namely +18,000 readers of independent research from 50 U.S. states and 165 countries:

I wish you a great joyful & restful holiday season, Merry Christmas and a New Year filled with health, followed by numerous personal and professional achievements!

After Christmas yet before New Year’s Eve, you will receive my year-in-review on the economy and financial markets via my 25-50 cherry-picked Maverick charts:

✍️ 2025 Top 25 Maverick Charts! The Year in Independent Review!

After (likely in January) you will get the following 2 Maverick Specials:

✍️ Warren Buffett’s Cash Pile & More ... Stash Away Baby! Berkshire Hathaway Report #2

✍️ 2026 Top 25 Maverick Predictions! The Inaugural Edition!

P.S. and way more independent investment & economic research incoming in 2026!

During the holidays season, many people do a lot of good and engage in charity work.

Also this time, my huge request is to NOT donate/tip and support my work, the data costs and publication overall, but rather choose the local community where you live.

That could be financial support, sorting out your home with clothes, shoes, devices, toys, anything that you do not really need! Your own personal work & time is for sure great also! Many times it means more than anything!

As always, give your best shot to be a positive influence & force out there!

If you would ask me where to donate, I am biased towards science and healthcare. There are many ways and places how to support various missions, feel free to choose!

Please take note of this remarkable recent breakthrough in the medical field:

👉 born deaf though after 2 years after treatment, a 3-year-old girl who underwent a breakthrough gene therapy treatment can hear on her own!

👉 it works by injecting a functional gene via virus into the ear, restoring otoferlin protein for sound transmission) — Let that sink in & bring the sink if you wish! 😉

👉 and remember, like with most breakthroughs, it takes a lot of human and financial capital, many bottlenecks, problem solving, years, decades of marginal improvements!

As I always like to say: the scientists, researchers, innovators, geeks, optimists, crazy ones, the naive and dreamers that dare, the ones that challenge the status quo, the mavericks, the ones who fall though get back and keep try again and again ARE the among the real heroes of society … ! 😉

Kudos, chapeau, respect, gratitude … just hats off to them! 🫡 🫶 🙏

My recommendations to play in the background these days are the following:

👉 for a calm and relaxing vibe: Ludovico Einaudi - Four Dimensions in London 2016 (note the waterphone, a unique, handcrafted instrument named after its creator, Richard Waters, and patented in 1975 … wonderful! is that the 4th dimension? 😉)

If you get lucky and notice Ludovico touring around your town, you won’t regret it, you will forget everything, and enter into another dimension: reflection, peace, connection, hopeful, bright, optimistic …

👉 for an upbeat and rhythmic vibe, a great live performance from Coldplay — I was lucky last year to attend one of their concerts which I also fully recommend to you all!

With respect and warm wishes, enjoy the festive season! And do not forget, keep compounding: family, friends, capital, community, knowledge, research and mindset!

Mav 🎄🎅❄️☃️🎁

Maverick Equity Research

namely 15,000+ readers from 50 U.S. states and 164 countries:

• Happy Easter to everybody who celebrates this weekend the Easter holiday!

• wishing you all a season filled with peace, joy, and beautiful weather!

Secondly, thank you very much to all that did donate/tip this ad free & paywall free publication which is all about independent economic and investment research. Why independence in general is key will be the subject of a dedicated post very soon!

Just like last time with the occasion of the Christmas celebration, during also the Easter season many people do a lot of good & engage in charity work. This time also, my huge request is to NOT donate/tip and support my work and publication, though choose maybe the local community where you live: could be financial, sorting out your own clothes, shoes, devices, toys, anything that you do not really need! Your own personal work & time is for sure awesome also! Small gestures = big contributions!

As always, give your best shot to be a positive influence and force out there!

P.S. given busy days lately, just in case you missed my latest research, there you go:

✍️ Maverick Special Report #5: Disconnected - Economic Policy Uncertainty & Corporate Bonds Spread (IG & HY)

Finally, what’s coming next via my independent economic & investment research:

✍️ Why Investment and Economic Independent Research = Paramount Nowadays!

• a tweet on the topic that I posted just last week had +75,000 views …

✍️ Full Equity Research section will start also where I will cover single businesses/ stocks from US, Switzerland, Canada and Europe overall. The focus will be on:

• under-covered businesses, out of which there will be plenty that you never heard

• time tested businesses (minimum 1 business cycle) which are not or rarely covered: resilient, no CEO stories, no hot takes, no BS, but sharp focus on the products, services & execution for the 3x win: customers, shareholders, employees

✍️ The State of the U.S. Economy in 75 Charts, Edition #4 (3rd edition here)

• comprehensive coverage of the U.S. + leading indicators + recession probability

✍️ S&P 500 Report #6: Valuation, Fundamentals & Special Metrics (5th edition here)

• valuation focus and special metrics: 6th edition coming with more improvements

✍️ S&P 500 Report #6: Performance, Earnings & Sentiment (5th edition here)

• not much changes price more than earnings & sentiment on the short-term

✍️ Top 50 Maverick Charts to Watch in 2025 and Beyond

• sleek charts that tell 10,000 words, save precious time & provide key insights!

✍️ Maverick Special Report #6: Big Volatility & Drawdowns = Juicy Returns

• price is what you pay, free cash flow is what you get

✍️ Maverick Special Report #7: Harvesting Geopolitical Risk Premium Through The 2025 Trade War

• bad times bring opportunities to materially improve medium-long term returns

✍️ Maverick Special Report #8: U.S. Manufacturing = A Bad Wet & Fake Dream

• Manufacturing = romantic, but why U.S. does not need/want manufacturing back

✍️ Maverick Special Report #9: Inflation -Dynamics, Expectations & Pricing

• I was aiming not to cover this as inflation was cooling off and back to target, though with the current trade/tariff debacle, inflation is likely here to stay

• but even if not, solid understanding, pricing & inflation expectations are key

My research is NOT behind a paywall & there are NO pesky ads floating around.

As always the focus will be on quality not frequency, the opposite of news & headlines. High quality independent research delivered via sleek visuals which say 10,000 words takes time & costs to put together. What would be highly appreciated from your side?

Just sharing this around with like-minded people, and hitting the 🔄 & ❤️ buttons!

Share Maverick Equity Research

Your support will make possible more & more independent investment research: from a single individual … not a fund, bank, or click-baity media company or so … !

Happy Easter! And never forget, keep compounding: family, friends, hobbies, community, work, capital, knowledge, research and mindset!

Mav 👋 🤝

“Compound interest is both the ultimate and biggest natural hedge!” Maverick Equity Research

have a great 2025 and welcome to the +700 new inquisitive minds that subscribed to this publication doing independent economic and investment research! Currently delivered to 160 countries and 50 U.S. states to a smooth group of +12,800 people!

2025 research is work in progress, many ideas with a focus on quality over quantity! The next extensive research will cover key topics via sleek visuals for 2025 & beyond:

✍️ Top 50 Maverick Charts to Watch in 2025 & Beyond! ✍️

Until then starting the year with a ‘ Maverick Food For Thought’ kind of post!

Firstly, one via Nassim Taleb where he covers 11 principles and 9 No-Nos. Naturally, these are not 100% black/white, many nuances and contexts can be derived. What is for sure is that I like them and I remind myself of them occasionally. Maybe you will too and will engage into your own useful introspection journey! Food for thought … .

On that number 4, do not read newspapers/news: some consumption we all do just watchout for the ‘The Rise of Negative Media’ for clicks & views for advertising money, and that is because the algos are made as such, that is what attracts views! As always, I have empirical data on that not just some empty or random opinion:

👉 there is a huge negative news positive bias, and a big positive news negative bias. Since 2010, the media massively increased headlines that use fear, anger, disgust, and sadness. Correspondingly, it has also decreased articles of neutrality and joy.

👉 it's no surprise that few media outlets are covering this meta point, isn’t it?

On the positivity side about the world, have you seen this visual summarising 2024?

👉 I doubt it … because the media/algos do not ‘promote’ these kinds of developments

👉 huge progress from health, quality of life, natura & animals, eco & climate & wow!

Secondly, who is on your team in 2025 and beyond?

• I will be with the independent economic and independent research, yet what about your general environment for your personal and business life?

• I strongly recommend you get inspired from how the Navy selects who gets to join the elite SEAL Team 6: it is about the Performance & Trust matrix, specifically avoiding the most toxic person … ‘Who is the asshole?’

• it reminds me also Warren Buffet’s take on the 3 things to look for in a person: “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it, it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.” (😊)

‘Everyone’s wrong. No matter who you are. Everyone’s wrong some of the time!’ Elon Musk on a 5-step improvement process: it is counterintuitive but so true! Valid for business, finance, economics, research, engineering … enjoy it!

Very often, the best answer is the great question! Meaning truly understanding what questions to ask, and if you can properly frame the question, then the answer and solution are actually the easy part! And just like that, breakthrough solutions can pop while explaining it!

It is just fine to be the ‘stupidest’ person in the room, trust me, many many are:

Who are the best managers? The great individual contributors who never ever wanna be a manager! Steve Jobs’ take:

No wonder Apple became the most valuable company on planet earth, likely soon hitting the $4 trillion mark … you can check my take on Apple from 2023:

✍️ Apple (AAPL) - The Big Apple = The Most Valuable Company on Planet Earth

Sharing this around with like-minded people + hitting the 🔄 & ❤️ buttons are key! That’ll definitely support bringing in more & more independent investment research!

Like this, the big positive externalities become the name of the game! Thank you!

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Have a great Sunday! Keep compounding: capital, friends, community, erudition and mindset!

