The Da Vinci Invest Code How corporate News move the equity markets A product from
Overview 1. Introduction 2. Key data in corporate news 3. Case Studies SAP Microsoft Oracle 4. Company Page 2
page 3 Introduction Corporate news influence the equity markets Unexpected corporate news create market trends and investment opportunities The Da Vinci Invest Code
page 4 Introduction Over 5000 news daily Pre-news published by government agencies, courts, corporate sources and reputable blogs Scheduled and unscheduled events Social media like tweets, blogs, boards, foren and social networks The Da Vinci Invest Code
Key data in corporate news Key market moving data of the corporate news Earnings guidance Profit warnings Dividend proposals / announcements Earnings per share (EPS) / loss per share EBIT / EBITDA Free cash flows Operating profit / loss Revenues / sales / turnover Tier 1 capital ratios / solvency ratios Analyst research reports on initial coverage, recommendations and sector Credit reports on upgrades and downgrades Page 5
Case Studies: SAP Trading opportunity: SAP announces record 4Q 2010 (13 Jan 2011) SAP releases ad hoc news Unscheduled, unstructured news Distributed by news companies at 16:44:17 on 13/1/2011 SAP announces record fourth quarter 2010 software revenue: Software revenue increases around 34% (around 24% at constant currencies) to approximately EUR1.5 billion. Full-year 2010 non-ifrs software and software related service revenue increases around 20% (around 13% at constant currencies) and exceeds company guidance. [ ] Seite 6
Case Studies: SAP SAP (ISIN DEO007164600) Significant market reaction after 7 seconds 16:44:24 Significant price and volume boost / 13 January 2011 16:44:17 - Release/event Seite 7
Case Studies: SAP SAP (ISIN DE0007164600) A closer look at the seconds following publication 13 January 2011 16:44:17 - Release/event 16:44:24 Significant price and volume boost Seite 8
Case Studies: Microsoft Selerity Scoops Microsoft Earnings Using Proprietary Real-time Search an Hour Ahead of News Outlets Summary Microsoft (Ticker: MSFT) Using proprietary low latency search & extraction technology, Selerity was able to uncover and publish a public version of Microsoft s earnings release an hour ahead of other media outlets. Selerity s event data and machine-generated news was immediately distributed over its low-latency infrastructure giving clients an incredible opportunity. While many awaited the results after the close, a number of astute investors observed the actual results from Selerity. Other media outlets were also quick to recognize Selerity for its successful delivery of the data. Seite 9
Case Studies: Microsoft Selerity Scoops Microsoft Earnings Using Proprietary Real-time Search an Hour Ahead of News Outlets Wall Street Journal reporter Kristina Peterson made the following observation, It turns out that Selerity, a company that gathers event data for traders, seems to be the first to have stumbled upon the Microsoft earnings release. Ms. Peterson adds that, the company s real-time search engine, which scans the investor relations websites of public companies, picked up what appeared to be Microsoft s second-quarter earnings release this afternoon well before its expected release after the market s close. Seite 10
Case Studies: Microsoft Microsoft Share Price Reaction Selerity publishes values for Earnings Per Share (EPS) ($0.77), Revenues ($19.95 BLN), and Net Income ($6.634 BLN) at 2:50 PM EST. Other media outlets began reporting on the data just before the market closed. Given the volume and liquidity in both Microsoft stock and equity options, traders had the opportunity to build sizeable trades and capitalize off Selerity s timely capture of the data. Seite 11
Case Studies: Oracle Overview Oracle (ORCL) is scheduled to report 1Q 2014 earnings after the close of trading on Wednesday, September 18. The software giant is expected to report its earnings right at the closing bell and host a conference call at 5:00 p.m. EST. Look for a possible reaction in the index futures and broad market ETFs when results are disclosed. Seite 12
