HOLT US Market Overview March 11 2022.pdf
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About This Presentation
US Market Overview 2022
Slide Content
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSUR E AND THE STATUS OF NON-US
ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that
could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
HOLT
®
US Market Overview –March 2022
Finding Growth within Quality and Capital Discipline
within Value
David Rones,CFA
HOLT Investment Strategy
[email protected]
Sean Burns
HOLT Investment Strategy
[email protected]
Joseph Pecora
HOLT Investment Strategy
[email protected]
RichardCurry PhD
HOLT Investment Strategy
[email protected]
Vishal Bondre
HOLTInvestment Strategy
[email protected]
ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that
could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
HOLT
®
US Market Overview –March 2022
Finding Growth within Quality and Capital Discipline
within Value
David Rones,CFA
HOLT Investment Strategy
[email protected]
Sean Burns
HOLT Investment Strategy
[email protected]
Joseph Pecora
HOLT Investment Strategy
[email protected]
RichardCurry PhD
HOLT Investment Strategy
[email protected]
Vishal Bondre
HOLTInvestment Strategy
[email protected]
HOLT US Market Overview: March 2022
2
Key Debates:
Hyper Growth stocks have underperformed the U.S. market by -18% so far in 2022 and have now cumulatively underperformed since
the start of 2020. Is it time to reengage with the group?
Pages10-15.
Qualityappeals during periods of market uncertainty and Quality stocks, particularly Quality Defensives,have performed admirably
during the recent market weakness. Looking ahead, where are the most attractive opportunities within high Quality?
Pages 16-22.
Value has offered the best offense in 2022driven by Cyclical Value stocks. Value stocks have meaningfully outperformed over the last
year, profitability forecasts have already improved, and economic growth looks to be slowing. Can the Value rotation continue?
Pages 23-33.
Recent HOLT Investment Strategy documents:
A Bad Stretch for Good Companies Offers a Chance to Selectively Upgrade Quality: HOLT Global Market Overview –Feb 22 / Video Replay
The Prospects for FAAMG after a Decade of Dominance
Hyper Growth Suffered in '21, but Quality and Value Remain More Appealing: HOLT U.S. Market Overview -December 2021/ Video Replay
U.S. Value Stocks are Becoming Harder to Ignore –September 2021 / Video Replay
US Quality Growth with International Value for the Best of Both Worlds –September 2021/ Video Replay
Quality and Growth have decoupled in the U.S. Investors should stick with Quality -HOLT US Market Overview -June 2021 / Video Replay
Investors Have No Appetite for U.S. Defensive Stocks
2
Key Debates:
Hyper Growth stocks have underperformed the U.S. market by -18% so far in 2022 and have now cumulatively underperformed since
the start of 2020. Is it time to reengage with the group?
Pages10-15.
Qualityappeals during periods of market uncertainty and Quality stocks, particularly Quality Defensives,have performed admirably
during the recent market weakness. Looking ahead, where are the most attractive opportunities within high Quality?
Pages 16-22.
Value has offered the best offense in 2022driven by Cyclical Value stocks. Value stocks have meaningfully outperformed over the last
year, profitability forecasts have already improved, and economic growth looks to be slowing. Can the Value rotation continue?
Pages 23-33.
Recent HOLT Investment Strategy documents:
A Bad Stretch for Good Companies Offers a Chance to Selectively Upgrade Quality: HOLT Global Market Overview –Feb 22 / Video Replay
The Prospects for FAAMG after a Decade of Dominance
Hyper Growth Suffered in '21, but Quality and Value Remain More Appealing: HOLT U.S. Market Overview -December 2021/ Video Replay
U.S. Value Stocks are Becoming Harder to Ignore –September 2021 / Video Replay
US Quality Growth with International Value for the Best of Both Worlds –September 2021/ Video Replay
Quality and Growth have decoupled in the U.S. Investors should stick with Quality -HOLT US Market Overview -June 2021 / Video Replay
Investors Have No Appetite for U.S. Defensive Stocks
3
Factors
Factors
24%
23%
18%
10%
8%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
ValuationLow VolatilityOverall QualityMomentum Growth
Last 12 Months: Q1Factor vs. Equal Weight Universe
13%
9%
7%
3%
2%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
ValuationLow VolatilityOverallMomentum Quality Growth
Year to Date: Q1Factor vs. Equal Weight Universe
4
The Valuation factor has continued to deliver strong returns in 2022 and
the highest Growth stocks have lagged.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
Overall Scorecard Score = 33% Quality + 33% Momentum + 33% Valuation. For more on the HOLT Scorecard see HOLT Scorecard & Factor Library Primer
23%
18%
10%
8%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
ValuationLow VolatilityOverall QualityMomentum Growth
Last 12 Months: Q1Factor vs. Equal Weight Universe
13%
9%
7%
3%
2%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
ValuationLow VolatilityOverallMomentum Quality Growth
Year to Date: Q1Factor vs. Equal Weight Universe
4
The Valuation factor has continued to deliver strong returns in 2022 and
the highest Growth stocks have lagged.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
Overall Scorecard Score = 33% Quality + 33% Momentum + 33% Valuation. For more on the HOLT Scorecard see HOLT Scorecard & Factor Library Primer
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Low Volatility
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
High Quality
5
Factor rotations on display.
Cheap Value = Valuation Factor.
Using Region relative Factor Percentiles.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/14/2022.
Rolling 12-Month Excess Returns of Factor Top Quintile (Q1) vs Equally Weighted Market (Top 1000 US)
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cheap Valuation
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
High Growth
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Low Volatility
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
High Quality
5
Factor rotations on display.
Cheap Value = Valuation Factor.
Using Region relative Factor Percentiles.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/14/2022.
Rolling 12-Month Excess Returns of Factor Top Quintile (Q1) vs Equally Weighted Market (Top 1000 US)
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cheap Valuation
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
High Growth
6
Market Segments
Market Segments
31%
19%
17%
13%
2%
-32%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Stable YieldQuality
Defensives
Cyclical
Value
Banks &
Insurance
Quality
Growth
Hyper
Growth
Last 12 Month Total Returns vs. USA Top 1000 Universe
13% 13%
11%
6%
-7%
-18%-20%
-15%
-10%
-5%
0%
5%
10%
15%
Cyclical
Value
Stable YieldBanks &
Insurance
Quality
Defensives
Quality
Growth
Hyper
Growth
Year to Date Total Returns vs. USA Top 1000 Universe
7
The Hyper Growth segment has continued to lag while Value and
Defensive segments have continued to outperform.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
See appendix for segment definitions.
19%
17%
13%
2%
-32%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Stable YieldQuality
Defensives
Cyclical
Value
Banks &
Insurance
Quality
Growth
Hyper
Growth
Last 12 Month Total Returns vs. USA Top 1000 Universe
13% 13%
11%
6%
-7%
-18%-20%
-15%
-10%
-5%
0%
5%
10%
15%
Cyclical
Value
Stable YieldBanks &
Insurance
Quality
Defensives
Quality
Growth
Hyper
Growth
Year to Date Total Returns vs. USA Top 1000 Universe
7
The Hyper Growth segment has continued to lag while Value and
Defensive segments have continued to outperform.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
See appendix for segment definitions.
-10
-8
-6
-4
-2
0
2
4
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Segment Median Market Implied Yield (MIY) Spread vs Market
Quality GrowthHyper Growth Quality DefensivesStable YieldBanks & InsuranceCyclical Value
High Risk / Required Return
Low Risk / Required Return
8
Dispersion in Market Implied Yields across segments has narrowed,
yet remains very wide relative to history.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the HOLT
CFROE
®
model are trimmed by 150 bps throughout this analysis to preserve comparability.
-8
-6
-4
-2
0
2
4
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Segment Median Market Implied Yield (MIY) Spread vs Market
Quality GrowthHyper Growth Quality DefensivesStable YieldBanks & InsuranceCyclical Value
High Risk / Required Return
Low Risk / Required Return
8
Dispersion in Market Implied Yields across segments has narrowed,
yet remains very wide relative to history.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the HOLT
CFROE
®
model are trimmed by 150 bps throughout this analysis to preserve comparability.
0.9
1.2
-0.2
-0.3
-1.2
-2.6
1.7
2.1
1.5
-0.8
-0.9
-4.5
1.8 1.7
0.2
-0.6
-1.7
-3.2
-5
-4
-3
-2
-1
0
1
2
3
Cyclical Value Banks & Insurance Stable Yield Quality
Growth
Quality
Defensives
Hyper
Growth
Median Market Implied Yield, Spread vs. Market Median
20Yr Median Mar '21 Current
9
Afew relative tradeoffs have shifted over the last year.
High Risk / Required Return
Low Risk / Required Return
Source: Credit Suisse HOLT, Data Date: 3/15/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the HOLT
CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
1.2
-0.2
-0.3
-1.2
-2.6
1.7
2.1
1.5
-0.8
-0.9
-4.5
1.8 1.7
0.2
-0.6
-1.7
-3.2
-5
-4
-3
-2
-1
0
1
2
3
Cyclical Value Banks & Insurance Stable Yield Quality
Growth
Quality
Defensives
Hyper
Growth
Median Market Implied Yield, Spread vs. Market Median
20Yr Median Mar '21 Current
9
Afew relative tradeoffs have shifted over the last year.
High Risk / Required Return
Low Risk / Required Return
Source: Credit Suisse HOLT, Data Date: 3/15/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the HOLT
CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
10
U.S. Hyper Growth Stocks Remain Unappealing
U.S. Hyper Growth Stocks Remain Unappealing
11
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/10/2022. Universe defined as largest 1000 companies by ttmmarket cap. Returns equally weighted.
Round Trip Complete –U.S. Hyper Growth is a market-performer since
the beginning of the pandemic.
Hyper Growth -Broadening of Growth may Derail the Hype Train–Feb 2021
Hyper Growth Suffered in '21, but Quality and Value Remain More Appealing–Dec 2021
50
75
100
125
150
175
200
225
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22
Total Return Since 2020
US Hyper Growth Top 1000 US
Examples of firmsthat have been
classified as Hyper Growth over the last
year and are more than 50% down from
52-Week highs. Largest names shown.
TickerName
ROKU ROKU
ZM ZOOM VIDEO
DOCU DOCUSIGN
PINS PINTEREST
DASH DOORDASH
SHOP SHOPIFY
W WAYFAIR
SQ BLOCK
SNAP SNAP
U UNITY SOFTWARE
PLTR PALANTIR
NET CLOUDFLARE
CHWY CHEWY
SPOT SPOTIFY
SNOW SNOWFLAKE
HUBS HUBSPOT
MDB MONGODB
BILL BILL.COM
TEAM ATLASSIAN
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/10/2022. Universe defined as largest 1000 companies by ttmmarket cap. Returns equally weighted.
Round Trip Complete –U.S. Hyper Growth is a market-performer since
the beginning of the pandemic.
Hyper Growth -Broadening of Growth may Derail the Hype Train–Feb 2021
Hyper Growth Suffered in '21, but Quality and Value Remain More Appealing–Dec 2021
50
75
100
125
150
175
200
225
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22
Total Return Since 2020
US Hyper Growth Top 1000 US
Examples of firmsthat have been
classified as Hyper Growth over the last
year and are more than 50% down from
52-Week highs. Largest names shown.
TickerName
ROKU ROKU
ZM ZOOM VIDEO
DOCU DOCUSIGN
PINS PINTEREST
DASH DOORDASH
SHOP SHOPIFY
W WAYFAIR
SQ BLOCK
SNAP SNAP
U UNITY SOFTWARE
PLTR PALANTIR
NET CLOUDFLARE
CHWY CHEWY
SPOT SPOTIFY
SNOW SNOWFLAKE
HUBS HUBSPOT
MDB MONGODB
BILL BILL.COM
TEAM ATLASSIAN
-9.0
-8.0
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Hyper Growth –Market Implied Yield Spread to US Top 1000
12
U.S. Hyper Growth stocks are still the most expensive market
segment, but the implied yield spread continues to narrow toward the
long-term average level.
March 15
th
2022 = -3.2
2018-2019 Average = -3.9
Long-term Average = -2.6
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTM market cap.
Market Implied Yields for Financial firms on the HOLT CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
-8.0
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Hyper Growth –Market Implied Yield Spread to US Top 1000
12
U.S. Hyper Growth stocks are still the most expensive market
segment, but the implied yield spread continues to narrow toward the
long-term average level.
March 15
th
2022 = -3.2
2018-2019 Average = -3.9
Long-term Average = -2.6
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTM market cap.
Market Implied Yields for Financial firms on the HOLT CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
13
Hyper Growth’s growth advantage is forecasted to decline over the
next several years.
