WHITE KNUCKLE BULLISH

February 2011

 

SITUATION:   BEARISH SENTIMENT, FEARFUL STREET ANALYSTS
Debate in the market feared either Tea Party deflation or QE2, 3, 4 hyperinflation and nothing in between.  We told our clients - stridently - that fifty years out historians would be hugging global political leaders in the U.S., Europe, the Middle East and China.  Check with us in 2061 but the call looks very, very good.

ACTION:        WHITE KNUCKLE BULLISH
Highlighted gradual, sustainable recovery (against consensus), Discerning geopolitical cooperation and pragmatic moves we highlighted gradual, sustainable recovery including:                          

1.  No massive U.S. foreclosures is a bi-partisan area of agreement.
2.  U.S. dollar – less crappy than most other currencies.
3.  Oil – stronger dollar OR demand destruction would keep it in check.
4.  Food – people eat it.  When it gets too expensive, they get mad.
5.  China – inflation today, putting on brakes now, slowdown tomorrow.
6.  Labor – no bargaining power.

RESULT:        6 FOR 6 PLUS GOOD STOCK CALLS

1.  Housing recovery happened.  Foreclosures stabilized.                        
2.  Stronger dollar (never tanked).                         
3.  Oil – never got far above $100 again.                      
4.  Food – price down, no longer discussed as an “asset class.”             
5.  China – slower growth, political transition.                     
6.  Labor – wages are rising now but thesis essentially correct.             


BY ANY MEANS NECESSARY

August 2011

SITUATION:  United States Downgraded by Standard & Poor's  
Investor panic with market off as much as (17%) off 52-week high and down (11%) at time we actually published.

ACTION:        By Any Means Necessary
Extensive field work confirmed underlying economic improvement.  Market FCF/EPS yield 8-9%. Made BULLISH call while others downgraded stocks or the sector.

RESULT:         Best 1Y Performance on the Street
Excess return 1042 basis points, ranked #1 on 10 of 14 formally covered stocks.

Also known as our "10-F'ing Aircraft Carriers" call....

Also known as our "10-F'ing Aircraft Carriers" call....