can see, there is a very large list of stocks that have good absolute trends in place, but we do need more to improve relative to the All Country World Index (ACWI).  Of the 78% of stocks with established absolute trends, there are a number of companies that have improving relative strength and we believe the 37% will improve in weeks and months to come. 

In this report, we highlight the top 100 stocks using monthly logarithmic charts to show the multi-year bases that many of these companies are emerging from.  Although the ACWI benchmark only goes back 10 years, it covers the lookback needed for the analysis.

Some names that jump out to us right here are:  Northern Trust (NTRS), Charles Schwab (SCHW), Morgan Stanley (MS), Bank of America (BAC), Julius Baer, Banco De Chile, Erste Group, Man Group, T&D Holdings (8795), Kinnevik AB, KBC, Prudential PLC, Sumitomo Mitsui FN (8316) and Hang Seng Bank (0011).

  

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