Equity Strategies Group-Level Analysis Of The Equity Markets
Select Industries Plays Defense
Health Care Equipment and Health Care Supplies were both downgraded to Unattractive this month. Weight-loss drugs have generated most of the negative headlines in the space, but we’ve also observed slow and steady deterioration in top- and bottom-line growth.
Select Industries Moves Back Into Energy
Oil & Gas Equipment & Services was purchased for the Select Industries portfolio last month, re-establishing exposure to what was our largest overweight entering 2023. The sector leapt from #11 to #4 in the ranks on the back of improved sentiment and macro readings.
Multi-Year Holdings Key To Select Industries
The GS Scores help Leuthold Select Industries portfolio identify underappreciated themes that can turn into multi-year holdings. Managed Health Care has been a holding for over 13 years, while Semiconductor Equipment (seven years), and Homebuilding (six years) have also been long-term winning positions.
Select Industries Remains Active Within Sectors
The portfolio takes a very active approach within sectors, with almost half of its Consumer Discretionary weight allocated to Homebuilding, while completely avoiding Chemicals within the overweight Materials sector.
Group Selection Scores Remain In Gear
The Group Selection Scores have performed well in the first half of 2023, not an easy feat considering the abrupt style reversal that took place in January. Value and technical indicators are struggling, but the rest of the model is more than picking up the slack.
Select Industries Portfolio Shifts From Commodities To Growth
Exposure to commodities (and defense) has fallen rapidly within Select Industries. The primary beneficiaries of that reduction are growth-oriented groups.
Leuthold Select Industries Portfolio
As an all-cap strategy, Select Industries is currently targeting larger market-cap themes via our “Big” groups from Info Tech, Communication Services, and Health Care.
Leuthold Select Industries Portfolio
A combination of strength from Information Technology with weakness from Energy resulted in the two swapping places in our sector ranks this month.
Leuthold Select Industries Portfolio
Select Industries has overweight positions in Energy, Materials, Consumer Discretionary, and Industrials. The portfolio has no exposure to Consumer Staples, Real Estate, or Utilities.
Rankings At The Top Offer Diversified Mix
Energy remains the top-rated sector, but Information Technology, Communication Services, and Financials follow closely behind. These offer a diverse mix of commodity, growth, and cyclical options.
Rate-Sensitive Groups Dominate Unattractive List
Utilities, Real Estate, and Consumer Staples are the bottom three sectors among the GS Scores.
Leuthold’s Industry “Dreams” And “Nightmares”— Annual Update
We update our annual exercise reviewing how the industry “Dreams” and “Nightmares” of the previous year (2021 in this case) fared in the ensuing year (2022), and conclude with the new year’s industry composition of the Dream and Nightmare portfolios based on 2022 performance.
Sector Rankings
Energy, Health Care, and Information Technology kick-off 2023 at top of our sector scores. Energy and Health Care have resided in the 1st and 2nd spots, respectively, for the last three months. Info Tech moved up from the 6th spot in October to 3rd this month. Consumer Discretionary, Real Estate, and Utilities are the lowest rated for the second consecutive month.
Energy Strength Is Intact; GS Scores Continue To Produce Positive Results
Energy has solidified its spot atop the GS Scores; it’s by far the highest-rated sector and counts three underlying groups among the top-ten industries out of all the sectors. Valuations have only improved amid steady outperformance, and renewed capital discipline looks to remain for the foreseeable future.
Sector Rankings
See this month's sector rankings.
Energy Attains #1 Ranking For First Time Since 2009
The Energy sector has improved across a variety of factor subsets, with particularly large jumps in growth and macro/economic categories. For investors weighing investment ideas in the Energy space, we highlight the three Attractive groups for consideration.
S&P/MSCI GICS Changes
It’s that time again when S&P and MSCI reevaluate the Global Industry Classification Standard (GICS) to determine if any changes are warranted. We have a more vested interest in these changes than most, as GICS is the backbone for our industry structure that feeds into the Group Selection (GS) Scores.
Sector Rankings
Energy, Financials, and Information Technology remain at the top of our sector scores. Real Estate made the largest advance as it moved from the 11th ranking to 8th. Communication Services has now dropped to sit among the bottom three (9th spot), joining Consumer Discretionary and Industrials at 10th and 11th, respectively.
Discretionary And Industrials Decline Rapidly In Rankings
Not much has changed at the top of our sector rankings in recent months, with Financials, Energy, and Info Tech in the top three positions. But, we have seen a very rapid decline with two sectors, Consumer Discretionary and Industrials. Over the past several months, these cyclical sectors have sunk to the bottom of our ratings. Here we take a look at what has caused this dramatic drop.
Sector Rankings
See this month's sector rankings.
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