Corbin Releases Inside The Buy-side®: 1Q16 Earnings Primer

April 13, 2016
Corbin Advisors Research Indicates Investor Sentiment Stabilized; Extreme Market Volatility Seemingly over but Overhangs Linger

Investors Warm To Beaten-down Industrials; U.S. Presidential Election Seen As Negative For Markets

Negative sentiment, which registered highest in December over the last 13 quarters, has thawed; survey finds investor sentiment bifurcated between neutral to bearish and neutral to bullish

  • 43% of investors expect earnings in line with consensus expectations
  • Industrials witnessed an uptick in bullish sentiment for the first time since 4Q14 (October) and have crossed an inflection point, with bulls outpacing bears for the first time since 3Q15 (September)
  • Survey confirms most think we are in late economic cycle; outlook remains challenged with 40% expecting U.S. recession in 2017
  • 57% assert the uncertainty regarding the U.S. Presidential race is having a negative impact on markets; John Kasich seen as best for markets, Bernie Sanders and Donald Trump viewed as worst

HARTFORD, Conn. – April 13, 2016 – Corbin Advisors, a leading investor research and investor relations (IR) advisory firm, today released its quarterly research report, Inside The Buy-side®, a global survey that captures trends in institutional investor sentiment heading into the earnings season.  The poll is based on responses from 60 institutional investors globally managing over $580 billion in assets.

Heading into first quarter earnings season, our survey finds investor sentiment has stabilized after reaching the highest level of bearishness in over three years.  Investor expectations have reset with 75% of U.S.-based investors anticipating earnings results in line to better than consensus, up measurably from 43% last quarter.  European-based investors now hold the most bearish outlook with 38% expecting worse than results.  Nevertheless, outlooks for 2016 remain somewhat muted amid slowing global growth and political uncertainty in the U.S.

“There is still no revenue growth and we might see a decline in the number and magnitude of corporate stock buybacks,” said Rick Kaplan, Chief Investment Officer at Legacy Asset Management.

Survey findings also reflect a bifurcation of sentiment among investment professionals between neutral to bearish, 45%, and neutral to bullish, 41%.  Notably, participants see a bottom for industrials as data confirms the first uptick in bullish sentiment since October 2014 with most expecting oil prices to rise over the next six months.  Investors anticipate U.S. GDP to grow 2.2% in 2016, however, 52% expect China GDP to worsen and global capex spending to remain challenged over the next six months.

“With plunging oil prices, the persistent strengthening U.S. dollar and extreme China fears of January and February behind us for now, we are at an interesting juncture,” commented Rebecca Corbin, Founder and CEO of Corbin Advisors.  The bears continue to latch onto a slow global economy, geopolitical volatility and a cycle seemingly in the late innings while the bulls are embracing a slow but more stable global economic environment, record low real interest rates and a rebounding U.S. dollar to support their thesis.  In this regard, a more pronounced dichotomy of views than is typical has emerged and for now, sentiment is improving although the environment remains fragile.”

Investors’ anticipation of a recession is unchanged from the previous quarter with 64% expecting economic contraction in 2017 or 2018.  Given their perception that we are in the late stages of a prolonged recovery cycle, 84% continue to place more weight on corporate balance sheets when evaluating investments.

Finally, uncertainty regarding the U.S. Presidential election has largely unnerved the investment community.  Participants view John Kasich as best for the markets while a Bernie Sanders or Donald Trump presidency would be most detrimental.  A majority, 57%, report the election is having a negative effect on the financial markets with over one-quarter reporting adjusting their asset allocation as a result.

“At this point the market is acting like [the election] doesn’t exist and is missing the meaning of the anger being expressed,” said Bill Anderson, Portfolio Manager at Carnegie Investment Counsel.

Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinAdvisors.com.

About Corbin Advisors

Corbin Advisors assists public companies with systematically understanding and positively influencing critical institutional investor sentiment by leveraging our proprietary research-based approach.  We provide senior level executives and IR professionals with company-specific quantitative and qualitative feedback from investors and analysts and then draw upon our firm's considerable expertise to guide management teams in shaping those perceptions and maximizing valuation.  Our clients range from highly sophisticated mega-caps to micro-caps worldwide across diverse industries.  Our quarterly investor research report, Inside The Buy-side®, which tracks changes in global institutional investor sentiment, is covered by news affiliates worldwide and regularly featured on CNBC.

To access the full report, visit our website: www.corbinadvisors.com/research-library

Contacts

Corbin Advisors
Bronwyn Swanson, 203-283-7997
bronwyn.swanson@corbinadvisors.com