Flow Rider

- Huge waves — "Flows are away from developed market equities towards bonds and EM equities. Mega caps have been caught in this underperformance rip tide."
- Awesome — "We estimate European mega caps have at least €375bn of firepower. While the UK mega caps have £200bn. How will it be used? M&A or buy backs?"
- Hang 10 — "M&A will continue the flow imbalance away from mega caps and towards large ex mega and mid cap. Long mega cap is short M&A."
- Radical — "Mega caps struggle under the weight of too many shares issued during the bull market of the late 90s. Be radical. Shrink the share count."
- Wipeout — "Over time those companies that have consistently shrunk the share count have outperformed those that have kept issuing shares."
- Gnarly, dude — "Get in front of the flows. Buy those companies that will retire their own equity and don’t own those who are buying someone else's."


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