Mav 👋 🤝

namely 12,000+ readers of independent research from 50 US states and 159 countries:

I wish you a great joyful & restful holiday season, Merry Christmas and a New Year filled with health, followed by numerous personal and professional achievements!

During the holidays season, many people do a lot of good and engage in charity work. Also this time around, my huge request is to NOT donate/tip and support my work and publication, but rather choose the local community where you live. Could be financial support, sorting out your home with clothes, shoes, devices, toys, anything that you do not really need!

Your own personal work & time is for sure great also! Many times it means more than anything! As always, give your best shot to be a positive influence & force out there!

My recommendations to play in the background these days are the following:

👉 for a calm and relaxing vibe: Ludovico Einaudi - Four Dimensions. If you see Ludovico touring around your town, you won’t regret it, you will forget everything, and enter into another dimension: reflections, hopeful, bright, optimistic …

👉 for an upbeat and rhythmic vibe, the latest live performance from Coldplay. I was lucky this year to attend one of their concerts which I also fully recommend to you all!

With respect and warm wishes, enjoy the festive season!

Mav 🎄🎅❄️☃️🎁

P.S. if time allows, can’t promise, I will send you next weekend my year in review from the economy and financial markets via 25 or 50 cherry picked Maverick charts …

✍️ 2024 Top 25 Maverick Charts - A Year in Review ✍️

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Happy Easter to everybody who celebrates the Easter holiday! Wishes in advance also to the Orthodox Easter which comes a little later in May this time around!

Wishing you all a season filled with peace, joy, and beautiful weather!

Currently, 6,000+ readers from 50 US states and 134 countries read my research!

Thank you very much to all that did donate/tip this ad free & paywall free publication which is all about independent investment research.

Just like last time with the occasion of the Christmas celebration, during also the Easter season many people do a lot of good & engage in charity work. This time also, my huge request is to NOT donate/tip and support my work and publication, though choose maybe the local community where you live: could be financial, sorting out your own clothes, shoes, devices, toys, anything that you do not really need! Your own personal work & time is for sure awesome also! Small gestures = big contributions!

As always, give your best shot to be a positive influence and force out there!

As I celebrate Easter later in May, I’ll just focus these days on the upcoming research!

So, what’s coming next from my side via independent investment research?

1. ✍️ The State of the US Economy in 45 Charts, Edition #3

• you can read the previous edition here

2. ✍️ a special Macro report dedicated exclusively to the topic of: Inflation!

• definitely one of the most important drivers of macro & markets these days!

• you can read the latest special Macro-Equities report via the following link:

✍️ Zooming Out via 100+ Years Charts = Leveraging Deep History to Navigate the Future

3. ✍️ S&P 500 reports

• one dedicated exclusively to the Performance, Profitability & Special Metrics side

• one dedicated exclusively to the Valuation side

You can read the previous editions here

4. ✍️ Maverick Charts & Markets - March 2024 Edition #16

• You can read the previous 15 editions here

5. ✍️ Top 25 Maverick Charts to Watch in 2024 and Beyond

• in typical Maverick style: sleek charts that tell 10,000 words that save precious time and provide key insights!

6. ✍️ Full Equity Research section will start also where I will cover single stocks from US, Switzerland, Canada and Europe overall. The focus will be on:

• under-covered businesses, out of which there will be plenty that you never heard

• time tested businesses (minimum 1 business cycle) which are not or are rarely in the news: no CEO stories, no hot takes, no drama, no BS, but sharp focus on the products, services and execution for the customers and shareholders ...

7. 📖 Education section started this year and more incoming given how important it is

“If you are investing in your education and you are learning, you should do that as early as you possibly can, because then it will have time to compound over the longest period. And that the things you do learn and invest in should be knowledge that is cumulative, so that the knowledge builds on itself.“ Warren Buffett

“Spend each day trying to be a little wiser than you were when you woke up.” Charlie Munger

8. ✍️ Special Research and Topics are also in the pipeline, step by step …

• Thinking, Fast and Slow …

• Doing, Fast and Slow …

As always the focus will be on quality and not frequency, hence the opposite of news and headlines. High quality independent research and analysis delivered via sleek visuals which say 10,000 words takes time to put together, trust me on that one … .

My research is NOT behind a paywall & there are NO pesky ads floating around.

What would be highly appreciated from your side? Just sharing it around (restack, email, forward, re-tweet) with like-minded people and hitting the ❤️ button.

Share Maverick Equity Research

Your support will make possible more & more independent investment research: from a single individual … not a fund, bank, or click-baity media company or so … !

Happy Easter!

Mav 👋 🤝

I wish you a great joyous holiday season, Merry Christmas and a New Year filled with health, followed by numerous personal and professional achievements!

Second of all, thank you very much to all that did donate/tip this ad free & paywall free publication which is all about independent investment research. Namely, hats off to Vinny G., Johanna K., Darryl B., Arny T., Don C., Rhino I., and all the anonymous individuals that showed their generosity which is highly appreciated!

During the holidays season, many people do a lot of good and engage in charity work. This time around my huge request is to NOT donate/tip and support my work and publication, but choose maybe the local community where you live: could be financial support, sorting out your home with clothes, shoes, devices, toys, anything that you do not really need! Your own personal work & time is for sure awesome also!

As always, give your best shot to be a positive influence & force out there!

What research is coming from my side in 2024? A few drafts in the pipeline are:

✍️ The State of the US Economy in 35 Charts, 2nd edition. Edition #1 here.

✍️ Full Equity Research, the much requested section & my specialty will also start: single stocks detailed coverage aka deep dives: from management & governance to industry, business model & strategy to financials and valuation. Value, Quality, Dividend & Growth stocks from US, Canada, Switzerland & Europe

• a big focus on Founder led / Owner-operator companies that have been time tested across business cycles

• why founder led / owner-operator? because management’s skin in the game is key: it’s not just own financial capital, but very or even more important than that, own personal reputation and legacy

• why time tested across business cycles? because that denotes quality, resilience and that the products/services are adding value to customers, independent of macro, politics, hence not just luck, some short term hype or a fashionable trend

✍️ Maverick Valuations - USA: S&P 500, Dow Jones, Nasdaq 100, 3rd edition. Edition #2 can be read here

✍️ My Name is Bond, Yield Bond! The Return of Yield! A series on investing in bonds

✍️ Top 25 Maverick Charts to Watch in 2024 Top-down: Macro, Stocks & Bonds

✍️ Educational topics breaking down complex topics in plain language and visuals

and way more …

With warm wishes, enjoy the festive season!

Mav 🎄🎅❄️☃️🎁

2 common question I get from some of you here, then Twitter and also by banking current or former colleagues and peers is some variation like the following:

‘Which tools/data do you use for the independent investment research you do day in day out?’

‘What educational resources you use to keep learning and improving your research?’

Therefore, below covering both research/data tools and Educational resources which I glad to affiliate and partner with:

📊 Research tools: Koyfin (US based) and Finchat (Canada based)

📊 Education: Coursera

📊 Research tools

I have a vast and lengthy experience using many tools, including the very high end ones that cost $10,000 - $30,000/year in banking, brokerage and investment funds.

Hence, I did burn a lot of time search and compare alternative many tools that are out there, pros & cons, different costs, features and a key factor, future development plans.

Therefore, I believe one gets a lot of value with the following below 👇. Enjoy!

1. Koyfin, a great investment research & analytics platform! Equities & Macro focus.

You’ll see many of my charts are powered by Koyfin, a coverage with many use cases:

✍️ Maverick Charts - Stocks & Bonds - November 2023 Edition #13 ✍️

Not only anyone interested saved a lot of time, but via my partnership with Koyfin, you would get a Koyfin Pro 7-day gift + a big 20% off on any of their premium plans.

A decent free plan is also available to test, have a go at it and check the value you get!

2. FinChat, another great investment research & analytics platform! Equities focus!

You will also see many powered charts by FinChat, a coverage with many use cases:

✍️ Which Research Tools Do I Use? FAQ answered: AI powered investment research tool! ✍️

Not only anyone interested saved a lot of time, but via my partnership with FinChat, you would get a big 15% off on any of their premium plans.

A decent free plan is also available to test, have a go at it and check the value you get!

FAQ: what is the difference between Koyfin and FinChat, which one is better? Both are very good research tools, I can say institutional level with many features! It will depend on your use cases, easiest is to just check my research & test yourself. I use them both & get a lot of value: saving time, charting & key insights = research!

I am also now exploring macro, exclusive databases and some sleek niche tools! Once and if I am convinced by the value they offer to me & likely yourself, I’ll update this post, hence check here sometimes or email me. I am just not the marketing/sales type to promote and shout everyday about anything, not even my work which I let it speak for itself, so yeah 😉.

If you own or manage a great product or good experiences as a user, just let me know.

📊 Education

I am a strong believer in lifelong learning for personal and professional development.

My top online educational platform that I have been using for 10 years is Coursera!

This dedicated article on it will give you a good sense of what is it offering:

📖 Education, a new section inside Maverick Equity Research

I will also share more of the courses I did, currently doing and also what I recommend.

Have a great day!

Mav

frequently asked questions I get: ‘which tools do you use for your independent research? Do you know a solid tool out there for stocks which can do a lot but without a big price tag? How do you cross-check other research for accuracy? How can I research best various stocks?’

Likely you know Bloomberg, FactSet etc which are top tools but the problem is price: $30,000/year & respectively $18,000/year. The good thing is that competition is on and there are many tools out there, each with their pros & cons and various price tags. The bad part is comparing them & seeing which one offers great value for many uses cases.

I did the work and one tool that I use regularly which offers great value is FinChat!