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ serviceas of 3/10/2022.
Consensus sales growth estimates measured for Hyper Growth constituents as of 12/31/2021.
Long-Term Median: 18.7%
26.9
28.6
22.8
18.0
15.6
15.2
0
5
10
15
20
25
30
35
40
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Median Sales Growth Spread (Hyper Growth
-
Universe)
Hyper Growth’s Growth Advantage
Median Sales Growth of Hyper Growth stocks relative to Median Sales Growth of U.S. Top 1000 Companies
Hyper Growth’s growth advantage is forecasted to decline over the
next several years.
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ serviceas of 3/10/2022.
Consensus sales growth estimates measured for Hyper Growth constituents as of 12/31/2021.
Long-Term Median: 18.7%
26.9
28.6
22.8
18.0
15.6
15.2
0
5
10
15
20
25
30
35
40
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Median Sales Growth Spread (Hyper Growth
-
Universe)
Hyper Growth’s Growth Advantage
Median Sales Growth of Hyper Growth stocks relative to Median Sales Growth of U.S. Top 1000 Companies
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
Median Market Implied Yield Spread vs Market
Hyper Growth Quality Growth
High Risk / Required Return
Low Risk / Required Return
14
For investors seeking Growth, CFROI® Revisions, Beta, and Valuation
Spreads make Quality Growth more attractive than Hyper Growth.
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ serviceas of 3/14/2022.
Beta calculated using rolling 252-day returns of equally weighted group vs the equally weighted Top 1000 US Companies.
Revisions ValuationRisk
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
13-Week CFROI Revisions Breadth
(% Positive)
Quality Growth Hyper Growth
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Rolling 252-Day Beta vs US Top 1000
Quality Growth Hyper Growth
-8
-7
-6
-5
-4
-3
-2
-1
0
1
Median Market Implied Yield Spread vs Market
Hyper Growth Quality Growth
High Risk / Required Return
Low Risk / Required Return
14
For investors seeking Growth, CFROI® Revisions, Beta, and Valuation
Spreads make Quality Growth more attractive than Hyper Growth.
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ serviceas of 3/14/2022.
Beta calculated using rolling 252-day returns of equally weighted group vs the equally weighted Top 1000 US Companies.
Revisions ValuationRisk
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
13-Week CFROI Revisions Breadth
(% Positive)
Quality Growth Hyper Growth
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Rolling 252-Day Beta vs US Top 1000
Quality Growth Hyper Growth
An Allocation to the U.S. Hyper Growth segment remains unattractive.
15Related: Aiding Software Investors in Pursuit of the next Big Winners
Hyper Growth stocks with CFROI < 5%
(FY-1, LFY, FY1 all less than 5%)
Source: Credit Suisse HOLT Lens™, Data Date: 3/14/2022.
Click here to see full list in HOLT Lens
Hyper Growth stocks with CFROI > 5%
(FY-1, LFY, FY1 all greater than 5%)
Click here to see full list in HOLT Lens
Hyper Growth stocks with expensive valuations and
nascent profitabilitywarrant the most caution…
… though there are some firms exhibiting
evidence of scaling and are worth monitoring.
Name Symbol Mkt Cap
SNOWFLAKE INC SNOW 52.0
CROWDSTRIKE HOLDINGS INC CRWD 42.6
DOORDASH INC DASH 29.8
ZSCALER INC ZS 28.2
CLOUDFLARE INC NET 27.7
OKTA INC OKTA 24.0
UNITY SOFTWARE INC U 22.3
MONGODB INC MDB 20.9
PALANTIR TECHNOLOGIES INC PLTR 20.8
HUBSPOT INC HUBS 19.5
SPLUNK INC SPLK 19.4
BILL.COM HOLDINGS INC BILL 19.4
PLUG POWER INC PLUG 11.2
TELADOC HEALTH INC TDOC 8.7
Name Symbol Mkt Cap
SALESFORCE.COM INC CRM 194.7
SERVICENOW INC NOW 102.2
ATLASSIAN CORP PLC TEAM 62.0
PALO ALTO NETWORKS INC PANW 53.8
MARVELL TECHNOLOGY INC MRVL 53.1
ILLUMINA INC ILMN 47.7
AUTODESK INC ADSK 42.3
DEXCOM INC DXCM 37.8
ZOOM VIDEO COMMUNICATIONS ZM 29.2
TRADE DESK INC TTD 27.5
COSTAR GROUP INC CSGP 21.9
PINTEREST INC PINS 15.2
ROKU INC ROKU 13.9
PAYLOCITY HOLDING CORP PCTY 10.4
15Related: Aiding Software Investors in Pursuit of the next Big Winners
Hyper Growth stocks with CFROI < 5%
(FY-1, LFY, FY1 all less than 5%)
Source: Credit Suisse HOLT Lens™, Data Date: 3/14/2022.
Click here to see full list in HOLT Lens
Hyper Growth stocks with CFROI > 5%
(FY-1, LFY, FY1 all greater than 5%)
Click here to see full list in HOLT Lens
Hyper Growth stocks with expensive valuations and
nascent profitabilitywarrant the most caution…
… though there are some firms exhibiting
evidence of scaling and are worth monitoring.
Name Symbol Mkt Cap
SNOWFLAKE INC SNOW 52.0
CROWDSTRIKE HOLDINGS INC CRWD 42.6
DOORDASH INC DASH 29.8
ZSCALER INC ZS 28.2
CLOUDFLARE INC NET 27.7
OKTA INC OKTA 24.0
UNITY SOFTWARE INC U 22.3
MONGODB INC MDB 20.9
PALANTIR TECHNOLOGIES INC PLTR 20.8
HUBSPOT INC HUBS 19.5
SPLUNK INC SPLK 19.4
BILL.COM HOLDINGS INC BILL 19.4
PLUG POWER INC PLUG 11.2
TELADOC HEALTH INC TDOC 8.7
Name Symbol Mkt Cap
SALESFORCE.COM INC CRM 194.7
SERVICENOW INC NOW 102.2
ATLASSIAN CORP PLC TEAM 62.0
PALO ALTO NETWORKS INC PANW 53.8
MARVELL TECHNOLOGY INC MRVL 53.1
ILLUMINA INC ILMN 47.7
AUTODESK INC ADSK 42.3
DEXCOM INC DXCM 37.8
ZOOM VIDEO COMMUNICATIONS ZM 29.2
TRADE DESK INC TTD 27.5
COSTAR GROUP INC CSGP 21.9
PINTEREST INC PINS 15.2
ROKU INC ROKU 13.9
PAYLOCITY HOLDING CORP PCTY 10.4
16
Stock Selection Within Quality
Stock Selection Within Quality
17
The Profitability advantage of the highest Quality stocks has
continued to expand over the past decade.
Source: Credit Suisse HOLT, Data Date: 2/28/2022. Universe: Top 1000 US Companies by ttmmarket cap. Uses Region Relative Factor Percentiles.
-5
0
5
10
15
20
25
198019831986198919921995199820012004200720102013201620192022
Median Forecasted CFROI by Quintile of Quality
Q1 Q2 Q3 Q4 Q5
Ticker Name
MSFT MICROSOFT
HD HOME DEPOT
KO COCA-COLA
AVGO BROADCOM
ADBE ADOBE
ACN ACCENTURE
MDT MEDTRONIC
INTU INTUIT
AMAT APPLIED MATERIALS
ADP AUTOMATIC DATA
ADI ANALOG DEVICES
ICE INTERCONTINENTAL EXCH
AON AON
ITW ILLINOIS TOOL WORKS
CL COLGATE-PALMOLIVE
SHW SHERWIN-WILLIAMS
FISV FISERV
MAR MARRIOTT INTL
KDP KEURIG DR PEPPER
Examples of Top Quintile Quality firms
continuing to improve CFROI. Largest
names shown. See full list in HOLT Lens.
The Profitability advantage of the highest Quality stocks has
continued to expand over the past decade.
Source: Credit Suisse HOLT, Data Date: 2/28/2022. Universe: Top 1000 US Companies by ttmmarket cap. Uses Region Relative Factor Percentiles.
-5
0
5
10
15
20
25
198019831986198919921995199820012004200720102013201620192022
Median Forecasted CFROI by Quintile of Quality
Q1 Q2 Q3 Q4 Q5
Ticker Name
MSFT MICROSOFT
HD HOME DEPOT
KO COCA-COLA
AVGO BROADCOM
ADBE ADOBE
ACN ACCENTURE
MDT MEDTRONIC
INTU INTUIT
AMAT APPLIED MATERIALS
ADP AUTOMATIC DATA
ADI ANALOG DEVICES
ICE INTERCONTINENTAL EXCH
AON AON
ITW ILLINOIS TOOL WORKS
CL COLGATE-PALMOLIVE
SHW SHERWIN-WILLIAMS
FISV FISERV
MAR MARRIOTT INTL
KDP KEURIG DR PEPPER
Examples of Top Quintile Quality firms
continuing to improve CFROI. Largest
names shown. See full list in HOLT Lens.
18
Quality stocks have been resilient during the recent market drawdown.
Quality Defensives have provided the most insulation while Quality
Growth stocks underperformed.
Source: Credit Suisse HOLT, Bloomberg. Data Date: 3/14/2022. Universe = USA Top 1000.
US Top 1000
-18.3
Quality Growth
-24.2
Quality Defensive
-8.5
Q1 Quality
-13.6
-30
-25
-20
-15
-10
-5
0
5 Max Drawdown
US Top 1000
Quality Growth
Quality Defensive
Q1 Quality
Quality stocks have been resilient during the recent market drawdown.
Quality Defensives have provided the most insulation while Quality
Growth stocks underperformed.
Source: Credit Suisse HOLT, Bloomberg. Data Date: 3/14/2022. Universe = USA Top 1000.
US Top 1000
-18.3
Quality Growth
-24.2
Quality Defensive
-8.5
Q1 Quality
-13.6
-30
-25
-20
-15
-10
-5
0
5 Max Drawdown
US Top 1000
Quality Growth
Quality Defensive
Q1 Quality
-4
-3
-2
-1
0
1
2
19911994199720002003200620092012201520182021
Quality Defensives Market Implied Yield (MIY),
Spread vs Quality Growth
-4
-3
-2
-1
0
1
2
19911994199720002003200620092012201520182021
Quality Defensives Market Implied Yield (MIY),
Spread vs Market
0
1
2
3
4
5
6
7
8
19911994199720002003200620092012201520182021
Quality Defensives Median Market Implied Yield
(MIY)
High Risk / Required Return
Low Risk / Required Return
19
Quality Defensives are expensive in absolute terms, relative the U.S.
market, and relative to Quality Growth names.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US Companies by ttmmarket cap.
Current = 1.6, 6%ile Current = -1.7, 11%ile
Current = -1.1, 17%ile
Examples of firmsthat have been classified as Quality
Defensives over the last year and seen Market
Implied Yields decline in absolute terms:
TickerName
ICE INTERCONTINENTAL EXCHANGE
SJM JM SMUCKER
COST COSTCO WHOLESALE
HRL HORMEL FOODS
HSY HERSHEY
KO COCA-COLA
KMB KIMBERLY-CLARK
AJG ARTHUR J GALLAGHER
PG PROCTER & GAMBLE
GIS GENERAL MILLS
-3
-2
-1
0
1
2
19911994199720002003200620092012201520182021
Quality Defensives Market Implied Yield (MIY),
Spread vs Quality Growth
-4
-3
-2
-1
0
1
2
19911994199720002003200620092012201520182021
Quality Defensives Market Implied Yield (MIY),
Spread vs Market
0
1
2
3
4
5
6
7
8
19911994199720002003200620092012201520182021
Quality Defensives Median Market Implied Yield
(MIY)
High Risk / Required Return
Low Risk / Required Return
19
Quality Defensives are expensive in absolute terms, relative the U.S.
market, and relative to Quality Growth names.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US Companies by ttmmarket cap.
Current = 1.6, 6%ile Current = -1.7, 11%ile
Current = -1.1, 17%ile
Examples of firmsthat have been classified as Quality
Defensives over the last year and seen Market
Implied Yields decline in absolute terms:
TickerName
ICE INTERCONTINENTAL EXCHANGE
SJM JM SMUCKER
COST COSTCO WHOLESALE
HRL HORMEL FOODS
HSY HERSHEY
KO COCA-COLA
KMB KIMBERLY-CLARK
AJG ARTHUR J GALLAGHER
PG PROCTER & GAMBLE
GIS GENERAL MILLS
20
Illustrating the widening valuation tradeoff between Quality Growth
(left) and Quality Defensives (right).
