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Inventory/Sales Follow Up

We respond to questions following our piece last week and conclude that our analysis is broadly supported by Bureau of Economic Analysis (BEA) data.  BEA data also shows that the Manufacturing Inventory to Sales ratio in the US is at

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Significant Downside Risk From An Inventory Correction – The Stars Are Aligned

The inventory to sales ratio for our covered sectors is at a 25 year high, having jumped since 2008.  There is risk that this corrects, lowering apparent demand and putting pressure on pricing and margins – valuations only discount this

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The Apparent Link Between Employment and Healthcare Demand

Privately insured US persons (and presumably households) consume 2.7x the healthcare of age- and health-status adjusted persons (and households) who are uninsured As employment rises and falls, households shift from one category (un-/under-employed, un-/under-insured) to another (employed / insured), and

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We Should Be Deal Shy

Eaton Corp’s plan to buy Cooper Industries (announced this month), reminds us that the Industrials and Basics group has flexible balance sheets and is generating plenty of free cash.  Outside Metals and Mining, companies in these sectors rarely generate shareholder

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Video Advertising: The Incredible Disappearing Audience

  Advertisers turn to broadcast TV to get to a big audience fast, but this selling point is quickly deteriorating.  Top programs are drawing fewer viewers every year as the audience is spread over a wider range of choices, and

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Why HMOs are Cheap, Despite Rising Utilization

Utilization rises as the economy strengthens; with economic strength comes rising employment. For commercial HMOs, the question is whether the benefits of employment growth (which brings enrollment growth, sales growth, operating leverage, and improving underwriting risks at the margin) can

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SSR Index of Current-Quarter Healthcare Services Demand Estimates Growth within 50bps, Before Earnings are Reported

‘Unit demand’ for US healthcare ties closely to underlying economic measures, including but not limited to rates of employment. A critical mass of these measures is available during or immediately after a given quarter; using these we model current-quarter unit

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The Internet Revolution: It’s Not Social OR Mobile, It’s Apps

We believe that the Internet economy is in the midst of a revolutionary paradigm shift from the neutral browser of the PC era to the tightly managed App model.  While the growth of social and mobile applications have spawned significant

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Chemicals Skepticism – A Wide Divergence – Commodities vs Coatings

Extending our Skepticism Analysis (SSR Skepticism Index – SSRI) to look at the sub-industries within Chemicals we confirm lack of investor conviction in commodity chemicals – valuations underestimate current and expected returns.  History shows that this corrects through relative outperformance

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Is There a Cyclical Rebound in US Healthcare Demand? Evidence to Date from 1Q12 Results

The link between quarterly reports and underlying healthcare demand is remarkably noisy and signals from 1Q12 results thus far are mixed; however on net we see convincing evidence of strengthening US healthcare demand   With a single exception (HUM) commercial

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