📈 The Irbis Index May 2024

Welcome to the May 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 April 2024, click here.

Key Trends for May ‘24:

Relative stock performance (Jun ‘23 - May ‘24) 

Road Freight companies continue to show the largest average change in price despite having experienced a large decline over April and May.

At the end of March, average prices were at 182% of what they were a year prior, but, now, at the end of May, average prices are only at 127% of what they were a year prior.

Many other industries have also observed a decline towards the end of May, despite the S&P500 performing better than in April.

Average EV/EBITA multiples

In May, the EV/EBITDA across all industries tracked increased compared to the month prior, apart from Road Freight which fell from 16.27x in April, and Food Retailers which fell from 5.22x in April.

The EV/EBITDA multiple across Food Production Equipment Manufacturers increased significantly, with many of the companies within this industry receiving upward revisions from analysts.

Still, Cold Storage and Logistics continues to be the sector with the highest EV/EBITDA multiple among the industries tracked by Irbis Index.

On the other hand, Food Retailers continued to command the lowest EV/EBITDA multiple for at least five consecutive months.

However, most companies tracked in this industry received more upward revisions than downward revisions in May.

Average Debt/Equity ratio (Industrial REITs)

The debt-to-equity ratio of Industrial REITs is not comparable to previous months due to a change in the composition of REITs tracked by the Irbis Index.

In May, UK Commercial Properties was delisted as it had merged with Tritax Big Box REIT.

The merger of the two creates one of the UK’s biggest REITS.

Top positive correlations

The largest positive correlation is between the S&P500 and Meat, Fish, and Dairy, making the list for the 5^th month in a row, but leading the list for the first time in this period.

When the S&P500 is used to predict prices of the top Meat, Fish, and Dairy companies over a year, the mean absolute error is only 3.4%.

The top 5 correlations in May are the same as that in April, with varying orders.

Top negative correlations

The largest negative correlation was observed between Meat, Fish, and Dairy and Food Retailers an absolute decrease from its correlation of -0.67 last month.

Target price variations

In May, Americold drops off the list of top positive target price variations, making way for Tesco – who last made the list in March with a target price variation of 46.1%.

In May, Tesco received 1 analyst upward revision while Americold received 3 downward revisions.

Warehouse REIT makes the list for at least 4 months in a row, suggesting that analysts remain optimistic about the company’s performance and prospects.

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

Associated British Foods, a food producer that previously made this list in April 2024, no longer has a negative price variation but rather a +5.2% target price variation.

Energy

Electricity prices increased across all countries tracked on the Irbis Index in May apart from Belgium and France.

In May, Solar was a popular top source of power, replacing Wind in most countries e.g. Germany, Luxembourg, the Netherlands, and Spain.

Great Britain, despite moving away from Wind (35% observed in April), moved towards Gas as a top source of power rather than Solar as observed in the countries listed above.

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