My Low Enterprise Value screen scored the following names as the highest ranking outputs on 11/11:
- HCI Group Inc ($HCI)- bought 10/18
- Banco Macro SA ($BMA)- bought 10/18
- Netease Inc ($NTES)- new, watch
- Magellan Health Services ($MGLN)- new, watch
- Barrett Business Services Inc ($BBSI)- new, watch
- Taser International ($TASR)- watch
- American Equity Investment Life Holding ($AEL)- new
- Raymond James Financial ($RJF)- new, watch
This is a working post, so qualitative assessments for the lists’ new names will follow shortly.
Again, I have to note that this new list has already significantly outperformed SPX to date (alpha of +2.3%).
So far, my work has put Netease on my trade blotter, where it will sit as I await an entry point to buy. NTES is a Chinese electronic gaming company. What Nintendo ($NTDOY) was to 1980s America, NTES can be to 2010s China. It has a nice foothold in multiple device gaming in a country where the middle class is rising with a nice tailwind to consumer expansion. Further, NTES has joint ventures/partnerships/licensing deals with some prominent foreign (US) companies–an important vote of confidence in the shadowy Chinese capital markets.
An important near term catalyst for NTES is its launch of 2 new games before year-end. Both new titles are in new genres for the developer, which further diversifies its offerings. We can expect the launch of newly licensed Blizzard ($ATVI) games shortly too, expanding on NTES’s success in distributing the World of Warcraft series throughout China. New mobile games are forthcoming in 2014 too.
This is a real company, with real, recurring cash flows; this isn’t some Zynga ($ZNGA) shell game. NTES wouldn’t have shown up on my screen otherwise.
Technically, intraday, NTES is breaking-out of a 30-minutes Head & Shoulders bottom with $70 neckline resistance. Its daily fractal shows a LT bull flag with $77.5 flagpole. The weekly chart presents little argument, with a bull flag embedded within a longer-term bull channel, despite ST 2x bear divergence in the stochastic and MFI, plus LT 3x divergence in MFI alone–the latter of which is undergoing a bull reversal in MACD:
Here’s the performance to date (intraday) of unrealized positions still open from prior screens; buys executed 4/30, 6/10 & 10/18, as documented:
Here’s a followup on the last Core Value screen 10/23:
Passive +6.67% (alpha= +3.73)
Active +6.08% (alpha= +2.94)
Here’s a followup on the Low Enterprise Value screen run 10/8:
Active & Passive +17.90% (alpha= +9.09)
We started a position in Telecom Italia ($TI) at $9 on Friday, which continues our rotation into international exposures. Our portfolio’s allocation remains just over 70/27/3 (stocks/bonds/cash) vs 60/40 benchmark; beta fluctuating around 0.93 vs 0.76 benchmark; sigma at 1.14 vs 0.51.
We still expect the #Euphoria trade into year-end, perhaps redoubled by a flurry of M&A activity.