Archive for the ‘Alpha Romania’ category

The BRD Jiseki

Though SIFs went up, the banking sector has underperformed. We can understand non confirmation and large divergences between different stocks, but it’s rare that two segments of the same financial sector diverge consistently. The banking market leader BRD failed to bounce and is currently near previous lows at 10.5. The BRD Jiseki remains negative. All the three Jiseki cycles are pointing lower. BRD is still at 55 percent rankings, which is still not a worst performer. We continue to look lower on BRD.

This as we pointed out is in sharp contrast to the non banking financial companies that have taken off. We already start hearing “bull” loud and clear. This when markets like India are reeling under negativity and there is no real price confirmations across the globe, the local excitement on non banking financial funds comes as a shock. We know there is a policy anticipation driving it. But do you really think this can change the course of the Romanian markets?

For us at Orpheus large multi-month, multi-year performance cycles discount causality. This also means that upmove on the SIFs (non banking financial sector) might still be a trading bounce and not a sustainable rally. For more on the multi month outlook of Romania Banks and SIF’s read the latest Alpha Romania.

 

Dr. Ionut Nistor is the co-author of Performance Cycles paper published in Kyoto Economics Journal. Ionut has been part of the core team that developed and nurtured the idea of Alpha products since July 2008. A real gentleman with a kind disposition, Ionut’s understanding of markets and finance comes from his decade long experience as a professor of Corporate Finance. Currently he is pursuing his post doctorate studies at Kobe University in Japan. He is fluent in Japanese, Romanian and English and plays multiple roles at Orpheus. He is the academic consultant for Orpheus, assisting us in taking many of our ideas to the academic world. He also handles Alpha Romania and Alpha Japan. You can follow his work on Time Triads, linia de trend blogs and soon on the SSRN (Social Science Research network).

The Bric Model from a Japanese Perspective
Ionut Nistor - Econohistory
Alpha Romania

Performance cycles is a term coined by Orpheus Capitals. This is another name for time triads, time arbitrage, time fractals but expressed in terms of relative performance. It’s a bounded oscillator that moves in a range say from 1 to 30. 1 is top relative performance and 30 is worst performance. The idea is that performance is cyclical. A top performer will underperform in future and vice versa. A top relative performer is also the worst value pick and the top relative underperformer is the best value pick.

Coverage: Central and Eastern Europe Indices, Romanian Indices and Stocks, BETXT, BETXT components, SIF5 Futures, DOW Jones


The BET Cycle

Jiseki cycle’s job is to tell us whether the performance is negative or positive. The BET Jiseki cycle is still near 65% and pointing lower. We have no signs of reversal. And inability to find supports at current levels would suggest further negativity across the financial sector. The latest report carries the ranking of top Romanian stocks. TLV, SIF3 and BETFI are the worst, while the other Financials are above 50% and still expensive according to quarterly rankings. BRD is the most expensive financial stock.

Enjoy the latest early economic report.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Relative Performance

Relative Performance is the indicator which suggests how a certain asset is behaving compared to the index. It means that if BETXT has moved up 5% and COMI has moved up 2% then the relative performance of COMI vs. BETXT is -3%. A falling relative performance for COMI vs. BETXT suggests that COMI is still underperforming compared to BETXT. While Aerostar suggests the stock is rising compared to BETXT. If a stock outperforms the index, it is a sign of strength.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Time for bounce

This could be a good time for multi day bounce. The quality of the bounce would tell us whether the worst is behind us or there is another leg down. We have already talked about oversold valuations in Romania compared to the some of the other global markets. Don’t be surprised if the bounce back is sharp. Oversold markets have a tendency to bounce fast.

There are other reasons why this could be good trading bounce. First, the previous lows have been retested. Second, prices have reached key Fibonacci retracement supports. 61.8 percent retracement support from 2009 lows to 2010 highs are key support levels. A bounce from current levels could be good entry points for multi months. Let’s review the respective levels closely.

Enjoy the latest early economic report.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Oltchim worst to best

Oltchim has moved a complete circle from the worst ranking stock to the best ranking stock. The stock took off from Sep 2010 lows at 0.2 to 2011 highs at 2.33. The moment the stock reached top ranking it reversed direction. The latest Alpha illustrated various topping and negative Jiseki cycles for the late economic components like Petrom, TGN, TEL etc.

The late economic energetic components are still top ranked. This suggests that energy as a sector allocation might continue to underperform the rest of the market.

Enjoy the latest Alpha Romania.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Why is valuation inverted?

On one side an investor may not insist for profit before valuing a company on or off the stock market. At the height of the boom, it was possible for a promising dot-com to make an initial public offering (IPO) of its stock and raise a substantial amount of money even though it had never made a profit or, in some cases, earned any revenue whatsoever.

The other side we may have good profit making companies dirt cheap with no buyers. Price by book is a way to measure how much is a company worth in cash. Five companies from American DOW 30 are below Price-Book ratio of 1. While Romanian market undervalues19 out of 25 BETXT companies (75%).

Market does not always undervalue stocks, it also errors on the overvaluation side and it does it cyclically. Cycle of error corrects and just like everything else the worst valuations deliver. However, only few understand this repeating error like Warren Buffet who invested $ 5 billion in the worst ranked Bank of America with a P/B 0.335, which is less than most Romanian stocks.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Why is BRK the worst Romanian stock?