Source: Credit Suisse HOLT Lens, Data Date: 3/14/2022.
Top 20 by market cap shown, see full list and screening
criteria in HOLT Lens.
Top 20 by market cap shown, see full list and screening
criteria in HOLT Lens.
Reasonably Priced Quality GrowthIdeas: Expensive Quality DefensiveIdeas:
Name SymbolMktCap
WALMART INC WMT 387.4
PROCTER & GAMBLE CO PG 356.6
COCA-COLA CO KO 255.0
COSTCO WHOLESALE CORP COST 233.1
PEPSICO INC PEP 217.7
DANAHER CORP DHR 189.4
MEDTRONIC PLC MDT 139.1
AMERICAN TOWER CORP AMT 106.1
ZOETIS INC ZTS 89.6
CME GROUP INC CME 82.4
BECTON DICKINSON & CO BDX 75.4
CROWN CASTLE INTL CORP CCI 75.2
INTERCONTINENTAL EXCHANGE ICE 72.3
GENERAL DYNAMICS CORP GD 65.7
COLGATE-PALMOLIVE CO CL 63.5
WASTE MANAGEMENT INC WM 62.4
HERSHEY CO HSY 42.2
KIMBERLY-CLARK CORP KMB 41.6
BAXTER INTERNATIONAL INC BAX 40.0
GENERAL MILLS INC GIS 38.7
Name SymbolMktCap
MICROSOFT CORP MSFT 2100.5
ALPHABET INC GOOGL 1719.8
VISA INC V 416.2
ACCENTURE PLC ACN 196.9
BLACKSTONE GROUP INC BX 137.9
S&P GLOBAL INC SPGI 137.9
INTUIT INC INTU 120.0
DEERE & CO DE 120.0
ANALOG DEVICES ADI 77.5
AON PLC AON 65.4
ACTIVISION BLIZZARD INC ATVI 62.6
BOSTON SCIENTIFIC CORP BSX 59.4
MOODY'S CORP MCO 56.6
KLA CORP KLAC 48.8
LULULEMON ATHLETICA INC LULU 37.7
GLOBAL PAYMENTS INC GPN 36.2
OLD DOMINION FREIGHT ODFL 35.2
CBRE GROUP INC CBRE 29.4
AMETEK INC AME 29.3
COPART INC CPRT 27.4
Illustrating the widening valuation tradeoff between Quality Growth
(left) and Quality Defensives (right).
Source: Credit Suisse HOLT Lens, Data Date: 3/14/2022.
Top 20 by market cap shown, see full list and screening
criteria in HOLT Lens.
Top 20 by market cap shown, see full list and screening
criteria in HOLT Lens.
Reasonably Priced Quality GrowthIdeas: Expensive Quality DefensiveIdeas:
Name SymbolMktCap
WALMART INC WMT 387.4
PROCTER & GAMBLE CO PG 356.6
COCA-COLA CO KO 255.0
COSTCO WHOLESALE CORP COST 233.1
PEPSICO INC PEP 217.7
DANAHER CORP DHR 189.4
MEDTRONIC PLC MDT 139.1
AMERICAN TOWER CORP AMT 106.1
ZOETIS INC ZTS 89.6
CME GROUP INC CME 82.4
BECTON DICKINSON & CO BDX 75.4
CROWN CASTLE INTL CORP CCI 75.2
INTERCONTINENTAL EXCHANGE ICE 72.3
GENERAL DYNAMICS CORP GD 65.7
COLGATE-PALMOLIVE CO CL 63.5
WASTE MANAGEMENT INC WM 62.4
HERSHEY CO HSY 42.2
KIMBERLY-CLARK CORP KMB 41.6
BAXTER INTERNATIONAL INC BAX 40.0
GENERAL MILLS INC GIS 38.7
Name SymbolMktCap
MICROSOFT CORP MSFT 2100.5
ALPHABET INC GOOGL 1719.8
VISA INC V 416.2
ACCENTURE PLC ACN 196.9
BLACKSTONE GROUP INC BX 137.9
S&P GLOBAL INC SPGI 137.9
INTUIT INC INTU 120.0
DEERE & CO DE 120.0
ANALOG DEVICES ADI 77.5
AON PLC AON 65.4
ACTIVISION BLIZZARD INC ATVI 62.6
BOSTON SCIENTIFIC CORP BSX 59.4
MOODY'S CORP MCO 56.6
KLA CORP KLAC 48.8
LULULEMON ATHLETICA INC LULU 37.7
GLOBAL PAYMENTS INC GPN 36.2
OLD DOMINION FREIGHT ODFL 35.2
CBRE GROUP INC CBRE 29.4
AMETEK INC AME 29.3
COPART INC CPRT 27.4
21
To illustrate, implied sales growth for many Quality Growth and Quality
Defensive stocks appear similar...
Source: Credit Suisse HOLT, Data Date: 3/11/2022.
Implied Growth = 10 Year Sales Growth CAGR Implied by Current Stock Price.
Calculated in HOLT Lens using a 10-year forecast assuming flat asset turns, IBES margins through 2024 and then held flat, and solve for current price (0% upside).
Name SymbolMktCap
Implied
Growth
MICROSOFT CORP MSFT $ 2,100.5 8.0%
ALPHABET INC GOOGL $ 1,719.8 6.0%
VISA INC V $ 416.2 8.0%
ACCENTURE PLC ACN $ 196.9 8.5%
S&P GLOBAL INC SPGI $ 137.9 7.5%
INTUIT INC INTU $ 120.0 10.0%
BOSTON SCIENTIFIC CORP BSX $ 59.4 6.0%
KLA CORP KLAC $ 48.8 5.0%
GENERAC HOLDINGS INC GNRC $ 18.0 9.0%
POOL CORP POOL $ 17.8 9.0%
US Quality Growth Examples US Quality Defensive Examples
Name SymbolMktCap
Implied
Growth
PROCTER & GAMBLE CO PG $ 356.6 7.0%
COCA-COLA CO KO $ 255.0 8.0%
COSTCO WHOLESALE CORP COST $ 233.1 10.0%
PEPSICO INC PEP $ 217.7 6.0%
DANAHER CORP DHR $ 189.4 7.0%
ZOETIS INC ZTS $ 89.6 9.0%
CROWN CASTLE INTL CORP CCI $ 75.2 9.0%
INTERCONTINENTAL EXCHANGE ICE $ 72.3 8.5%
COLGATE-PALMOLIVE CO CL $ 63.5 6.0%
WASTE MANAGEMENT INC WM $ 62.4 8.0%
To illustrate, implied sales growth for many Quality Growth and Quality
Defensive stocks appear similar...
Source: Credit Suisse HOLT, Data Date: 3/11/2022.
Implied Growth = 10 Year Sales Growth CAGR Implied by Current Stock Price.
Calculated in HOLT Lens using a 10-year forecast assuming flat asset turns, IBES margins through 2024 and then held flat, and solve for current price (0% upside).
Name SymbolMktCap
Implied
Growth
MICROSOFT CORP MSFT $ 2,100.5 8.0%
ALPHABET INC GOOGL $ 1,719.8 6.0%
VISA INC V $ 416.2 8.0%
ACCENTURE PLC ACN $ 196.9 8.5%
S&P GLOBAL INC SPGI $ 137.9 7.5%
INTUIT INC INTU $ 120.0 10.0%
BOSTON SCIENTIFIC CORP BSX $ 59.4 6.0%
KLA CORP KLAC $ 48.8 5.0%
GENERAC HOLDINGS INC GNRC $ 18.0 9.0%
POOL CORP POOL $ 17.8 9.0%
US Quality Growth Examples US Quality Defensive Examples
Name SymbolMktCap
Implied
Growth
PROCTER & GAMBLE CO PG $ 356.6 7.0%
COCA-COLA CO KO $ 255.0 8.0%
COSTCO WHOLESALE CORP COST $ 233.1 10.0%
PEPSICO INC PEP $ 217.7 6.0%
DANAHER CORP DHR $ 189.4 7.0%
ZOETIS INC ZTS $ 89.6 9.0%
CROWN CASTLE INTL CORP CCI $ 75.2 9.0%
INTERCONTINENTAL EXCHANGE ICE $ 72.3 8.5%
COLGATE-PALMOLIVE CO CL $ 63.5 6.0%
WASTE MANAGEMENT INC WM $ 62.4 8.0%
22
…but the Quality Growth names have been improving CFROI and have
delivered higher and more consistent growth.
Source: Credit Suisse HOLT Lens, Data Date: 3/14/2022. Static universe used based on screens from page 20.
Reasonably Priced Quality Growth, Median Weighted Expensive Quality Defensive, Median Weighted
CFROI (%)
Asset Growth (%)
CFROI (%)
Asset Growth (%)
…but the Quality Growth names have been improving CFROI and have
delivered higher and more consistent growth.
Source: Credit Suisse HOLT Lens, Data Date: 3/14/2022. Static universe used based on screens from page 20.
Reasonably Priced Quality Growth, Median Weighted Expensive Quality Defensive, Median Weighted
CFROI (%)
Asset Growth (%)
CFROI (%)
Asset Growth (%)
23
Stock Selection Within Value
Stock Selection Within Value
Feb-00, -55%
Feb-10, 48%
Sep-20, -37%
Feb-22, 35%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
19901992199419961998200020022004200620082010201220142016201820202022
24
Value stocks recently outperformed Growth by the most since 2001…
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe defined as Top 1000 US Companies by ttmmarket cap.
High Growth = Highest quintile using Region relative Factor Percentiles.
Cheap Systematic Value = Cheapest quintile using Region relative Factor Percentiles.
Rolling 12-Month Long/Short Return: Cheap Value vs High Growth
Feb-01, 121%
Feb-10, 48%
Sep-20, -37%
Feb-22, 35%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
19901992199419961998200020022004200620082010201220142016201820202022
24
Value stocks recently outperformed Growth by the most since 2001…
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe defined as Top 1000 US Companies by ttmmarket cap.
High Growth = Highest quintile using Region relative Factor Percentiles.
Cheap Systematic Value = Cheapest quintile using Region relative Factor Percentiles.
Rolling 12-Month Long/Short Return: Cheap Value vs High Growth
Feb-01, 121%
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
19901992199419961998200020022004200620082010201220142016201820202022
25
...but, Value stocks still trade at a significant discount to Growth.
Ratio of Median HOLT Price to Book: Cheap Value vs High Growth
Current:
Cheap Value: 1.3x
High Growth: 7.4x
Dec 2020:
Cheap Value: 1.1x
High Growth: 9.7x
Feb 2000:
Cheap Value: 1.0x
High Growth: 12.0x
Sept 2002:
Cheap Value: 0.9x
High Growth: 2.9x
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe defined as Top 1000 US Companies by ttmmarket cap.
High Growth = Highest quintile using Region relative Factor Percentiles. Long-term median HOLT P/B = 3.8x.
Cheap Systematic Value = Cheapest quintile using Region relative Factor Percentiles. Long-term median HOLT P/B = 1.1x.
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
19901992199419961998200020022004200620082010201220142016201820202022
25
...but, Value stocks still trade at a significant discount to Growth.
Ratio of Median HOLT Price to Book: Cheap Value vs High Growth
Current:
Cheap Value: 1.3x
High Growth: 7.4x
Dec 2020:
Cheap Value: 1.1x
High Growth: 9.7x
Feb 2000:
Cheap Value: 1.0x
High Growth: 12.0x
Sept 2002:
Cheap Value: 0.9x
High Growth: 2.9x
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe defined as Top 1000 US Companies by ttmmarket cap.
High Growth = Highest quintile using Region relative Factor Percentiles. Long-term median HOLT P/B = 3.8x.
Cheap Systematic Value = Cheapest quintile using Region relative Factor Percentiles. Long-term median HOLT P/B = 1.1x.
-4
-3
-2
-1
0
1
2
3
4
5
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Segment Median Market Implied Yield (MIY) Spread vs Market
Stable Yield Banks & Insurance Cyclical Value
High Risk / Required Return
Low Risk / Required Return
26
Within Value, Cyclical Value implied yields have recently exceeded
Banks & Insurance for the first time since mid-2018.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the
HOLT CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
-3
-2
-1
0
1
2
3
4
5
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Segment Median Market Implied Yield (MIY) Spread vs Market
Stable Yield Banks & Insurance Cyclical Value
High Risk / Required Return
Low Risk / Required Return
26
Within Value, Cyclical Value implied yields have recently exceeded
Banks & Insurance for the first time since mid-2018.
