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Volatile Estimates in Europe by Jennifer Thomson, Gavekal Capital
Changes in sales and earnings estimates have historically ranked fairly high in our factor analysis– a methodology we employ to gauge which variables have the greatest influence on/ correlation with moves in the overall market.
Generally speaking, both variables have improved (albeit marginally) since March:
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
MSCI The World Index
Most of this improvement is the result of the more positive growth outlook for North American companies– and the dramatic turnaround in earnings estimates, in particular:
MSCI North America
Estimates for MSCI Pacific constituents have steadily improved as well– just not as sharply as those for their North American counterparts:
MSCI Pacific
In Europe, however, the trend toward a more positive outlook seems to have stalled and reversed as the change in both sales and earnings growth estimates has turned negative once again:
MSCI Europe
The recent moderation– following such a sharp improvement in estimates (on a three month basis)– suggests that MSCI Europe’s correction could continue quite a bit further:
