“I would tend to sell a little in the current area”

Remi Le Bailly: Good morning to all and to all. It’s time for our Monday talk. I am very happy to see you again for this weekly meeting dedicated to stocks and investments. The session is quiet today, as always (always?) when Wall Street is closed.

Etienne: Hello Mr. Le Bailly, is it too soon to return to the stock market in moderation given the peak of inflation that seems to have been reached in the United States? What are the 4 or 5 stocks you would put in your portfolio today given the high volatility? Thanks in advance.

The Paris Stock Exchange recovered well last week after Wall Street and the Cac 40 index continues to gain ground today. The index returns to the 6,500 point mark for the first time in a month.

With that said, I’m not sure this means the return of a sustainable bull market. Last week’s progress corresponds more to a rebound after a sharp drop (especially in the United States) than to a change in trend. Even if inflation no longer seems to be accelerating in the United States, it is still going strong and looks set to last. In Europe, the figures published today (8.7% one year in Germany and Spain) do not reflect any slowdown.

It is true that the improvement in the health situation in China is good news that may allow the indices to rise a little, but I do not think that the Cac 40 will be able to cross the graphical resistance found at 6,630 points. Therefore, the market should continue to evolve between 6,200 and 6,650 points, as it has been doing for several weeks. Therefore, we are rather at the top of this trading zone, which doesn’t really encourage me to strengthen positions. I would tend to sell a little in the current area.

To talk a little about values, I think that the “sleeping beauties” (Orange, Sanofi, TotalEnergies, etc.) that we talked about in the weekly a few weeks ago are still attractive in the current context. Instead, they fell last week as the market rally benefited luxury and cyclicals more. Other high yielding stocks like Axa, Veolia or Stellantis may be worth a look.

Remy08: Hello, I wanted to know your opinion on luxury companies, in particular LVMH, which has fallen significantly in the last two months. However, I find that he still has a lot of assets, including the share buyback program. I don’t understand why it doesn’t go up. Good for you.

Yes, luxury has gone down a lot because of China and has rebounded for a few days and specifically today because of the improvement in the health situation in this country. As I have said on several occasions, the context of rising interest rates is not favorable for growth stocks and therefore for luxury stocks. So I think other sectors are likely to benefit in the short term.

On the other hand, in a medium-long term view, it is a sector that, therefore, retains very good prospects. Five years from now, luxury stocks will be worth significantly more than today, I’m convinced of that, but on a year’s horizon, this is not necessarily the sector to play. Finally, I remind you thatInvest does not give advice on LVMH asInvest It is a subsidiary of the luxury group.

Kimmo: Hello Mr. Le Bailly, about Saint-Gobain, what would you advise me to sell or wait for? Despite the “so-called” acceleration of growth, the price is constantly falling: in January 2022 it was 67 euros, and today it is 55 euros. What do you think of this solid group that fails to stand out? Is it a management problem, because the markets are there? Counting on your always fine analysis, thank you. Sincerely.

Saint-Gobain has more or less fallen like the market since the beginning of the year after an excellent year in 2021 (fifth largest increase in the index with a gain of 65%). The general performance is still very correct. I even tend to think that the management manages things quite well with a fairly dynamic asset management policy. In addition, the group still seems confident in its ability to pass on strong cost increases, particularly in raw materials, to its sales prices.

Finally, from a longer-term perspective, the good prospects for thermal renewal are very favourable. Therefore, I advise you to keep your titles.

RAZATBACK: Hello, interested in following Mr. Vincent Bolloré’s restructuring of the galaxy, I would like to know which of his holdings is best positioned to benefit from future rapprochement moves. (Vivendi? Bolloré? Financière de l’Odet? Any other?) Thanks in advance.

If there is a complete restructuring of the organization chart of the group, it is better to target the leading companies since they accumulate the discounts. In this case it is Financière de l’Odet, but since the beginning of the year the stock market has performed less favorably than that of Bolloré, which benefited from the announcement of the sale of its transport and logistics in Africa.

It is also possible that the operation is carried out in two stages. First in Bolloré and then in Odet. So it is not easy to decide. I would say that you have to bet first on Odet and also put some balls on Bolloré.

Papanoel: Hello Mr. Le Bailly, in this period of dividend distribution, can you explain the difference between a coupon and a partial redemption (for example for Klépierre or ABC Arbitrage)? Thanks have a nice day.

I’m not 100% sure, but I think the difference comes from the origin of the dividend. Klépierre cannot pay a dividend as such since it has no distributable income as such. Therefore, he must deduct sums from the premiums. This explains the different name.

land42: Hello Mr. Le Bailly, after the capital increase of Air France-KLM, is there a change in the upper and lower limits of the limited bonus certificate FRBNPP03DD68? Thanks.

Yes, in the event of a capital increase, the limits are adjusted to take this operation into account.

JPMarkan: Hi, it can be difficult to know whether to take a takeover bid when the majority of the capital is divided among many small owners because in the event of a failure, the stock is still trading. Also, once the takeover bid is open, how can you know the percentage and number of shares offered for the takeover bid from day to day?

It is always a difficult choice. The easiest way out is to bring in the offer, but if the price isn’t good enough, it may be better to keep it.

This choice is not without risk. A general decline in the market can cause the stock to fall below the offer price. In another scenario, the float is reduced and the stock market life of the stock is less lively and the stock declines. However, the threshold to trigger the withdrawal offer is now set to 90%. This means that if this threshold is not reached, enough shareholders have rejected the offer. Among them are often funds that have also felt that the price was not high enough.

They associate with and sometimes negotiate an increased offer with the company that triggered the takeover bid. But it’s not always like this. In other cases, the security remains listed for several years before the majority company launches a new offer at a much higher price.

In short, there is no precise rule. That is why we decide on a case-by-case basis the operations. Finally, to be complete, it is not possible, as far as I know, to know the number of titles contributed from day to day.

BOURVIL: Hi, I’m tempted to buy a US Nasdaq 100 but currency risk is currently very high with a very strong dollar that would weaken. A simulation with an Amazon share bought today that would take 20% and hold until the euro/dollar rises to 1.20 to be resold is catastrophic and would only allow a capital gain of just 8% given the fall of the dollar. So is the game worth it? Is it better to play an ETF in this case?

You are right, the behavior of indices and shares is very different if we think in euros or dollars. If you want to bet on American techno as a whole, it may be preferable to do so through ETFs hedged against exchange rate risk (we say “hedge”). Major ETF issuers offer such products on the major indices and, in particular, on the Nasdaq.

On the other hand, if you want to enjoy the fall of a great techno, better buy it direct. The volatility of these securities is such that if they are well anticipated, this should largely cover an unfavorable currency effect.

Gilbert: Hi Rémi, I would like to repeat my question from last week, fully understanding that you cannot process all requests. What do you think of the Worldline perspective? Where is the sale of the payment terminal branch announced as imminent at the beginning of the year? Thank you for your opinion.

The quarterly figures were quite reassuring and the company maintained its annual targets. The sale of the terminals to the Apollo fund should take place in the second half. However, the company has lost its “star” status for more than a year. After a series of disappointments, he must convince investors that the future will be better. We are buying but it is a security that has a “wild card” side. It is, for me, an extra line to play for a possible stock market “recovery”.

It’s almost 5:20 pm It’s time to leave us. You’ll meet Denis Lantoine next week. Please note that due to Whit Monday, the appointment is scheduled for Tuesday at 4 pm Good week everyone.