Source: Credit Suisse HOLT, Data Date: 3/14/2022. Universe: Top 1000 US companies by TTMmarket cap. Market Implied Yields for Financial firms on the
HOLT CFROE model are trimmed by 150 bps throughout this analysis to preserve comparability.
27
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe Top 1000 US Companies by ttmmarket cap.
Revisions breadth calculated as the % of companies with positive revisions over the trailing 13-weeks divided by the number of companies with non-zero revisions over the same period.
Forecasted levels of Profitability for Cyclical Value stocks are near
decade highs.
U.S. Cyclical Value Stocks
0
1
2
3
4
5
6
7
8
9
19901992199419961998200020022004200620082010201220142016201820202022
Median Forecasted CFROI (next 12-months)
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
Universe Top 1000 US Companies by ttmmarket cap.
Revisions breadth calculated as the % of companies with positive revisions over the trailing 13-weeks divided by the number of companies with non-zero revisions over the same period.
Forecasted levels of Profitability for Cyclical Value stocks are near
decade highs.
U.S. Cyclical Value Stocks
0
1
2
3
4
5
6
7
8
9
19901992199419961998200020022004200620082010201220142016201820202022
Median Forecasted CFROI (next 12-months)
28
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/9/2022.
Universe defined as Cyclical Value stocks within largest 1000 US Companies based on ttmmarket cap.
However, there are reasons for skepticism. Slowing global economic
growth is typically a challenging backdrop for Cyclical Value.
Revisions are already slowing.
30
35
40
45
50
55
60
65
70
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
201120122013201420152016201720182019202020212022
Rolling 1-Year Excess Return of Cyclical Value vs
US Manufacturing PMI’s
Rolling 1-Year Return NAPMPMI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201120122013201420152016201720182019202020212022
Cyclical Value,
13-Wk CFROI Revisions Breadth (% Positive)
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/9/2022.
Universe defined as Cyclical Value stocks within largest 1000 US Companies based on ttmmarket cap.
However, there are reasons for skepticism. Slowing global economic
growth is typically a challenging backdrop for Cyclical Value.
Revisions are already slowing.
30
35
40
45
50
55
60
65
70
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
201120122013201420152016201720182019202020212022
Rolling 1-Year Excess Return of Cyclical Value vs
US Manufacturing PMI’s
Rolling 1-Year Return NAPMPMI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201120122013201420152016201720182019202020212022
Cyclical Value,
13-Wk CFROI Revisions Breadth (% Positive)
29
In December, we screened for attractive Cyclical Value ideas and noted
ROIC was increasingly being used in CEO incentives.
Our December U.S. Market Overview (p.24) highlighted 26 names that
were representative of the opportunity in Cyclical Value.
The screen identified cheaper names within Cyclical Value but avoided the
most financially distressed firms. We noted the increased adoption of
ROIC as incentives for CEOs within the subset.
The screen performedwell during the recent period of strength for the
Cyclical Value segment. Strong performance came almost exclusively from
resource-related names.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Screen Data Date: 12/13/2021.
35%
42%
69% 70%
78%
65%
58%
31% 30%
22%
LFY -4 LFY -3 LFY -2 LFY -1 LFY
% of Screen Companies with a ROICCEO Incentive
No Yes
Name Symbol
Total Return
12/15 -3/14
HALLIBURTON HAL 64%
MOSAIC MOS 60%
MARATHON OIL MRO 47%
CHEVRON CVX 46%
ALCOA AA 44%
EOG RESOURCES EOG 39%
CONOCOPHILLIPS COP 38%
EXXON MOBIL XOM 35%
PIONEER NATURAL PXD 34%
VALERO ENERGY VLO 34%
DEVON ENERGY DVN 34%
CONTINENTAL RESOURCES CLR 32%
HESS HES 25%
MARATHON PETROLEUM MPC 24%
DIAMONDBACK ENERGY FANG 22%
HUNTSMAN HUN 22%
VIACOMCBS PARA 22%
FREEPORT-MCMORAN FCX 20%
DOW DOW 13%
PHILLIPS 66 PSX 12%
WESTROCK WRK 5%
DXC TECHNOLOGY DXC -1%
WESTERN DIGITAL WDC -21%
FORD MOTOR F -22%
VIATRIS VTRS -22%
GENERAL MOTORS CO GM -30%
Total Return
12/15 -3/14
Screen Average 22%
Screen Energy, Chemicals & Mining Average 34%
Cyclical Value (All) 2%
Screen Non-Energy Average -10%
USA Top 1000 Universe -13%
In December, we screened for attractive Cyclical Value ideas and noted
ROIC was increasingly being used in CEO incentives.
Our December U.S. Market Overview (p.24) highlighted 26 names that
were representative of the opportunity in Cyclical Value.
The screen identified cheaper names within Cyclical Value but avoided the
most financially distressed firms. We noted the increased adoption of
ROIC as incentives for CEOs within the subset.
The screen performedwell during the recent period of strength for the
Cyclical Value segment. Strong performance came almost exclusively from
resource-related names.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Screen Data Date: 12/13/2021.
35%
42%
69% 70%
78%
65%
58%
31% 30%
22%
LFY -4 LFY -3 LFY -2 LFY -1 LFY
% of Screen Companies with a ROICCEO Incentive
No Yes
Name Symbol
Total Return
12/15 -3/14
HALLIBURTON HAL 64%
MOSAIC MOS 60%
MARATHON OIL MRO 47%
CHEVRON CVX 46%
ALCOA AA 44%
EOG RESOURCES EOG 39%
CONOCOPHILLIPS COP 38%
EXXON MOBIL XOM 35%
PIONEER NATURAL PXD 34%
VALERO ENERGY VLO 34%
DEVON ENERGY DVN 34%
CONTINENTAL RESOURCES CLR 32%
HESS HES 25%
MARATHON PETROLEUM MPC 24%
DIAMONDBACK ENERGY FANG 22%
HUNTSMAN HUN 22%
VIACOMCBS PARA 22%
FREEPORT-MCMORAN FCX 20%
DOW DOW 13%
PHILLIPS 66 PSX 12%
WESTROCK WRK 5%
DXC TECHNOLOGY DXC -1%
WESTERN DIGITAL WDC -21%
FORD MOTOR F -22%
VIATRIS VTRS -22%
GENERAL MOTORS CO GM -30%
Total Return
12/15 -3/14
Screen Average 22%
Screen Energy, Chemicals & Mining Average 34%
Cyclical Value (All) 2%
Screen Non-Energy Average -10%
USA Top 1000 Universe -13%
30
The Energy sector illustrates this dynamic. The sector has a history of
value destruction, though over the last decade growth has been more
disciplined.
US Aggregate Energy Sector
Source: Credit Suisse HOLT Lens, 3/14/2022. Analyzethe aggregate U.S. Energy sector in HOLT Lens.
HOLT P/B, Energy Sector % of Aggregate U.S. Market
The U.S. Energy sector has not earned its cost
of capital since 2008, though forecasts have
improved recently.
Weak profitability eventually resulted in a
substantially lower asset growth rate for the
sector over the last few years.
Over the last 30 years, the Energy sector has
traded at a HOLT P/B of about 70% that of
the U.S. market, currently its about 50%.
Asset Growth
CFROI
The Energy sector illustrates this dynamic. The sector has a history of
value destruction, though over the last decade growth has been more
disciplined.
US Aggregate Energy Sector
Source: Credit Suisse HOLT Lens, 3/14/2022. Analyzethe aggregate U.S. Energy sector in HOLT Lens.
HOLT P/B, Energy Sector % of Aggregate U.S. Market
The U.S. Energy sector has not earned its cost
of capital since 2008, though forecasts have
improved recently.
Weak profitability eventually resulted in a
substantially lower asset growth rate for the
sector over the last few years.
Over the last 30 years, the Energy sector has
traded at a HOLT P/B of about 70% that of
the U.S. market, currently its about 50%.
Asset Growth
CFROI
31
The sector is not getting the improved valuations that are warranted
based on current oil prices.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/11/2022.
*Based on CL12 price of $84.5 and linear relationships drawn with monthly data from 2010-2022. See Appendix for details.
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Aggregate U.S. Energy HOLT P/ B Relative to the Market
WTI 12 Month Price, lhs US Energy HOLT P/B Relative to Market, rhs
Forecasted profitability for the U.S.
Energy sector has improved alongside
higher oil prices.
However, since 2020 the sector has
traded at wide discount to the market,
even as oil prices have increased.
The sector currently trades at a HOLT
P/B that is 50% of the aggregate U.S.
market, versus a P/B of 67% of the
market that is warranted by oil prices
0
1
2
3
4
5
6
7
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Aggregate U.S. Energy Forecasted CFROI
Energy Forecast CFROI, rhs WTI 12 Month Price, lhs
Implied by oil prices*
Implied by oil prices*
The sector is not getting the improved valuations that are warranted
based on current oil prices.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/11/2022.
*Based on CL12 price of $84.5 and linear relationships drawn with monthly data from 2010-2022. See Appendix for details.
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Aggregate U.S. Energy HOLT P/ B Relative to the Market
WTI 12 Month Price, lhs US Energy HOLT P/B Relative to Market, rhs
Forecasted profitability for the U.S.
Energy sector has improved alongside
higher oil prices.
However, since 2020 the sector has
traded at wide discount to the market,
even as oil prices have increased.
The sector currently trades at a HOLT
P/B that is 50% of the aggregate U.S.
market, versus a P/B of 67% of the
market that is warranted by oil prices
0
1
2
3
4
5
6
7
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Aggregate U.S. Energy Forecasted CFROI
Energy Forecast CFROI, rhs WTI 12 Month Price, lhs
Implied by oil prices*
Implied by oil prices*
32
Click here to view US Energy Aggregate in HOLT Lens
Energy CEOs are increasingly being incentivized to focus on return on
capital, which could help drive more sustainable CFROIs.
Source: Credit Suisse HOLT, Data Date: 3/11/2022. Relative Wealth Chart of the US all-cap Energy Aggregate (weighted scenario).
US Energy Companies (3Bn+) with a Return on Capital CEO Incentive
Nam e Ticker MktCap FY-4FY-3 FY-2FY-1 LFY
EXXON MOBIL CORP XOM $ 361.8 Yes Yes Yes Yes Yes
CHEVRON CORP CVX $ 330.4 Yes Yes Yes Yes Yes
CONOCOPHILLIPS COP $ 129.9 Yes Yes Yes Yes Yes
SCHLUMBERGER LTD SLB $ 60.9 Yes Yes Yes Yes Yes
PHILLIPS 66 PSX $ 35.6 Yes Yes Yes Yes Yes
HALLIBURTON CO HAL $ 34.0 Yes Yes Yes Yes Yes
HESS CORP HES $ 30.4 Yes Yes Yes Yes Yes
ONEOK INC OKE $ 30.1 Yes Yes Yes Yes Yes
HOLLYFRONTIER CORP HFC $ 5.8 Yes Yes Yes Yes Yes
HELMERICH & PAYNE HP $ 4.6 Yes Yes Yes Yes Yes
EOG RESOURCES INC EOG $ 70.0 No Yes Yes Yes Yes
OCCIDENTAL PETROLEUM CORP OXY $ 54.3 No Yes Yes Yes Yes
ANTERO RESOURCES CORP AR $ 7.1 No Yes Yes Yes Yes
RANGE RESOURCES CORP RRC $ 7.0 No Yes Yes Yes Yes
CHAMPIONX CORPORATION CHX $ 5.2 NA Yes Yes Yes Yes
TECHNIPFMC PLC FTI $ 3.5 NA Yes Yes Yes Yes
BAKER HUGHES COMPANY BKR $ 38.0 Yes No Yes Yes Yes
PIONEER NATURAL RESOURCES PXD $ 58.0 No No Yes Yes Yes
DEVON ENERGY CORP DVN $ 41.0 No No Yes Yes Yes
WILLIAMS COS INC WMB $ 39.4 No No Yes Yes Yes
DIAMONDBACK ENERGY INC FANG $ 24.3 No No Yes Yes Yes
CONTINENTAL RESOURCES INC CLR $ 21.8 No No Yes Yes Yes
MARATHON OIL CORP MRO $ 18.8 No No Yes Yes Yes
COTERRA ENERGY INC CTRA $ 10.5 No No Yes Yes Yes
MURPHY OIL CORP MUR $ 5.7 No No Yes Yes Yes
SOUTHWESTERN ENERGY CO SWN $ 3.9 No No No Yes Yes
VALERO ENERGY CORP VLO $ 36.6 No No No No Yes
PDC ENERGY INC PDCE $ 7.0 No No No No Yes
CACTUS INC WHD $ 4.5 No No No No Yes
Click here to view US Energy Aggregate in HOLT Lens
Energy CEOs are increasingly being incentivized to focus on return on
capital, which could help drive more sustainable CFROIs.
