Over the past few months we’ve followed the LVMH (share price) story through the eyes of Apollo. We picked the story up originally following the relentless downturn.
It was when we noticed that the drivers of value had transitioned to Cash flow and Book Value that we saw the stock bottom. The market was looking at valuation metrics that might indicate a bottom to the shares. At €460 we saw such a signal – a credible signal with a good history of success.
Then followed the appearance of a positive Accelerator signal, which has a 65% hit rate since 2004 and a signal that reveals a consequent re-estimation of future expected returns by the market – and in this case, in a good way.
And now, we note that the stock has entered the Apollo RE-RATING cycle. This cycle is dynamic and unique. Generated from the bottom up, that shows the changes in the implied cost of capital being attributed to future cash flows by the market. In this case we are looking at a stock, but the same can be seen at sector and market levels.
As an investor, you might be the one who buys at a turning point. The changes in the drivers of value that indicate a bottom.
You might want to see evidence of growth momentum turning positive
or, you might want that reassurance that the market is now gaining confidence in the outlook and re-rating the stock.
You maybe the one who initiates a position at point A and adds as the story unfolds.
Either way, Apollo can take you through that journey and enable better informed, smart decisions.
The chart below shows the evolution of the Apollo Investment Cycle. Seeing is believing.
