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Author Archives: Chris Versace, Chief Investment Officer

About Chris Versace, Chief Investment Officer

I'm the Chief Investment Officer of Tematica Research and editor of Tematica Investing newsletter. All of that capitalizes on my near 20 years in the investment industry, nearly all of it breaking down industries and recommending stocks. In that time, I've been ranked an All Star Analyst by Zacks Investment Research and my efforts in analyzing industries, companies and equities have been recognized by both Institutional Investor and Thomson Reuters’ StarMine Monitor. In my travels, I've covered cyclicals, tech and more, which gives me a different vantage point, one that uses not only an ecosystem or food chain perspective, but one that also examines demographics, economics, psychographics and more when formulating my investment views. The question I most often get is "Are you related to…."

Thematic Signals Vol. 7, #1

Hello and welcome to the 7th volume of Thematic Signals!

2023 has only just started but investors are staring down what is likely to be a challenging December quarter earnings season laced with recession fears, structural changes in the economy, across demographics, technology, and consumer behavior all continue to unfold. While some folks continue to think about the world about us as well as investing in terms of sectors, our view remains that this approach is an outdated strategy.

That means, yes, we continue to see flaws with sector-based investing so much so that, yes, we continue to see it as a dead strategy. Part of that is the shoe-horning of companies into categories that don’t necessarily reflect what is really driving their businesses or to use investor lingo, their “alpha.” Another is that when we see the world through our thematic lens, the world around us continues to generate data points and other points of affirmation for our thematic strategies. While the near-term may be volatile for stocks, following those thematic signposts offers a favorable longer-term outlook.

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Thematic Signals #45 Vol.6

Traditionally, data privacy and the safeguarding of digital identity products and services have been lumped within the broader scope of Cybersecurity. Tematica recently launched the Tematica Bita Data Privacy and Digital Identity Index. It is our view that traditional cybersecurity is increasingly focused solely on the protection of large stores of data. Protecting personal privacy and digital identity data is more focused on what is known as Zero-Trust Environments or even passwordless access which help provide ring-fenced protection where humans, devices, and other devices can interact in a much more fluid environment. Bio-Key (BKYI) is an index constituent that we think best exemplifies the direction this emerging branch of cybersecurity is heading.

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Thematic Signals #44 Vol.6

Happy Holidays and Merry Christmas readers! 

While many are busy couch surfing or braving brick & mortar stores to get ready for the coming holidays and gift-giving season, we continue to be overwhelmed with confirming data points for our investment strategies. That said, this week’s Thematic Signals is likely to be the last one of 2022 as team Tematica looks to unplug, chill out, and rest up for the coming year. When we come back stronger than ever, we’ll not only be sharing the latest points that speak to the structural changes our themes have identified, but we’ve got a few more company interviews to share as well. We may even have a new investment theme or two to add to the mix as well.

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Thematic Signals #43, Vol. 6

Hey folks, as you likely suspect we at Tematica do a lot of leg work and deep dives when developing our investment themes and refreshing our thematic mosaic. This means that in addition to scouring financial filings, company presentations, and earnings transcripts, we also chat with company management, thought leaders, and other industry movers and shakers. Those conversations complement the fundamental work we do and refresh the thematic tapestry that underpins our various investment strategies.

It’s no secret that EVs are a hot topic given the interest in Tesla (TSLA), General Motors (GM), Nio (NIO), Blink Charging (BLNK), Rivian (RIVN), and the EV company invested in by Warren Buffett, BYD Company (BYDDY). However, the passenger car and truck market as well as the commercial truck market are only part of the larger shift away from combustion engines. As we see it, there is a larger thematic wave unfolding – a much bigger EV transition that spans bikes, motorcycles, aircraft, and boating as well as ag and construction equipment. In recent months, General Motors (GM) invested in Pure Watercraft, Deere & Co (DE) acquired Kreisel, and Volvo Construction invested in electric hauling solutions.

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Disclosures

This conversation is provided for informational purposes only and is not an offer or solicitation to buy or sell any securities. Tematica Research was compensated by a third party to conduct this interview. The information described herein is taken from sources that we believe to be reliable, but we do not guarantee the accuracy and completeness of such information. Statements made are subject to change and may change without notice. Neither the company presented, nor the sponsoring third-party has reviewed or approved the presented materials. 

This Dividend Aristocrat Is Well on Its Way to a ‘Coronation’

This Dividend Aristocrat Is Well on Its Way to a ‘Coronation’

Recently I touched on the several new additions to the S&P Dow Jones Dividend Aristocrats, a group of S&P 500 constituents that have increased their dividends for at least 25 years. Now, I am circling back to the latest dividend payment from an existing Aristocrat: PepsiCo (PEP) .

