KINGFISHER INVESTMENT RESEARCH


KINGFISHER INVESTMENT RESEARCH



Wednesday, January 11, 2017

Valur Investing

ShadowStock

@JournalofValue

There Are No Bad Assets Just Bad Prices: Exploiting Market Anomalies with Overlooked Underappreciated Ignored Data
Joined May 2009

Tuesday, January 10, 2017

Politics, Policy Uncertainties Likely to Sway Markets in 2017

 


Politics, Policy Uncertainties Likely to Sway Markets in 2017


January 9, 2017

S
Download PDF

Barbeau: We think headlines, rhetoric and speculation will continue to spark global mkt volatility in '17. Here’s why:

For fans of surprise endings, especially in political contests, 2016 was a banner year. Unexpected election outcomes swung global equity markets both up and down and continue to influence the outlook for many sectors and companies. And Coleen Barbeau, director of portfolio management, Franklin Equity Group, says the volatility likely will continue into 2017. In fact, she believes this year may be even more unpredictable, as additional elections are held and policy changes play out across the globe. While these events may sway equity markets, Barbeau maintains that stock fundamentals should—eventually—resume their place as the key determinant of stock value.
Download PDF
For fans of surprise endings, especially in political contests, 2016 was a banner year. Unexpected election outcomes swung global equity markets both up and down and continue to influence the outlook for many sectors and companies. And Coleen Barbeau, director of portfolio management, Franklin Equity Group, says the volatility likely will continue into 2017. In fact, she believes this year may be even more unpredictable, as additional elections are held and policy changes play out across the globe. While these events may sway equity markets, Barbeau maintains that stock fundamentals should—eventually—resume their place as the key determinant of stock value.
Coleen Barbeau
Coleen Barbeau
Coleen Barbeau
Senior Vice President, Director of Portfolio Management
Portfolio Manager
Franklin Equity Group

After the UK Brexit vote and the US presidential election, international equity markets should be accustomed to the unexpected by now. 

And as 2017 unfolds,
we believe uncertainty is likely to persist. Instead of trading on underlying corporate fundamentals, we think this uncertainty creates the potential for markets to trade on news headlines as well as on rhetoric and speculation about policy changes coming from a number of Western capitals.
We believe the potential for significant policy change in the United States is what has largely driven the surge in equities since the presidential election in November. Growth stocks have drastically underperformed value stocks, as investors favored financial and energy names while selling what had been strong performers in the information technology and health care sectors. Bank stocks, in particular, have moved in dramatic fashion—rerating not on a near-term change in profit outlook, but simply on optimism about possible industry deregulation and a more rapid pace of interest rate increases.

Also, hopes for greater fiscal spending in the United States, along with the subsequent rise in bond yields, have led to a move into stocks that could benefit from faster growth and greater inflation—the so-called “reflation trade.”

Infrastructure and defense-related names—especially those sporting low valuations as measured by price-to-earnings ratios—surged at the expense of what we view as higher-quality stocks that generally offer more sustainable earnings growth, cash flows and dividend streams.
While these moves may mark the dawn of a new period for global equity markets, in our view, not much has changed fundamentally. According to the International Monetary Fund, the pace of global economic growth is likely to remain steady in 2017, with global gross domestic product growing a projected 3.4% after a 3.1% expansion in 2016.1

Underpinning these forecasts is relatively robust growth in emerging markets and more modest expansion in developed economies, including somewhat faster growth in the United States, a slowdown in Europe and the United Kingdom and continued sluggishness in Japan.
Although the US Federal Reserve may continue to raise interest rates modestly over the course of 2017, the European Central Bank (ECB) and Bank of Japan are likely to continue asset purchases as they look to support growth and bolster inflation in their respective economies. 

We anticipate that this liquidity should continue to buoy international equity markets, even as the ECB begins to taper bond purchases in April 2017. Additionally, a stronger US dollar is likely to put a cap on US equity markets, after the recent move higher has left them trading at the top of their historic valuation range.
With many US stocks potentially at their peaks, we see greater opportunities to seek best-in-class, non-US companies that are positioned to take advantage of growth opportunities around the world. 

Moreover, unlike US stocks, many of these companies have traded sideways over the past few years, and their valuations look more compelling to us. 

For instance, our bottom-up research has led us to individual opportunities more recently in the United Kingdom and Japan. 

