On May 29, we wrote a post on Linkedin – ‘You can Bank on it.’
“We analyse every stock on value, risk, momentum and then using the Apollo investment process, aggregate up to give the sector perspective. It’s transparent, it’s repeatable, and it’s signaling a shift (in favour or the banks sector.)
“Financials have been out in the cold and laggards. They’re next.”
On that day, the S&P Financials index (S5FINL) stood at 856 and as of last night’s close it’s 957 which is close to 12%.
During that period the US banks have reported record breaking results and UBS has backed that up today. If ever the stars were aligned..
Let’s be clear what we do and have been doing for many years, which is unique and why we can make the successful and repeatable calls and comments that we do.
Twenty years ago we created Apollo.
We do Macro from the bottom up. Sector and market views are expressed by the aggregation of company Value, risk, volatility and the signals and indicators at a single stock level and that gives a unique perspective on sectors that cannot be found elsewhere. We provide the Need to Know moments.
Making stock calls is good. Making the big calls on sectors and markets, is the game changer.
Once Apollo has played its part, investors can complete the picture with their own analytics, theories and valuation metrics. In the original post, we took the opportunity of painting that picture. The combination of Apollo and reality was extremely compelling.
The chart below shows the Apollo Fair Value range for the S5FINL which shows the sector trading in the upper boundary of a rising FV range and below, shows the progression from a massive discount to FV, that we were highlighting to a meaningful and historically high premium that we see today. Positive sentiment and momentum.
From here on in, the next move could be to dig back into the individual stock names and see whether profit taking might we warranted, reversing the ‘from the bottom up’ process.
Some people like to play down ‘timing’ but there’s a reason for the well known saying that ‘Timing is everything.’