• they are the first product I partner & affiliate with given the value they offer: institutional data quality, unique features, speed, automation, charting & more

• you will see more & more of it via my future research, especially in the Full Equity Research (Stock Deep Dives) section where it shines. Below you will see an overview of the tool with clear examples & use cases

• Should you see the value via my use cases but also you testing it, as an ambassador/affiliate you can get the current price before future increases and on top a further -15% off from any plan applied at checkout.

Grant Williams asked in June if there is a ChatGPT like product for finance?

Yes, there is: FinChat.

And now my overview via sleek use cases & examples and I also encourage you strongly to personally check and test the research platform:

1. Business Segments & KPIs on specific stocks, Visa (V) example & two key notes:

• KPIs are proprietary and a key differentiator and guess what, not even Bloomberg ($30,000/year) or FactSet ($18,000/year) have them inside…

• Business Segment data to collect it all & chart them manually is very time intensive & humanly error prone which happens independent of research providers: did mistakes there myself, saw mistakes at very big houses and sometimes even after approved deals worth tens of millions…

2. Just 1-click & the Payments Transaction Volume KPI 2020-June 2023 is charted:

3. Cloud segments of the mighty techs Amazon, Microsoft & Google:

4. Google Cloud segment: 2nd profitable EBIT (Operating Income) quarter:

5. CrowdStrike (CRWD) Subscriber growth: quarterly since 2020 for a 61.6% CAGR

6. Tesla (TSLA) Segments, KPI and Financials breakdown:

Total Deliveries since 2012:

Tesla Model 3/Y Production with Quarterly data since 2020 for a CAGR of 61.00%:

Tesla Model S/X Production with Quarterly data since 2020 for a CAGR of 2.41%:

Tesla Total Production with Quarterly data since 2020 for a CAGR of 54.42%:

Tesla Total Revenues Breakdown since 2012:

• Automotive Sales with the big 82.5% share

• Services & Other Revenue growing very very well ... that will be quite big down the road imo ... ecosystem power ...

• the same for Energy Generation and Storage ... and the latter with big margins imo ... It is all about the ecosystem ... hence, creating a big moat ...

Follow up complementary questions are offered automatically:

Tesla Income Statement (P&L):

Just 1-click and you get the Net Income charted, quarterly since 2016:

7. Financial Modelling via FinChat AI made fast & easy, DCF (Discounted Cash Flow) use case. Example: you just ask the built-in FinChat AI Assistant: ‘Build me a discounted cash flow (DCF) model for Tesla’

You will get first a nice walkthrough of the DCF with the taken assumptions & values. Following that, you get the output where the DCF uses consensus estimates, but every single assumption is editable according to your views & research after it is generated:

Additionally, you will get complementary questions that you might want to ask:

No question how much time this saves to anybody doing DCFs, and that’s besides the consensus estimates guidance which is very valuable as well be it one agrees or not with it. Simply impressive!

8. FinChat AI assistant can do way more, just ask it and answers will come back. For example: "Why was Roper's (ROP) free cash flow down in 2022?".

FinChat AI will directly index and show transcripts from management talking about the drop in FCF and provide you the why!

Additionally, it will tell you the key aspect: when normalized, it actually grew 8% adjusting for Vertafore. Just for this 2 questions, quite some time would have to be spent … but not anymore. FinChat AI is like having a research super assistant.

Examples of questions for the 50,000+ companies you can currently ask FinChat about:

9. Are you a dividend investor? There you go taking Coca Cola (KO) as an example: dividends per share & dividend yield since 1970 … done with 2 clicks!

10. Stock Screeners: very robust with many filters, both quantitative & qualitative:

General Stratosphere Tools overview, feel free to explore: Wall Street analysts view, industry peers, ownership, fillings, ratios, charting, super investors holdings, hedge fund letters, Excel add-in, dashboards & more:

Note: FinChat V2 was released in July … check what was brought & also the pipeline:

All in all, the main take-ways are:

1. Further major developments are incoming for an industry defining research tool

2. You can lock in the current price, and on top a -15% off via my ambassador link

I hope you found this timely information & offer useful! Feel free to ask any questions.

Have a great day!

Mav

we have a new bull market and it is time to counterintuitively answer the research question: what are the most shorted stocks? To me, it is always more interesting to find that out during a bull market than in a bear one. That’s because in a bear market often even good companies get punished via sentiment and ‘flight to safety’ which is actually an opportunity, but more on the ins & outs of that in a future special edition.

Coverage for the most shorted stocks will be also on the Big 3 indices: Dow Jones, Nasdaq 100 & the S&P 500. That is similar and highly complementary to the recent Maverick Valuations where naturally the focus was on valuations. As well, you can read The S&P 500 Report in case you missed it. Everything connects as you very well know.

Just 1-click to subscribe if you aren’t yet receiving my research & sharing it around.

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Report structure:

📊 Bear & Bull Markets

📊 The Most Shorted Stocks

👍 Bonus Charts 👍

📊 Bear & Bull Markets

2022 was a bear market for stocks and it marked the worst one since the 2007-2009 Global Financial Crisis (GFC). The latter saw the S&P 500 down by 37% in 2008, while 2022 finished down by 19%. However, a key note that is very often overlooked: when you factor in inflation-adjusted returns, the performance of the S&P 500 in 2008 was only about 10% worse than in 2022 (2008 CPI -0.02% while 2022 CPI +8.3%)!

This created a perfect environment for short sellers to shine, in both stocks & bonds! There were not many places to hide, though another key note: while indeed bonds got crushed heavily (as we heard many times) due to ramping inflation and naturally higher interest rates, another key note:

👉 SHV (1-year or less maturities, cash proxy): even with ramping inflation & interest rates, ended the year with a remarkable positive +0.89% - let that sink in! Also many hedging instruments & strategies worked very well, some even with double digit returns, but that’s for a future key research piece on risk management & hedging.

👉 TLT (20-year+ maturities): took the biggest pain being down -31.24%

👉 AGG (US investment grade: treasuries, corporate, MBS, ABS, munis): -12.93%

2022 total returns: SPY, TLT, AGG, SHV:

From a maximum drawdown (peak-to-trough decline) perspective:

👉in 2022 we recorded a -25% which except

👉 the 2020 Covid crash with a -33.5%

👉 was the worst one since the whooping -56.8% in 2008 - let that sink in!

A personal anecdote here now: in 2008 I was down 52%, yes 52%! Believe it or not, happy to say it as it was the best lesson I could ever have and unless experienced, cannot be fully personally immersed: it really made me think as owning pieces of real businesses where employees and management go every day to do (most of them) their best and move things forward … versus owning or playing around with ticker symbols which quite some times move based on sentiment or randomly … which can be both a blessing and a curse … to me these days it’s the former.

S&P 500 performance & drawdowns for the past 20 years:

Back to today, we have a new bull market via the popular +20% definition. The Big 3 indices are up >20% since the 2022 bear market lows. Nasdaq-100 (QQQ) leads with a whooping +44%, S&P 500 (SPY) with +27% while the Dow Jones (DIA) with +21.65%.

Some do not like this +20% return definition from the previous low to call it a new bull market, hence are rightfully more picky by saying it should also or at least reach the previous all-time high: the Big 3 indices are less than 5% close to their all-time highs.

Now do they all reach new highs in 2023? Quite likely and even if not this year, they will sooner or later … as long as you believe in humanity making progress, hence economies developing and stock prices just reflecting that via some digits on a screen.

S&P 500 stocks 2023 returns categorized by sectors & industries (size = market cap):

All stocks listed on US stock exchanges by sectors and industries (size = market cap):

Always interesting to check a risk-on & sentiment proxy in the markets, and that is the hyper-growth / innovation investing theme via the Ark Invest ETFs: huge returns!

Wonder about volatility these days? The VIX (volatility index) at multi-year lows. Almost at Q4 2019 pre-Covid spike levels.

You might wonder, how often do bull & bear markets happen? A single chart can say 1,000 words & below the S&P 500 bull & bear markets since the 1929 Great Depression via the 20% +/- definition:

• 20% +/- moves happen quite a lot ... what's for sure is that economies and societies evolve, hence the stock market just prices all that in ...

• bear markets are always transitory be it recessions, pandemics, wars, inflation, interest rates … hence if you are bullish on humanity, being bullish on stocks is the moving train hard to stop with the …

What about historical drawdowns (% and duration) during the last 9 decades? Like bear markets, they come and go … only ‘permabears’ think all the time the world is crumbling … yet the moving train marches on and on … just check the big up moves in terms of both size and duration!

In this new bull market, we marked a new year-to-date high for the New York Stock Exchange New Highs – New Lows list. You can’t have a bull market without bulls, meaning an expansion of new highs.

The magic question now: was the new bull market to be expected?

• In January this year I wrote a piece where I was previewing incoming flows and if there was dry powder cash sitting on the sidelines ready to be deployed. If you missed it: January New Money Flows = The Biggest Market Structure Dynamic!

‘is there dry powder cash sitting on the sidelines? Yes! Actually, it has been the money flow winner in 2022! Does any of that Cash come back into and go into stocks & bonds? It should: inflation is burning cash in stealth mode & reduces purchasing power … time value of money 101.’ Simply put, money is flowing on and on and it has to go somewhere …

• We also know that historically, following a down year the S&P 500 is up 86% of the time in the second half of the year and 100% of the time for the entire year

📊 The Most Shorted Stocks

Now that we did set the scene properly, let’s answer the subject research question: which are the most shorted stocks in the new bull market?