We are focused on companies which garner most of their revenues abroad, as they leverage their robust business models to capture growth opportunities in faster-growing regions like the United States or emerging markets.

Politics remain the wildcard. What a combination of lower taxes, looser regulation and potentially greater protectionist policies in the United States may mean for the economy and global trade remains to be seen. 

Increased protectionism, in particular, could upend supply chains and make doing business globally more challenging. The populist rhetoric might also increase across Europe in 2017 as French, German and Dutch voters head to the polls.

Although political rhetoric, a changing regulatory regime and potentially more protectionist policies may influence how markets trade from day-to-day in 2017, we believe fundamentals will ultimately matter. As markets get more clarity on the emerging policy backdrop, we believe companies with strong growth potential that the market has overlooked will likely fare well over the longer term.

Get more perspectives from Franklin Templeton Investments delivered to your inbox. Subscribe to the Beyond Bulls & Bears blog.
For timely investing tidbits, follow us on Twitter @FTI_Global and on LinkedIn.

___________________________________________________
1. Source: International Monetary Fund, World Economic Outlook, October 2016. There is no assurance that any estimate, forecast or projection will be realized.

 

Trumponomics gets the thumbs down from Nobel-winning economists




Inline image 1

Trumponomics gets the thumbs down from Nobel-winning economists

A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect's programs could lead to a deep recession.
Speaking on a panel during the first day of the annual American Economic Association meeting in Chicago, the Nobel laureates voiced a variety of concerns about the billionaire developer's stance, from his haranguing of US companies about their outsourcing plans to the risk that his tax and spending proposals could lead to run-away budget deficits.


"There is a broad consensus that the kind of policies that our president-elect has proposed are among the polices that will not work," said Joseph Stiglitz, summing up the views of the panel that included his fellow Columbia University professor Edmund Phelps and Yale University's Robert Shiller.
Such disapproval though is likely to fall on deaf ears. Trump rode to victory on the back of an unconventional campaign that was short on advice from PhD economists -- relying more on a team of wealthy businessmen -- and there's no indication that's about to change.
He pledges to accelerate growth and create millions of well-paid jobs through spending hikes and tax cuts as well as reduced regulations and renegotiated trade deals.

Discouraging newcomers

Phelps was particularly critical of Trump's singling out of individual companies for abuse and praise, saying such interference could end up discouraging newcomers from entering markets and bringing with them much-needed innovation.
"The Trump government is threatening to drive a silver spike into the heart of the innovation process," he said.
Phelps also voiced concern about Trump's plans for big tax cuts and spending increases. "Such a policy runs the risk it could lead to an explosion of public debt and ultimately cause a serious loss of confidence and a deep recession," he said.
That also has the University of Chicago's Roger Myerson worried. While other presidents have run big budget deficits in the past, they depended on foreign purchases of US debt to do so.

'Confidence and trust'

With Trump threatening to renegotiate US trade agreements and shift to an "America First" policy, the willingness of foreigners to keep buying US government securities can't be taken for granted, Myerson said.
America's interaction with other countries "has to be based on confidence and trust," Stiglitz said. "That's being eroded."
Angus Deaton of Princeton University said he was less worried about the US economy under Trump than he was about international relations, particularly when it comes to China.
The Asian nation was facing difficult economic problems and sounding more bellicose in the region even before Trump won the presidency on a vow to take it on, Deaton said.
Yale's Shiller was the only Nobel Prize winner on the panel discussion who didn't take a shot at Trump. "I'm a natural optimist and I would not like to speculate on how bad it could get," he said. "Maybe one of the other panelists wants to do that."
They certainly did.
Bloomberg

Sunday, November 6, 2016

The Psychology of Human Misjudgement - Charlie Munger Full Speech



BuffettMungerWisdom: http://buffettmungerwisdom.wordpress.com

"Influence: The Psychology of Persuasion by Rober Cialdini" http://amzn.to/WgcAuo

"Poor Charlie's Almanack Expanded Third Edition" http://amzn.to/13szxgn





Audio of the often referred to speech by Charlie Munger on the psychology

of human misjudgement given to an audience at Harvard University circa Jun 1995.

Mr. Munger speaks about the framework for decision making and the

factors contributing to misjudgements. c. Jun 1, 1995



FULL TEXT:

http://buffettmungerwisdom.wordpress....



