What Worked Japan - 12 Aug 2016 - Nothing really. Stuck between Earnings Ending and O-Bon starting

What Worked – Nothing stood out this week except Beta. This is one of those weeks we have come to expect during Earnings season and or during a Holiday. Although this one came at the end of Earnings season and right before O-Bon. High Beta names that did well this week were Brothers Industries (6448) up 28%, Toyo Tire & Rubber (5105) up 25% and DeNA Co (2432) up 21%. All the other factors were basically insignificant.

Who Moved – Despite the lack of conviction in factors, there were still 16 names that moved on volume this week. This is compared to 108 names that moved on volume last week. On the positive side, Brother Industries (6448) was up 28%, COSMOS Pharmaceutical (3349) was up 10% and Sumitomo Warehouse (9303) was up 7%. On the other side, ONO Pharma (4528) was down 15%, Sawai Pharma (4555) was down 8% and Daifuku Co (6383) was down 7%.

Summary

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What Worked Australia - 05 Aug 2016 - Growth off while Beta moving

What Worked – This week saw high growth names flat to market, while the low growth names beat out the index. OP Growth in particular returned its second lowest IC number in over a year, and the non-energy materials space saw a lot of the positive movement. Western Areas (WSA, +8.1%), Santos Limited (STO, +6.2%) and Genworth Mortgage (GMA, +8.3%) all forecasting negative OP growth for the coming fiscal year, and all posting good returns for the week.

In terms of Beta, the names with higher beta where naturally up with the market, while the lower beta names remained relatively flat. Beta itself has had a very good run over the last 6 months generating a spread of +2.0% above the market. High beta names like Whitehaven Coal (WHC, +10.7%), Origin Energy (ORG, +2.0%) and Seven Group Holdings (SVW, +11.5%) all up substantially for the week.

Who Moved – 18 names managed to move on higher than normal volumes this week, with 11 names down and 7 up. On the negative side, Seven West Media (SWM, -22.0%), Nine Entertainment (NEC, -9.6%) and REA Group (REA, -7.6%) all down on very high volume, while MMA Offshore (MRM, +18.6%), Virtus Health (VRT, +1.0%) and Qube Holdings (QUB, +4.1%) all up on significantly higher than normal volumes.

Summary

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What Worked Japan - 05 Aug 2016 - Crazy volume this week as factors move at the extremes

What Worked – Usually during Earning season factors stop working and it is pretty boring. However that is not the case this season and the movements are happening at the extremes and on volume. If you look at the Quintile spreads (top 20% - bottom 20%) you can really see the movements this week. There was a good selloff in names that were up over the last 12 months. The quintile spread is negative 4%. Miura (6005) was down 16%, Morinaga Milk (2264) was down 9% and MEGMILK SNOW BRAND (2270) was down 11%.

High Beta names did well this week with a quintile spread of 3%. Mitsubishi Corp (8058) was up 11%, Mitsubishi UFJ Lease (8593) was up 7% and Rohm (6963) was up 7% this week. Value, particularly high dividend yield and low PBR, also did well this week.  Chiba Bank (8331) was up 6%, Mitsubishi Gas Chemical (4182) was up 5% and Jafco (8595) was up 3%. However, high ROE names saw a pretty good sell off this week. TOTO (5332) was down 16% and Meiji Holdings (2269) was down 13%.

Who Moved – Crazy volume this week. 108 names moved on volume. That is good number of volume spikes for any week and an insane number for Earnings season. 20% of TOPIX 500 moved on volume this week and a third of those were in the Banks. On the positive side, Glory (6457) was up 16%, Familymart (8028) was up 15% and UNY Group0 (8270) was up 15% on strong volume. On the negative side, Nihon Kohden (6849) was down 18%, Ushio (6925) was down 16% and San-in Godo Bank (8381) was down 15%.

Summary

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What Worked Asia - 29 Jul 2016 - Selloff in Value in Korea but nothing really stood

What Worked – Nothing really stood out in China /  Hong Kong. However there was a slight move into size in Hong Kong. Goldin Properties Holdings was up 20% and Wang On Properties was up 13%. Dividend Yield continues to drive the market in Singapore. High dividend yield names have done well in Singapore since the beginning of June. This week Sheng Siong Group was up 5% and Mapletree Industrial Trust was up 5%.

Korea was all about Value this week. Low PBR names that did well were Hyundai Heavy Industries up 17% and Hyundai Mipo Dockyard up 11% this week. In Taiwan there was a good rotation away from low PBR names and into positive EPS revision names. Walsin Technology is up 17% and Realtek Semiconductor is up 7%. 