• For that we’ll look at and inside the Big 3 indices: Dow Jones (DIA), Nasdaq-100 (QQQ) & S&P 500 (SPY): despite a 2023 rally, quite constant short interest levels with the Dow the lowest & SPY the highest. Note the recent down tick for all 3!

• Going with a 2D view and showing besides the short interest, the 2023 returns:

Dow Jones deep dive:

• Going inside the Dow Jones with the 2023 returns & short interest levels:

Nasdaq-100 techie deep dive:

• Time for the Nasdaq-100 with the 2023 returns & short interest levels:

S&P 500 deep dive:

• And the mighty S&P 500 aka ‘the market’, 2023 returns & short interest levels:

• S&P 500 itself (SPY) and the 11 Sectors that shape it!

Legend for the newer investors & recall for the experienced: XLC = Communication Services, XLY = Consumer Discretionary, XLK = Technology, XLB = Basic Materials, XLI = Industrials, XLF = Financials, XLRE = Real Estate, XLE = Energy, XLP = Consumer Staples, XLV = Health Care, XLU = Utilities

Firstly, the 2023 performance of the 11 sectors: XLK (Tech) XLC (Communications) & XLY (Consumer Discretionary) the big 3 leaders:

Time for the short interest for the 11 sectors:

• XLK & XLC not surprisingly the least shorted sectors, while oddly enough XLI (Industrials) with a big short interest in 2023 though lately also cooling off

• similarly, XLF (Financials) with a big jump on the idea of the ‘most anticipated recession ever’ that many did expect together with one of the sharpest upward interest rate cycles and an inverted yield curve … summer cooling off also lately

Going with a 2D view to show 2023 returns & the short interest for each sector:

Complementary, the S&P 500 with the 11 sectors & the industries breakdown:

• Going inside the 11 sectors of the S&P 500 for more granularity & because likely you noticed, plotting 500 stocks in 1 chart is interesting but not enough revealing:

XLK - Technology: not much short selling activity overall given the recent performance and note how nobody is shorting Nvidia (NVDA) these days ;))

XLC - Communications: similarly, where META is not touched a lot by short sellers

XLY - Consumer Discretionary: not too long ago Tesla (TSLA) was highly shorted (Musk said was the most shorted stock in history) but these days barely at all …

XLE - Energy: mixed bag here given the great run up while lately returns cooling off

XLRE - Real Estate: many commentators point out real estate being very vulnerable given the rising interest rates, though that’s not reflected much in the short interest

XLF - Financials: besides some exceptions, not much short interest action here

XLV - Health Care: performance wise a mixed bag and not much short interest … sector is defensive in general

XLP - Consumer Staples: performance wise a mixed bag and not much short interest

XLU - Utilities: not much short interest in the single names, but as a sector one of highest shorted one … which is quite peculiar also because it is a defensive sector

XLI - Industrials: not much short interest in the single names, but recall my note from above: lately XLI was and is the highest shorted sector out of the 11 …

XLB - Materials: not much short interest in the single names, but as a sector the 2nd highest shorted one …

Going even bigger than the Dow, Nasdaq-100 and the S&P 500, let’s see the most shorted stocks from the NASDAQ and NYSE combined:

Do you wonder the situation in the bond market? JNK, the most liquid High Yield bond ETF hovers above the record $7 billion notional short interest … a pain trade:

Wonder what are they thinking there? They are not buying into the economic recovery and the recent stock market rally, but most of all I suspect they are looking at US junk loans getting downgraded at increasing pace: America's US$ 1.4tn risky corporate loan market has been hit by the biggest slew of downgrades since the depths of the Covid crisis in 2020, as rising borrowing costs strain businesses piled high with floating-rate debt … a space to watch for sure imho!

👍 Bonus Charts 👍

US interest rates: 'All riseeee! like judges say (FED)! U.S. government bond yields 1y 2y 3y 5y 10y 30y with a 20-year lookback period:

• 3 hiking cycles in 20 years: not the 1st one nor the last one ... I tell you that ...

• currently above the 2015-2019 period and around the 2004-2009 cycle

• are we experiencing Peak FED? Peak interest rates? Quite likely imho …

Now into our context: after the era of cheap interest rates, there must be companies out there that are now feeling the pain and will struggle with high financing costs and/or lack of funds to borrow to keep making ‘the vision’ a viable business model … i.e. short selling candidates …

Market breadth has been a key critique of this new bull market & for a while that was fair & square as the ‘Magnificent 7’ big tech were driving most of the gains. Lately though the rally is broadening as other sectors are contributing more & more.

• over 80% of the index is now trading above its 50-day MA (moving average)

• all sectors of the S&P 500 have climbed since the end of May

US Recession Probability in the next year has fallen to 20% via GS (down from their earlier projection of 25%) which is way below the consensus:

• that’s still slightly above the unconditional average post-war probability of 15% - a recession has occurred approximately every 7 years

• but far below the 54% median among forecasters in the latest Wall Street Journal survey (which is down from 61% three months ago)

This research is NOT behind a paywall & there are NO pesky ads floating around.

Did you enjoy this extensive research by finding it interesting, saving you time & getting valuable insights? Now some of you asked how can one support me which is really kind of you 🤗. Therefore, it would be great & highly appreciated if you would support an independent investment researcher for the ‘Maverick-esque’ ongoing & future research. A donation or a tip to support my work can be done via the following:

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Mav

first of all, welcome to the new subscribers as recently we crossed the 2,250 milestone!

Now let’s have a look at Apple via some sleek charts which tell a 1,000 words!

Report structure:

📊 Apple Size … Matters

📊 Apple & The Market aka S&P 500

📊 Apple Financials & Valuation

📊 Apple & Warren Buffet’s Berkshire

📊 Bonus & Fun Charts: Apple’s Moat

📊 Apple Size … Matters

First of all, Apple is the most valuable company on the planet and is the first one to cross the $3 trillion market capitalisation mark. With a +48% in 2023 alone, it equates to a $984 market cap gain which is equivalent to gaining the value of 12 Airbnbs, 6 Disneys, 2.3 Walmarts or 122 Ralph Laurens. Let that sink in & bring the sink!

Apple is also the 1st company to reach in value the following milestones:

• $1 trillion in 2018

• $2 trillion in 2020

• $3 trillion in 2023 now

• is $4 trillion possible? Your thoughts?

N.B. Microsoft, Google, Amazon & Nvidia the other trillion 5 club members ...

Apple 10 year total return of a whooping 1,266% for a 30% CAGR (Compounded Annual Growth Rate)! Note also it was not a smooth run with some big drawdowns which even they had:

• 2016: 32%

• 2019: 39%

Key take-away: business ownership vs stock ticker mentality is key ...

Apple supply chain analysis via this great overview which tells a 1,000 words in one go:

• 689 suppliers ... that barely have power ... can be replaced with ease ...

• 393 customers as big corporates, then a worldwide retail distribution and fan base

It’s a really Big Apple as it is now worth more than the entire Russell 2000 index or all the stocks listed on the Toronto Stock exchange! Let that sink in & bring the sink!

Apple is rounded in the top five by some of the world’s most recognizable brands: Microsoft, Saudi Aramco), Google’s/Alphabet & Amazon. The top 30 most valuable companies in the world are these as of May 5th 2023:

The 10 biggest stocks in the S&P 500 every 5 years going back to 1980: Apple was 2nd place in 2010, 1st in 2015 and again first in 2020 and as of today in 2023! Note also Microsoft’s (MSFT) great progression since 1995 once it entered top 10 in 1995.

Not an apples to apples comparison, but how does Apple look versus the combined market cap of the 100 largest public companies from the world’s top economies?

• Roughly equal to the market cap of 100 largest public companies in France

• 3% higher than the market cap of 100 largest public companies in UK

• 20% higher than the market cap of 100 largest public companies in India

• 29% higher than the market cap of 100 largest public companies in Germany

China and Japan have larger companies but Apple still beats many of them:

Apple’s market cap is larger than the 62 biggest public companies in Japan and 16 biggest public companies in China.

Apple VS The World, let that sink in too!

📊 Apple & The Market aka S&P 500

• Apple is making new & new all-time highs relative to the S&P 500 (AAPL:SPY)

• From a technical analysis point of view, Apple broke out convincingly of all time highs after basing for quite a while …

• Apple has the biggest weight in the S&P 500 index, hence a big impact overall

• How big is the effect in 2023? The S&P 500 is +14% in 2023 and 2.54% (254 b.p.) are driven by Apple alone which equates to 18% of the market was moved by Apple.

Complementary view, Apple & the S&P 500:

📊 Apple Financials & Valuation

Valuation wise:

• Apple trades at a 7.2x forward P/S and a 29.1x forward P/E which looks expensive but note: even after the recent mega run, it’s below the 5 year median

Next, some very ‘Maverick-esque’ visual analytics that you rarely see around: Apple and the Nasdaq-100 components with forward P/S multiples + the percentile of Apple’s stock & all Nasdaq-100 components key multiples vs their 10-year history (simply put, a good angle to see Apple’s historical valuation multiples with itself today and also the other tech businesses from the Nasdaq-100 for a relative comparison):

• P/S: Apple trades at a 7.3x forward Sales while sitting at the 99th percentile with it’s 10-year historical P/S multiple. That does not look like ‘cheap’, but expected given their performance in the least years, hovering at all-time highs now and overall business model. Note also names that trade at an even higher multiple and still in the 90-100 percentile range

• P/E: Apple trades at a 29.4x forward Sales while sitting at the 93rd percentile with it’s 10-year historical P/E multiple

• P/FCF: Apple trades at a 29.8x forward Sales while sitting at the 98th percentile with it’s 10-year historical P/FCF multiple

Next, one of my favorite charts when a business can do at once ‘The Magic X Cross’ = sending dividends to shareholders & also the company buying back their own stock, hence rewarding shareholders also via these two corporate finance actions:

Apple shareholder yield at 3.81% = Dividend Yield 0.49% + Share buyback Yield 3.01% + Debt Paydown Yield 0.30%

If you want the exact financials where you can find the buybacks & dividends, there you go with the Cash Flow Statement, Financing Activities section page 33 from their Annual Report / 10K. Note, numbers are in parenthesis as negative given they are cash outflows to shareholders:

Key question on the stock buybacks: how much of their own stock you think Apple bought back in the last 10 years? About $580 billions, yes, billions!