When we say worst we talk about 1000 global assets. On a half yearly basis Broker has performed the worst among the group. A poorest performance pushes a stock into low ranking. And since the rankings keep changing we have a Jiseki cycle. The chart illustrated here showcases how BRK is struggling at the bottom attempting to move up. Now this is where the light at the end of the tunnel. If a company remains in the group and is below 20% statistically it has more than 60% chance to come back to growth and perform for its shareholders and contribute to market growth. There is another reason for BRK to be so low, brokerage companies deliver the least performance in a bad market. So if the stock market is down, brokerage companies need more than speculative strategies to hedge a stock market fall. A brokerage company that delivers in a falling market understands risk and manages it well. This does not seem to be the case for BRK. But nevertheless this is one stock that should shoot up when market is ready to reverse direction. And irrespective of the level of innovation that is the time BRK should be in your portfolio. Currently the financials still seem to be bottoming with a negative bias. We need further upmove to look for a sustained multi week reversal.

Enjoy the latest early economic report.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Why is ATB the best Romanian stock?

There are a few reasons. First, the Price to Book ratio of the stock is below 1. So it’s worth more in cash that the price it’s trading for. One would say that’s true for many other stocks in the market today. Let’s look at some more reasons. The stock Beta (a measure of sensitivity compared to the market) is also below 1. This makes the stock less volatile. Hence not a darling of speculators who seek fast gains. Less than 1 beta stocks are for investors and for risk reduction in portfolio. Third, Jiseki cycles are coming out of the worst ranking.

Any stock at such low rankings is already at it’s worst and a high potential accumulate. Fourth, technically it looks like a bottoming stock till it remains above 0.4. These are key Fibonacci retracement supports that should hold. The latest alpha carries the late economic stocks, unlike the ATB and TGN not many other late economic utility stocks look bottoming. BETNG Jiseki is still negative and SNP and RRC still have more negativity lying ahead.

Our Jiseki Time cycles are seasonal patterns of strength or weakness in assets. They are derived from percentile rankings of 0 to 100. The higher the percentile more the chance for an asset to weaken and worst the ranking, better the chance for the respective asset to outperform.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


The frantic call index - II

We received a few calls last few days owing to our bold buy call starting SEP. There was a distinct disbelief that we were looking at a positive turnaround soon. Apart from the various reasons we gave regarding accumulate, the late economic stocks, ATB and BIO both seem to be completing corrective countertrend structures that should resolve higher. Strange as it may sound, a positive structure on pharmaceutical stocks does not lead to a negative bear but an emerging bull. Till ATB and BIO break 0.4 and 0.15 distinctively there is no bear for the pharmaceutical stocks. Enjoy the latest late economic sector update.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.


Alpha Romania - Time to buy

After most Romanian Indices fell 90% from 2007 highs, we screamed In March 2009 suggesting a great buy opportunity. We wrote about march reversals, we wrote about Oct bottoms and we tried to convince most of our readers and investors that markets don’t go to negative and 90% cheap was a great accumulation time. Of course for those of us who were watching us in 2007 would also remember our sell calls near historical tops at BETFI 95,000. A few reasons, the current market levels are great opportunity to accumulate and buy for a 300-400% return in a few years.

A few reasons. 1. Humans will speculate and fight till the time they live. So even in the worst crisis, there will be people speculating on a market price. There will always be people who differ in their value perceptions of the market and in their judgment whether the world is coming to an end or not. There will always be a section of speculators who will bet against the world coming to an end and buy. This is why markets exist. 2. Contrarian investments are known to fair better than momentum investing. Though it’s harder to be a contrarian, as one has to wait longer for opportunities. But contrarians make more money than momentum investors. It’s a know fact. 3. There is no better time to be a contrarian, when majority is extremely negative. As is the case now. Majority feels that we are getting into a secular bear market. Moreover since markets are already near 90% from 2007 tops, the valuations could not be more attractive. Unlike a momentum investor a contrarian knows well that markets can’t fall below zero. 4. The current market price structure suggests that prices have reached all time historical supports (Illustrated Charts). We don’t think BETFI will break 15,619 low. We think the multi year low is already in place. And it’s time to buy SIFs and most of the blue chips. 5. A contrarian buys with a larger holding period and knows that there is nothing called a perfect bottom. 6. Investors who look at DOW JONES and the problem regarding US deficit should understand that though we are in an interconnected market, market indices have different performances, and while Romanian BETFI moved up 300% from 2009 lows to 2010 highs, DOW JONES just moved up less than 90% over the same time. So market performances and macro economic drivers are always different over the longer multi month term. 7. We also mentioned this prior. Emerging markets like Romania can give cues regarding direction of global equity. We continue to look higher on Romanian equity and global equity. Accumulate and buy this market. Multi year reversals are around the corner, as early as September 2011. Next week we will look at individual blue chips and their relative rankings and Jiseki cycles.

Alpha is a daily strategy signal product that gives trading and investment signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. Alpha is a part of the time triads analytics developed by Orpheus Research.

Coverage Romania: Romanian stocks, Indices and currency.