The choice would seem clear enough:


But two funny things happened this week to Porsche. The first: CEO, Matthias Mueller, remarked that he anticipated flat demand into 2013 despite great results so far in 2012.

The second: two lawsuits against their Volkswagen acquisition strategies in 2008 were halted. Porsche shares surged.

Contrasted to the tenor of this article in the Wall Street Journal’s ‘Driver’s Seat’ blog one wonders if equity holders are, well, a touch complacent: the double whammy of stagnant European and decelerating Chinese demand may be priming the luxury German airbags for use.

Is there opportunity in this? If so, is there a hedge?

The shot below is the spread of Porsche vs Honda over the last 18 months with the recent ‘lawsuit turbo charge’ clearly visible.



Honda plan to double sales of small cars (led by the ‘Fit’) in emerging markets over five years and the firm, for what it is worth, is loved by analysts even more than Porsche.

The Honda Fit (‘Navigate the urban maze in style’) is no 911 Carrera. But with a volume vs niche automaker trade it may matter little.

(Usual disclaimers, merely food for thought etc etc. PAH3/HMC are cointegrated; this analysis run with a time-adaptive beta)

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Bloomberg today published this article on deposit flight from weaker to stronger members of the Eurozone banking fraternity.

One might wonder if there is a relative value opportunity in this – for example, long one of the beneficiary banks in the Netherlands, France or Germany and short a bleeder in Italy, Greece, Spain or Ireland.

Minimal research suggests, for example, the Dutch subsidiary of the Royal Bank of Scotland (RBS) versus Credito Emiliano Spa (CE). However, RBS N.V has flight issues of its own – the parent is shuffling deposits from Amsterdam to London doubtless for the usual purpose of enhancing shareholder value.

Moreover, Credito Emiliano S.p.A does not (if you believe analyst sentiment) look that bad next to RBS (possibly not the best acid test anyway).

So, casting around elsewhere with the view that the Eurozone banks are all pretty much going to sink or swim as a group in the current crisis, perhaps setting CE against France’s Caisse régionale de Crédit Agricole mutuel de Paris et d’Ile de France (CAF - praise be to abbreviations) is worth a thought.

Nothing particularly wrong with CAF – nice, solid roots as an agricultural cooperative bank. But it is owned by Crédit Agricole whose fortunes it mirrors. Happily this latter now repents, as only true sinners can, the days it strayed so far from its roots into derivative instruments and dodgy Greek and Italian investments. Management appear sincere converts.

Usual disclaimers plus a small graph to round things off:


Entering long CAF, short CE territory


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Apple, pairs & Samsung

Monday, September 17, 2012 | 1 comments »


Apple vs Samsung (cointegrated spread w/Kalman filter adaptive beta)

Little 'blog-app' for you.

Does it truly not take a genius as Samsung suggest? Can 2 million iPhone 5 pre-orders be wrong?

Apple vs Samsung as a relative value trade consistently shows Apple to be very hard to pick up as a bargain. Roughly four times as hard as it is to purchase Samsung at relative value. The folks out there consuming may love an Apple product. But the folks out there in equity markets love an Apple stock even more.

So Samsung at least comfortably has the measure of its rival when it comes to the buy-leg of pairs trading volume. Will that continue?

With the Samsung Galaxy S4 arriving a full 5 months from now; and the fanaticism of Apple owners (goods and equity) showing no signs of abating one can't help but think the odds are favourable it will.

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