Let's put that into context now for magnitude: $580bn equates roughly to the market capitalisation of the cumulated 490 companies in the S&P 500. Let that sink in!

An Apple buy-back a day, keeps one's returns not away ... to make a fun word-play :)

How big is the current buyback program? $90bn magnitude:

• that is LARGER THAN the *total market cap* of 420 constituents of the S&P 500

• $90 billion is also about enough to buy every American an Apple Watch SE at full retail price ;)).

One luxurious worry in a way question here would be: all those dividends & buybacks now but is Apple also still investing to foster future growth? Let’s look at CAPEX = Capital Spending in absolute $ invested and % of Revenues:

• since 2013 high & stable investments to fuel further growth

• note how since 2018, CAPEX/Revenue has been trending lower which signals us that the investments do generate more & more revenues - the growth engine is on for CAPEX to further turn into + Net Present Value (NPV) projects

Having the trio of CAPEX deployed, dividends, buybacks is not something many companies can 'afford' to do all at ONCE from my experience at least … . Following up on that now, a key question: what’s needed to do that combo of dividends and share buybacks for shareholders, while also still investing for future growth via CAPEX? Cash flow baby! And for that I always like the following cash flow progression:

Operating Cash Flow (OCF) for 20 years:

Progressing further to Free Cash Flow (FCF) for 20 years:

Free Cash Flow done, how can we progress further? Free Cash Flow per Share! Why? Because plenty of businesses out there with good free cash cash flow but which dilute shareholders by issuing stock very often …

Wondering after all that, how much cash is still available on Apple’s balance sheet? Quite some: $48bn! Many companies do not have that total market capitalisation, even some popular and hot names that you see around quite often!

Apple ROE (quarterly) since 2013: impressive…

Apple Return on Capital (ROC, quarterly) since 2013: impressive again…

Now, how does Apple’s latest annual Income Statement look? Not bad, not bad at all …

Apple price & EPS normalised consensus … price follows earnings, right?

The same just extended evolution over the past 5 years:

For a nice angle, what about Apple’s ecosystem & Google? Google annual payment to Apple to be the Default Search Engine on iOS … not bad, right?

What about Apple and gaming? Gaming? What’s Apple got to do with Gaming? A lot! They don't make games directly, but they have a very 'moaty' ecosystem aka marketplace generating a lot of fees:

👉 $9.5 billions of Revenue from gaming in 2018, $11 billions in 2019 and $13.5 in 2020

👉 in 2019 alone, Apple made $2 billion more profits from games than Microsoft, Nintendo, Sony and Activation Blizzard COMBINED! Let that sink in!

📊 Apple & Warren Buffet’s Berkshire

Buffett’s stake in Apple is now about 6% and is worth about $175 billions, which is about 5x his $31 billion cost basis. To clear out a common confusion out there: the $175 billion stake equates to about 24% Berkshire’s market capitalisation and 48.75% of Berkshire’s public stock portfolio (which is not at all Berkshire’s empire value). When Buffett bought Apple for the first time in Q1 2016, many said he was late to the tech party … but clearly that was not the case.

Complementary view of Buys & Sells - longer & shorter term 5-year timeframe:

Guess what was Apple's shareholder yield when Buffett started buying in Q1 2016? More than >7%! Note also that during 2019, it was even 13% while during the Covid crash, almost 10%.

What’s the main risk Berkshire faces with this still concentrated position?

• ‘China risk’ as a major part of their manufacturing is in China still, though note the recent material progress. Note also that Buffett sold Taiwan Semiconductor TSMC on geo-political concerns in the region, yet did not sell Apple …

• my best guess is maybe Buffett says, ok, if something happens will just buy more with the Berkshire big pile of cash + Apple itself would do more share buybacks ... hence can still sleep well via this 'natural hedge' ... !

• recall Buffett in 2019: "I like our Apple holdings very much. We would like AAPL to go lower in price so we can buy more. But I won't say more than that since we do not give away advice about specific investments. We do like it when Apple buys back shares since we own more of the business."

What’s Buffett’s latest take on Apple and their stake?

• 'Apple is a better business than any other we own' ...

• 'I know where Apple is going to be in 5 or 10 years, but not car companies'

• 'I don't understand the phone at all, but I do understand consumer behavior'

• ‘Apple is NOT 35% of Berkshire portfolio overall’ (on portfolio concentration)

• ‘People would rather give up their 2nd car than their Iphone’

• Apple buys back a lot of their own shares - regarding the shares outstanding situation ...

My Twitter post here & video via CNBC:

Buffett also said 4 years ago:

• 'Apple Makes Its Products Indispensable'

• 'if you look at that little piece of whatever it is, that is one of the most valuable real estate in the world’

Buffet & Apple clear now, what about Wall Street’s price targets via the consensus view on Apple? Stock is fairly priced. Note though the High & Low delta is quite big.

📊 Bonus & Fun Charts: Apple’s Moat

• Apple KPI you do not see around too often: iPhone Installed User Base with a 19% CAGR since 2013

• Apple Services revenue ... monster with a 16.49% CAGR!

• How many subscriptions do you think Apple has sold so far? 860 million!

How could this translate down the road? Well, if Apple would raise the monthly price by just 1$, could generate almost an extra $10 billions / year in revenue! How many would cancel Apple subscriptions with just a 1$ increase? Not many!

Hence, Apple has a big ecosystem with a lot of network effects and hence a ‘moat’ with an easy pricing lever they can tap into in order to generate incremental high margin returns for many years ahead. Let that one sink in!

• BlackRock = world’s largest asset manager with over $9 trillion in assets under management (AUM). Guess the number 1 holding? Apple! Top 25 equity holdings:

• Which is The Most Innovative Company in 2023? Simple: Apple … and it’s not just in 2023 but it’s 4 years in a row now

• Apple’s growing moat via customer demographic profile:

👉 Share of young Americans (18-24 age group) that own Apple iPhones growing & growing ...

👉 Note: they are mostly not big money makers now naturally = more $ coming via future services ... future secured & ‘funding secured’

👉 once in, hard to switch = Buffett daddy & investors like that quite for sure

• Can we translate the above via funny and cool MEMEs? Yes! Check the 2 below:

We can say that Apple has a ‘moat’ … no wonder Buffett said: 'I don't understand the phone at all, but I do understand consumer behavior'

Should you have found this cherry-picking endeavour interesting and valuable, subscribe and share it around with people that might also be interested! Thank you!

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Mav

welcome to the 1st edition of the ‘Maverick Valuations’ report covering Switzerland.

This report is unique, hence quite ‘Maverick-esque’ as I tried to find it served by banks, overall media, or independent investment researchers like myself, but none. Therefore, I decided to create it myself and also plan to improve it going forward.

Report is NOT behind a paywall & there are no pesky ads here. It would only be highly appreciated you just spreading the word around to likely interested people.

Share

Report structure:

📊 Swiss stocks = ‘Swissness’ 📊

🏦 Bonus Charts 🏦

What are the various likely use cases provided by this report & visual analytics? Research for market leaders & laggards, likely un/warranted cheap or expensive stocks, peers analysis, stock screener, outliers, positive or negative momentum, relative strength, full equity research on single stocks & general market assessment.

My favorite use cases:

• finding future winners via further research

• finding stocks that did well across past tough times, hence resilient winners … which are likely also going forward to be future winners 

• N.B. the Full Equity Research section will cover those in the future

Great to have at hand at least 8 times per year: before & after each of the 4 quarterly earnings. An overall yearly recap is also very interesting. Let’s see before Q1 2023 earnings are out & usefully compare going forward with the future editions. Check your stocks & also outliers in the scatterplots, it can get interesting & food for thought.

📊 Swiss stocks = ‘Swissness’ 📊

What’s inside? Let’s dive into the MSCI Switzerland ETF (EWL) which was created in 1996 & consists of 42 stocks. It invests in stocks operating across diversified sectors, market capitalizations (size) & both growth & value (style).

How? Via sleek visuals & analytics, namely price & valuation scatterplots because they say 1,000 words. Full names, tickers with sectors & industries to begin with:

Performance via the overall 5 year Total Return of EWL vs ACWI: EWL not only outperformed ACWI, but note as well how during the Covid crash it dropped less: EWL is 56.7% in Health Care & Consumer Staples which are defensive sectors.

Note: EWL has a 0.5% fee / year, hence on the medium-long term it can be a material dragger on the compound interest for investors vs buying the individual names.

Very interesting via a 20-year dividend overview, namely yield and payments:

• current dividend yield is 1.82%, though note it went above even 5% during the 2007-2009 Global Financial Crisis & the 2012 EuroZone Sovereign debt crisis. Now given that defensive sectors dominate and also AAA rated Switzerland, during bad times locking in a 5% dividend yield is quite tempting to me

• dividend payments not interrupted & increasing over time - during 2007-2009 more often payments to likely signal the market that this is a relative safe place

6 Maverick visuals in total now, 3 on price & 3 on valuation:

• Price action views:

2023 YTD Winners & Rebounders from their 52-week low

2023 Total Returns & 2022 Total Returns to answer an interesting research question: which stocks were positive both in the 2022 bear market & up to today in 2023?

