Monthly Performance Update (US Stocks) April 4, 2017

MDT, GNC, AFL, NVDA – Hold, BABA – Take Profit

Investment Summary

We issued 3 Buy Trades in February and March 2017, GNC Holdings Inc, Aflac Inc and NVIDIA Corporation. GNC Holdings has not performed as per our expectations while NVDA has outperformed the market since the call.

  • Alibaba Group Holding Ltd (BABA): Since we issued the trading buy on BABA in January, BABA has performed as per our expectation and hit our target price of USD 109 in the last week of March. Since then, BABA seems to be stagnating around its current price range. BABA has also been relatively quiet on news for the month of March. President Trump and Premier Xi are set to meet on April 6-7, in the lead up to the meeting, President Trump has repeatedly highlighted trade with China as an issue he intends to discuss and take a hard stance on. Given the potential volatility of the outcome of the meeting, we have decided to close our position and take profit in BABA.
  • Medtronic PLC (MDT):  MDT was on track to hitting our target price set in January, however, due to the recent healthcare vote in USA, the price has corrected somewhat from its 3 month high of USD 84. With the expectation that the Affordable Care Act to remain intact, the price has stabilized and we remain optimistic of MDT’s future.
  • GNC Holdings Inc (GNC): Since our call for GNC in February, GNC released their earnings for the quarter and unfortunately the results were worse than expected, causing the share price to tumble below our stop loss point. However, we continue to be long GNC as the transition to “New GNC”, GNC’s Interim CEO’s new business plan, seems to be gaining traction. Furthermore, we believe that the price has tumbled as short interest in the stock has increased significantly. As a percentage of GNC’s available float, 38.13% has been shorted. GNC’s next earnings results will be around May 2017, and in with short interest at such high levels, if earnings show signs of recovery or stabilizing, we believe that a short squeeze might potentially occur and the share price should recover.

Figure 1 : GNC Short Interest

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Source: Bloomberg

  • Aflac Inc. (AFL): AFL has traded sideways since our trading note was released. We believe that the fundamental story remains unchanged for AFL and will look to further news on the coming rate hikes as catalyst for movement.
  • NVIDIA Corporation (NVDA): Since our call on NVDA, the stock has performed as per our expectation and continues its recovery since hitting its 3 month low of around USD 96. No fundamental change in NVDA since the release of our report.

Technical Analysis: Our view remains unchanged from those stated in the individual reports linked above.

Figure 2: Summary of Trade Positions

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