Who Moved – 204 names moved on volume this week. A good number of the volume spikes came in Taiwan and India. At the Sector level, the Finance and Process Industries Sectors had a number of volume spikes. On the positive side, Jindal Steel & Power was up 23%, Bank Pembangunan Daerah Jawa Barat dan Banten was up 23% and Bangkok Expressway and Metro Public was up 22%. On the other side, Dr. Reddy’s Laboratories was down 18%, Hansae Co was down 13% and Gudang Garam was down 11%.

Summary

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What Worked Japan - 29 Jul 2016 - Value and Beta bounced back this week

What Worked – After a super huge week two weeks ago and then a reversal last week, Value did well again, particularly PE. Low PE names that did well were Zeon Corp (4205) up 16%, Alps Electric (6770) up 15% and NTN Corp (6472) up 10%.  High Beta names acted the same. Two weeks ago high Beta names were super strong, there was a slight selloff last week and then they did well again this week. Tokai Rika (6995) is up 21%, Zeon Corp (4205) is up 16% and SUMCO (3436) is up 13%.

On the other side, there was a slight selloff in size this week. COLOPL (3668) was down 21%, KOMERI (8218) was down 12% and Capom (9697) was down 12%. There was also a selloff in names that were up over the last 12 months. M3 (2413) is down 12% and ONO Pharma is down 8%.

Who Moved – 27 names moved on volume this week. On the positive side, Shin-Etsu Chemical was up 13%, Nidec (6594) is up 10% and Advantest (6857) is up 11%. On the other side, Nintendo (7974) is down 25%, KOMERI (8218) is down 12% and Canon Marketing Japan (8060) is down 10%. All on strong volume. 

Summary

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What Worked Australia - 29 Jul 2016 - Complete reversal of last week

What Worked – This week was almost a complete mirror image of last week with Value once again in play, and longer term momentum signals also strong. PER along with 12 month momentum were both very strong, signals that are normally contradictory to each other. Names that are cheap on a trailing PER basis and have performed well over the last 12 months included Fortescue Metals (FMG, +9.9%), Metcash (MTS, +3.9%) and WPP AUNZ Limited (WPP, +11.6%) – all up this week, while the opposite end of the spectrum saw Cardno (CDD, -1.7%), Origin Energy (ORG, -8.5%) and Santos (STO, -9.3%) all furthering their 12 month losses.

ROIC, along with ROE to a certain extent, have made it 2 weeks in a row as a focus on profitability comes into play. JB Hi-Fi (JBH, +6.3%), Cochlear (COH, +2.7%) and Norther Star Resources (NST, +8.6%) all up this week and all near the top of the market in forecast ROIC.

Who Moved – Only 9 names managed to move this week on higher than normal volumes. On the positive side, Bradken Limited (BKN, +48.4%), Monadelphous Group (MND, +13.2%) and Qube Holdings (QUB, +6.3%) all up, while Asaleo Group (AHY, -9.3%) and Pact Group Holdings (PGH, -5.2%) the only names down on volume.

Summary

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What Worked Asia - 15 Jul 2016 - Size and Value domintated in Asia this week

What Worked – In China it was all about Size this week and to a lesser degree Value. ANTA Sports Products (2020 HK) was up 17% and China Pacific Insurance (2601 HK) was up 13%. Large-cap names also did well in Hong Kong this week and growth names were hurt. Haier Electronics Group (1169 HK) was up 18% and Johnson Electric Holdings (207 HK) was up 12%. Singapore was all about Size and Beta this week. Beta has been one of the strongest factors in the last 6 months in Singapore. Silverlake Axis (SILV SP) was up 7% and Yoma Strategic Holdings (YOMA SP) was up 6%.

South Korea was all about Value, particularly FY1 PE. Kolon (002020 KS) was up 14% and Young Poong (000670 KS) was up 16%. In Taiwan it was also all about Size and to a lesser degree Value. Growth and Beta dominated in the Philippines and in Indonesia high Beta and high Dividend Yield names did well this week.  Vale Indonesia (INCO LJ) was up 29% and Semen Baturaja (SMBR LJ) was up 21%.

Who Moved –  Lot of names moved on volume this week. 211 to be specific. Thailand, Taiwan and India made up a good portion of the volume spikes. At the sector level, Finance and Non-Energy Minerals made up a good number of the volume spikes. On the positive side, Bank Maybak Indonesia (BNII IJ) was up 35%, Godfrey Phillips India (INCO IJ) was up 29% and Dongkuk Steel (001230 KS) was up 21%. On the other side, Yeong Guan Energy Technology was down 14%,TV18 Broadcast was down 11% and Highwealth Construction was down 10%.