Here on recent performance returns, it is quite interesting at times to plot it like this: 1 year past returns with Earnings/EPS growth. Rationale? We want to spot companies with declined stock price, but still strong expected earnings growth

• Valuation views via:

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

Free Cash flow aka ‘cash’ view: P/FCF multiple & FCF/Share (last twelve months). Interpretation: P/FCF multiple the stock is trading at for the given level of FCF/Share

🏦 Bonus Charts 🏦

Fun fact: Swiss National Bank stocks holdings overview as of YE 2022 = $139 billions market value & 2677 positions!

• Some call it a mutual fund, some jokingly a hedge fund ... quite sure a big tech investor with a 26.9% weight: Apple, Microsoft, Amazon, Google, Nvidia … then Tesla, United Health, J&J, Exxon, P&G, Visa, Chevron, Tesla, HD

• SNB does not ‘trade’ to be sure here about the jokes, it tracks +/- the MSCI USA index with a 80/20 allocation between bonds & stocks (algorithmically rebalanced)

Check how it changed since the middle of 2020, very interesting ... $118 billion market value back then while now $139 billion market value

I hope you enjoyed this research & it would be great to hear your feedback! Should you have found this interesting and valuable, just subscribe & share it around with likely interested people as well. Thank you!

Share Maverick Equity Research

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Maverick Equity Research

welcome to the 1st edition of the ‘Maverick Valuations’ report covering Europe.

This report is unique, hence quite ‘Maverick-esque’ as I tried to find it served by banks, overall media, or independent investment researchers like myself, but none. Therefore, I decided to create it myself and also plan to improve it going forward.

Report is NOT behind a paywall & there are no pesky ads here. It would only be highly appreciated you just spreading the word around to likely interested people.

Share

Report structure is the following:

📊 50 European stocks 📊

📊 GRANOLAS = The European FAAMG 📊

📊 Goldman Sachs Key Charts on Europe 📊

What are the various likely use cases provided by this report & visual analytics? Research for market leaders & laggards, likely un/warranted cheap or expensive stocks, peers analysis, stock screener, outliers, positive or negative momentum, relative strength, full equity research on single stocks & general market assessment.

My favorite use cases:

• finding future winners via further deep dives / full equity research

• finding stocks that did well across past tough times, hence resilient winners … which are likely also going forward to be future winners 

Great to have at hand at least 8 times per year: before & after each of the 4 quarterly earnings. An overall yearly recap is also very interesting. Let’s see after most Q4 2022 earnings are out & usefully compare going forward with the future editions. Check your stocks & also outliers in the scatterplots, it can get interesting & food for thought.

📊 50 European stocks 📊

What’s inside? European coverage via 50 businesses diversified across sectors & industries, market cap (size), and both value & growth (style). How? Via sleek visuals & analytics, namely price & valuation scatterplots because they say 1,000 words. Full names, tickers with sectors & industries to begin with:

6 visuals total now from my side, 3 on price & 3 on valuation:

• Price action views:

2023 YTD Winners & Rebounders from their 52-week low

2023 YTD Winners & Total Return for 2022 to answer the research question: which stocks were positive both in the 2022 bear market and up to today in 2023?

Here on recent performance returns, it is quite interesting at times to plot it like this: 1 year past returns with Earnings/EPS growth. Rationale? We want to spot companies with declined stock price, but still strong expected growth

• Valuation views via:

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

Free Cash flow aka ‘cash’ view: P/FCF multiple & FCF/Share (last twelve months). Interpretation: P/FCF multiple the stock is trading at for the given level of FCF/Share

📊 GRANOLAS = The European FAAMG 📊

Who are the ‘GRANOLAS’? Not many heard given not much covered, but they are Europe’s large-cap/blue chips Compounders: GlaxoSmithKline, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, Louis Vuitton, AstraZeneca, SAP & Sanofi

6 visuals total now from my side, 3 on price & 3 on valuation:

• Price action views:

2023 YTD Winners & Rebounders from their 52-week low

2023 YTD Winners & Total Return for 2022 to answer the research question: which stocks were positive both in the 2022 bear market and up to today in 2023?

Here on recent performance returns, it is quite interesting at times to plot it like this: 1 year past returns with Earnings/EPS growth. Rationale? We want to spot companies with declined stock price, but still strong expected growth

• Valuation views via:

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

Free Cash flow aka ‘cash’ view: P/FCF multiple & FCF/Share (last twelve months). Interpretation: P/FCF multiple the stock is trading at for the given level of FCF/Share

📊 Goldman Sachs Key Charts on Europe 📊

• 16 visuals total now from Goldman Sachs with key notes:

The ‘Compounders’ - Europe’s big caps the GRANOLAS vs. FAAMG companies in the US – first look at this…

… then this:

…and finally this – FAAMG margins are under pressure but GRANOLAS enjoy cont’d premium margins:

The secular underperformance of value vs growth has shifted, and we think this trend is likely to continue - should benefit Europe given mostly value-stocks

Valuation - Europe relative to the US: Europe’s discount to the US is especially large. All sectors in Europe are currently on a discount to the US. Europe is cheap vs the US also when adjusting for sector composition:

Using Global sector weights Europe & UK trade on a large discount to the US market

US & Europe valuation differential is not fully justified by expected growth rates:

There’s still room for foreign buyers to step in / increase exposure. They haven’t actually bought much yet – the big buyers of Europe have been corporates:

Even ahead of the recent distressing events, the discount for European Banks was wide versus the history of the post-GFC period & it’s widened since. Sure, EU banks have seen a great deal of momentum before recently – but looking at the sector over a few years it still looks relatively cheap:

This is a chart we show to non-European investors. Europe’s exposure to Europe is actually much less significant vs other regional indices. In fact, NorthAm, China, LatAm are sizeable regional exposures, and Luxury & Tech have caught up with Banks & Energy in terms of market share:

I hope you enjoyed this extensive research & it would be great to hear your feedback! Should you have found this endeavour interesting and valuable, just subscribe & share it around with likely interested people. Thank you!

Share Maverick Equity Research

Have a great day!

Maverick Equity Research

P.S. in case you missed: my 2022 European Stock Screener and the 2023 update

welcome to the 1st edition of the ‘Maverick Valuations’ report covering powerful Themes & Trends, namely: AI, EV, Battery, SaaS & Cloud, Cybersecurity, E-Commerce, Innovation, Infrastructure, Green Energy & Big Tech.

Why? Powerful forces set to shape our economies both vertically & horizontally. Additionally, thematic investing has 2 big potential advantages: industry expertise can make a big difference & portfolio diversifier via recurrent low correlations. What’s inside? Selected leading & emerging businesses. How? Via sleek visuals & analytics, namely price & valuation scatterplots … because they say 1,000 words.

This report is unique, hence quite ‘Maverick-esque’ as I tried to find it done & served somewhere else (comfy, no?), be it by banks, overall media, or independent investment researchers like myself. Therefore, I decided to create it and plan to improve it as we move forward. Was willing to pay for a good regular service straight to my inbox, yet none, but if you find similar somewhere, please let me know.

Report is NOT behind a paywall & there are no pesky ads here. It would only be highly appreciated if you just spread the word around to likely interested people.

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Report structure = 10 major themes & trends:

📊 Artificial Intelligence ‘AI’: AI & Robotics + Semiconductors as AI Hardware 📊

📊 Electric Vehicles (EV) & Autonomous Driving 📊

📊 Lithium & Battery Technology 📊

📊 Software as a Service & Cloud Computing = ‘SaaS’ & ‘Cloud’ 📊

📊 Cybersecurity = ‘Cyber’ 📊

📊 E-Commerce = ‘online shopping’ 📊

📊 Disruptive Innovation = ‘Hyper Growth’ 📊

📊 Infrastructure = ‘CAPEX’ 📊

📊 Clean Energy = ‘Green’ 📊

📊 Big Tech = ‘FANGMAN’ 📊

What are the various likely use cases provided by this report & visual analytics? Research for market leaders & laggards, likely un/warranted cheap or expensive stocks, peers analysis, stock screener, outliers, positive or negative momentum, relative strength, full equity research on single stocks & general market assessment.

My favorite use cases:

• finding future winners via further deep dives / full equity research

• finding stocks that did well across past tough times, hence resilient winners … which are likely also going forward to be future winners 

• finding ‘Pick & Shovel’ businesses that span across industries with many use cases which can make tick 2 boxes in the same time: limited downside risk though still keeping good potential upside. Hint: check NVDA & others😉

Great to have at hand at least 8 times per year: before & after each of the 4 quarterly earnings. An overall yearly recap is also very interesting. Let’s see now after Q4 2022 earnings & usefully compare going forward with the future editions. Check your stocks & the outliers in the scatterplots, it can get interesting & food for thought.

Here we go with the 10 thematic trends that shall shape economies going forward.