Source: Credit Suisse HOLT, Data Date: 3/11/2022. Relative Wealth Chart of the US all-cap Energy Aggregate (weighted scenario).
US Energy Companies (3Bn+) with a Return on Capital CEO Incentive
Nam e Ticker MktCap FY-4FY-3 FY-2FY-1 LFY
EXXON MOBIL CORP XOM $ 361.8 Yes Yes Yes Yes Yes
CHEVRON CORP CVX $ 330.4 Yes Yes Yes Yes Yes
CONOCOPHILLIPS COP $ 129.9 Yes Yes Yes Yes Yes
SCHLUMBERGER LTD SLB $ 60.9 Yes Yes Yes Yes Yes
PHILLIPS 66 PSX $ 35.6 Yes Yes Yes Yes Yes
HALLIBURTON CO HAL $ 34.0 Yes Yes Yes Yes Yes
HESS CORP HES $ 30.4 Yes Yes Yes Yes Yes
ONEOK INC OKE $ 30.1 Yes Yes Yes Yes Yes
HOLLYFRONTIER CORP HFC $ 5.8 Yes Yes Yes Yes Yes
HELMERICH & PAYNE HP $ 4.6 Yes Yes Yes Yes Yes
EOG RESOURCES INC EOG $ 70.0 No Yes Yes Yes Yes
OCCIDENTAL PETROLEUM CORP OXY $ 54.3 No Yes Yes Yes Yes
ANTERO RESOURCES CORP AR $ 7.1 No Yes Yes Yes Yes
RANGE RESOURCES CORP RRC $ 7.0 No Yes Yes Yes Yes
CHAMPIONX CORPORATION CHX $ 5.2 NA Yes Yes Yes Yes
TECHNIPFMC PLC FTI $ 3.5 NA Yes Yes Yes Yes
BAKER HUGHES COMPANY BKR $ 38.0 Yes No Yes Yes Yes
PIONEER NATURAL RESOURCES PXD $ 58.0 No No Yes Yes Yes
DEVON ENERGY CORP DVN $ 41.0 No No Yes Yes Yes
WILLIAMS COS INC WMB $ 39.4 No No Yes Yes Yes
DIAMONDBACK ENERGY INC FANG $ 24.3 No No Yes Yes Yes
CONTINENTAL RESOURCES INC CLR $ 21.8 No No Yes Yes Yes
MARATHON OIL CORP MRO $ 18.8 No No Yes Yes Yes
COTERRA ENERGY INC CTRA $ 10.5 No No Yes Yes Yes
MURPHY OIL CORP MUR $ 5.7 No No Yes Yes Yes
SOUTHWESTERN ENERGY CO SWN $ 3.9 No No No Yes Yes
VALERO ENERGY CORP VLO $ 36.6 No No No No Yes
PDC ENERGY INC PDCE $ 7.0 No No No No Yes
CACTUS INC WHD $ 4.5 No No No No Yes
33
Stock selection within Cyclical Value
Source: Credit Suisse HOLT, Data Date: 3/14/2022.
Name Symbol
Mkt Cap
($B)
EXXON MOBIL XOM 360
CHEVRON CVX 331
CONOCOPHILLIPS COP 128
FREEPORT-MCMORAN FCX 69
EOG RESOURCES EOG 68
PIONEER NATURAL PXD 57
DOW DOW 45
DEVON ENERGY DVN 40
DUPONT DE NEMOURS DD 38
VALERO ENERGY VLO 37
PHILLIPS 66 PSX 35
MOSAIC MOS 23
DIAMONDBACK ENERGY FANG 23
CONTINENTAL RESOURCES CLR 21
MARATHON OIL MRO 18
CELANESE CE 15
ALCOA AA 15
EASTMAN CHEMICAL EMN 14
SNAP-ON SNA 11
COTERRA ENERGY CTRA 10
AGCO AGCO 10
OWENS CORNING OC 9
ITT ITT 7
REGAL REXNORD RRX 6
MANPOWER MAN 5
Name Symbol
Mkt Cap
($B)
PARAMOUNT GLOBAL PARA 21
DISH NETWORK DISH 16
BATH & BODY WORKS BBWI 12
CLEVELAND-CLIFFS CLF 12
VIATRIS VTRS 12
UNITED AIRLINES UAL 11
TENET HEALTHCARE THC 10
AMERICAN AIRLINES AAL 9
PLAINS ALL AMER PIPELNE PAA 8
KOHL'S KSS 8
EQT EQT 8
DXC TECHNOLOGY DXC 8
NEXSTAR MEDIA NXST 7
PENN NATIONAL GAMING PENN 7
GAMESTOP GME 6
ADT ADT 6
SUNRUN RUN 6
GAP GPS 5
PVH PVH 5
ALTICE USA ATUS 5
Favorindustrial economy Cyclical Value names
with ROIC incentives, reasonable valuations, and
lower probability of defaults.
Avoidnames with higher probability of default
readings without ROIC incentives.
See full list and criteria in HOLT Lens See full list and criteria in HOLT Lens
Stock selection within Cyclical Value
Source: Credit Suisse HOLT, Data Date: 3/14/2022.
Name Symbol
Mkt Cap
($B)
EXXON MOBIL XOM 360
CHEVRON CVX 331
CONOCOPHILLIPS COP 128
FREEPORT-MCMORAN FCX 69
EOG RESOURCES EOG 68
PIONEER NATURAL PXD 57
DOW DOW 45
DEVON ENERGY DVN 40
DUPONT DE NEMOURS DD 38
VALERO ENERGY VLO 37
PHILLIPS 66 PSX 35
MOSAIC MOS 23
DIAMONDBACK ENERGY FANG 23
CONTINENTAL RESOURCES CLR 21
MARATHON OIL MRO 18
CELANESE CE 15
ALCOA AA 15
EASTMAN CHEMICAL EMN 14
SNAP-ON SNA 11
COTERRA ENERGY CTRA 10
AGCO AGCO 10
OWENS CORNING OC 9
ITT ITT 7
REGAL REXNORD RRX 6
MANPOWER MAN 5
Name Symbol
Mkt Cap
($B)
PARAMOUNT GLOBAL PARA 21
DISH NETWORK DISH 16
BATH & BODY WORKS BBWI 12
CLEVELAND-CLIFFS CLF 12
VIATRIS VTRS 12
UNITED AIRLINES UAL 11
TENET HEALTHCARE THC 10
AMERICAN AIRLINES AAL 9
PLAINS ALL AMER PIPELNE PAA 8
KOHL'S KSS 8
EQT EQT 8
DXC TECHNOLOGY DXC 8
NEXSTAR MEDIA NXST 7
PENN NATIONAL GAMING PENN 7
GAMESTOP GME 6
ADT ADT 6
SUNRUN RUN 6
GAP GPS 5
PVH PVH 5
ALTICE USA ATUS 5
Favorindustrial economy Cyclical Value names
with ROIC incentives, reasonable valuations, and
lower probability of defaults.
Avoidnames with higher probability of default
readings without ROIC incentives.
See full list and criteria in HOLT Lens See full list and criteria in HOLT Lens
Summary
34
Hyper Growth stocks –Not yet time to reengage with the segment.
•Though implied yields have narrowed versus the market as the group has underperformed, the segment remains expensive
relative to history.
•Hyper Growth stocks have reverted to the high beta profile that is more consistent with its history.
•The top-line growth advantage Hyper Growth stocks enjoyed relative to the market has normalizedand revisions are weak.
High Quality stocks remain attractive–favor Quality Growth over Quality Defensives going forward.
•QualityDefensives have offered relative protection during the recent market weakness, but are very expensive versus history.
•Quality Growth namesoffer durable competitiveadvantages at more reasonable valuations.
Continue to favor Cyclical Value stocks as the most appealing way to get exposure to Value.
•Cyclical Value implied yields are high versus the marketand other Value segments.
•Profitability forecasts for Cyclical Valuestocks have substantially improved and might have limited scope for upside, but select
names have scope to re-rate if the firms demonstrate a credible focus on capital discipline and return on capital.
•Cyclical Value stocks fromthe Energy, Materials, and Industrials sectors with ROIC based CEO incentives offer appeal.
34
Hyper Growth stocks –Not yet time to reengage with the segment.
•Though implied yields have narrowed versus the market as the group has underperformed, the segment remains expensive
relative to history.
•Hyper Growth stocks have reverted to the high beta profile that is more consistent with its history.
•The top-line growth advantage Hyper Growth stocks enjoyed relative to the market has normalizedand revisions are weak.
High Quality stocks remain attractive–favor Quality Growth over Quality Defensives going forward.
•QualityDefensives have offered relative protection during the recent market weakness, but are very expensive versus history.
•Quality Growth namesoffer durable competitiveadvantages at more reasonable valuations.
Continue to favor Cyclical Value stocks as the most appealing way to get exposure to Value.
•Cyclical Value implied yields are high versus the marketand other Value segments.
•Profitability forecasts for Cyclical Valuestocks have substantially improved and might have limited scope for upside, but select
names have scope to re-rate if the firms demonstrate a credible focus on capital discipline and return on capital.
•Cyclical Value stocks fromthe Energy, Materials, and Industrials sectors with ROIC based CEO incentives offer appeal.
35
Appendix
Appendix
36
U.S. Energy Sector cash flow forecasts are likely to start substantially
exceeding growth expenditures and debt levels have been stable
Source: Credit Suisse HOLT, 3/9/2022.
US Aggregate Energy Sector
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21
Gross Cash Flow vs. Reinvestment ($mm)
Rental Expense R&D Expense
Exploration Expense Capex
Gross Cash Flow
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21
HOLT Debt ($mm)
U.S. Energy Sector cash flow forecasts are likely to start substantially
exceeding growth expenditures and debt levels have been stable
Source: Credit Suisse HOLT, 3/9/2022.
US Aggregate Energy Sector
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21
Gross Cash Flow vs. Reinvestment ($mm)
Rental Expense R&D Expense
Exploration Expense Capex
Gross Cash Flow
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21
HOLT Debt ($mm)
37
Improved valuations are warranted based on current oil prices.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/11/2022.
Based on CL12 price of $84.5 and linear relationships drawn with monthly data from 2010-2022.
0
1
2
3
4
5
6
7
8
0
20
40
60
80
100
120
2010201120122013201420152016201720182019202020212022
Energy Forecast CFROI WTI 12 Month Price, lhs
4.78
y = 0.0776x -1.5754
R² = 0.8803
0
1
2
3
4
5
6
7
8
20 30 40 50 60 70 80 90 100 110 120
US Energy Fo recast CFROI
WTI 12 Mo nth Price
Aggregate, 2010 -2022
Current
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
2010201120122013201420152016201720182019202020212022
WTI 12 Month Price, lhs
US Energy HOLT P/B Relative to Market, rhs
48%
y = 0.0054x + 0.2083
R² = 0.6491
20%
30%
40%
50%
60%
70%
80%
90%
100%
20 30 40 50 60 70 80 90 100 110 120
US Energy HOLT P/ B Relative to Mark et
WTI 12 Mo nth Price
Aggregate, 2010 -2022
Forecasted profitability for the U.S. Energy sector has improved alongside
higher oil prices…
However, since 2020 the sector has traded at an increasingly wide discount
to the market relative as oil prices have increased.
The sector currently trades at a HOLT P/B that is 50% of the aggregate U.S.
market, versus a P/B of 67% of the market that is warranted by oil prices.
2020-2022
2020-2022
Current
…though forecasted CFROI remains below forecasts from 2010-2013.
Improved valuations are warranted based on current oil prices.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service, Data Date: 3/11/2022.
Based on CL12 price of $84.5 and linear relationships drawn with monthly data from 2010-2022.
0
1
2
3
4
5
6
7
8
0
20
40
60
80
100
120
2010201120122013201420152016201720182019202020212022
Energy Forecast CFROI WTI 12 Month Price, lhs
4.78
y = 0.0776x -1.5754
R² = 0.8803
0
1
2
3
4
5
6
7
8
20 30 40 50 60 70 80 90 100 110 120
US Energy Fo recast CFROI
WTI 12 Mo nth Price
Aggregate, 2010 -2022
Current
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
2010201120122013201420152016201720182019202020212022
WTI 12 Month Price, lhs
US Energy HOLT P/B Relative to Market, rhs
48%
y = 0.0054x + 0.2083
R² = 0.6491
20%
30%
40%
50%
60%
70%
80%
90%
100%
20 30 40 50 60 70 80 90 100 110 120
US Energy HOLT P/ B Relative to Mark et
WTI 12 Mo nth Price
Aggregate, 2010 -2022
Forecasted profitability for the U.S. Energy sector has improved alongside
higher oil prices…
However, since 2020 the sector has traded at an increasingly wide discount
to the market relative as oil prices have increased.
