Shorts continue to deliver strong alpha
Vision initiated 5 new shorts and closed 9 in Q1. Regarding the closed shorts, alpha ranged from 46% on the high end with AAK, to 6% on the low end for Assa Abloy. Other closed shorts included Fluidra, KION Group, Dorman Products, Planet Fitness, Pop Mart, Smoore International and Techtronic Industries. Consistent with Vision’s pursuit of liquid and non-consensus ideas, the 5 new shorts in Q1 had median average daily $ volume of >$150m and median short interest % of free float of 2.5%. Their new shorts include European luxury, European telco, European cap good, US restaurant and US healthcare.
Technology
Report by
Cerundolo Investment Research
Guy Cerundolo provides a basket of long ideas in Europe. These stocks have good and improving multi-factor model scores. In addition to SAP (see chart) he also highlights companies including ASM International, Assa Abloy, CRH, Ferrovial, Philips, Rolls-Royce and Tesco.
Industrials
High quality compounder at an attractive valuation - ALLE consistently generates the highest operating margins (>20%) and ROIC (20%) in a market where the top-3 players have ~80% of the US market. Abacus forecast 20% EPS growth from 2021-23 driven by improving margins, increasing penetration of electronic locks and a cyclical bounce in non-residential spending. Inflation fears are overstated and Abacus do not consider Latch to be a long-term threat. A valuation gap has also opened vs. Assa Abloy which is not justified by fundamentals. 12-month TP $181 (30% upside).