📊 Artificial Intelligence ‘AI’: AI & Robotics + Semiconductors as AI Hardware 📊

• Artificial Intelligence & Robotics = ‘AI’ & ‘ROBOS’

What’s inside? Global coverage via 118 businesses operating across AI software, robotics technologies, industrials, health care, consumer discretionary, software research & systems. Full names, tickers and sectors to begin with:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

• AI Hardware = Semiconductors

What’s inside? 30 businesses operating across semiconductors producers, equipment & information technology. Full names, tickers & sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Electric Vehicles (EV) & Autonomous Driving 📊

What’s inside? 74 companies operating across the development of electric vehicles and/or autonomous vehicles, including companies that produce electric/hybrid vehicles, components and materials, autonomous driving technology, and network connected services for transportation. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Lithium & Battery Technology 📊

What’s inside? Global coverage via 99 businesses operating across development and production of lithium battery technologies and/or battery storage solutions, exploration, production, development, processing, and/or recycling of the materials and metals used in lithium-ion batteries such as Lithium, Cobalt, Nickel, Manganese, Vanadium and/or Graphite. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Software as a Service & Cloud Computing = ‘SaaS’ & ‘Cloud’ 📊

What’s inside? Global coverage via 64 companies operating across software & services, IT services, internet services & infrastructure, data management & storage services, technology hardware and equipment, data storage & peripherals, companies that deliver a platform for the creation of software in the form of virtualization, middleware, and/or operating systems. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Cybersecurity = ‘Cyber’ 📊

What’s inside? Global coverage via 51 companies operating across cyber security sectors and industries. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 E-Commerce = ‘online shopping’ 📊

What’s inside? Global coverage via 55 businesses operating across online retail sectors & industries. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Disruptive Innovation = ‘Hyper Growth’ 📊

What’s inside? Global coverage via 27 companies operating in the disruptive innovation sectors, namely development of new products or services, technological improvements & advancements in scientific research relating to the areas of genomics, innovation in automation & manufacturing , transportation, energy, artificial intelligence & materials - the increased use cases of shared technology, infrastructure & services and technologies that make financial services more efficient. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth. Note: most are not profitable yet.

📊 Infrastructure = ‘CAPEX’ 📊

What’s inside? USA coverage via 154 businesses operating across materials, industrials, capital goods, construction and engineering, machinery, transportation, road & rail, railroads & utilities sectors. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Clean Energy = ‘Green’ 📊

What’s inside? Global coverage via 95 businesses operating across utilities, independent power & renewable electricity producers, renewable electricity, alternative energy resources, biofuels, electric power by solar energy, by wind energy, & hydroelectric power generation. Full names, tickers and sectors:

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

📊 Big Tech = ‘FANGMAN’ 📊

What’s inside? The 7 tech industry juggernauts: Facebook (META), Apple (AAPL), NVIDIA (NVDA), Google (GOOGL), Microsoft (MSFT), Amazon (AMZN) & Netflix (NFLX) & chill … 😉

Price action view: 2023 YTD Winners & Rebounders from their 52-week low

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue CAGR 1Y (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales CAGR

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

• Free Cash flow aka ‘cash’ view: P/FCF multiple & FCF/Share (last twelve months). Interpretation: P/FCF multiple the stock is trading at for the given level of FCF/Share

I hope you enjoyed this extensive research & it would be great to hear your feedback! Should you have found this endeavour interesting and valuable, just subscribe & share it around with likely interested people. Twitter thread can be found here. Thank you!

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Maverick Equity Research

welcome to the 1st edition of the ‘Maverick Valuations’ report covering Canada via the MSCI Canada ETF (EWC). Sleek visuals & analytics via Price and Valuation scatterplot … because they say 1,000 words.

I plan to expand the Canadian coverage down the road as soon as I get good financial data so that I cover the main Canadian stock indices, equivalent how I did it for US.

Report is NOT behind a paywall & there are no pesky ads here. It would only be highly appreciated if you just spread the word around to likely interested people.

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Report structure is the following:

📊 MSCI Canada ETF (EWC) 📊

🏦 Bonus Charts 🏦

What are the various likely use cases provided by this report & visual analytics? Research for market leaders & laggards, likely un/warranted cheap or expensive stocks, peers analysis, stock screener, outliers, positive or negative momentum, relative strength, full equity research on single stocks & general market assessment.

My favorite use cases:

• finding future winners via further deep dives / full equity research

• finding stocks that did well across past tough times, hence resilient winners … which are likely also going forward to be future winners 

• finding ‘Pick & Shovel’ businesses that span across industries with many use cases which can make tick 2 boxes in the same time: limited downside risk though still keeping good potential upside

Great to have at hand at least 8 times per year: before & after each of the 4 quarterly earnings. An overall yearly recap is also very interesting. Let’s see after most Q4 2022 earnings are out & usefully compare going forward with the future editions. Check your stocks & also outliers in the scatterplots, it can get interesting & food for thought.

📊 MSCI Canada ETF 📊

Let’s dive into the MSCI Canada ETF (EWC) which was created in 1996 & consists of 95 large & mid-cap stocks (including those in the main S&P/TSX 60 index). It covers diversified sectors & covers both growth & value stocks. For more info, the ETF constituents by name, ticker and sector can be found here while the factsheet here.

10 visuals total now from my side:

• Introduction before anything, the overall 5 year Total Return:

Note: EWC has a 0.5% fee / year, hence on the medium-long term it can be a material dragger on the compound interest for investors vs buying the individual names.

• Price action views:

2023 YTD Winners & Rebounders from their 52-week low

2023 YTD Winners & Total Return for 2022 to answer the research question: which stocks were positive both in the 2022 bear market and up to today in 2023?

• Valuation views via:

Sales/Revenue aka ‘Top-line’ view: P/S multiple & Revenue growth (next year estimates). Interpretation: Forward P/S multiple the stock is trading at for the given level of estimated Sales growth

Gross Profit aka ‘gross’ view: P/GP multiple & Gross Profit CAGR (last twelve months). Interpretation: P/GP multiple the stock is trading at for the given level of Gross Profit growth

Profitability aka ‘Bottom-line’ view: P/E multiple & Earnings/EPS growth (next year estimates). Interpretation: Forward P/E multiple the stock is trading at for the given level of estimated Earnings/EPS growth

Free Cash flow aka ‘cash’ view: P/FCF multiple & FCF/Share (last twelve months). Interpretation: P/FCF multiple the stock is trading at for the given level of FCF/Share

Lastly via a side angle, 2 Enterprise Value (EV) multiples: EV/EBITDA & EV/EBIT

EBITDA view aka loose proxy for Cash Flow from Operations (CFO): EV/EBITDA & EBITDA growth (next full year forward estimates)

EBIT view aka core operations aka operating profit view: EV/EBIT & EBIT growth (next full year forward estimates)

Side note visual for Sales to EBITDA … to Net Profit. Naturally, more to the story once going into specific industries, sectors and single names … comparability is key.

🏦 Bonus Charts 🏦

Have you ever wondered about the combined Short Interest & Total Return on these big Canadian basket of stocks? 3 visuals total and a takeaway: stocks with high return & low short interest can be seen as carrying positive sentiment & resilient winners.

Total Return in 2023 vs Short Interest: some short could have worked

Total Return for the past 12 months vs Short Interest: given the 2022 bear market, some more shorts could have worked

Total Return for the past 3 years vs Short Interest: but it’s hard to stop a moving train & shorting blue chips from essentially any market, will likely result in losses the more one holds the position … unless short term & super due diligent, very hard business.

I hope you enjoyed this research & it would be great to hear your feedback! Should you have found this interesting and valuable, just subscribe & share it around with likely interested people as well. Twitter post can be found here. Thank you!

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Maverick Equity Research

below an update on the ‘Stock Screening for Value in Europe - Edition #1’ from last year that was done in the middle of a historical European energy crisis & a war.

In case you did not subscribe yet for delivery straight to your inbox, it’s just 1-click:

Subscribe now

Report is not behind a paywall & there are no pesky ads here. It would be highly appreciated if you just spread the word around to people that might also be interested.

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Report structure is the following:

📊 Stock Screening Results & Valuation 📊

📊 Europe overall Performance, Earnings & Valuation 📊

📊 Tailwind: Stock Buybacks & Dividends 📊

📊 Fund Managers Positioning & Financial Flows 📊

📊 Economic Sentiment, Monetary Policy & Energy 📊

📊 Bonus: European Energy sector 📊

📊 Stock Screening Results & Valuation 📊

First of all, the results visualised via the combined view of Total Return in the last 3 months & Total Return in 2023:

And now going into valuation territory. For that, the following scatterplot shows the EV/Sales multiple (next twelve months) ‘VS’ the 1 year ahead Revenue estimates for YoY% growth:

From Sales to Earnings, let’s see also the output via the lens of P/E (next twelve months) ‘VS’ 1 year ahead EPS estimates for YoY% growth:

📊 Europe overall Performance, Earnings & Valuation 📊

Secondly, let’s see what’s going on currently in Europe via complementary research & key questions answered.

How did Europe overall via STOXX 600 start? Best start since at least 1987:

How does this start look relative to the US S&P 500 counterpart? According to Bernstein, European earnings estimates of 0.6% growth for 2023 are the lowest ever at the start of a year & the market expects fourth-quarter profits to show the weakest growth in two years, Barclays strategists say. There's "room for more short covering if earnings meet expectations" said Emmanuel Cau at Barclays.

Complementary via Athanasios Psarofagis from Bloomberg: the rotation into Europe happened very quickly while the performance spread over SPY is the largest ever:

ETFs level wise, after a decade long underperformance, the % of European equity ETFs beating the SPY is at a whooping 87% level:

Complementary via Bespoke, after underperforming by one of the widest margins in over 20 years from late May through late August, in the last 3 months European stocks (IEV) have outperformed the S&P 500 ETF (SPY) by a record margin:

What caused this performance? A lot have to do with guess what, earnings! Estimates were revised DOWN materially in 2022 (left), while in 2023, Q4 2022 earnings have surprised by 4% to the UPSIDE (right):

And it’s not just earnings, but also incoming economic data which via Citigroup’s Economic Surprise Index (CESI), kept coming out lately above expectations. Below both indices for the EuroZone (blue) & US (red) with Eurozone strong lately:

Valuation wise via Goldman Sachs, a great chart with geographical ranges of historical forward P/E valuation multiple: currently relatively low for Europe & Emerging Markets while high for the US & Switzerland. Europe wise, Germany, UK & Italy are far below from their long-term median P/E.

