What’s the right beta for your portfolio?

Trivariate Research

Trivariate analysed the top 500 US equities for five factors beyond the market: size (top 100 vs. 401-500), growth vs. value, high-quality vs. junk, liquidity and momentum. They focused on 3 different portfolios (min-vol, max-Sharpe, max-return) to show a range of outcomes. Over the last 20 years, the “efficient frontier” or optimal beta for a median portfolio appears to be between 0.95 and 1. If you are looking to lower your portfolio beta efficiently, owning high-quality value stocks with relatively low liquidity is a prudent strategy (e.g. Exxon Mobil, Philip Morris, Lowe’s, Medtronic). If you want to take more risk, the optimal factor loadings would be to add to highly liquid growth stocks that are junk quality (e.g. Tesla, Applovin, Micron).

- 07 February, 2025

Eastern (EAST EY) EY

Consumer Staples

AlphaMena

Despite EAST's huge 3-month performance (the share price has risen nearly 50%), AlphaMena maintains a bullish view, underpinned by the 47% upside offered by their DCF model. Recent numbers were robust as results were supported by strong revenue growth coupled with efficient cost-control measures (net revenues increased by 15% while PAT soared 20%). The stock is trading at low multiples (6.23x EV/EBITDA and 8.16x PE in 2025E), while offering a 13.9% dividend yield. Moreover, Philip Morris International’s recent acquisition of a minority indirect stake (14.7%) in the company is further reassuring the market about its mid-term outlook.

- 18 October, 2024

Philip Morris International (PM)

Consumer Staples

Hedgeye

Fire without the smoke - 3 consecutive years of HSD% organic revenue growth with positive volumes ranks among the best in class in Consumer Staples. Yet PM trades at a modest 15x PE and offers a 5.5% dividend yield. The non-combustible portfolio reaching a tipping point for the company’s profitability and growth will trigger the re-rating, according to Hedgeye. They see the potential for the shares to deliver a 25% compounded annual return from EPS growth, multiple expansion, dividends and deleveraging. That would lead to shares doubling over a multi-year duration in most economic scenarios. Investors who cover Staples can't afford not to own this stock.

- 05 April, 2024

Swedish Match (SWMA SS) Sweden

Consumer Staples

TobaccoIntelligence

Philip Morris International will accept all SWMA shares that have been tendered to it despite failing to achieve its 90% minimum stake threshold. PMI must still secure further shares in a voluntary transaction during a new offer period to achieve its goal of utilising compulsory purchases to acquire all remaining stakes in the Swedish company. After PMI raised its public offer in October, the total bid now amounts to SEK176bn ($15.8bn).

- 11 November, 2022

Philip Morris International (PM)

Consumer Staples

TobaccoIntelligence

Considers leaving the Russian market as it scales down operations - PMI cancels the launch of its heated tobacco device Iqos Iluma in Russia. It has also withdrawn plans to manufacture over 20bn Terea sticks for its device, losing $150m. Last month PMI, British American Tobacco and Japan Tobacco announced they would have limited investments in Russia, continuing their sales and domestic production. Imperial Brands was the only company halting domestic Russian production and sales & marketing activity across the country.

- 14 April, 2022