📈 The Irbis Index February 2024

Welcome to the February 2024 edition of The Irbis Index!

We’re curious about new ways to leverage asymmetry of information to enhance investor returns.

The Irbis Index is a tool we are developing to reveal hidden correlations between global macroeconomic trends and events and the industries in which we’re investing. 

The Index tracks the market by highlighting key trends of large players across related industries.

On the 5th of each month, we issue the updated Index covering the preceding month, along with all associated trends.

Source: finance.yahoo.com.

To find The Irbis Index for January 2024, click here.

🚀 Index Update! In 2024, we have extended the scope of The Irbis Index by incorporating two additional categories: Road Freight and Container Leasing (more details in the Index Key above).

Key Trends for February ‘24:

Relative stock performance (Mar ‘23 - Feb ‘24) 

Road Freight companies show the largest average change in price,  increasing rapidly since July 2023 with average prices now at 163% of what they were a year ago.

Container Leasing, Industrial REITs, and Food Production Equipment Manufacturers have made a significant recovery over the past 2 months as well, in line with the S&P500.

Average EV/EBITA multiples

In February, the Cold Storage and Logistics sector recorded the highest EV/EBITDA multiple among the industries monitored, surpassing Road Freight, which had been the top-performing industry in January.

This is the highest multiple recorded by the industry in the last 4 months.

Within the Cold Storage and Logistics industry, both Nichirei and Americold each received 2 upward revisions from analysts.

On the other hand, Food Retailers continued to command the lowest EV/EBITDA multiple. In February, this multiple increased slightly to 5.84x, from the previous month’s multiple of 5.27x, also reporting its highest multiple in the last 4 months.

Average Debt/Equity ratio (Industrial REITs)

The debt-to-equity ratio of Industrial REITs increased slightly from 43.7% in January to 44.3% in February.

Top positive correlations

The largest positive correlation was observed between the S&P500 and Road Freight.

When the S&P500 is used to predict prices of the top Road Freight companies companies over a year, the mean absolute error is only 2.5%.

Industrial REITs and Food Producers also make the list with a correlation of 0.80.

When tested whether Industrial REITs affect Food Producers or vice versa, it is observed that it is more accurate to use Industrial REITs to track Food Producers, as this results in a lower mean absolute error.

This suggests that changes in the Industrial REIT industry affect the Food Producer industry more than the converse.

Top negative correlations

The largest negative correlation was observed between Road Freight and Commodities (Metal), with a change from -0.68 in January to -0.79 in February.

Overall, the price of industrial metals continues to be negatively correlated with many of the industries the Irbis Index tracks. 

Target price variations

Warehouse REIT continues to make the list of positive price variations for at least six months in a row.

All other companies are new to the list this month.  

In January, Smurfit Kappa was among the top four companies with the most positive target price changes over the preceding five months. However, it did not maintain this position in February.

Rational AG held the top spot for the negative target price variation in February and has now made the list for three months in a row.

In February, UK Commercial Properties remained on the list of top negative price variations for at least four months in a row. 

The percentage difference for both Rational AG and UK Commercial Properties has increased from the previous month where Rational AG reported a -13.6% target price variation and UK Commercial Properties reported a -12.7% target price variation.

Energy

Electricity prices decreased across all countries on the index.

In February, several countries reduced their wind energy output, with Germany's wind energy production decreasing from 62% to 39%, Luxembourg's from 32% to 14%, and the Netherlands' from 66% to 40%, shifting towards gas sources instead.

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