Case Studies: Oracle Outliers & Strategy Key Measures: Non-GAAP Earnings Per Share (EPS): Back in July, Oracle stated in its 4Q 2013 earnings conference call that Non-GAAP EPS for the current 1Q period is forecast to range between $0.56 to $0.59, up from $0.53 last year. The current Street estimate is at the low point of the range at $0.56 (Source: Yahoo! Finance). Revenues: Oracle indicated it expects 1Q 2014 total revenue growth on a GAAP and Non- GAAP basis to range from 3% to 6% in constant currency. That would equate to $8.456 billion to $8.703 billion. The consensus is toward low end of that range at $8.48 billion. Note that Oracle tends to report guidance on the ensuing conference call at 5:00 p.m. EST, an hour after the earnings release. Analysts are expecting 2Q 2014 Non-GAAP EPS of $0.69. With Oracle drifting below the 52-week high established in March, shares are trading at just 10.42x forward earnings, well below historical averages. A FWD PEG ratio of just 1.29 suggests the shares are trading slightly above the estimated earnings growth rate. Last quarter, in line results on Non-GAAP EPS sent shares lower by about 9%. The average one-day price move off earnings is 5.85%. The options market is currently pricing in a similar reaction to historical averages. Sympathy Plays: Accenture (ACN), International Business Machines (IBM), Cisco Systems (CSCO) Seite 13
Case Studies: Oracle Recent News 09/17: According to a post by Investor s Business Daily, RBC Capital Markets analysts are looking for a solid report, mainly due to solid execution, currency headwinds, and improving macroeconomic trends. The firm also sees a stabilizing hardware business by the second quarter of 2014, a sentiment that was mirrored by Wedbush Securities in the same article. 09/16: Oppenheimer & Co. is looking for in-line results, and a rise in share price, according to a post on WallStCheatSheet.com. The firm reiterated its Outperform rating, citing checks that show business trends improving. Seite 14
Seite 15 Technical Review Oracle shares have just reclaimed its 200 day-sma, while simultaneously clearing a descending trend-line dating back to the 52-week highs from March (albeit on average volume). The stock is essentially flat this year, which is a disappointment considering the S&P 500 s nearly 21% advance. If earnings surprise to the upside, look for initial resistance near $34.80, followed by recent highs of $35.32. Should earnings disappoint, support can be found near $32.50, followed up $31.50. (Chart courtesy of StockCharts.com) Case Studies: Oracle 2012 2012 The The Da Vinci Da Vinci Invest Invest Code Code
Seite 16 Summary Oracle shares are back above the key 200-day SMA ahead of the 1Q earnings release, thanks in part to an improving macroeconomic backdrop. But with last quarter s surprisingly weak results fresh on the minds of investors and a cautious IT spending backdrop, Street sentiment is mixed ahead of the 1Q numbers. Nonetheless, Oracle also boasts a broad product mix and diverse customer base which serve to insulate the company from the broader market fears, while enterprise growth and valuation have lifted the stock off of the lows established earlier this year. Case Studies: Oracle 2012 2012 The The Da Vinci Da Vinci Invest Invest Code Code
Company Hendrik Klein is a 38 years old German living and working in Switzerland. He graduated with a degree in Business Administration from University FH Mittweida in Germany. He is one of the youngest traders to clear the EUREX trader certification and working on the Frankfurt Stock Exchange Floor. Worked with well known names in the area of fixed income and market neutral trading in Europe. He is specialized in Relative Value options trading, Global Macro strategies and investments in alternative asset classes. Hendrik worked as a broker and general agent with leading German private banks. He was the head of equity and equity derivatives proprietary trading at Landesbank Baden-Wuerttemberg. Hendrik co-founded Da Vinci Invest in 2004 where he is the acting CEO/CIO. Da Vinci and its products won various awards in Europe for the superior risk-adjusted returns. The specialty of Da Vinci relative value and superior risk management ability is well recognized in the finance industry. Hendrik is an active participant in various media/panel discussions (eg: CNBC) and chaired various global conferences Europe and USA. Hendrik lives with his wife and 2 sons in Zurich. Seite 17
Da Vinci Invest AG Hendrik Klein Zugerstr. 46 CH-6314 Unterägeri Phone.: +41 41 511 83 40 Fax. +41 41 511 83 49 Email: info@davinci-invest.ch For more Information: www.davinci-invest.ch A product from
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