Widely known for its products that include Pepsi, Lays, Mountain Dew, Doritos, Gatorade, Tropicana, and Aquafina water, the company has been paying consecutive quarterly cash dividends since 1965. Indeed, 2019 marked the company’s 47th consecutive annual dividend increase, which has the company approaching the rarified air of the Dividend Kings. As a reminder, a Dividend King is an S&P 500 company that has increased its dividend for at least 50 consecutive years, an incredible achievement, which explains why there were only 28 such names in 2019.

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Disclosure

Want to Beef Up on Dividend Stocks? Here Are Some NOBL Opportunities

Want to Beef Up on Dividend Stocks? Here Are Some NOBL Opportunities

One of the time-tested strategies for investors is buying companies with an increasing dividend policy. To say it is one of the most loved and most watched strategies would be something of an understatement given the incremental income it generates for investors and the $6.7 billion in assets held by ProShares S&P 500 Dividend Aristocrats exchange-traded fund (NOBL) , which tracks the S&P 500 Dividend Aristocrats Index. If there was any question as to the results of the strategy of buying a portfolio of companies with a long history of boosting their dividends, the below chart should be enough of an answer:

The companies that comprise the S&P 500 Dividend Aristocrats Index are a cross-section of S&P 500 constituents that have increased their dividends for at least 25 years. The index is equal-weighted in nature, which means the position size for each is the same, and the qualifying universe of companies is reviewed each January. In addition, per the index’s methodology document, prospective index constituents must also have a minimum float-adjusted market cap of at least $3 billion at the time of the rebalance data and have an average daily value traded of at least $5 million for the three months prior to the rebalancing reference date.

Last year, four companies were added to the Dividend Aristocrats: Caterpillar (CAT), Chubb Limited (CB), People’s United Financial (PBCT)  and United Technologies (UTX), which lifted the number of constituents to 57 up from 53 in 2018. With January 2020 having come and gone, the S&P has added…

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Disclosures

Daily Markets: Coronavirus Delivers Sharp Shift To The Markets

Daily Markets: Coronavirus Delivers Sharp Shift To The Markets

First off, after a nail biter of a game heading into half time, the Kansas City Chiefs dominated the fourth quarter to win Super Bowl LIV.  Before the game, the AFC and the NFC were tied for Super Bowl victories at 27 each. The last time both conferences had the same number of wins was back in 1990 at 12 a pop. In the prior five years when the 49ers won the Super Bowl, the S&P 500 was up for the remainder of the year every time by an average of 20.2%. The one time the Chief won the Super Bowl was in 1970 which saw the S&P 500 fall 0.3%. The one other time they made it but lost to the Packers, the S&P 500 gained 14.1% in the remainder of the year.

Before the big game, last week we closed the books on January and to say it ended on a weak note would be a bit of an understatement. Coronavirus contagion fears dominated not just the stock market, but the global economy. Last Friday stocks fell sharply, with the major US indices falling between 1.5% and 2.1%. The hit from coronavirus fears has been so profound the S&P 500, the Dow Jones Industrial Average, the NYSE Composite and the Russell 2000 were all in negative territory YTD as of Friday’s close. The Nasdaq 100 and the Nasdaq Composite remained up 3% and 2% YTD, respectively, but even that is dwarfed by the near 37% jump in the CBOE S&P 500 Volatility Index.

And for context on the sharp shift in the markets last week, consider this: a week ago, every major global equity index was at least one standard deviation above its 50-day moving average. After Friday’s close most were in oversold territory except Australia and New Zealand, which were aided by currency declines.

As the Chiefs and their fans celebrate their victory…

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Disclosures

Feel Secure With This Big Special Dividend

Feel Secure With This Big Special Dividend

This cybersecurity company will likely draw you in with its special $12 dividend, and then keep you for a while.

In the last few days, NortonLifeLock (NLOK), the company formerly known as Symantec before selling its enterprise business to Broadcom (AVGO), announced a $12 per share special dividend. Before discussing that eye-popping special dividend, let’s touch on what the “new” Norton Lifelock is — its remaining business is “dedicated to helping secure the devices, identities, online privacy, and home and family needs” for consumers. Needless to say, as the above connectivity expansion occurs and the number of vulnerable access points increase, in my view, Norton’s business will have a long-term tailwind behind it, especially as data privacy becomes a key issue following the European Union’s General Data Protection Regulation and similar laws that are developing in the U.S., including the California Consumer Privacy Act.

Circling back to the $12 per share special dividend…

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Disclosure: At the time of publication, NLOK shares were a constituent in the Foxberry Tematica Research Cybersecurity & Data Privacy Index.C