Out Fox The $treet

With so much negative news surrounding emerging markets and the strong gains in the US market, it is interesting to see India slowly climb to multi-year highs. In the last couple of months, the Bombay Sensex Index has climbed over 21,000. The index originally reached over 20,000 in December 2007. Since that point it has gone virtually nowhere. See the chart below: The best that I can tell the index actually reached an all-time high after spending the last six years consolidating. India appears set for a major breakout and maybe the best stock to play that move in the US would be ICICI Bank (IBN) . The major Indian bank with a market cap in excess of $20B actually hit a peak of over $70 back in early 2008. The stock has lost 50% of its value during those nearly 6 years (sounds like the NASDAQ bubble from 2000). It might be a good stock to own in 2014. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Emerging markets stocks have been a major theme of the Opportunistic portfolios at Stone Fox Capital so I'm actually pleased to see investors fleeing emerging market stocks. Weak emerging market performance has reduced portfolio performance over the last 2-3 months, but it also provides opportunity for picking up long term growth stocks on the cheap. According to this AP report , EPFR Global reported that investors pulled $5.45B out of emerging market funds during just the second week of February alone. Yes, thats correct. It only took a few scary moments in the Middle East and some high inflation for investors to jump ship. Emerging markets have long been a traders market as investors jump in and out depending on the market direction. Oddly though, these markets provide a lot more long term growth and hence investors should be buying the dips in a lot of these markets. That doesn't appear to be the case though as I wrote yesterday about how the Chinese market has perked up...

Interesting Bloomberg report on increasing competition for Indian banks not only for employees, but also the potential for new licenses to be issued by the government. The main thrust of the article is the potential implementation of 'gardening leave' which bans employees from working for a competitor for 6 months unless they pay a fine, but the more important aspect for the 2 Indian banks trading in the US, ICICI Bank (IBN) and HDFC Bank (HDB), are the new bank licenses to be issued by the Indian central bank. Portfolio holding IBN is the main private bank in India and hence the market appears to follow their moves. They appear to already be facing high turnover with 15% of junior staff leaving last year. Not sure that's high enough to be overly disruptive, but the number could rise if more competition is let into the market. Those new banks will want the experience of the employees at IBN. From a business perspective, they'll likely focus efforts on attacking the 7...

ICICI Bank (IBN) shot up 6% today placing the stock in a severe oversold position. Hence considering the market being up 8 of the last 9 days, Stone Fox used the jump to unload our stock in IBN in the Opportunistic Portfolio. The more long term focused Growth Portfolio cut back its position by roughly 15% as well. IBN still has long prosperous future ahead, but the market and particular the stock were ahead of itself short term. The RSI was an off the charts 82 and the CCI hit 262. Both numbers that can typically signal a short term top. Hopefully the stock will swoon back to the low $40s soon and we'll re-enter the position. 2:20 Update:  Trade was just below $48. So far the stock and the market have held up better then expected from over bought conditions. Would imagine the stock does dip back to mid $40s, but at some point i'd expect a breakout above the current ranges in the SP500 to leave a lot of people expecting a pullback that doesn't happen.

How good is this Indian bank that they reported stronger results YOY even though they had nearly $300M more in loan provisions. The ability to lower expenses so drastically even though they grew deposits and loans speaks to the efficiency of this bank. -- Profit after tax of US $216M; 39% increase over first quarter -- 42% year-on-year increase in core operating profit (excludes the huge swings in treasury income) -- 12% year-on-year reduction in costs due to cost rationalization measures -- Capital adequacy of 14.01% -- CASA ratio increased to 30% from 25% a year ago IBN continues to launch both domestic and international growth where they can utilize non-resident Indians as customers and a low cost structure in India to run these international operations at lower costs. At October 22, 2008, the Bank had 1,400 branches and 4,530 ATMs. (State Bank of India has 10,000 branches) Current and savings account deposits increased 16% to Rs. 66,914 crore (US$ 14.2 billion) at September 30, ...