Thematic Investing

Reviews and analyses of selected FlowPoint investment themes such as our Stay At Home Index, our Reopening Index, cybersecurity, financial technology and shorting the private prison operators. The U.S. economy is a $19 trillion source of constant change, both secular and cyclical. Demographic, regulatory, technological, economic, social and political forces constantly unleash challenges (Short opportunities) and opportunities (Long positions). FlowPoint invests in innovation and “creative destruction” in corporate trends, emphasizing winners and losers in security selection. Not every investment theme we research is represented in the portfolio at all times – fundamental economic trends don’t always coincide with stock market opportunity.

FLOWPOINT’S COVID REOPENING INDEX

Jul 5, 2020 | Thematic Investing

Summary

Covid-19 has shuttered entire segments of the global economy. Companies levered to travel, entertainment and office space have seen significant reductions in business fundamentals, and their shares have lagged. Might these stocks represent attractive entry points, once the “all-clear” is given on the virus?
FlowPoint has calibrated an index of 77 companies in the COVID cross-hairs (FP REOPEN) such as the airlines, restaurants, hospitals, cruise ships, travel agencies, retailers, and live entertainment venues. Sector-wise, compared to the S&P 500, our Reopen Index is heavy on Consumer Discretionary (33% weight vs. S&P’s 13%) and light on technology, financial and health care.
The median FlowPoint Reopening stock has a $5 billion market cap, is down -31% YTD, and trades around the same P/E (20x) as the market, despite lower returns, and nearly triple the S&P 500’s reliance on share buybacks.
By contrast, the median FlowPoint Work From Home Index company share price is up 26% YTD while just ten of the 91 stocks are down YTD. Refer to our FlowPoint Stay at Home Index for a comparison to the companies benefiting from COVID-related social and economic changes.