The sector currently trades at a HOLT P/B that is 50% of the aggregate U.S.
market, versus a P/B of 67% of the market that is warranted by oil prices.
2020-2022
2020-2022
Current
…though forecasted CFROI remains below forecasts from 2010-2013.
38
For investors that are concerned about higher treasury yields, over
the long term Quality Growers tend to be less sensitive to rates than
Quality Defensives.
Source: Credit Suisse HOLT, Bloomberg. Data Date: 3/14/2022.
-35%
-20%
-31%
-16%
-38%
0%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Hyper Growth Banks & Insurance Cyclical Value Quality Defensive Quality Growth Stable Yield
Correlation of Segment Excess Returns to Changes in 10-Yr Treasury Yields
15 Yrs 5 Yrs 3 Months
For investors that are concerned about higher treasury yields, over
the long term Quality Growers tend to be less sensitive to rates than
Quality Defensives.
Source: Credit Suisse HOLT, Bloomberg. Data Date: 3/14/2022.
-35%
-20%
-31%
-16%
-38%
0%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Hyper Growth Banks & Insurance Cyclical Value Quality Defensive Quality Growth Stable Yield
Correlation of Segment Excess Returns to Changes in 10-Yr Treasury Yields
15 Yrs 5 Yrs 3 Months
-8
-6
-4
-2
0
2
4
6
8
10
12
14
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Median HOLT Market Implied Yield (MIY)
Q1 Q2 Q3 Q4 Q5
-12
-10
-8
-6
-4
-2
0
2
4
6
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Median HOLT Market Implied Yield (MIY)
Spread to Universe Median
Q1 Q2 Q3 Q4 Q5
39
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT. Date range: January 1991 –March 2022.
Wide value spreads remain across the U.S. Large/Mid Cap universe.
-6
-4
-2
0
2
4
6
8
10
12
14
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Median HOLT Market Implied Yield (MIY)
Q1 Q2 Q3 Q4 Q5
-12
-10
-8
-6
-4
-2
0
2
4
6
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Median HOLT Market Implied Yield (MIY)
Spread to Universe Median
Q1 Q2 Q3 Q4 Q5
39
Universe: Largest 1000 US companies by TTM market cap, Source: Credit Suisse HOLT. Date range: January 1991 –March 2022.
Wide value spreads remain across the U.S. Large/Mid Cap universe.
24%
23%
18%
10%
8%
-11%-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
ValuationLow VolatilityOverall QualityMomentum Growth
Last 12 Months: Q1Factor vs. Equal WtUniverse
13%
9%
7%
3%
2%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
ValuationLow VolatilityOverallMomentum Quality Growth
Year to Date: Q1Factor vs. Equal WtUniverse
28%
20%
17%
10%
7%
-22%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Valuation OverallLow VolatilityMomentum Quality Growth
Year to Date: Q1-Q5Returns
48%
46%
43%
29%
23%
-27%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Low VolatilityOverallMomentum QualityValuationGrowth
Last 12 Months: Q1 –Q5 Returns
40
Long-Short (top) and long only (bottom) factor performance.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
Overall Scorecard Score = 33% Quality + 33% Momentum + 33% Valuation. For more on the HOLT Scorecard see HOLT Scorecard & Factor Library Primer
23%
18%
10%
8%
-11%-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
ValuationLow VolatilityOverall QualityMomentum Growth
Last 12 Months: Q1Factor vs. Equal WtUniverse
13%
9%
7%
3%
2%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
ValuationLow VolatilityOverallMomentum Quality Growth
Year to Date: Q1Factor vs. Equal WtUniverse
28%
20%
17%
10%
7%
-22%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Valuation OverallLow VolatilityMomentum Quality Growth
Year to Date: Q1-Q5Returns
48%
46%
43%
29%
23%
-27%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Low VolatilityOverallMomentum QualityValuationGrowth
Last 12 Months: Q1 –Q5 Returns
40
Long-Short (top) and long only (bottom) factor performance.
Source: Credit Suisse HOLT, the BLOOMBERG PROFESSIONAL™ service. Data Date: 3/14/2022. Universe = USA Top 1000. Total Returns vs. Equally weighted universe.
Overall Scorecard Score = 33% Quality + 33% Momentum + 33% Valuation. For more on the HOLT Scorecard see HOLT Scorecard & Factor Library Primer
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
QualityCorrelation to Market Implied Yield (MIY)
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Quality Correlation to 13-Wk CFROI Revisions
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Growth Correlation to Market Implied Yield
(MIY)
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Growth Correlatin to 13-Wk CFROI Revisions
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
GrowthCorrelatin to Low Volatility
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Quality Correlation to Low Volatility
41
Relative to recent history, a Quality bias currently tilts investors toward
higher implied yields and lower volatility profiles.
Source: Credit Suisse HOLT, Universe = USA Top 1000. 2/28/2022. Rank correlations of factor exposures.
Expensive Higher Vol/BetaWeaker Revisions
Cheap Lower Vol/BetaStronger Revisions
Cheap Lower Vol/BetaStronger Revisions
Expensive Higher Vol/BetaWeaker Revisions
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
QualityCorrelation to Market Implied Yield (MIY)
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Quality Correlation to 13-Wk CFROI Revisions
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Growth Correlation to Market Implied Yield
(MIY)
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Growth Correlatin to 13-Wk CFROI Revisions
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
GrowthCorrelatin to Low Volatility
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
199820012004200720102013201620192022
Quality Correlation to Low Volatility
41
Relative to recent history, a Quality bias currently tilts investors toward
higher implied yields and lower volatility profiles.
Source: Credit Suisse HOLT, Universe = USA Top 1000. 2/28/2022. Rank correlations of factor exposures.
Expensive Higher Vol/BetaWeaker Revisions
Cheap Lower Vol/BetaStronger Revisions
Cheap Lower Vol/BetaStronger Revisions
Expensive Higher Vol/BetaWeaker Revisions
Hyper Growth
High Growth, Low Quality,
High HOLT P/B
Quality Growth
High Quality and Growth, High HOLT
P/B and some Risk
Quality Defensives
Lowest Risk, High Quality, High HOLT
P/B
Stable Yield
Low Risk, Low Quality, High Income
Cyclical Value
High Risk, Low HOLT P/B, Low Growth
Banks & Insurance
In 2020, we introduced a new way to classify stocks based on common
combinations of fundamental attributes to better understand risk and
returns.
42
Value
Income Risk
Quality
Growth
Attributes
JPM
BAC
WFC
MS
C
CVX
XOM
MU
GE
GM
NOW
CRM TSLA
SQ
VZ
NEE DUK
PSA
MCD
KO
DHR
UNH
PG
AMZN
V
GOOG
PYPL
FB
Source: Credit Suisse HOLT, Data Date: 9/14/2021. Companies listed are for illustrative purposes only.
For more on HOLT Factors: Scorecard and Factor Library Primer.
Click to see criteria in HOLT Lens
TM
SHOP
High Growth, Low Quality,
High HOLT P/B
Quality Growth
High Quality and Growth, High HOLT
P/B and some Risk
Quality Defensives
Lowest Risk, High Quality, High HOLT
P/B
Stable Yield
Low Risk, Low Quality, High Income
Cyclical Value
High Risk, Low HOLT P/B, Low Growth
Banks & Insurance
In 2020, we introduced a new way to classify stocks based on common
combinations of fundamental attributes to better understand risk and
returns.
42
Value
Income Risk
Quality
Growth
Attributes
JPM
BAC
WFC
MS
C
CVX
XOM
MU
GE
GM
NOW
CRM TSLA
SQ
VZ
NEE DUK
PSA
MCD
KO
DHR
UNH
PG
AMZN
V
GOOG
PYPL
FB
Source: Credit Suisse HOLT, Data Date: 9/14/2021. Companies listed are for illustrative purposes only.
For more on HOLT Factors: Scorecard and Factor Library Primer.
Click to see criteria in HOLT Lens
TM
SHOP
43
Screening Criteria for Market Segments
Quality Growth
• Operational Quality Peer Rank > 50
• Growth Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Low Volatility Peer Rank < 80
• Excludes Utilities, REITs, Banks & Insurance
Quality Defensives
• Low VolatilityPeer Rank > 80
• Operational Quality Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Excludes Utilities, REITs, Banks & Insurance
Hyper Growth
• Operational Quality Peer Rank < 50
• Growth Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Low Volatility Peer Rank < 80
• Excludes Utilities, REITs, Banks & Insurance
Stable Yield
• Low VolatilityPeer Rank > 80
• Operational Quality Peer Rank < 50
• Dividend Yield Peer Rank > 50
• Excludes Banks & Insurance
Cyclical Value
• Low VolatilityPeer Rank < 50
• HOLT Price / Book Peer Rank > 50
• Growth Peer Rank < 50
• Excludes Utilities, REITs, Banks & Insurance
Banks & Insurance
• Sector = Banks or Insurance
Source: Credit Suisse HOLT.
Screening Criteria for Market Segments
Quality Growth
• Operational Quality Peer Rank > 50
• Growth Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Low Volatility Peer Rank < 80
• Excludes Utilities, REITs, Banks & Insurance
Quality Defensives
• Low VolatilityPeer Rank > 80
• Operational Quality Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Excludes Utilities, REITs, Banks & Insurance
Hyper Growth
• Operational Quality Peer Rank < 50
• Growth Peer Rank > 50
• HOLT Price / Book Peer Rank < 50
• Low Volatility Peer Rank < 80
• Excludes Utilities, REITs, Banks & Insurance
Stable Yield
• Low VolatilityPeer Rank > 80
• Operational Quality Peer Rank < 50
• Dividend Yield Peer Rank > 50
• Excludes Banks & Insurance
Cyclical Value
• Low VolatilityPeer Rank < 50
• HOLT Price / Book Peer Rank > 50
• Growth Peer Rank < 50
• Excludes Utilities, REITs, Banks & Insurance
Banks & Insurance
• Sector = Banks or Insurance
Source: Credit Suisse HOLT.
44
The US Market Implied Yield (MIY) is very low in absolute terms and
relative to history.
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
2.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
HOLT Market Implied Yield
US Market Aggregate excluding Financials
The US Market Implied Yield (MIY) is very low in absolute terms and
relative to history.
Source: Credit Suisse HOLT, Data Date: 2/28/2022.
2.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
HOLT Market Implied Yield
US Market Aggregate excluding Financials
45
Deriving a Cost of Equity and Equity Risk Premium
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
Model Inputs and Assumptions
Calculation Details
Market Implied Yield (WACC) 2.94% Corporate Yield 3.23%
Leverage 20.1% Government Yield (10Yr) 1.97%
Credit Spread 1.24% Long Term Inflation Expectations 1.90%
WACC =W% Equity * Real Cost of Equity +W% Debt * Real Cost of Debt
2.94% = 79.9% * Solve + 20.1% *Real Risk Free + Credit Spread
2.94% = 79.9% * Solve + 20.1% * 0.06% + 1.24%
2.94% = 79.9% * Solve + 20.1% * 1.30%
2.94% = 79.9% * 3.36% + 20.1% * 1.30%
Market Cost of Equity (Blend with Financials)
3.59%
Market Equity Risk Premium (COE -Risk Free)
3.52%
Nominal Cost of Equity (COE + Inflation)
5.49%
Deriving a Cost of Equity and Equity Risk Premium
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
Model Inputs and Assumptions
Calculation Details
Market Implied Yield (WACC) 2.94% Corporate Yield 3.23%
Leverage 20.1% Government Yield (10Yr) 1.97%
Credit Spread 1.24% Long Term Inflation Expectations 1.90%
WACC =W% Equity * Real Cost of Equity +W% Debt * Real Cost of Debt
2.94% = 79.9% * Solve + 20.1% *Real Risk Free + Credit Spread
2.94% = 79.9% * Solve + 20.1% * 0.06% + 1.24%
2.94% = 79.9% * Solve + 20.1% * 1.30%
2.94% = 79.9% * 3.36% + 20.1% * 1.30%
Market Cost of Equity (Blend with Financials)
3.59%
Market Equity Risk Premium (COE -Risk Free)
3.52%
Nominal Cost of Equity (COE + Inflation)
5.49%
0.1%
-2%
0%
2%
4%
6%
8%
10%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Real Risk Free Rate
3.52%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
US Market Equity Risk Premium
1.2%
0%
1%
2%
3%
4%
5%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Credit Spread
46
The decline in the discount rate has primarily been driven by ultra-low
risk free rates.
