Research Reports

In this edition, we explore the state of US auto market; margin of safety erased in US equity market rally; growing pains and growth in US equity market; and EOG Resources, Alnylam, and Pembina.

Based in Stuttgart, Germany, Mercedes-Benz Group makes premium and luxury passenger vehicles and commercial vans. Brands include Mercedes-Benz, AMG, and Maybach. Mercedes-Benz Mobility provides the company's dealers and its customers with vehicle financing as well as mobility services in ride hailing, car sharing, and charging. Mercedes owns 9.74% of Aston Martin and 9.55% of Beijing Automotive Group. Through Tenaciou3 Prospect Investment, Li Shufu, chair of Chinese automaker Geely, owns 9.69% of Mercedes-Benz. Other major shareholders include Beijing Automotive Group at 9.98% and Kuwait Investment Authority at 4.9% (6.8% before the sale of a 1.9% stake in March 2023).

U.S. markets were mixed on Friday intraday following yesterday's rally. Recent comments from Fed officials indicate that the timing of the first interest rate is likely to come later rather than sooner. On the earnings front, shares of Carvana (CVNA) are up 33% after reported its first profitable year. The Nasdaq fell 0.1%, the S&P 500 was up 0.13% and the Dow gained 0.3%. Crude oil fell $2 to $76.55 per barrel, while gold rose $17 to $2048 per ounce.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Insider Picks is a daily report that utilizes a proprietary algorithm to identify 25 companies with compelling insider purchase histories based on transactions over the past three months.

When it comes to researching earnings for the S&P 500, we think it makes sense to focus primarily on a few key sectors that can actually make a difference. As an example, the Real Estate sector, which accounts for about 2% of S&P 500 capitalization, contributed only 1% of S&P 500 EPS during the recent 4Q EPS period, which is starting to draw to a close. Basic Materials is another 2% market weight that generates a thin 2% of total earnings. We don't think clients should be spending a lot of time trying to get these sectors right. The groups that really make a difference are going to be Information Technology, which has accounted for 24% of the earnings, the largest contribution in a year; and Financial Services and Healthcare, which are expected to account for 17% and 14%, respectively. Perhaps not surprisingly, these are three economic sectors in which the United States enjoys competitive advantages versus other nations. At the next tier, the Industrial, Consumer Discretionary, and Communication Services all appear in line, with market-cap weights and earnings contributions in the 9%-10% range. We note that the Energy sector punches above its weight, accounting for less than 4% of total market capitalization but generating 6% of S&P 500 profits.

Apparently, what goes up can keep going up! Thursday was a monumental day for AI, the Technology sector, Nvidia, and the entire semiconductor space. NVDA's blowout quarter, again, sent the shares further into space, rising 111 points or 16.4% to another all-time high of $785. At the beginning of 2024, the stock was under $500, and in October 2022, it was trading down near $100. NVDA lifted the Nasdaq and the Nasdaq 100 (NDX) by 3% and the S&P 500 by 2.1%. It was the largest daily gain for the NDX and Nasdaq since February 2023 and the largest for the SPX since January 2023.

Nearly two months into 2024, stocks continue to perform well, yet insiders remain very cautious (as they have been for the past month). Insiders have unique views into their respective corners of the market, and their overt caution begs a question. Shouldn't stocks be pulling back if insiders are correct?