Haymaker Friday Edition
Haymaker Friday Edition
In The Ring – December 15th, 2023
Thanks for the feedback!
Shutterstock
With the posting of our first “Chart Book” Haymaker on Monday, we asked for feedback about the new content format and for your thoughts on the value we try to deliver every week. What we received in return were well-considered, detailed, and even enthusiastic responses from many of you (much appreciated, by the way).
What we also received was confirmation that the chart book format is one we should and will definitely use for our Monday content moving forward. What we’ll likely do is provide two to three charts/content for all subscribers and reserve the next seven to eight for those on one of our two payment tiers. At least one of those in the paid section will include “Trading Alert” information to help guide our do-it-yourself investor-readers.
One thing we absolutely value as content creators is the feedback you, our subscribers, share in response to our work. Knowing that we’ll have 10 chart slots to fill every week from now on, let us know in the comments section from time to time if there are any sectors, asset classes, or particular stocks for which you’d like us to publish a chart and pertinent commentary. The Haymakercommunity is all the stronger with greater dialogue.
Today’s piece is a Friday Haymaker, which means the Champions, Contenders, and DFTC lists take center stage (and we’ve got some good stuff for you this week). Be on the lookout for the post which will take the form of our first officialHaymaker: Chart Book Edition!
Thanks again, have a great weekend, and be sure to share this piece with any finance-minded friends and colleagues.
David “The Haymaker” Hay
Evergreen Compatibility Survey
Getting Physical
Shutterstock
“(On) only 5 occasions (over the) past 90 years (has the) Fed cut rates when core CPI (now 4.0%) higher than (the) unemployment rate (3.7%).” -BofA’s Michael Hartnett
“‘It may still be a bit naive and premature to believe that […] we get through this rate cycle without any major accidents’ from someone other than us (in this case, Goldman Sachs’ stalwart Peter Oppenheimer).” -David Rosenberg
Thanks to my great friend Grant Williams, I’ve gotten to know one of America’s most successful money managers. Several years ago, this individual gave me an outstanding stock idea, one I purchased in my personal long/short portfolio. The company in question was Puerto Rico-based Banco Popular (BPOP). Less than two years after he outlined the bull case for BPOP it had nearly tripled.
Unfortunately, because it was headquartered in Puerto Rico, I felt it was too risky for client portfolios. Obviously, that was a mistake. In fact, he correctly believed that its PR location was actually a positive due to increasing U.S. government assistance, an influx of wealthy mainlanders seeking favorable tax treatment, and the emasculation of most of BPOP’s competition. He was spot-on with those points, as well.
After listening to a recent podcast Grant did with this individual (who has asked to me to leave his name out of this Haymaker) I emailed him asking for more information on the bullish ideas he shared during that chat. Being the gentleman he is, he readily agreed and we had an hour-long call on Monday reviewing those investment opportunities. It was a fire hose of great information and data, with me frantically typing away to memorialize his thoughts. As I was doing so, it dawned on me that many of you would like to read some of what he had to say.
The first area we discussed was auto insurance. He believes companies like Allstate are in a long-term recovery cycle after a severe profits plunge. The industry-wide problems occurred after the initial windfall the sector enjoyed during Covid. That was when accidents rates fell at an unprecedented clip due to the lockdowns. This caused them to cut premiums. However, once normal driving levels resumed, accident incidents soared. Making matters worse, the cost of replacement vehicles went ballistic. It was a nasty double-whammy but, as we’ve all experienced, auto insurance premiums have exploded. In some cases, they are exceeding the monthly cost of car loans.
Catastrophe losses also were high post-Covid due to a greater frequency of natural disasters, but this hurricane season was unusually benign. With losses falling off and premiums much higher, there does appear to be a new earnings up-cycle underway for the property/casualty underwriters. As recently as September, Allstate was bouncing around near $100. Since then, it’s up about 40%. Accordingly, while the bull case is strong it also looks to be well-recognized, as he admitted. Should there be a meaningful correction, this might be a place to commit some capital for those who like this story.
On a current action basis, he is a fan of two related companies. One is A-Mark Precious Metals, a gold minter (note the “t”, i.e., it’s not a miner!), broker, and retailer. They own JM Bullion, apparently America’s largest bullion broker. Previously, A-Mark had only been a wholesaler, selling gold to retail outlets. But now it has a significant direct-to-consumer business and has moved a considerable amount of its transactions online. …
Subscribe to Haymaker to read the rest.
Become a paying subscriber of Haymaker to get access to this post and other subscriber-only content.
A subscription gets you:
Subscriber-only posts and full archive | |
Post comments and join the community |
IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
David Hay shall have no responsibility for: (i) determining that any opinion, forecast, projection, risk assumption, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinion, forecast, projection, risk assumption, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinion, forecast, projection, risk assumption, or commentary discussed herein to any particular reader’s investment objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that David Hay has an advisory agreement, oral or otherwise, with any reader.
David Hay serves on the Investment Committee in his capacity as Co-Chief Investment Officer of Evergreen Gavekal (“Evergreen”), registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Evergreen in no way implies a certain level of skill or expertise or that the SEC has endorsed the firm or David Hay. Investment decisions for Evergreen clients are made by the Evergreen Investment Committee. Please note that while David Hay co-manages the investment program on behalf of Evergreen clients, this publication is not affiliated with Evergreen and do not necessarily reflect the views of the Investment Committee. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
20231216