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my Brexit shopping list ?3
12:53 24-Jun-16
By and large most equities haven't gone on sale to the extent I'd hoped for, but I suppose that is consistent with the attitude I've espoused on Brexit from the beginning. There are a few, though. Here they are, along with some thoughts:
- ERII: I've already said plenty here. I doubt the
effects of Brexit will linger in stocks, but they will in the
Euro and the U.S. Dollar, which implies lower nominal oil prices
as well. So, it's worth reiterating that patience will be
required, but I think the upside from milestone achievement
outweighs the risk of further short-term mis-pricing.
- WPRT: Some subscribers have asked me about the recent
price trend here. My only answer is that thinly traded stocks
are often moved by private needs that have nothing to do with
the outlook. Similar to ERII, extended low natural gas prices
will actually be a boon for Westport. There's still plenty of
execution risk, of course, and no quantification until
management gives an update for the combined company.
Nonetheless, whereas I was lukewarm, at best, about the stock
price in my initial writeup, I now think the time may finally be
right near all-time lows.
- IDTI: Integrated Device has probably the best
technology portfolio of any stock I cover making it a solid
long-term option. I recently commented on little value being
left in the stock, but it has now declined more than most
others, and enough to re-ignite my interest. It's easy to
imagine that IDTI can outpace any market rebound, making this a
potentially good entry point
These are in addition to BGCP and MX, which I've thought were
great values all along. Market declines continue to exceed
Euro/USD declines, in what looks to me like a transfer of capital
from those who were foolish enough to think that last night's vote
was a foregone conclusion. I continue to see that as a short-term
phenomena for U.S. stocks, and bargains in such a situation often
peak in the final hour of trading, especially on a Friday. That
doesn't rule out some carryover beyond today, but I am willing to
cautiously take advantage of what I believe will prove to be some
good long-term entry points.