📈 The Irbis Index March 2024

Welcome to the March 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 February 2024, click here.

Key Trends for March ‘24:

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

Road Freight companies show the largest average change in price, increasing rapidly since July 2023 with average prices now at 182% of what they were a year ago.

Food Production Equipment Manufacturers and Industrial Manufacturers have also made a significant recovery over the past few months, in line with the S&P500.

Average EV/EBITA multiples

In March, Cold Storage and Logistics continued to achieve the highest EV/EBITDA multiple for a second month in a row compared to other tracked industries, falling slightly below last month’s multiple of 21.75x.

None of the tracked companies within the Cold Storage and Logistics Industry, received a downward revision from analysts, with Americold receiving one upward revision, Nichirei 4 upward revisions, and STEF 2 upward revisions.

On the other hand, Food Retailers continued to command the lowest EV/EBITDA multiple for at least the third month in a row. However, this multiple has been increasing over the months from 5.27x in January to 5.84x in February and 5.99x in March.

Average Debt/Equity ratio (Industrial REITs)

The debt-to-equity ratio of Industrial REITs increased this month and has been increasing from 43.7% in January to 44.3% in February, up again to 44.5% in March.

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 top the list of price variations despite not having any analyst revisions over the past 30 days.

New to the list is Americold with a 56.5% price variation between actual price and target price, suggesting that analysts are optimistic about the Cold Storage outlook.

This month, Rational AG, UK Commercial Properties, and Sainsbury’s continue to top the list of negative target price variations.

Despite this, Rational received 4 up revisions from analysts over the past 30 days and no down revisions, indicating a positive outlook from analysts.

Energy

Electricity prices did not change significantly this month, with none of the countries experiencing an absolute percentage change in electricity price of more than 10%.

The top sources of power in March remained the same in all countries in comparison to February, apart from Spain which moved from 27% Nuclear in February to 27% Wind in March.

On the other hand, other countries that relied on wind energy in March experienced a decline in wind as a source of power.

For example, power generated from wind dropped from 62% to 39% in Germany, 32% to 11% in Luxembourg, and 66% to 32% in the Netherlands.  

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