IBKR Quant Blog


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Macro

Interactive Brokers Asset Management - The Beauty of Staying the Course


“Really, what matters, in the long run, is sticking with things and working daily to get better at them.”– Angela Duckworth

When you’re growing up, parents or teachers occupy your time with activities that may seem trivial but are actually valuable.

For example, they might give you word puzzles to learn how to distinguish a pattern and follow it.

Playing competitive sports can also sharpen one’s strategic sense as we experiment with different match-ups to improve the chances of winning.

 

Strategic Patterns

When one researches the history of successful companies, there is often a strategic pattern underpinning how the organization works.

For investors, it’s crucial to understand what has worked and why, when making individual stock calls.

When it comes to portfolio management, the idea of sticking with what has worked is a subject of considerable debate in the investment world.  

 

Rebalancing

The concept of rebalancing, or taking some gains from your winners so a portfolio’s value is not concentrated too much on one or two holdings, is as a standard operating procedure for most fund managers.

Interestingly, fabled investors Warren Buffett and Charlie Munger disagree.

They believe that selling positions which have appreciated makes no sense, regardless of how much concentration they represent in a portfolio.

 

Takeaway

In my opinion, investors are fortunate to own a winning stock, so holding on and sticking with what works is usually the strategy I would advocate, with the caveat that each situation is different.

Many clients get nervous if one position is too much of their portfolio’s total value.

Regardless of how one approaches the portfolio management issue, sticking with what works is high on my list, just as Mrs. Duckworth wisely noted.

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Yale Bock manages the Concentrated GARP and Long Term GARP portfolios offered by Interactive Brokers Asset Management, an online investing marketplace and a division of Interactive Brokers Group. He is also the founder of Y H & C Investments, a registered investment advisor.

This material is not intended as investment advice. IBKR Asset Management or portfolio managers on its marketplace may hold long or short positions in the companies mentioned through stocks, options or other securities.

This material is from Interactive Brokers Asset Management and is being posted with Interactive Brokers Asset Management’s permission. The views expressed in this material are solely those of the author and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

Interactive Brokers - Brief Market Commentary with Steve Sosnick - February 19, 2019


Interactive Brokers chief options strategist Steve Sosnick discusses market activity for February 19, 2019.

 

Produced February 19, 2019

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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actions

Bullseye Brief - Shenanigans or No Shenanigans


Week of Feb 18, 2019

 

Portfolio Changes

Motorola Solutions, Inc. (MSI) - SELL - Exceptional earnings performance and a strong outlook boosted the stock

15% on a single day two weeks ago… evidence Motorola management is executing exactly to plan. Shares are within

$2 of my target, so I’m booking a long-term gain on half the position and will look to work the balance higher.

 

Palo Alto Software (PANW) - SELL - Shares have risen 40% in eight weeks, and now trade within $3 of my $230

target. I love the company, but am shifting into sell mode on the stock. As I noted in my “2019 Outlook” several weeks

ago, rising volatility necessitates trading more tactically this year.

 

Qualcomm Inc. (QCOM) - POTENTIAL ADD - I may add to my small position, depending on the verdict in QCOM’s

non-jury trial against the FTC for alleged non-competitive behavior. If the judge rules against Qualcomm and the

stock drops precipitously, I will probably buy more. This is a long-term play on 5G, not a short-term trade around

litigation.

 

20-Year Bond ETF (TLT) - POTENTIAL COVER - I am short the TLT in anticipation of an eventual return to higher

inflation. That’s clearly not happening at the moment, but I do think the 10-year yield has overshot at 2.66%. I will look

to cover when the yield recedes to 3%. Note that I have moved the target to $116 from $113. TLT is about $122 currently.

 

United Rentals, Inc. (URI) - BUY - I established this new position about $1.50 above my buy zone because the

market opened higher last Monday morning, and I don’t want to quibble over a great company trading at 7x earnings.

My position is smaller than I’d like, but at least I have a toehold.

 

 

Picks Making News

 

Applied Materials, Inc. (AMAT) - Earnings disappoint, but the stock only slips 4%. I think the market assumes 2Q will

mark the bottom of the semiconductor cycle, which is why shares have actually risen 40% from the December low.

Such forward optimism feels a little weird, but it’s happening across the entire sector. I am also long Nvidia, NXP,

Qualcomm, and Qorvo.

 

Aptiv PLC (APTV) - Added to Goldman’s Conviction Buy List on the exceptional growth opportunity associated with

being a first mover in electric vehicle harnesses and control systems.

