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10 US large-caps FOMO which are getting ‘bid’ because of global safety trade

Last week, we posited that the relentless bid for S&P 500 is in part to the “global safety trade” and as economic/ seismic ripple effects from Coronavirus grow, investors will see “growth stocks” and “large caps” and “relative group” — of which, US equities represent such a trifecta.  And YTD, Growth is beating the overall market by 320bp (R1K Growth vs R1K).

There are more data points supporting this view including large retail inflows into US domestic large-cap funds.  But take a look below, we compare the performance of Growth stocks YTD and their performance based on index inclusion:

– Stocks that are in both the Russell 1000 Growth and S&P 500 Growth are handily outperforming those that are not: 6.7% YTD vs 2.0%-4.3%

This is evidence, in our view, that Global safety trade is causing a surge in US growth stock performance, particularly those in both benchmarks.

10 US large-caps FOMO which are getting 'bid' because of global safety trade



POINT 1: SOME GROWTH STOCKS ARE MASSIVELY CONTRIBUTING TO GROWTH INDEX GAINS…
Below are the top 25 contributors to Index Performance (Russell 1000 Growth and S&P 500 Growth) based on their ratio of “contribution to gains” vs “index weight”

Basically, any stock with this ratio >2.0 is carrying twice its weight in index performance.

– Topping the Russell 1000 Growth list is Tesla (12X) and close behind is UBER (6.6X) and SQ (5.9X).   
– In the S&P 500, it is NOW (4.9X) and MSFT (4.6X).

In other words, these are stocks that Growth Managers might have FOMO, if they are not OW or at least “equal weight” these names.

10 US large-caps FOMO which are getting 'bid' because of global safety trade



POINT 2: 10 FOMO NAMES THAT LIKELY HAVE AN UNDERLYING “BUY THE DIP” BID BY GROWTH MANAGERS
We created a list of stocks that we think could be Growth Manager FOMO names. These are stocks which:

– outsize performance YTD in both Russell 1000 Growth and/or S&P 500 Growth
– outperformed in past 6 months (adding to FOMO pressure) (since Aug 2019)
– but underperformed in the prior 6 months (Feb 2019 to Aug 2019)

The resulting list is 10 stocks shown below:
MSFT, AMZN, TSLA, CRM, UBER, NOW, SQ, TEAM, LHX, WDAY

10 US large-caps FOMO which are getting 'bid' because of global safety trade
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