Monday, August 7, 2023

2Q23 Corporate Earnings (Update)

In advance: 2Q23 corporate earnings reports thus far reinforce sentiment for a soft (or no) US economic landing, evidenced in part by outperformance of Small- and Mid-cap factor-based strategies (ref. ETF benchmark proxies: PRFZ +4.4% 1-mo. total return, +17.2% 3-mos., +14.9% YTD23, as of 080423; SMLF +3.0%, +14.7%, +12.7%) relative to higher quality Large- and Mid-cap asset classes (QUAL: +1.5%, +12.0%, +20.7%) at interim-period points of inflection.

Core sectors represent a continuum of investable opportunities, amidst both evolving public policy and technological innovation, even across volatile economic cycles and subcycles. The Energy complex for example, bounded by Oil&Gas (XLE: +6.8%, +12.3%, +1.3%; XOP: +11.8%, +24.9%, +7.7%; OIH: +17.6%, +34.3%, +12.4%) and Clean Tech (PBW: -0.9%, +19.1%, +7.1%), provides structured parameters for complementary niche/thematic/megatrend institutional portfolio strategies.

For depth, relevant subsector ETFs further characterize Clean Tech segments: Solar (TAN: -12.2%, -8.1%, -14.0%), Wind (FAN: -5.7%, -6.6%, -3.9%), Grid (GRID: -3.5%, +6.8%, +17.3%), Lithium (LIT: -4.9%, +7.8%, +8.9%) and Automotive (CARZ: -0.5%, +20.4%, +40.0%).

Adaptive principles of indexation are requisite to improve peer group analytics and valuation during this third iteration of benchmark analysis, an essential means to isolate and capture PBW component member performance dispersion in Alpha-strategies (+62.6%/-81.2% 1-mo., +178.7%/-81.5% 3-mos., +199.5%/-91.9% YTD23, +102.6%/-97.1% 12-mos.).

Proprietary <U/O> Matrix via Applied Indexation, derived from a combined Renewables/Diversified Industrials/Technology sector-themed overlay within PBW, utilizes the modularity of corporate business segment operations embedded in company revenue lines to refine conventionally assigned sector/industry/subindustry nomenclature on a relative portfolio-weighted basis (12 segments, 62 classifications, 256 single and multi-listed component members; n=75).

Effective <U/O> Matrix via Applied Indexation Tier-2: Alpha and Alpha-Beta screens are generated from a comprehensive set of four spreadsheets: 1] Anatomy (component members, data introduction), 2] Iteration (industry sort, computations), 3] Matrix (applied indexation, data analytics) and 4] Summary Template (composite data, portfolio characteristics).

For Excel downloads, reference (PayPal hosted, nominal expense; auto-generated password).

Please message direct with any questions or for product development considerations.

note: w/r/t past-positive forward looking indicators featured in <U/O> Matrix via Applied Indexation, a brief primer is provided online along with related tabs and slideshow tutorial <U/O> Matrix - Establishing Predictive Value: Applied Indexation, Hierarchical Data Sets and Competitive Market Information for background methodology.

#EnergyComplex #CleanEnergy #PortfolioStrategies #CorporateFinance #BSOs

At Venn’s intersection, sets and subsets of competing interests endure. The dynamic principles of BSOs are three-fold: 1) multinational and Large-cap companies function as benchmark sector/industry/subindustry proxies based on scale (Alpha-Beta), 2) Small- and Mid-cap companies participate as competitive peers (Alpha) and, hence, acquisition candidates and 3) among subsets of 1) and 2) are companies provisioning multiple economic sectors, asset classes and geographies. Successful trading strategies (conventional, systematic, factor-based) and adaptive investable motifs (niche, thematic, megatrend) isolate Value in Growth, and Growth in Value, by aligning the prospective Alpha drivers directly associated with ecosystem composition and supply chain verticals.

Forward looking statements, estimates and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. This content is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. The author's opinions are subject to change without notice. No part of this product, related articles, publications or web-based content may be reproduced in any form or referred to in any other publication without express written permission of Universal Orbit © 2023 and David B. Kleinberg.

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