 

Aveo Pharmaceuticals, Inc. (AVEO) - The company is presenting this weekend at ASCO, and while I don’t expect any new revelations, the presumed attention may rekindle some degree of hope amongst the analyst community. That said, this stock is probably stuck below $1 for the remainder of 2019… I may sell my position to clear my head.

Allowing the trial to run through yearend could potentially demonstrate an improved Overall Survival rate (OS), but

the risk is that the Hazard Ratio (HR) of patients who die during the trial also rises, possibly at an even higher rate.

Sadly, these are very sick people suffering from a horrible disease, and many have failed previous protocols. I am

disappointed by the data. I am even more sorry for patients who desperately need a solution.

 

CVS Health Corp. (CVS) - Rolls out its first wellness centers in partnership with Aetna, which it recently acquired.

These facilities feature health clinics and yoga rooms attached to traditional pharmacies, potentially providing a much

needed model for preventative care and lower cost treatment.

 

Deere & Company (DE) - Earnings miss and guidance disappoints, but the stock only falls 2% on the assumption

pending trade resolution with China will provide clarity and restore upside. Deere has been within 3-4% of my $170

target for weeks. I will sell half when it gets there, presumably after Trump and Xi announce a deal in March. I may

even sell a tad next week to get my head in the right place.

 

Nvidia (NVDA) - Stock rallies 7% as the company beats earnings estimates and offers an upbeat outlook. I bought

this one in the hole… and so-far-so-good… but I admit I’m a nervous long. I’m betting on a bottoming of the

semiconductor cycle in 2Q, followed by an acceleration into the second half of the year. Now they have to deliver.

 

Trader Talk

 

I am having a very good year… maybe too good. On average, Bullseye positions are up 13.5% YTD. This is

wonderful news, but an annualized return of 107% is certainly not sustainable. No one is that good. I’ve said several

times that last year’s excessive volatility makes me inclined to think more tactically this year. My typical Buy & Hold

approach may be less appropriate in 2019, which is why I’m lightening up several positions as they approach their

targets. In years past I’d have held firm and waited for my number. This year I’m being more flexible, especially since

rallies don’t last forever. I do believe the US stock market has room to run, and that economic expansion will last

longer than many expect. I’m also a pragmatist. Putting some profits in my pocket now feels prudent.

 

Our Week Ahead

 

Monday

• Shenanigans - US markets are closed for Presidents Day. Go skiing and have fun.

• No Shenanigans - The House and Senate are on recess this week.

• Hoping No Shenanigans - The US and China resume trade talks.

• Earnings - RIG

 

Tuesday

• I Wonder - An ECB-sponsored event begins in Brussels… The Euro at 20 and its Road Ahead.

• EU Data Deluge - German investor confidence, Italian industrial orders and UK jobless claims

• Earnings - DVN, HST, NBL, WMT

 

Wednesday

• What’d They Say? - FOMC minutes from the January meeting, when Chair Powell began to sound dovish.

• Da - Vladamir Putin delivers his semi-annual State of the Nation address.

• More Debate - EU ambassadors discuss… wait for it…Brexit.

• Earnings - GRMN, NI, SNPS

 

Thursday

• Any Buyers? - Durable Goods Orders are expected to rise 1.8% MoM, the most since last August and potentially a

welcome sign of strength after last week’s plummeting retail sales data.

• Rebound - US Manufacturing is expected to rise for a second consecutive month after several months of declines.

• Earnings - BYD, DLPH, NEM, PWR, WEN

 

Friday

• Back at the Farm - The USDA issues its 2019 crop outlook.

• Bankers on Parade - Five Regional Federal Reserve Presidents speak in New York at an event sponsored by

Chicago’s Booth School of Business.

• Warren Watch - Mr. Buffett releases his annual letter to shareholders on Saturday morning, though the media will

likely offer a sneak peak sometime Friday.

• Earnings - None

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The author holds long positions in ALB,AMLP,BABA,MO,AMAT,APTV,AVEO,BAC,OZK,BWA,CVNA,FXI,CMTA,CVS,DE,FB,FOX,F,FTAI,FCX,3606 HK, IBKR, DXJ,GDXJ,LNR CN,MSI,NOK,OBSV,QRVO,KRE,CRM, 005930 KS,SFTBY,TDOC,TOCA,TIP,WIW,TLT short, UNH,WB,WTW,ZYNE

Bullseye publishes three new, actionable stock ideas every two weeks. On the off-weeks there’s a Sunday night Roadmap for the Week Ahead and Wednesday podcast.

