Argonautica

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

‘Vestas and the 180 degrees investment pivot’

When we think the facts of an investment case have changed so abruptly that there is not only limited upside but potentially significant downside to a stock price we are also prepared to short previous favourites. This investment volte-face can be highly contentious, emotionally difficult and fraught with reputational risk if it doesn’t pay off. On the popular American hedge fund drama, Billions, Axe Capital in-house psychiatrist and performance coach Wendy Rhoades terms this investment manoeuvre…

‘The Outokumpu moment: was the reflation of 2016 just a one year global economic restock?’

Steel stocks reported the biggest quantum of positive earnings surprise this year but have been amongst the worst stock market performers. Recent data points suggest that steel is on the verge of a global destocking cycle as the effects of China’s 2016 stimulus wear off. Just as last year, improvements in the steel industry heralded a pick-up in global industrial production, we believe these negative developments will result in a wider slowdown. This same stimulus resulted in a turnaround in global…

‘Are the French headed for a Frexit?’

The market is currently eyeing the upcoming French Presidential election with a cautious view as many associate a win for Ms. Le Pen with a French departure from the Euro-zone. What seems partially misunderstood is quite how much of a stretch ‘Frexit’ actually is – to focus on the 1st round of the Presidential election is to ignore the number of hurdles required to see France follow in the UK’s footsteps. Below, I explain what would be required for this event to unfold and why this appears unlikely. Source:…

‘European earnings outlook – more positive than you might expect...’

For European earnings, 2017 is so far panning out to be unusual - unusual because earnings are being upgraded for the market as a whole and for every sector within it. Whilst market commentators and investors continue to fret over macro and political concerns for Europe, the prospects for European corporate earnings are steadily improving. The chart below depicts the earnings revisions for the market as at the end of February over the last five years as well as this year - 2017 clearly stands out. Figure…

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