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Maltbie’s Minute on the Market: Selective Decoupling Ahead

For Singular Research's 2012 outlook, we see the broader market in a seemingly eternal tug – of war between countervailing forces, the fear of Euro contagion and decelerating EPS growth,
  • 1 min Read

By Robert Maltbie

Robert Maltbie Jr., CFA is the Chief Investment Officer and Portfolio Manager at Millennium Asset Management, and Founder of Singular Research. Robert has over 30 years of experience in money management. Manages/advises over $120 million in assets. Millennium is sub advisor for 40 Act Long- Short Equity Fund, which recently ranked in the top 2% of all funds in its category. This fund allows mutual fund investors access to top performing hedge fund expertise with innovative risk management strategies. Millennium is also GP to Argonaut 2000 LP. Fund, A top performing hedge fund with a strong nine-year track record of outperformance vs. most US domestic equity indices with only two down years. 
Robert Maltbie Jr., CFA is the Chief Investment Officer and Portfolio Manager at Millennium Asset Management, and Founder of Singular Research. Robert has over 30 years of experience in money management. Manages/advises over $120 million in assets. Millennium is sub advisor for 40 Act Long- Short Equity Fund, which recently ranked in the top 2% of all funds in its category. This fund allows mutual fund investors access to top performing hedge fund expertise with innovative risk management strategies. Millennium is also GP to Argonaut 2000 LP. Fund, A top performing hedge fund with a strong nine-year track record of outperformance vs. most US domestic equity indices with only two down years. 

For Singular Research’s 2012 outlook, we see the broader market in a seemingly eternal tug – of war between countervailing forces, the fear of Euro contagion and decelerating EPS growth, starting with Q4 negative Q/Q EPS comparisons with a backend of the year pickup vs. attractive valuations & corporate buy backs & mergers and acquisitions. Tomorrow, we’ll be highlighting some of the top names we like for 2012.

With EPS yields on the market sparking further equity retirement as strategic m & A will re-accelerate as the US economy decouples from Europe. We believe an improving employment picture will increase confidence, lifting money velocity from 30 year lows providing an upside surprise in 2012 GDP, possibly to a 3% growth level.

In the small cap realm, at present, the market appears fairly valued, as our longtime market proxy- New Horizons funds trades at 1.5x S&P 500 levels. Thus, selectivity will be rewarded and will favor growth over value in a slow growth environment with an eye on strategic takeover candidates. We are still finding growth at a discount as our median stock under coverage trades 11x our 2012 EPS estimate with a 7.6 EV/EBITDA and 22% expected EPS growth.

Disclosures: To read Singular Research’s important disclosures, click here.

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