The Equity Risk Premium, at 3.52% versus a long-term median of 3.4%, remains reasonableand is a sharp
contrast to the negative ERP observed in the early 2000’s.
Long-term Median: 2.2% Long-term Median: 3.4% Long-term Median: 1.0%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
-2%
0%
2%
4%
6%
8%
10%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Real Risk Free Rate
3.52%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
US Market Equity Risk Premium
1.2%
0%
1%
2%
3%
4%
5%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Credit Spread
46
The decline in the discount rate has primarily been driven by ultra-low
risk free rates.
The Equity Risk Premium, at 3.52% versus a long-term median of 3.4%, remains reasonableand is a sharp
contrast to the negative ERP observed in the early 2000’s.
Long-term Median: 2.2% Long-term Median: 3.4% Long-term Median: 1.0%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
47
US Aggregate Market Implied Equity Risk Premium
Long-term Median: 3.4%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
3.52%
-2%
0%
2%
4%
6%
8%
10%
US Aggregate Market Implied Equity Risk Premium
Long-term Median: 3.4%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
3.52%
-2%
0%
2%
4%
6%
8%
10%
3.59%
-2%
0%
2%
4%
6%
8%
10%
48
US Aggregate Real Cost of Equity
Long-term Median: 6.0%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
-2%
0%
2%
4%
6%
8%
10%
48
US Aggregate Real Cost of Equity
Long-term Median: 6.0%
Source: Credit Suisse HOLT, Bloomberg. Data Date: 2/28/2022.
Disclosure Appendix
Analyst Certification
HOLT Specialist: David Rones, HOLT Specialist: Sean Burns, HOLT Specialist: Richard Curry, HOLT Specialist: Joseph Pecora and HOLT Specialist:
Vishal Bondre each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately
reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this report.
Important Global Disclosures
Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products
may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made
available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the
frequency and manner of receiving communications, the client’s risk profile and investment, the size and scope of the overall client relationship with the
Firm, as well as legal and regulatory constraints. To access all of Credit Suisse’s research that you are entitled to receive in the most timely manner,
please contact your sales representative or go to https://plus.credit-suisse.com .
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market
that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to
Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: https://www.credit-suisse.com/sites/disclaimers-
ib/en/managing-conflicts.html .
Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to
provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional.
Credit Suisse has decided not to enter into business relationships with companies that Credit Suisse has determined to be involved in the development,
manufacture, or acquisition of anti-personnel mines and cluster munitions. For Credit Suisse's position on the issue, please see https://www.credit-
suisse.com/media/assets/corporate/docs/about-us/responsibility/banking/policy-summaries-en.pdf .
The European Market Abuse Regulation requires that Investment Recommendations are identified and Credit Suisse policy is to ensure any
recommended or suggested investment strategy is classified accordingly. For the Purposes of MAR, HOLT Investment Recommendations will have the
following meanings:
Relative Buy : Applying the HOLT framework and valuation model, the stock shows upside potential on a relative basis.
Hold : Applying the HOLT framework and valuation model, the stock looks fairly valued on a relative basis.
Relative Sell : Applying the HOLT framework and valuation model, the stock shows downside potential on a relative basis.
Please click https://rave.credit-suisse.com/disclosures/view/content/disclosure_quarterly_holt_recommendations to view the
MAR quarterly recommendations and investment services report for HOLT research recommendations.
For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within
the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=694009&v=-6lu5ar7uy1jmw7ibg8c24xrtz .
Important Regional Disclosures
Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from, or in connection with, this research report.
Analysts who conduct site visits of covered issuers are not permitted to accept payment or reimbursement for travel expenses from the issuer for the
site visit.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-
suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.
Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities
and instruments may rise or fall and, in some cases, investors may lose their entire principal investment.
To the extent any Credit Suisse equity research analyst employed by Credit Suisse International (a "UK Analyst") has interactions with a Spanish
domiciled client of Credit Suisse AG or its affiliates, such UK Analyst will be acting for and on behalf of Credit Suisse Bank (Europe), S.A., with respect
only to the provision of equity research services to Spanish domiciled clients of Credit Suisse AG or its affiliates.
Pursuant to CVM Resolution No. 20/2021, of February 25, 2021, the author(s) of the report hereby certify(ies) that the views expressed in this report
solely and exclusively reflect the personal opinions of the author(s) and have been prepared independently, including with respect to Credit Suisse. Part
of the author(s)´s compensation is based on various factors, including the total revenues of Credit Suisse, but no part of the compensation has been, is,
or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided,
and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject
company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may
constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities.
This research report is authored by:
Credit Suisse Securities (USA) LLC ......HOLT Specialist: David Rones ; HOLT Specialist: Sean Burns ; HOLT Specialist: Richard Curry ; HOLT
Specialist: Joseph Pecora ; HOLT Specialist: Vishal Bondre
Valuation Methodology and Risks
The HOLT methodology does not assign ratings or a target price to a security. It is an analytical tool that involves use of a set of proprietary quantitative
algorithms and warranted value calculations, collectively called the HOLT valuation model, that are consistently applied to all the companies included in
its database. The HOLT valuation model is a discounted cash flow model. Third-party data (including consensus earnings estimates) are systematically
translated into a number of default variables and incorporated into the algorithms available in the HOLT valuation model. The source statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure
the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing
multiple companies across industries or national borders.
The default scenario that is produced by the HOLT valuation model establishes a warranted price that represents the expected mean value for a
security based upon empirically derived fade algorithms that forecast a firms future return on capital and growth rates over an extended period of time.
As the third-party data are updated, the warranted price updates automatically. A company’s future achieved return on capital or growth rate may differ
from HOLT default forecast. Additional information about the HOLT methodology is available upon request.
A 12 month history of HOLT recommendations can be found at https://rave.credit-suisse.com/disclosures/view/content/holt_dissemination_history .
Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important
disclosures, with the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at
https://rave.credit-suisse.com/disclosures .
Analyst Certification
HOLT Specialist: David Rones, HOLT Specialist: Sean Burns, HOLT Specialist: Richard Curry, HOLT Specialist: Joseph Pecora and HOLT Specialist:
Vishal Bondre each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately
reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this report.
Important Global Disclosures
Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products
may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made
available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the
frequency and manner of receiving communications, the client’s risk profile and investment, the size and scope of the overall client relationship with the
Firm, as well as legal and regulatory constraints. To access all of Credit Suisse’s research that you are entitled to receive in the most timely manner,
please contact your sales representative or go to https://plus.credit-suisse.com .
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market
that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to
Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: https://www.credit-suisse.com/sites/disclaimers-
ib/en/managing-conflicts.html .
Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to
provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional.
Credit Suisse has decided not to enter into business relationships with companies that Credit Suisse has determined to be involved in the development,
manufacture, or acquisition of anti-personnel mines and cluster munitions. For Credit Suisse's position on the issue, please see https://www.credit-
suisse.com/media/assets/corporate/docs/about-us/responsibility/banking/policy-summaries-en.pdf .
The European Market Abuse Regulation requires that Investment Recommendations are identified and Credit Suisse policy is to ensure any
recommended or suggested investment strategy is classified accordingly. For the Purposes of MAR, HOLT Investment Recommendations will have the
following meanings:
Relative Buy : Applying the HOLT framework and valuation model, the stock shows upside potential on a relative basis.
Hold : Applying the HOLT framework and valuation model, the stock looks fairly valued on a relative basis.
Relative Sell : Applying the HOLT framework and valuation model, the stock shows downside potential on a relative basis.
Please click https://rave.credit-suisse.com/disclosures/view/content/disclosure_quarterly_holt_recommendations to view the
MAR quarterly recommendations and investment services report for HOLT research recommendations.
For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within
the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=694009&v=-6lu5ar7uy1jmw7ibg8c24xrtz .
Important Regional Disclosures
Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from, or in connection with, this research report.
Analysts who conduct site visits of covered issuers are not permitted to accept payment or reimbursement for travel expenses from the issuer for the
site visit.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-
suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.
Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities
and instruments may rise or fall and, in some cases, investors may lose their entire principal investment.
To the extent any Credit Suisse equity research analyst employed by Credit Suisse International (a "UK Analyst") has interactions with a Spanish
domiciled client of Credit Suisse AG or its affiliates, such UK Analyst will be acting for and on behalf of Credit Suisse Bank (Europe), S.A., with respect
only to the provision of equity research services to Spanish domiciled clients of Credit Suisse AG or its affiliates.
Pursuant to CVM Resolution No. 20/2021, of February 25, 2021, the author(s) of the report hereby certify(ies) that the views expressed in this report
solely and exclusively reflect the personal opinions of the author(s) and have been prepared independently, including with respect to Credit Suisse. Part
of the author(s)´s compensation is based on various factors, including the total revenues of Credit Suisse, but no part of the compensation has been, is,
or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided,
and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject
company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may
constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities.
This research report is authored by:
Credit Suisse Securities (USA) LLC ......HOLT Specialist: David Rones ; HOLT Specialist: Sean Burns ; HOLT Specialist: Richard Curry ; HOLT
Specialist: Joseph Pecora ; HOLT Specialist: Vishal Bondre
Valuation Methodology and Risks
The HOLT methodology does not assign ratings or a target price to a security. It is an analytical tool that involves use of a set of proprietary quantitative
algorithms and warranted value calculations, collectively called the HOLT valuation model, that are consistently applied to all the companies included in
its database. The HOLT valuation model is a discounted cash flow model. Third-party data (including consensus earnings estimates) are systematically
translated into a number of default variables and incorporated into the algorithms available in the HOLT valuation model. The source statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure
the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing
multiple companies across industries or national borders.
The default scenario that is produced by the HOLT valuation model establishes a warranted price that represents the expected mean value for a
security based upon empirically derived fade algorithms that forecast a firms future return on capital and growth rates over an extended period of time.
As the third-party data are updated, the warranted price updates automatically. A company’s future achieved return on capital or growth rate may differ
from HOLT default forecast. Additional information about the HOLT methodology is available upon request.
A 12 month history of HOLT recommendations can be found at https://rave.credit-suisse.com/disclosures/view/content/holt_dissemination_history .
Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important
disclosures, with the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at
https://rave.credit-suisse.com/disclosures .
This report is produced by subsidiaries and affiliates of Credit Suisse operating under its Securities Research function within the Investment Banking Division. For more information on our structure, please use the following link: https://www.credit-
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losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay
more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be
difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites.
Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website
material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own
risk. This research report does not, and is not intended to be, an advertisement within the meaning of article 68 of the Swiss Financial Services Act and/or article 95 of the Swiss Financial Services Ordinance. This research report is not a prospectus, basic
information sheet (BIB) or a key information document (KID). Any recipients of this document should, however, note that any communication forwarding or using this research report as a basis for discussion, would qualify as such advertisement if it is
intended to draw the recipient's attention to specific financial instruments covered by this research report.
This report is issued and distributed in United Kingdom and European Union (except Germany and Spain): by Credit Suisse International, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation Authority; Spain: Credit Suisse Bank (Europe), S.A. regulated by the Comision Nacional del Mercado de Valores; Germany: Credit Suisse (Deutschland) Aktiengesellschaft
regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). United States: Credit Suisse Securities (USA) LLC; Canada: Credit Suisse Securities (Canada), Inc.; Switzerland: Credit Suisse AG; Brazil: Credit Suisse (Brasil) S.A.
Corretora de Títulos e Valores Mobiliários or its affiliates; Mexico: Banco Credit Suisse (México), S.A., Institución de Banca Múltiple, Grupo Financiero Credit Suisse (México) and Casa de Bolsa Credit Suisse (México), S.A. de C.V., Grupo Financiero
Credit Suisse (México) ("Credit Suisse Mexico"). This document has been prepared for information purposes only and is exclusively distributed in Mexico to Institutional Investors. Credit Suisse Mexico is not responsible for any onward distribution of this
report to non-institutional investors by any third party. The authors of this report have not received payment or compensation from any entity or company other than from the relevant Credit Suisse Group company employing them; Japan: by Credit Suisse
Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau ( Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers
Association, Type II Financial Instruments Firms Association. This report has been prepared and issued for distribution in Japan to Credit Suisse’s clients, including institutional investors; Hong Kong SAR: Credit Suisse (Hong Kong) Limited; Australia:
Credit Suisse Equities (Australia) Limited; Thailand: Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701,
Rama IV Road, Silom, Bangrak, Bangkok10500, Thailand, Tel. +66 2614 6000; Malaysia: Credit Suisse Securities (Malaysia) Sdn Bhd; Singapore: Credit Suisse AG, Singapore Branch; India: Credit Suisse Securities (India) Private Limited (CIN
no.U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INZ000248233), having registered address at 9th Floor, Ceejay
House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777; South Korea: Credit Suisse Securities (Europe) Limited, Seoul Branch; Taiwan (Chinese Taipei): Credit Suisse AG Taipei Securities Branch; Indonesia: PT Credit Suisse
Sekuritas Indonesia; Philippines:Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above.