Friday, November 4, 2016

A Moment in Time


 
Photographer spent 6 years and 720,000 attempts to capture this | by ©AlanMcFadyen



Kingfisher, by Koson Ohara


  Image result
  Color Woodblock Print / Allen W. Seaby:
 https://data.ukiyo-e.org/harvard/images/HUAM-CARP07204.jpg
 Image result
 Image result
 Image result
 Matsumura Keibun (Japanese, 1779-1843).[Japanese kerria and kingfisher]
 Image result for japanese wood block print of kingfisher
 OHARA KOSON (1877 - 1945) LEDŇÁČEK A DVA KAPŘI

Wednesday, May 11, 2016

Resources

ValueWalk

@valuewalk

Breaking & evergreen news on -hedge funds, value investing. Free newsletter underrated small caps send annon tips
New York
Joined January 2010
 
 
 
 
 
Value Investing News is a community driven value investing news site. You can submit links to news items, rate stories, and leave comments.
 
 
 
 
 
 
 
 
 

Stock Selection Framework



Hurricane Capital ‏@HurriCap May 5

Illustrative Stock Selection Framework from @manualofideas #investing #valueinvesting #stocks #assets #earnings





The Manual of Ideas

@manualofideas

Great ideas are the lifeblood of investing and the focus of The Manual of Ideas.
New York, London, Zurich
Joined April 2009

http://www.manualofideas.com/


Source:
https://twitter.com/manualofideas


Sunday, May 1, 2016

The Intelligent Investor by Benjamin Graham - Audiobook


 

Charles H Brandes - Ben Graham Centre Value Investing 2015


 
 Dec 7, 2015
Mr.
Brandes is Chairman of the firm’s five-member Executive Committee,
where he shares responsibility for driving strategic decisions and
monitoring implementation of the firm’s vision and objectives at Brandes
Investment Partners, L.P. He is also a member of the all-cap investment
committee and the Investment Oversight Committee, which monitors the
processes and activities of the firm’s investment committees. Before
founding Brandes in 1974, Mr. Brandes became an acquaintance of Benjamin
Graham, widely considered the father of the value-investing approach.
He has also authored a book on value investing. Mr. Brandes is a board
member of several organizations involved in scientific, eleemosynary and
cultural work. He earned his BA in economics from Bucknell University
and has 46 years of investment experience.

For more on Brandes Investment Partners LP, see www.brandes.com

Friday, April 29, 2016

Prem Watsa, Fairfax Financial - Ben Graham Centre Value Investing 2011



Published on Dec 7, 2015
In
addition to acting as a guest speaker on February 16, Mr. Prem Watsa,
Chairman and CEO, Fairfax Financial Holdings Ltd. has invited Dr.
Athanassakos and a group of his Value Investing MBA and HBA students to
attend the Fairfax annual meeting of shareholders on Wednesday, April
20, 2011 at 9:30 a.m. in Toronto, Ontario, Canada. After the annual
meeting, students will have an opportunity to meet Mr. Watsa and his
team.



Mr. Watsa is the Chairman and Chief Executive Officer of
Fairfax Financial Holdings Ltd., a financial services holding company,
which he took over in 1985. The company, through its subsidiaries, is
engaged in property and casualty insurance and reinsurance, as well as
investment management. Mr. Watsa is a Chartered Financial Analyst, a
graduate of the prestigious Indian Institute of Technology with a degree
in Chemical Engineering and a holder of an MBA from the Ivey Business
School at Western University. He is a member of the Board of Trustees of
the Hospital for Sick Children, a member of the Advisory Board for the
Ivey Business School and a member of the Board of Directors of the Royal
Ontario Museum Foundation, as well as Chairman of the Investment
Committee of St. Paul’s Anglican Church.



Fairfax has been one of
the few companies to escape the ravages of the great recession of 2008
as Mr. Watsa and his team had anticipated the credit crisis and had
taken the necessary steps to protect Fairfax . Mr. Watsa, also known as
the Buffett of the North, had discussed his fears about the markets in a
key note speech he gave to The Ben Graham Center of Value Investing
First Annual Symposium on Value Investing on May 25, 2007. His key note
speech can be viewed here.



For more on Fairfax Financial Holdings Ltd., see www.fairfax.ca