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Laxman Pai, Opalesque Asia: Adverse conditions unlock opportunities for special situations, which have remained active buyers, said Lyxor in its weekly brief.
Since President Trump's tweets, U.S. activists launched no less than 40 new campaigns. Details reveal interesting investing patterns.
First, managers mainly targeted the more isolated mid and small caps segments. "While the credit and governance quality of these companies appear weaker than in large caps, we find that the majority boasts a favorable revenue and profit growth mix. Managers have typically avoided riskier deep turnaround or distressed situations," said Lyxor.
Second, managers concentrated on a selective set of industries, such as energy, industrials and consumer discretionary, and on companies with a hard catalyst. For instance, in energy, the concentration of insufficiently profitable E&Ps remained dominant.
In the consumer segment, the reshuffling of the media content industry was a key theme, where the concentration in large caps is expected to extend to smaller players. In contrast, there were few additions in healthcare and technology, sectors that are both facing heavy political uncertainties.
Third, managers tended to focus on companies attractively priced relative to their large or small mainstream peers. While returns from these new positions have proved to be mixed so far, weak market conditions unlocked more opportunities.
Fourth, the objective of these new campaigns ...................... To view our full article Click here
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