Additional Regional Disclaimers
Australia: Credit Suisse Securities (Europe) Limited ("CSSEL") and Credit Suisse International ("CSI") are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority ("FCA") and the Prudential Regulation Authority
under UK laws, which differ from Australian Laws. CSSEL and CSI do not hold an Australian Financial Services Licence ("AFSL") and are exempt from the requirement to hold an AFSL under the Corporations Act (Cth) 2001 ("Corporations Act") in
respect of the financial services provided to Australian wholesale clients (within the meaning of section 761G of the Corporations Act) (hereinafter referred to as “Financial Services”). This material is not for distribution to retail clients and is directed
exclusively at Credit Suisse's professional clients and eligible counterparties as defined by the FCA, and wholesale clients as defined under section 761G of the Corporations Act. Credit Suisse (Hong Kong) Limited ("CSHK") is licensed and regulated by
the Securities and Futures Commission of Hong Kong under the laws of Hong Kong SAR, which differ from Australian laws. CSHKL does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of
providing Financial Services. Investment banking services in the United States are provided by Credit Suisse Securities (USA) LLC, an affiliate of Credit Suisse Group. CSSU is regulated by the United States Securities and Exchange Commission under
United States laws, which differ from Australian laws. CSSU does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing Financial Services. Credit Suisse Asset Management LLC
(CSAM) is authorised by the Securities and Exchange Commission under US laws, which differ from Australian laws. CSAM does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing
Financial Services. This material is provided solely to Institutional Accounts (as defined in the FINRA rules) who are Eligible Contract Participants (as defined in the US Commodity Exchange Act). Credit Suisse Equities (Australia) Limited (ABN 35 068 232
708) ("CSEAL") is an AFSL holder in Australia (AFSL 237237).
Malaysia: Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020.
Singapore: This report has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (each as defined under the Financial Advisers Regulations) only, and is also distributed by Credit Suisse
AG, Singapore Branch to overseas investors (as defined under the Financial Advisers Regulations). Credit Suisse AG, Singapore Branch may distribute reports produced by its foreign entities or affiliates pursuant to an arrangement under Regulation 32C
of the Financial Advisers Regulations. Singapore recipients should contact Credit Suisse AG, Singapore Branch at +65-6212-2000 for matters arising from, or in connection with, this report. By virtue of your status as an institutional investor, accredited
investor, expert investor or overseas investor, Credit Suisse AG, Singapore Branch is exempted from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the “FAA”), the Financial Advisers
Regulations and the relevant Notices and Guidelines issued thereunder, in respect of any financial advisory service which Credit Suisse AG, Singapore Branch may provide to you.
EU: This report has been produced by subsidiaries and affiliates of Credit Suisse operating under its Securities Research function within the Investment Banking Division.
In jurisdictions where CS is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in
accordance with applicable exemptions from registration or licensing requirements.
This material is issued and distributed in the U.S. by CSSU, a member of NYSE, FINRA, SIPC and the NFA, and CSSU accepts responsibility for its contents. Clients should contact analysts and execute transactions through a Credit Suisse subsidiary or
affiliate in their home jurisdiction unless governing law permits otherwise.
CS may provide various services to US municipal entities or obligated persons ("municipalities"), including suggesting individual transactions or trades and entering into such transactions. Any services CS provides to municipalities are not viewed as
"advice" within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. CS is providing any such services and related information solely on an arm's length basis and not as an advisor or fiduciary to the
municipality. In connection with the provision of the any such services, there is no agreement, direct or indirect, between any municipality (including the officials,management, employees or agents thereof) and CS for CS to provide advice to the
municipality. Municipalities should consult with their financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated
broker, dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products, the issuance of municipal securities, or
of an investment adviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than Credit Suisse AG, or its affiliates, that financial institution is solely responsible for
distribution. Clients of that institution should contact that institution to effect a transaction in the securities mentioned in this report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing
financial institution, and neither Credit Suisse AG, its affiliates, and their respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. No information or
communication provided herein or otherwise is intended to be, or should be construed as, a recommendation within the meaning of the US Department of Labor’s final regulation defining "investment advice" for purposes of the Employee Retirement
Income Security Act of 1974, as amended and Section 4975 of the Internal Revenue Code of 1986, as amended, and the information provided herein is intended to be general information, and should not be construed as, providing investment advice
(impartial or otherwise).
Copyright © 2022 CREDIT SUISSE AG and/or its affiliates. All rights reserved.
When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the
purchase price only.
suisse.com/who-we-are This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution,
publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse or its affiliates ("CS") to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specifically
indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks,
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are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable for any
particular investor. CS will not treat recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consult an
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your individual circumstances, or otherwise constitutes a personal recommendation to you. Please note in particular that the bases and levels of taxation may change. Information and opinions presented in this report have been obtained or derived from
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the extent that such liability arises under specific statutes or regulations applicable to CS. This report is not to be relied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, other communications
that are inconsistent with, and reach different conclusions from, the information presented in this report. Those communications reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no
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associate of CS or CS may be the only market maker in such investments. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future
performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by CS and are subject to change without notice. The price, value of and income from any of the securities or financial instruments
mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments. Investors in
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who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange
rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with
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losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay
more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be
difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites.
Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website
material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own
risk. This research report does not, and is not intended to be, an advertisement within the meaning of article 68 of the Swiss Financial Services Act and/or article 95 of the Swiss Financial Services Ordinance. This research report is not a prospectus, basic
information sheet (BIB) or a key information document (KID). Any recipients of this document should, however, note that any communication forwarding or using this research report as a basis for discussion, would qualify as such advertisement if it is
intended to draw the recipient's attention to specific financial instruments covered by this research report.
This report is issued and distributed in United Kingdom and European Union (except Germany and Spain): by Credit Suisse International, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation Authority; Spain: Credit Suisse Bank (Europe), S.A. regulated by the Comision Nacional del Mercado de Valores; Germany: Credit Suisse (Deutschland) Aktiengesellschaft
regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). United States: Credit Suisse Securities (USA) LLC; Canada: Credit Suisse Securities (Canada), Inc.; Switzerland: Credit Suisse AG; Brazil: Credit Suisse (Brasil) S.A.
Corretora de Títulos e Valores Mobiliários or its affiliates; Mexico: Banco Credit Suisse (México), S.A., Institución de Banca Múltiple, Grupo Financiero Credit Suisse (México) and Casa de Bolsa Credit Suisse (México), S.A. de C.V., Grupo Financiero
Credit Suisse (México) ("Credit Suisse Mexico"). This document has been prepared for information purposes only and is exclusively distributed in Mexico to Institutional Investors. Credit Suisse Mexico is not responsible for any onward distribution of this
report to non-institutional investors by any third party. The authors of this report have not received payment or compensation from any entity or company other than from the relevant Credit Suisse Group company employing them; Japan: by Credit Suisse
Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau ( Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers
Association, Type II Financial Instruments Firms Association. This report has been prepared and issued for distribution in Japan to Credit Suisse’s clients, including institutional investors; Hong Kong SAR: Credit Suisse (Hong Kong) Limited; Australia:
Credit Suisse Equities (Australia) Limited; Thailand: Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701,
Rama IV Road, Silom, Bangrak, Bangkok10500, Thailand, Tel. +66 2614 6000; Malaysia: Credit Suisse Securities (Malaysia) Sdn Bhd; Singapore: Credit Suisse AG, Singapore Branch; India: Credit Suisse Securities (India) Private Limited (CIN
no.U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INZ000248233), having registered address at 9th Floor, Ceejay
House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777; South Korea: Credit Suisse Securities (Europe) Limited, Seoul Branch; Taiwan (Chinese Taipei): Credit Suisse AG Taipei Securities Branch; Indonesia: PT Credit Suisse
Sekuritas Indonesia; Philippines:Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above.
Additional Regional Disclaimers
Australia: Credit Suisse Securities (Europe) Limited ("CSSEL") and Credit Suisse International ("CSI") are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority ("FCA") and the Prudential Regulation Authority
under UK laws, which differ from Australian Laws. CSSEL and CSI do not hold an Australian Financial Services Licence ("AFSL") and are exempt from the requirement to hold an AFSL under the Corporations Act (Cth) 2001 ("Corporations Act") in
respect of the financial services provided to Australian wholesale clients (within the meaning of section 761G of the Corporations Act) (hereinafter referred to as “Financial Services”). This material is not for distribution to retail clients and is directed
exclusively at Credit Suisse's professional clients and eligible counterparties as defined by the FCA, and wholesale clients as defined under section 761G of the Corporations Act. Credit Suisse (Hong Kong) Limited ("CSHK") is licensed and regulated by
the Securities and Futures Commission of Hong Kong under the laws of Hong Kong SAR, which differ from Australian laws. CSHKL does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of
providing Financial Services. Investment banking services in the United States are provided by Credit Suisse Securities (USA) LLC, an affiliate of Credit Suisse Group. CSSU is regulated by the United States Securities and Exchange Commission under
United States laws, which differ from Australian laws. CSSU does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing Financial Services. Credit Suisse Asset Management LLC
(CSAM) is authorised by the Securities and Exchange Commission under US laws, which differ from Australian laws. CSAM does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing
Financial Services. This material is provided solely to Institutional Accounts (as defined in the FINRA rules) who are Eligible Contract Participants (as defined in the US Commodity Exchange Act). Credit Suisse Equities (Australia) Limited (ABN 35 068 232
708) ("CSEAL") is an AFSL holder in Australia (AFSL 237237).
Malaysia: Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020.
Singapore: This report has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (each as defined under the Financial Advisers Regulations) only, and is also distributed by Credit Suisse
AG, Singapore Branch to overseas investors (as defined under the Financial Advisers Regulations). Credit Suisse AG, Singapore Branch may distribute reports produced by its foreign entities or affiliates pursuant to an arrangement under Regulation 32C
of the Financial Advisers Regulations. Singapore recipients should contact Credit Suisse AG, Singapore Branch at +65-6212-2000 for matters arising from, or in connection with, this report. By virtue of your status as an institutional investor, accredited
investor, expert investor or overseas investor, Credit Suisse AG, Singapore Branch is exempted from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the “FAA”), the Financial Advisers
Regulations and the relevant Notices and Guidelines issued thereunder, in respect of any financial advisory service which Credit Suisse AG, Singapore Branch may provide to you.
EU: This report has been produced by subsidiaries and affiliates of Credit Suisse operating under its Securities Research function within the Investment Banking Division.
In jurisdictions where CS is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in
accordance with applicable exemptions from registration or licensing requirements.
This material is issued and distributed in the U.S. by CSSU, a member of NYSE, FINRA, SIPC and the NFA, and CSSU accepts responsibility for its contents. Clients should contact analysts and execute transactions through a Credit Suisse subsidiary or
affiliate in their home jurisdiction unless governing law permits otherwise.
CS may provide various services to US municipal entities or obligated persons ("municipalities"), including suggesting individual transactions or trades and entering into such transactions. Any services CS provides to municipalities are not viewed as
"advice" within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. CS is providing any such services and related information solely on an arm's length basis and not as an advisor or fiduciary to the
municipality. In connection with the provision of the any such services, there is no agreement, direct or indirect, between any municipality (including the officials,management, employees or agents thereof) and CS for CS to provide advice to the
municipality. Municipalities should consult with their financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated
broker, dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products, the issuance of municipal securities, or
of an investment adviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than Credit Suisse AG, or its affiliates, that financial institution is solely responsible for
distribution. Clients of that institution should contact that institution to effect a transaction in the securities mentioned in this report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing
financial institution, and neither Credit Suisse AG, its affiliates, and their respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. No information or
communication provided herein or otherwise is intended to be, or should be construed as, a recommendation within the meaning of the US Department of Labor’s final regulation defining "investment advice" for purposes of the Employee Retirement
Income Security Act of 1974, as amended and Section 4975 of the Internal Revenue Code of 1986, as amended, and the information provided herein is intended to be general information, and should not be construed as, providing investment advice
(impartial or otherwise).
Copyright © 2022 CREDIT SUISSE AG and/or its affiliates. All rights reserved.
When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the
purchase price only.
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