Tag Archives: etf

Netflix Gaining In Europe, But Faces Regulatory Mandates

Netflix ( NFLX ) is successfully fending off a host of rivals in Europe thanks to its mix of Hollywood and local content, analysts say. After examining the online video markets in the U.K., Germany, France, Italy and Spain, investment bank UBS concluded that Netflix is well positioned for growth. “We think Netflix is doing quite well across Europe despite intense focus from local competitors in each market, not to mention competition with Amazon ( AMZN ), who was earlier to enter the U.K. and Germany,” UBS analyst Doug Mitchelson said in a research report Sunday. Mitchelson reiterated his buy rating on Netflix stock, with a 12-month price target of 141. Netflix stock was up 2%, near 94.50, in afternoon trading on the stock market today , but it has been trading below its 50-day moving average since posting disappointing earnings last month. Netflix’s early success in foreign markets comes as the company is ramping up production of original shows in local languages. “Management continues to suggest that only about 20% of international viewing is from local content and that U.S. content continues to travel well everywhere, including in the rest of world markets launched this year,” Mitchelson said. “Thus, we expect Netflix to continue to focus the majority of its content budget on U.S. content, though increasingly originals and almost exclusively content with global rights.” Europe Seeking More Local Content From Video Services Last week, the Financial Times reported that Netflix and other on-demand video services could be forced to devote at least 20% of their catalogs to European movies and TV shows as part of an overhaul of the EU’s broadcasting rules. The services also would be required to prominently display European content. Streaming video services currently are not covered by laws that require national broadcasters to ensure that the majority of their content is European. Those same regulations force broadcasters to contribute financially to the production of European films and TV shows. Netflix has opposed the proposed regulations, the FT reported. Investors are increasingly focused on Netflix’s international growth, as its service nears the saturation point in the U.S., Piper Jaffray analyst Michael Olson said in a report Monday. He rates Netflix stock as overweight, with a price target of 122. “While in calendar year 2016 we expect international will account for 35% of revenue, we are modeling 50% by 2020,” Olson said. RBC Capital Markets analyst Mark Mahaney on Sunday maintained his outperform rating on Netflix stock, with a price target of 140. RBC’s recent surveys of online users found strong usage and high satisfaction for Netflix in the U.S. and rising demand in France and Germany, Mahaney said. RELATED: Netflix Signs Programming Deal With Hispanic TV Leader Univision

Hot Launches

By Jeff Tjornehoj Click to enlarge With just $23.9 billion in net inflows this year, exchange-traded products (ETPs) are having their slowest start since the first five months of 2010 when only $18.7 billion in net inflows were made. But the industry continues to launch new products anyway and through this week (May 18) another 88 products have been unveiled. We took a look to see which ones have had the best luck attracting cash. Through May 18 the fastest-growing ETP is the SPDR SSGA Gender Diversity Index ETF (NYSEARCA: SHE ) , which tracks a market-cap weighted index of large U.S. companies that that exhibit gender diversity in their senior leadership positions; it’s attracted $264 million this year. Not too far behind in the asset race, the WisdomTree Dynamic Currency Hedged International Equity Fund (BATS: DDWM ) has brought in $238 million. This fund holds a basket of dividend-weighted stocks headquartered outside of the U.S. and Canada and dynamically hedges foreign currency exposure for U.S. dollar investors. While three others have managed to accumulate $50 million in assets so far, the rest of this year’s launches are still waiting for investors to find them: the remaining 81 launches this year collectively hold $700 million or just as much as these five.

The Great Temptation, Greatest Danger

“If we survive danger it steels our courage more than anything else.” – Reinhold Niebuhr I am often bewildered that what passes for analysis is really a focus on recent performance, rather than process. Yet, so little attention is given to the investor return/behavior gap, a well-documented phenomenon that proves that “on, average, investors sacrifice a substantial portion of their returns by incorrectly timing when to enter or exit investments”. In correct timing tends to come from chasing performance, getting in after a major up move has already taken place, and then, of course, exiting when the drawdown is likely near its end. The below chart sums up some of the research on this which, in my opinion, is a “must know” when considering where to put money to work. Click to enlarge The best returns in the future come from those parts of the marketplace that have not done well in the past. Yet despite the overwhelming evidence which supports this, strong recent performance is often the core catalyst to make an investment. In reality, it should be the exact opposite. High past performance and continuous visibility of that performance is a temptation too strong for many to ignore, and that temptation unequivocally results in sub-optimal returns going forward on average. Take that truism on mutual funds, and magnify it by a billion when it comes to Exchange Traded Funds (ETFs). Yes folks – I would argue to you that ETFs are the greatest danger to investors. Why? Because ETFs provide an even greater temptation to chase recent performance, day by day, hour by hour, and minute by minute. Overtrading is the ultimate source of the investor return gap, and the temptation to get “in and out” of the market has never been higher thanks to these investment vehicles. Now, don’t get me wrong here. We ourselves use ETFs to execute across our quantitative strategies in mutual funds and sub-advised separate account strategies we run. However, following a systematic, backtested, and quantitative approach using ETFs as the vehicle of choice for execution is NOT what the vast majority of ETFs “investors” do. The pattern of behavior remains the same. Assets for ETFs grow when the ETF has strong recent performance, and collapse after, with a lag, when losses have already occurred. In our case, we rotate based on leading indicators of volatility (click here to learn more). The majority rotate based on old leaders that have had continuously low volatility. The greatest danger is in using past strong performance to make an investment decision. ETFs like the S&P 500 SPDR ETF (NYSEARCA: SPY ) may be the greatest temptation of all that results in exactly that. *Join us this week for our live webcast on the 2016 Dow Award paper, hosted by the Market Technicians Association. Registration available by clicking here . This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.