YWR: Global Factor Model
Time to review the YWR Factor Model and discover the trends nobody is talking about, yet.
Cast your eyes over the Top 30. What do you see?
YWR Top 30
Gold Trend:
There are lots of gold miners (AngloGold, Harmony, Kinross, KGHM Polksa (silver)).
After a decade of scars gold is the biggest trend the asset management industry is afraid to own. Estimates are rising faster than the share price so P/E’s are still 10-11x on 2024.
We discussed the turnaround story at AngloGold back in April and why we think it will earn $3/share in 2025 and $4 in 2026.
These estimates seemed crazy back in April, but 4 months later analysts realize maybe it isn’t so crazy. Note analysts are still cautious on 2026 and 2027. No one wants to forecast a multi-year bull market in gold. Not after the shame of 2012-2019.
Harmony is also doing well.
Shipping: Here’s another trend nobody wants to own; shipping companies (Evergreen Marine, COSCO, Wan Hai, Yang Ming).
Last month we highlighted Maersk’s CEO comments about how the Houthis taking out the Suez Canal has stretched shipping lines and taken out excess capacity, causing shipping rates to rise. The Houthi problem has persisted longer than anyone expected and container rates are back above $5,000.
Earnings estimates for shipping companies like COSCO are through the roof for 2024, but nobody expects it to last. Over $2.50/share in 2024, but back down to $1.30 in 2025. The stocks are all trading on P/E’s of 4-5x earnings. For one reason or another shipping companies keep having monster years.
Investors are fearful of what happens to container rates when the current bulge in ship building orders is delivered. But maybe the transit routes of the world are permanently disrupted (Panama and Suez) and this extra capacity is needed. Maybe these ship deliveries aren’t about to crash the market.
Shipbuilding: It makes sense to see Shipbuilders in the Top 30 if shipping itself is doing well, and that is part of it, but there is another hidden trend behind why shipbuilding businesses keep popping up in the factor model.
We see HD Hyundai and HD Korea Shipbuilding (subsidiary of HD Hyundai) as well as Yangzijian on the list. In last month’s Global Factor Model we discussed Kawasaki Heavy (which also has a shipbuilding business) and is #31 on this month’s list.
And when we went down the rabbit hole what did we learn about Kawasaki Heavy, and Mitsubishi Heavy and one of the reasons shipbuilding is doing well?
We learned about the ship based Aegis missile defense system and why everyone wants one (Aegis is Skynet).
And what does HD Korea Shipbuilding also specialise in?
Yes, there is demand for container ships, and LNG carriers and hydrogen carriers, but there is a less discussed trend in the shipbuilding business. Rebuilding the navies of the world.
Industry Trends
Banks are doing well and European banks are still the biggest allocation in Dirty Dividends. The top ranked banks are Garanti, NatWest, Sabadell, Leumi, Banco Commercial Portugues, Emirates NDB and Sumitomo Matsui.
If you want to dig into the bank stocks more there is a link to the full rankings for all the stocks at the bottom of the post. You can filter for Major Banks and Regional Banks.
Tencent (Tencent’s path to HK$ 1000/share) and Oracle are in ‘Packaged Software’
In the monthly trend chart you see the rising importance of Precious Metals companies and Marine Shipping. These are two of the strongest trends in the world.
Country Trends
At the country level we see a continuation of our ‘New Europe’ theme. The top countries for earnings estimate momentum are the US followed by China, Japan, South Korea and Taiwan.
Our ‘New Europe’ theme is that maybe the world is changing and we are supposed to be more focused on industrial companies in Asia.
In the monthly chart below we see Japan is still doing well. So is South Korea.
The trend in South Korean estimate momentum, and the fact Korea is is a Top 5 ranked country in the YWR model makes you wonder if the KOSPI is about to go on a ripper.
Maybe that’s a reason to take a look at #24 in the YWR Top 30, Samsung Securities.
See below for:
Link to the full rankings spreadsheet for over 3,000 global stocks
Link to the Tableau dashboard for data visualisation at the sector and company level.
BTW, current and past factor model spreadsheets are available under the ‘Global Factor Model’ tab at www.ywr.world.