Argonautica

Professional investors can review published thought leadership and market updates from the Argonaut Investment Team.

3 posts found for February 2016

‘Anatomy of the European Banks Rout’

European bank stocks have collapsed so far this year whilst their credit default swaps (CDS) have risen rapidly. Surely the credit and equity markets are telling us something? – Europe’s nascent economic recovery is over? Negative rates are killing net interest margins? They don’t have enough capital?…the list goes on. Whilst all the above cannot be ignored and investors need to select bank stocks carefully, we think the wholesale selling pressure of bank stocks may have an altogether different origin…

‘Statoil: A Reckless and Naïve Dividend Policy?’

Amongst European oil majors Statoil’s profits are in our view almost uniquely geared to the price of crude given its lack of significant downstream assets and exposure to counter cyclical refining profits. Moreover, its upstream assets have historically been exposed to high-tax production in the Norwegian continental shelf, with the company’s expansionary capital expenditure focused in North American shale oil and gas production, all of which is now loss-making. Unbelievably, while oil is down 70%…

‘Casino: Heads They Lose, Tails They Lose’

Casino is anything but a boring supermarket story. Faced with increasing price competition in its native France a number of years ago, Casino decided to lever its balance sheet to acquire assets in emerging market countries, namely Brazil, Thailand, Columbia and Vietnam. Whilst this initially bought the company top-line growth, the combination of Euro denominated debt with emerging market earnings has now become problematic given the deterioration in emerging market macro conditions, currency headwinds,…