Recent Posts

Morning Meeting: Rules of Engagement

By Derek On January 17, 2012

Do you understand what you read?

In earlier post I wrote about how the morning meeting in equities is the most sacred part of the day. One of our readers was interested to know: how do you drill the analysts and what kind of questions do you ask? I thought, great! Now I know what to write for my next post. 

(If you aren’t familiar with the morning meeting ritual, you may first want to read that post here).

Sales people speak to clients daily communicating the analysts views and changes to those views on stocks. To speak effectively to clients, we need to understand exactly what the analyst is saying – and why. You don’t want to just parrot the research and, oh God, how many times have I seen sales people do that

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No Public Euronation

By Derek On January 11, 2012

Procrastination is opportunity’s assassin”  – Victor Kiam

Given a choice of good news or bad news most non-psychopaths would choose the former so let’s look at the good news first.

1)       Persistent signs of recovery in the US

2)       European issues well known and largely discounted by markets

The chart for the VIX is intriguing. There is also a lot of cash sitting on the sidelines. Individual investors took out appx $100 bn out of domestic equity funds in the US last year and hedge funds are mostly de-risked and cashed up. It is interesting too, despite the last two days of risk asset rallies, the 10 year yield is still at 1.96%. A lot of safe haven money is still parked in Treasuries and that could provide the powder for a stronger short term rally this quarter. However, all the good news has one thing in common: it is short

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Dissecting Research: Lenovo (992 HK)

By Derek On January 9, 2012

I am going to continue the series on how to dissect and make sense out of equity research reports with another tech stock. Asian tech stocks are like manufacturers and are fairly easy to understand. Of course, the environment changes much more quickly for a tech company than for a company that makes clothes pins, for example. But the variables are the same. Having said that, Lenovo (992 HK), the world’s second largest computer seller and our next victim, is becoming more of a retailer than a tech stock. For those who don’t have to live and breathe Chinese equities (I salute you), you may remember Lenovo was the Chinese computer company that purchased IBM’s PC division which was branded as the “ThinkPad.” Lenovo does have its own production facilities (25% of total) but most of their PCs and notebooks are outsourced to the same Taiwanese factories in China that

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