INSTITUTIONAL PRESENTATION 2020 We are independent We are - - PDF document
INSTITUTIONAL PRESENTATION 2020 We are independent We are subscription based, pure investor-pay model. No financing/banking relations with issuers. We hold c.32% of negative opinions vs 18% for other research providers. % of negative opinions
2020
We are subscription based, pure investor-pay model. No financing/banking relations with issuers. We hold c.32% of negative opinions vs 18% for other research providers.
Source : BLOOMBERG Data : as of 15th November 2019
by number of Stoxx600 stocks covered with a negative opinion
15% 18% 17% 15% 17% 10% 32% 20% 21% 6% 13% 14% 15% 25% 17%
The Thomson Reuters Analyst Awards are recognized as the gold standard in objective measurement
They measure the performance of sell-side analysts based on the returns of their buy/sell recommendation relative to industry benchmark. Extel conducts market studies across all three sides of the European Equities investment community, delivering a comprehensive range of rankings. The Extel Survey is the largest study of its kind worldwide, with over 11,300 participants casting more than 906,000 votes.
Year Award 2019 #2 Top European Independent Equity Research Provider 2018 #2 Top European Independent Equity Research Provider 2017 #1 Top European Independent Equity Research Provider 2016 #1 Top European Independent Equity Research Provider Year Award 2019 8 2018 17 2017 22 2016 10 2015 10 2014 7 2013 13
Founded in 2007, AlphaValue has become the world’s leading provider of Independent European Equity and Credit Research, helping money managers to generate ideas and assess the risks and opportunities within their mid to large cap portfolios. Our team of 30 leading analysts covering 464 stocks across Europe including 60% of the Stoxx 600, use a proprietary valuation model to provide a disciplined, consistent research framework. Proud of our independence – With no execution business or financing/banking relations with issuers, our recommendations are agnostic buy vs sell, with an average of 32% of sell recommendations, at any one time.
AlphaValue stands amongst the leading European equities research houses in terms of STOXX600 coverage
As of November 15th 2019 – research update less than 6 months old
459 434 418 409 407 387 386 384 369 369 345 325 322 278 218
Data as of November 9th 2019 17 105 164 69 30 6 1 3 1
AAA AA A BBB BB B CCC CC C DDD
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FINANCIALS David GRINSZTAJN UK & LATIN BANKS banks@alphavalue.eu Christian AUZANNEAU PROPERTY property@alphavalue.eu Farhad MOSHIRI FRENCH & SCANDI BANKS banks@alphavalue.eu Dieter HEIN FINANCIALS banks@alphavalue.eu Bassem NEIFER INSURANCE insurance@alphavalue.eu Jorge VELANDIA HOLDINGS
DEEP CYCLICALS Kevin VO INTEGRATED OILS
Fabrice FARIGOULE STEEL & STEEL PRODUCTS metalsmining@alphavalue.eu Varun SIKKA PAPER, METALS & MINING metalsmining@alphavalue.eu Martin SCHNEE CHEMICALS chemicals@alphavalue.eu Yi ZHONG AIRLINES transport@alphavalue.eu SEMI CYCLICALS Luis PEREIRA CAPITAL GOODS capitalgoods@alphavalue.eu Hugo PATERNOSTER AEROSPACE aerospace@alphavalue.eu Félix BRUNOTTE BUILDING & CONSTRUCTION building@alphavalue.eu Ankush KATHURIA SUPPORT SERVICES supportservices@alphavalue.eu CONSUMER DURABLES Hans-Peter WODNIOK AUTOS & STEEL autos@alphavalue.eu Nishant CHOUDHARY RETAIL retail@alphavalue.eu Jie ZHANG LUXURY retail@alphavalue.eu Mohit RATHI NON FOOD RETAIL nonfoodretail@alphavalue.eu DEFENSIVES Laura PARISOT FOOD food@alphavalue.eu Rishabh Kochar PHARMA pharma@alphavalue.eu Auguste DERYCKX LIENART UTILITIES utilities@alphavalue.eu Jean-Michel SALVADOR TELECOMS telecoms@alphavalue.eu Sejal VARSHNEY CONCESSIONS concessions@alphavalue.eu Virendra CHAUHAN HEALTH health@alphavalue.eu Surbhit GUPTA PHARMA pharma@alphavalue.eu GROWTH Hélène COUMES SOFTWARE software@alphavalue.eu Sumit SAYAL HEALTHCARE health@alphavalue.eu Veronique CABIOC’H MEDIA media@alphavalue.eu
Pierre-Yves GAUTHIER Head
What kind d of f infor formatio mations analysts ts are usin ing g fo for fu fundame damental ntal analysis is ? We hold the view that an analyst’s job is to start with careful and challenging reading of all material released by a given corporate, fill up a demanding spreadsheet focused on tracking down cash generation, use strict and transparent valuation processes, and then, and only then, put "on paper" the key words summing up her/his views. How stock
s recomm commend endations tions are are bu buil ilt ? Recommendations are geared to a “value” approach. Recommendations are based on target prices with no allowance for dividend returns. Valuations are computed from the point of view of a secondary market minority holder looking at a medium term (say 6 months) performance. A stock with a target price below its current price should not and will not be regarded as an Add or a Buy. How do do you de dete termi mine ne fu fundame damental ntal ups pside ide ? Valuation processes have been organized around transparency and consistency as primary objectives. Stocks belong to different categories that recognise their main
the valuation techniques are the same and in relation to the financial data available. What is is trigg gger ering ing an analyst upd pdate e ? New earnings steams, obviously but just as well business models changes What is is the e Price ce Mome mentum ntum indicator dicator ? Momentum analysis consists in evaluating the stock market trend of a given financial instrument, based on the analysis of its trading flows What is is the e Funda dame mental ntal Strengt ngth indic dicator tor ? The "Fundamental strength" is a quantitative and proprietary indicator built on our financial data and metrics, which aims to qualify a qualitative rating for each stock from 0 to 10 (best rating). This is a long term view What is is the e metho hodo dolog logy fo for the Credit dit Risk indicator dicator ? The cash flow driven equity research of AlphaValue concludes simultaneously to an equity view (Recommendation) and to a Credit Risk view that relies on rating agencies