📊 Tailwind: Stock Buybacks & Dividends 📊

Europe as a whole has room to raise dividends given payouts are low & dividends have provided historically the majority of returns in Europe:

Stock buybacks wise, the pace is higher than in the last 20 years:

📊 Fund Managers Positioning & Financial Flows 📊

How are fund managers positioned via BofA’s FMS investors popular survey? EuroZone & EM overweight, US, UK & Japanese equities underweight:

How about we quantify financial flows into Europe? Equity funds Capture investors’ $ chasing following strong Q4 Performance. $3.4bn weekly inflows in the week through January 25th which is the largest since February 2022. Note: before these funds had 48 straight weeks of outflows:

ETFs wise via Athanasios Psarofagis from Bloomberg: European equity ETF flows coming off low point:

And it’s not just flows into equities, but strong inflows to Euro credit ETFs as well:

Single ETFs flows wise via Eric Balchunas from Bloomberg: THINGS YOU NEVER SEE: A Europe ETF leading YTD flows with $3.6 billion:

📊 Economic Sentiment, Monetary Policy & Energy 📊

How are economic sentiment indicators lately? Picking up in both Europe & US while Europe relatively better since a while:

What are the latest probabilities of default in Europe? Currently nowhere near the higher levels of risk in 2012 and 2015 based on CDS market pricing. Given the great reforms & progress Greece has made lately, values looks way too high though they are low on an absolute level and past comparison.

Side note: since the 2012 European Debt Crisis we kept hearing from the permabears and gloom & doomers that Europe is about to break up ‘imminently’. One way to get attention is to constantly be a pessimistic and ‘forecasting’ the worst because at some point the business cycle tells us since ages that it turns & then suddenly somehow somebody ‘is right’ (sarcasm alert) ;).

Monetary Policy & Inflation in Europe? ECB will combat inflation bye tightening and then tightening some more while the Fed is nearly done: 

Liquidity wise, M2 (money supply) growth in the EuroZone growth (Y-o-Y) is trending lower and it’s not very unlikely to go negative.

Why? Well, what was seen until recently as something very remote and extreme, in US it already happened & it is the first time since 1933 when M2 growth goes negative. Let that sink in! US CPI (Y-o-Y) & M2 growth (Y-o-Y):

What about Energy markets? Both crude oil & natural gas are materially cheaper than before the invasion:

Complementary, combined view of US & Europe natural gas with both cooling off and now lower than a year ago:

Last but not least, for a big overview how big is the European economy? $16 Trillion!

📊 Bonus: European Energy sector 📊

A great Venn diagram from GS with companies featuring strong balance sheets, positive EPS revisions that would benefit from green policies going forward in Europe (estimate that a Europe IRA could mobilise €4tn of capital over the coming ten years): RWE, SSE, ENEL, EDP & ENGIE.

And that was it! Should you have found this cherry-picking endeavour interesting and valuable, just subscribe and share it around with people that might also be interested to read this kind of content in the future. Twitter post can be found here. Thank you!

Have a great day!

Maverick Equity Research

welcome to the 1st Stock Screening research piece, a dedicated section from Maverick Equity Research that aims for value in the current tricky European landscape.

Report is not behind a paywall & there are no pesky ads here. It would be highly appreciated if you just spread the word around to people that might also be interested.

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The energy crisis and the war is hitting hard Europe and stock prices naturally reflect the developments clearly with the recent tumble: the Stoxxx Europe 600 index forward P/E ratio is at the same 11x level as in the March 2020 Covid crash when indiscriminate selling was happening across the board.

Complementary chart also shows that European equities’ valuations are below their historical average on a forward P/E ratio:

After the P/E multiple, it is worth having a look also at the Price/Book multiple and in this case at Germany's DAX index with a 22 years overview: 2001 Dot-com, 2008 GFC/Lehman, 2009-2012 European Sovereign Debt Crisis ‘PIIGS’, Covid 2020 Crash & historically the book value is acting as a floor.

On a similar note, the S&P Europe SmallCap index currently has a Price/Book ratio below 1.2 for the fourth time in the last 20 years. After the first 3 times when it happened historically (2002/2008/2020), it returned more than 50% just 12 months later.

Going forward, the US Dollar index is not helping at all European businesses by going higher and higher as the US Federal Reserve tightens monetary policy to combat the ramping inflation. Source: Confounded Interest

Going further, we see how the valuations are coming down via material outflows from European equity ETFs: one big outflow once Russia invaded Ukraine while the most recent data (2nd highest) shows an even bigger outflow. Source: FT via BlackRock

The question is now, are we really worse than then? When this kind of selling as a basket happens, potential opportunities arise and in these cases they might not even be that hidden.

Getting more granular next, @IrnestKaplan (top #FinTwit contributor in terms of both diligence & experience) ran a screener in Europe with the following metrics:

Market capitalization > 500M

EBIT margin (LTM) > 25% 

ROE (LTM) > 25% 

ROIC (LTM) > 20% 

5 year Revenue CAGR (LTM) > 20% 

Results: 19 companies that are sorted in the following table by market capitalization:

Going forward, I did relax a bit the criteria, namely I went for a larger investment universe by market capitalization > 250M, lowered the EBIT margin to > 20% and ROE > 20%:

Market capitalization > 200M

EBIT margin (LTM) > 20% 

ROE (LTM) > 20% 

ROIC (LTM) > 20% 

5 year Revenue CAGR (LTM) > 20% 

Results: 25 companies that are sorted in the following table by market capitalization:

Now that we have the screened companies via the chosen fundamental metrics, an interesting view would be how did this group of companies fare since the beginning of 2022 when we had no war in Europe and the energy crisis did not seem to turn that ugly.

The following scatterplot shows us the Price change % Year-To-Date 'with' the Above 52-week Low % (which can serve in general as part of a use case to identify market leaders & laggards, positive/negative momentum, relative strength and/or likely unwarranted cheap stocks).

Despite the environment since the begging of the year, the 3 companies in the green quadrant did perform very well while material drawdowns have been registered by the companies in the red quadrant. Question is, are the latter warranted or as often markets overcook it on the downside via sentiment and/or flight to safety ?

From here, a logical step would be to get a bit into valuation territory. For that, the following scatterplot shows the EV/Sales multiple (next twelve months) ‘with’ the 1 year ahead Revenue estimates for YoY% growth:

Sales/Revenues is just the top-line dimension, hence let’s also see a Free Cash Flow (Price/FCF & FCF/Share) view which can provide additional insights:

Next step would be one digging even deeper into these names, their related industries and see for a fit for their investor profile and specific portfolio construction.

All in all, how much worse can the energy crisis in Europe get? How long the war will last and what are the implications down the road ? Consequently, a key question is do current valuations price in that the worst has yet to come or that it is behind us ? One thing is for sure: realistically nobody can say that exactly. All one can do from here is further research for an informed rationale.

In terms of that, lately we have good signs from both the energy and the war side:

• Via Bloomberg, German power price 1-year ahead (forward price) is back more to earth: almost halved within 2 days from €985 per MWh to €545. Food for thought: are these price swings just a question of the current tricky situation with the ‘supply’ side ?

As the EU works on a plan to temper the unprecedented energy crisis, power & gas prices are tempering to a 1 month low, though still sit around 8x hither than the old ‘normal’.

Complementary, if you want to keep track with the day ahead electricity prices in Europe the following map updated daily from EUenergy is a great source & visual:

For a deeper dive, I encourage you to read Andreas Steno Larsen’s latest takes ‘What on earth is going on in European electricity markets?’ & A (semi)-permanent energy GDP-shock in Europe? which strong arguments that currently the electricity markets are completely out of sync with fundamentals & the likely impact to the GDP.

Now when this kind of major disruptions happen, 1st & 2nd order effects are always coming up. The latest from Germany is Uniper, the country’s largest gas importer which is being nationalized given the cash reserve burn that has been going after Russia cut off supplies overall to Europe following Western sanctions. Uniper is basically working as an intermediary between Russian suppliers and German consumers, hence quite a key player in the supply ecosystem. Being forced to buy gas elsewhere at higher and higher prices on the expensive spot market, time was running out and the German government stepped in and become the majority shareholder after the stock dropped 92% from the all time highs that were reached just before the war started.

• regarding the latest from Ukraine, Putin decided to mobilize army reserves to support the invasion right after Ukraine ran a successful counteroffensive and managed to force Russian forces from more than 20 towns and villages. Reports indicate that it has tripled retaken area with over 3,000 sq km (1,158 sq miles).

Efforts are being done on many fronts and we have signs of the situation heading towards a stabilization. On the short term, unknows still hang heavily, drawdowns are part of investing, while on the medium-long term markets and economies will sort things out as they did in the past.

All in all, Europe is currently in deep trouble & out of favor from the investors’ side, though will this in the future mean we could have found deep value here these days?

STOXX Europe 600 total return & drawdowns since 2005:

I hope you found this European stocks screener exercise, overall approach & rationale interesting and valuable with more to come down the road. If that is the case, please just share it around with people that might also be interested to read this kind of content in the future. Thank you!

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Looking forward for your questions and feedback!

Have a great day!

Maverick Equity Research