Article / 02 September 2016 at 11:55 GMT

Recent changes to the equity portfolio

Head of Equity Strategy / Saxo Bank
  • Equities portfolio predominantly net-long
  • E.ON looks strong after Barclay's target cut
  • Weak NFP would lead to GDX strength

Danish energy firm E.ON had its price target slashed by Barclay's, 
but now looks to be oversold. Photo: iStock 

By Peter Garnry

Equity markets continue to have positive sentiment on the margin despite recent range trading. As a result, our portfolio is predominately net long. 

So what are some of the latest changes?
Today we have added a short position in STOXX 50 (EU50.I) with stop at 3,055 and a take-profit limit at 2,980 betting on a weaker than estimated nonfarm payrolls number. 

In addition, we have added a long position in E.ON (EOAN:xetr) as the share price went back to the support level at €8 in yesterday’s trading driven by a price target cut by Barclays. We are betting on a mean reversion play in E.ON as investors will increase exposure at these levels due to an attractive 6.1% dividend yield, and also because these levels have provided support multiple times over the past nine months.

E.ON daily price chart since August 2015:

Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank

We have closed our long position in Eurofins Scientific (EUFI:xpar) with a 13.5% gain over five months as we do not see enough upside relative to other opportunities.

We have also closed our short position in the NASDAQ 100 ETF (QQQ:xnas), which was a hedge against long US technology positions (Amazon and Facebook).
Recent trades that we have put on are long First Solar (FSLR:xnas) and long Toll Brothers (TOL:xnys) betting on a successful turnaround in the former and a continuation of the US housing boom in the latter.

Open positions:
Open positions
Source: Saxo Bank 

What will a weak NFP mean for the portfolio?

It will weaken the USD in the short term, taking gold higher and creating losses on our short gold miners position, so we would immediately sell this position on the open. 

Our long Deutsche Bank, UniCredit and Barclays would also likely take a hit but here we would stick to our theme of improving fundamentals and mean reversion from rock-bottom valuations. 

— Edited by Michael McKenna

Peter Garnry is head of equity strategy at Saxo Bank

02 September
marcovitz marcovitz
Hello Peter! Do you expect a large sell-off on the US indices in case the NFP is well below the expectations? or the dip will be bought?
02 September
Ramug65 Ramug65
Hi Peter! Does this means you recommending to close the short position of GDX ETF on the market opening now shortly? Please clarify
03 September
ChristianK ChristianK
Hi Peter. Is the open positions board available on tradingfloor? Or how can it be accessed?
12 September
Juan José Del Valle Rodríguez Juan José Del Valle Rodríguez
Dear Peter. I bought some EOAN shares at 8.20 EUR. How do you see spin off 1:10 made by E.ON and Uniper? EOAN -14.5% today. Will it be a negative outlook for share? Do you recommend hold both shares? Thanks in advance,


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