recommendations
On On-goi going ng cont ntro rols ls Each new report is flagged to research management with all changes to eps, DCF, NAV and target price for the equity side of the equation, and all credit research metrics (quantitative and qualitative) for the risk side. System rules will shift to an ad-hoc track research showing significant changes and/or insufficiently explained items. Such research may end up being recomputed/rewritten. Buil ilt-in in qu quality ity warnings ngs Management of research will be warned daily about shifts in recommendations (whether coming at the analyst initiative or sudden market shifts), and on a weekly basis about extreme cases (upsides/downsides of more than 30%), changes in share price momentums. On a monthly basis, deleveraged sector beta will be recomputed with big changes highlighted Mode delling lling Modelling is strict to the extent that the cash generation anticipated through the fund flow statement eventually drives next FY equity and the net debt so that modelling integrity is strong. Valuation procedures are strict as well with peer metrics only relying on AlphaValue researched peers and DCF computations leaving only corporate debt spreads and out year growth as degrees of freedom. SOTP/NAVs are recomputed daily when assets are listed. Examples: ples: Valuation tion of f a non n Financia ncial l (Sartorius
dim)
AlphaValue contribution to comply with “Section 11.6 : Use of dealing commission” of COBS’s chapter 11 : “Dealing and managing” (source : https://www.handbook.fca.org.uk/handbook/COBS/11.pdf) To be considered as substantive a research, the relevant research must: “Be ca capable able of
dding valu value to to the the in invest stment ment or
trading ading dec decisi ision
by providing roviding ne new insight insights th that at in infor form th the inve vest stme ment nt manager ger when hen making ng such ch decisions isions about
mers' port rtfo folios lios.” AlphaValue’s primary insight is to be independent and agnostic thanks to its flat fee payment system so that AlphaValue views are never driven by commission flows. AlphaValue has been meeting MIF2 requirements since 2008. The proof is the proportion of negative recommendations (30 to 55%) which are an order of magnitude above brokers’ average. AlphaValue being essentially a web based service is consistently updated when it comes to target prices and thus recommendations. AlphaValue does not leave a piece of research unattended with historical recommendations completely at odd with market developments. The other proof is the success of recommendations as measured by BARR metrics. They point to remarkable effectiveness way above alternative broker research. AlphaValue’s disciplined research and valuation procedures mean that it outperforms its brokers competitors when it comes to picking up the right stocks in a consistent
research process where all recommendations can be reversed engineered and backtracked. This discipline pays in achieving robust and sensible investment decisions. “Whatever form
its output utput take akes, s, repres epresent nt or
iginal tho thought, ught, in in the the cr criti itical al and and car careful eful con
sideration ration and and asse assessme ssment nt of
new and and exist existin ing facts, cts, and and must must not
rely repea epeat or
repack ckag age what hat has has bee been pre rese sent nted ed befor fore.” A most fundamental point of original thought is AlphaValue’s independence from commission flows. Its economics are driven by being competent again and again not by capturing commissions (that are mostly
AlphaValue is viscerally attentive to only bring proprietary views to its clients. It only buys price quotes as external data and entirely relies on its own assessment of listed corporates and their environment for its research processes. All the data is proprietary as is the software designed with the objective of providing clean research. All the thorough analytical steps are the product of AlphaValue’s analysts being asked to rejig all accounts to make sure that the cash generation dimension is highlighted. The strict processes make it impossible to skirt such demanding calculations as pension risk exposure or qualitative matters such as the true independence of a board member. “Have intel telle lectu tual rigou
must not
rely state te what at is is common monpla lace ce or
elf-evide dent nt.” Every piece of research or update thereof is the written result of an exacting accounting and valuation process that forces analyst to be loud and clear about why they changed their forecasts and thus valuations. Although valuation methodologies are mainstream the way they are forced upon the analyst is not, so that there cannot be a case of simplifying / shortcutting research. On top the research is available through a completely transparent web site where all the research can be rejigged and cross checked so that there is considerable value added in read-acrosses. It is deemed impossible to replicate those combinations of data if that data is not consistent and if the analytical tools are not designed with a background of considerable experience. “Present the inve vestment tment manage ger with meaningful aningful conc
lusions ns based ed on
lysis is or
pulation ation of
This points ensues from the previous observation. AlphaValue’s views on stocks can be extremely directional and contrarian but always with the proper backing with figures. They are all actionable as AlphaValue
AlphaValue has arrangements in place with the following firms to facilitate payment for services : Barclays, Bernstein, Bloomberg Tradebook, Carax, Citigroup, CM CIC Securities, Crédit Suisse, Deutsche Bank, Exane, Goldman Sachs, HSBC Bank Plc, Instinet, Investec, ITG, JP Morgan Securities, Kepler Capital Markets, Linear Investments, Liquidnet, Merrill Lynch, Morgan Stanley, Natixis Securities, Nomura Securities, SG Securities, UBS.
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