Founder & Author Adam Johnson traded equities and oil for 20 years at Merrill Lynch, Louis Dreyfus and ING. He also anchored two shows daily at Bloomberg Television during the financial crisis.

Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment.

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Bullseye and is being posted with Bullseye’s permission. The views expressed in this material are solely those of Bullseye, and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. 


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Securities Lending

Interactive Brokers - Securities Lending Report 2/12/19 - 2/18/19


Sectors vs Short Positions

 

 

SLB Update: Largest Short Values

The following chart shows the 15 largest short values on February 15, 2019.

 

 

SLB Update: Highest to Borrow

The following chart shows the 15 highest borrow fees on February 15, 2019.

 

SLB Update: Hardest to Borrow

The following table shows the 15 hardest to borrow securities during the week of 2/12/19-2/18/19.

 

ETF Shorts vs Non-Shorts

 

 

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Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment.

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


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actions

Wall Street Horizon - Weekly Corporate Event Highlights


Staying on top of corporate events is critical for any investment firm. Academic research has shown that events, as well as event revisions can affect volatility.  Below are examples of how some events can influence stock price: 

 

  • Earnings dates:  Studies have shown that when a company moves a date forward from the expected earnings announcement date, they tend to beat expectations and when a company moves a date back, they tend to miss expectations.
  • Conference calls:  Some analysts believe moves in a stock after an earnings call are often counterintuitive to the earnings release.
  • Conference presentation: Cancellation of presentations at investor conferences is often considered a negative trigger for company shares.
  • Movie or material Release: Similar to other events, a delay or postponement of the release date may have a negative effect on the price of the stock and cause volatility.

 

Weekly Corporate Event Highlights

Following are the selected events from Wall Street Horizon impacting the most widely held securities scheduled for this week. For more info on Wall Street Horizon corporate event dates, please click here.

 

Mon 2/18/2019


Nippon Telegraph & Telephone (9432_JP):  Presenting at NANOG (North American Network Operators Group) 75

 

Tue 2/19/2019


Novartis (NOVN_CH): Citi's 7th Annual IO Leadership Summit 2019

Wal-Mart Stores, Inc. (WMT): CONFIRMED Next Earnings Date for Q4 2019

Johnson & Johnson (JNJ):  Presenting at Consumer Analyst Group of New York Conference (CAGNY) 2019

Equinor ASA WW (EQNR_NO): Ex-date for  Quarterly dividend of $0.230

Wal-Mart Stores, Inc. (WMT): Same store sales report date for Q4 2019 CONFIRMED

 

Wed 2/20/2019


United Technologies Corp. (UTX):  Presenting at Barclays Industrial Select Conference 2019

NICE Ltd. (NICE):  Presenting at Call Center World (CCW) 2019

3M Corp. (MMM):  Presenting at Citi Global Industrials Conference 2019

CVS Health Corp (CVS): CONFIRMED Next Earnings Date for Q4 2018

Altria Group Inc. (MO):  Presenting at Consumer Analyst Group of New York Conference (CAGNY) 2019

Microsoft Corp. (MSFT): Ex-date for Quarterly dividend of $0.460

CVS Health Corp (CVS): Same store sales report date for Q4 2018 CONFIRMED

 

Thu 2/21/2019


CSX Corp. (CSX):  Presenting at Barclays Industrial Select Conference 2019

Caterpillar Inc (CAT):  Presenting at Citi Global Industrials Conference 2019

The Kraft Heinz Company (KHC): CONFIRMED Next Earnings Date for Q4 2018

Danone (BN_FR):  Presenting at Consumer Analyst Group of New York Conference (CAGNY) 2019

Honeywell International Inc. (HON): Ex Date for  Quarterly dividend of $0.820

NextEra Energy, Inc. (NEE):  Presenting at Wolfe Research Smart Ideas 1x1 Conference 2019  

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About Wall Street Horizon

Wall Street Horizon provides traders, portfolio managers, IROs, academics and others an ever-expanding set of forward-looking and historical corporate event datasets, including earnings dates, dividend dates, options expiration dates, splits, spinoffs and a wide variety of investor-related conferences. With access available via machine-readable feeds, the Enchilada web-based application and a growing network of third-party channel partners, the company's data is widely recognized for its unmatched accuracy and timeliness. For more information, click here.

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Wall Street Horizon and is being posted with Wall Street Horizon’s permission. The views expressed in this material are solely those of the author and/or Wall Street Horizon and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Informations complémentaires

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