Summary

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What Worked Australia - 15 Jul 2016 - Great week to be a value investor

What Worked – In what has been a good week for the index, momentum in all its flavours was punished this week as value swung back into fashion. Momentum, while largely driven by a pickup in the laggards, did also see a slight sell off in the better performing names. Qantas (QAN, +10.0%), Flight Centre (FLT, +4.9%) and Henderson Group (HGG, +10.7%) all producing very strong results this week while still being amongst the biggest losers over the previous 3 months.

In terms of value, Flexigroup (FXL, +15.2%), Seven West media (SWM, +7.1%) and Nine Entertainment (NEC, +8.6%) all posted very strong results this week and are amongst the cheapest names on the index on a trailing PER basis. Sales Growth on the back of this underperformed the index, with names like Vocus Communications (VOC, +3.6%), Mirvac Group (MGR, +3.4%) and Evolution Mining (EVN, -1.2%) all falling short of the benchmark this week.

Who Moved – This week saw only 21 names in the entire index produce negative results, but in the end volumes are sitting around average. Only 5 names from the index managed to move on significantly higher than normal volumes, and all of them produced very strong positive returns over the index. Amongst the top, Sandfire Resources (SFR, +25.0%), Whitehaven Coal (WHC, +23.2%) and Western Areas Limited (WSA, +16.7%) up sharply over the week and backed by very strong volumes.

Summary

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What Worked Japan - 15 Jul 2016 - Incredible numbers / biggest weekly reversal I have ever seen

What Worked – I have been writing the “What Worked” for more than 7 years. Which means I have written it almost 400 times. Please don’t make fun of my life. I have never seen numbers like this week. Value and Beta bounced like I have never seen them bounce before. FY1 PE had a 60% IC. Beta had an unbelievable 65% IC. Please remember that a 100% IC means that the numbers are perfectly positively correlated. Low PE names that bounce hard were Sumitomo Mitsui Trust (8309) up 25%, Mazda (7261) up 24% and Dai-Ichi Life Insurance (8750) up 24%. Nintendo (7974) dominated the high beta names up 69% this week. But who thought that walking around catching Pokemon would be fun.

The price reversal this week was incredible. 12-month price momentum had a negative 78% IC. Names down over the last year bounced super hard. Minebea (6479) was up 23%, NTN (6472) was up 23% and Nomura Holdings (8604) was up 20%.  On the other side, High Sales growth names that have dominated in the recent months did not do well this week. Square Enix (9684) was down 4%, Nitori Holdings (9843) was down 4% and Cyber Agent (4751) was down 4%.

Who Moved – The good news is that a number of the names also moved up on strong volume. 53 names moved on volume this week. On the positive side, obviously Nintendo (7974) moved on volume. Other than Nintendo, Bank of Kyoto (8369) was up 40%, Ryosan (8140) was up 29% and NSK (6471) was up 25% on strong volume. On the other side, Kyushu Electric Power (9508) was down 6%, Square Enix was down 4% and Yamato Holdings was down 3% on strong volume. 

Summary

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What Worked Australia - 8 Jul 2016 - Value comes off as market jumps into momentum

What Worked – – A very big move into momentum this week in with the shorter term one month momentum posting a +4.5% return spread for the week. There was strong buying into the names that have been up over the last month, and to a lesser extent a selloff in the names that have underperformed. This space is largely dominated by the resources stocks, and those that furthered their already good lead over the market this week included Beadell Resources (BDR, +16.5%), Whitehaven Coal (WHC, +18.9%) and Evolution Mining (EVN, +14.0%). On the other end, names that furthered their one month loss this week include Henderson Group (HGG, -5.3%), Sirtex Medical (SRX, -0.9%) and GWA Group (GWA, -4.1%).

Value was also beaten up this week as is usually the case in momentum focused trading on the index. Some of the cheaper names that took a hit include Flexigroup Limited (FXL, -5.1%), Lendlease (LLC, -3.4%) and National Australia Bank (NAB, -3.3%), while some of the most expensive names became more expensive, among them Newcrest Mining (NCM, +8.9%), REA Group (REA, +5.3%) and Macquarie Atlas Road (MQA, +5.6%).

Who Moved – Volumes were not around to the same levels as last week with only 13 names posting significantly higher than normal volumes. On the positive side, Western Areas Limited (WSA, +10.5%), Atlas Iron (AGO, +5.0%) and Tatts Group (TTS, +2.8%) all finished higher on strong volumes, while CIMIC Group (CIM, -11.9%), Henderson Group (HGG, -5.3%) and Lendlease (LLC, -3.4%) all finished down.

Summary

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