YWR Global Factor Model
Disclosure: These are personal views and market commentary only, not investment recommendations or guidance. For investment guidance please seek professional help.
It’s our favourite day of the month.
Factor model day.
Today we go through the YWR Global Factor model data for September to understand where earnings are trending.
Let’s start with the top 20 ranked stocks on the YWR scoring system.
Top 20 Ranked Stocks
What do we see? Lots of Turkish stocks, lots of Japan, autos, banks, and a homebuilder.
And Burford Capital? What’s that? It’s a company which finances legal cases and just won a $16bn settlement against Argentina.
Next let’s take a look at the top 300 ranked stocks and look at the country and industry trends.
Top 5 Ranked Countries
Below are the top 5 countries by the number of stocks represented in the top 300 YWR ranked stocks.
Here is how the country count has been trending year to date.
Japan has been trending up all year.
Notice Turkey (red) has gained momentum recently. The valuations on everything in Turkey are at record lows (P/E’s of 3-5x), earnings estimates are highly positive (because of inflation) and the stocks are starting work in $ terms.
China continues to slip (green). I haven’t dug into whether this is due to poor Price score or if it’s earnings momentum too (maybe both).
It’s not on the chart, but country #6 is Taiwan.
Let’s look at the industries.
Top 5 Industries by # of stocks in the YWR 300
Banks (combination of major + regional banks) have been the biggest YWR theme all year. They are benefiting from higher net interest margins and credit costs which, so far, have been the dog that didn’t bite.
Motor vehicles is another highly ranked sector (Japanese autos + Europeans).
Utilities is a sneaky sector which keeps scoring well. I think this is utilities finally passing on rate increases to customers, while fuel costs have moderated, but I’m not totally sure.
Kind of good to note a defensive sector scoring well and not well owned.
Oil refining has popped on the scene as a top sector. Refineries are making a fortune on diesel as inventory is low and Saudi and Russia are cutting heavier crude blends from the global supply. Similar to other YWR Untouchable sectors refineries are not expanding and instead using the record profits to buy back shares. #HowIcametoloveESG.
I broke out Trucks and Construction machinery from Motor Vehicles because it’s a different trend. This is the record level of construction going on and it’s a top theme globally. Notice also the steel stocks in the Top 20.
Here is how the top sectors have trended year to date.
The number of the banks on the list has been growing because of the Turkish banks scoring well, which are added to the European and US banks already making the list.
Motor Vehicles has been steady. Airlines used to be in the top 5, but has been replaced by oil refining.
YWR Factor Model Dashboard
At YWR I try to be the opposite of inflation where you keep getting more for your money, not less.
This month I’ve added a Tableau dashboard so you can see the industry trends broken out by earnings momentum, value and dividend yields.
The dashboard is a work in progress, but hopefully it’s useful.
YWR Global Factor Model Dashboard (September 2023)
Below is the full YWR Global Factor Model for September with over 3,000 stocks and their scores.